Exhibit 10.4

EXECUTION VERSION

Notwithstanding anything herein to the contrary, the liens and security
interests granted to the Agent pursuant to this Agreement and the exercise of
any right or remedy by the Agent hereunder, are subject to the provisions of (i)
the Intercreditor Agreement dated as of July 30, 2014 (as amended, restated,
supplemented or otherwise modified from time to time, the “ABL/Term Loan
Intercreditor Agreement”), among the Agent, the Term Loan Agent (as defined in
the Credit Agreement as hereinafter defined) and the Grantors (as hereinafter
defined) from time to time party thereto and (ii) the Subordination and
Intercreditor Agreement dated as of July 30, 2014 (as amended, restated,
supplemented or otherwise modified from time to time, the “PBGC Intercreditor
Agreement”, together with the ABL/Term Loan Intercreditor Agreement, the
“Intercreditor Agreements”), among the Agent, the Term Loan Agent, the PBGC (as
defined in the Credit Agreement) and the Grantors from time to time party
thereto.  In the event of any conflict between the terms of the Intercreditor
Agreements and the terms of this Agreement, the terms of the Intercreditor
Agreements shall govern and control.

SECURITY AND PLEDGE AGREEMENT

THIS SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of July
30, 2014 among WAUSAU PAPER CORP., a Wisconsin corporation (“Wausau Paper”),
WAUSAU TIMBERLAND COMPANY, LLC, a Wisconsin limited liability company (“Wausau
Timberland”), WAUSAU PAPER MILLS, LLC, a Wisconsin limited liability company
(“Wausau Mills”), WAUSAU PAPER TOWEL & TISSUE, LLC, a Wisconsin limited
liability company (“Wausau Towel & Tissue”), THE SORG PAPER COMPANY, an Ohio
corporation (“Sorg”), THE MIDDLETOWN HYDRAULIC COMPANY, an Ohio corporation
(“Middletown”, and together with Wausau Paper, Wausau Timberland, Wausau Mills
and Wausau Towel & Tissue, collectively, “Borrowers”), the other parties
identified as “Grantors” on the signature pages hereto and such other parties
that may become Grantors hereunder after the date hereof (together with the
Borrowers, each individually a “Grantor”, and collectively, the “Grantors”) and
BANK OF AMERICA, N.A., in its capacity as administrative agent (in such
capacity, the “Agent”) for the Secured Parties.

RECITALS

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof
(as amended, modified, extended, restated, renewed, replaced, or supplemented
from time to time, the “Credit Agreement”) among the Borrowers, the Lenders
party thereto and the Agent, the Lenders have agreed to make Term Loans upon the
terms and subject to the conditions set forth therein; and

WHEREAS, this Agreement is required by the terms of the Credit Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1.

Definitions.

(a)

Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement or, if not defined in the Credit
Agreement, the meanings ascribed to such terms in the applicable Intercreditor
Agreement.  With reference to this Agreement, unless otherwise specified herein:
 (i) the definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined, (ii) whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms,
(iii) the words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”, (iv) the word “will” shall be
construed to have the same meaning and effect as the word

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“shall”, (v) any definition of, or reference to, any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document, as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (vi) any reference herein to any Person
shall be construed to include such Person’s permitted successors and assigns,
(vii) the words “herein”, “hereof” and “hereunder”, and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof, (viii) all references herein to Sections, Exhibits
and Schedules shall be construed to refer to Sections of, and Exhibits and
Schedules to, this Agreement, (ix) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights, (x) the term “documents” includes any and all
instruments, documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical or
electronic form, (xi) in the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including;” the
words “to” and “until” each mean “to but excluding;” and the word “through”
means “to and including”, (xii) Section headings herein are included for
convenience of reference only and shall not affect the interpretation of this
Agreement and (xiii) 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.

(b)

The following terms shall have the meanings set forth in the UCC (defined
below):  Accession, Account, Account Debtor, Adverse Claim, As-Extracted
Collateral, Certificated Security, Chattel Paper, Commercial Tort Claim,
Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment,
Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument,
Inventory, Investment Company Security, Investment Property, Letter-of-Credit
Right, Manufactured Home, Payment Intangible, Proceeds, Securities Account,
Securities Intermediary, Security, Software, Supporting Obligation and Tangible
Chattel Paper.

(c)

In addition, the following terms shall have the meanings set forth below:

“Assignment of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C.
Section 15, 31 U.S.C.  Section 3737, and 31 U.S.C. Section 3727), including all
amendments thereto and regulations promulgated thereunder.

“Collateral” has the meaning provided in Section 2 hereof.

“Control” means the manner in which “control” is achieved under the UCC with
respect to any Collateral for which the UCC specifies a method of achieving
“control”.

“Copyright License” means any agreement now or hereafter in existence, providing
for the grant by, or to, any rights (including, without limitation, the grant of
rights for a party to be designated as an author or owner and/or to enforce,
defend, use, display, copy, manufacture, distribute, exploit and sell, make
derivative works, and require joinder in suit and/or receive assistance from
another party) covered in whole or in part by a Copyright.

“Copyrights” means, collectively, all of the following of any Grantor: (i) all
copyrights, works protectable by copyright, copyright registrations and
copyright applications anywhere in the world, (ii) all derivative works,
counterparts, extensions and renewals of any of the foregoing, (iii) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present and future infringements,
violations or misappropriations of any of the foregoing,

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(iv) the right to sue for past, present and future infringements, violations or
misappropriations of any of the foregoing and (v) all rights corresponding to
any of the foregoing throughout the world.

“Excluded Perfection Actions” means the following actions:  (a) the giving of
notice or taking other actions (other than the filing of UCC financing
statements) in respect of Letter of Credit Rights (to the extent the value
thereof does not exceed $100,000 for each such Letter of Credit Rights), (b)
taking actions to perfect the Agent’s security interest in the standing timber
located on the Excluded Timberlands Parcels, the aircraft described in Section
3(c)(vi) of this Agreement and any assets covered by a certificate of title,
including, without limitation, Vehicles, except to the extent that a security
interest in such assets can be perfected by the filing of a financing statement
under the UCC, (c) taking any action to perfect any Security Interest in any
part of the Collateral under the laws of any jurisdiction outside of the United
States and (d) taking actions to perfect the Agent’s security interest in any
assets with respect to which the Agent and the Borrowers shall reasonably
determine that the costs of creating and/or perfecting such a security interest
therein are excessive in relation to the value of the security interest to be
afforded.

“Government Contract” means a contract between any Grantor and an agency,
department or instrumentality of the United States or any state, municipal or
local Governmental Authority located in the United States or all obligations of
any such Governmental Authority arising under any Account now or hereafter owing
by any such Governmental Authority, as Account Debtor, to any Grantor.

“Intellectual Property” means, collectively, all of the following of any
Grantor: (i)  all systems software and applications software (including source
code and object code), all documentation for such software, including, without
limitation, user manuals, flowcharts, functional specifications, operations
manuals, and all formulas, processes, ideas and know-how embodied in any of the
foregoing, (ii) concepts, discoveries, improvements and ideas, know-how,
technology, reports, design information, trade secrets, practices,
specifications, test procedures, maintenance manuals, research and development,
inventions (whether or not patentable), blueprints, drawings, data, customer
lists, catalogs, and all physical embodiments of any of the foregoing, (iii)
Patents and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and
Trademark Licenses and (iv) other agreements with respect to any rights in any
of the items described in the foregoing clauses (i), (ii), and (iii).

“Issuer” means the issuer of any Pledged Equity.

“Patent License” means any agreement, now or hereafter in existence, providing
for the grant by, or to, any Grantor of any rights (including, without
limitation, the right for a party to be designated as an owner and/or to
enforce, defend, make, have made, make improvements, manufacture, use, sell,
import, export, and require joinder in suit and/or receive assistance from
another party) covered in whole or in part by a Patent.

“Patents” means collectively, all of the following of any Grantor: (i) all
patents, all inventions and patent applications anywhere in the world, (ii) all
improvements, counterparts, reissues, divisional, re-examinations, extensions,
continuations (in whole or in part) and renewals of any of the foregoing and
improvements thereon, (iii) all income, royalties, damages or payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past,
present or future infringements, violations or misappropriations of any of the
foregoing, (iv) the right to sue for past, present and future infringements,
violations or misappropriations of any of the foregoing and (v) all rights
corresponding to any of the foregoing throughout the world.

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“Pledged Equity” means, with respect to each Grantor, (i) 100% of the issued and
outstanding Equity Interests of each Domestic Subsidiary of each Borrower that
is directly owned by such Grantor and (ii) 65% (or such greater percentage that,
due to a change in an applicable Law after the date hereof, (A) could 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 (B) could not reasonably be expected to cause any material adverse tax
consequences) of the issued and outstanding Equity Interests entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Equity Interests not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary of each Borrower
that is directly owned by such Grantor, including the Equity Interests of the
Subsidiaries owned by such Grantor as set forth on Schedule 8.1.27(f) to the
Credit Agreement (as updated from time to time in accordance with the Credit
Agreement), in each case together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto, including, but not
limited to, the following:

(1)

all Equity Interests representing a dividend thereon, or representing a
distribution or return of capital upon or in respect thereof, or resulting from
a stock split, revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and

(2)

in the event of any consolidation or merger involving any Issuer and in which
such Issuer is not the surviving Person, all shares of each class of the Equity
Interests of the successor Person formed by or resulting from such consolidation
or merger, to the extent that such successor Person is a direct Subsidiary of a
Grantor.

“Trademark License” means any agreement, now or hereafter in existence,
providing for the grant by, or to, any Grantor of any rights in (including,
without limitation, the right for a party to be designated as an owner and/or to
enforce, defend, use, mark, police, and require joinder in suit and/or receive
assistance from another party) covered in whole, or in part, by a Trademark.

“Trademarks” means, collectively, all of the following of any Grantor: (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, internet domain names, trade styles, service marks,
logos, other business identifiers, whether registered or unregistered, all
registrations and recordings thereof, and all applications in connection
therewith (other than each United States application to register any trademark
or service mark prior to the filing under applicable Law of a verified statement
of use for such trademark or service mark) anywhere in the world, (ii) all
counterparts, extensions and renewals of any of the foregoing, (iii) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present or future infringements,
violations, dilutions or misappropriations of any of the foregoing, (iv) the
right to sue for past, present or future infringements, violations, dilutions or
misappropriations of any of the foregoing and (v) all rights corresponding to
any of the foregoing (including the goodwill) throughout the world.

“Vehicles” means all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title under the laws of
any state, all tires and all other appurtenances to any of the foregoing.

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“Vessel” means any watercraft or other artificial contrivance used, or capable
of being used, as a means of transportation on water (including, without
limitation, those whose primary purpose is the maritime transportation of cargo
or which are otherwise engaged, used or useful in any business activities of the
Grantors) which are owned by and registered (or to be owned and registered) in
the name of any of the Grantors, including, without limitation, any Vessel
leased or otherwise registered in the foregoing parties’ names, pursuant to a
lease or other operating agreement constituting a capital lease obligation, in
each case together with all related spares, equipment and any additional
improvements, vessel owned, bareboat chartered or operated by a Grantor other
than Vessels owned by an entity other than a Grantor and which are managed under
Vessel management agreements.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
state of New York except as such term may be used in connection with the
perfection of the Collateral and then the applicable jurisdiction with respect
to such affected Collateral shall apply.

“USPTO” means the United States Patent and Trademark Office.

“Work” means any work that is subject to copyright protection pursuant to Title
17 of the United States Code.

2.

Grant of Security Interest in the Collateral.  To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, each Grantor hereby grants
to the Agent, for the benefit of the Secured Parties, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Grantor in and to all of the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
“Collateral”):  (a) all Accounts;  (b) all cash, currency and Cash Equivalents;
(c) all Chattel Paper (including Electronic Chattel Paper and Tangible Chattel
Paper); (d) those certain Commercial Tort Claims set forth on Schedule 8.1.27(e)
to the Credit Agreement (as updated from time to time in accordance with the
Credit Agreement); (e) all Deposit Accounts; (f) all Documents; (g) all
Equipment; (h) all Fixtures; (i) all General Intangibles; (j) all Goods; (k) all
Instruments; (l)  all Intellectual Property; (m) all Inventory; (n) all
Investment Property; (o) all Letter-of-Credit Rights; (p) all Payment
Intangibles; (q) all Pledged Equity; (r) all Securities Accounts; (s) all
Software; (t) all Supporting Obligations; (u) all Vehicles; (v) all books and
records pertaining to the Collateral; (w) all Accessions and all Proceeds and
products of any and all of the foregoing and (x) all other personal property of
any kind or type whatsoever now or hereafter owned by such Grantor or as to
which such Grantor now or hereafter has the power to transfer interest therein.

Notwithstanding anything to the contrary contained herein, the security
interests granted under this Agreement shall not extend to (a) Excluded
Property, (b) the Excluded Brainerd Site and the Excluded Timberlands Parcels,
(c) any General Intangible, permit, lease, license, contract or other Instrument
of a Grantor to the extent the grant of a security interest in such General
Intangible, permit, lease, license, contract or other Instrument in the manner
contemplated by this Agreement, under the terms thereof or under applicable Law,
is prohibited and would result in the termination thereof or give the other
parties thereto the right to terminate, accelerate or otherwise alter such
Grantor’s rights, titles and interests thereunder (including upon the giving of
notice or the lapse of time or both) or (d) any United States intent-to-use
trademark applications to the extent that, and solely during the period in which
the grant of a security interest therein would impair the validity or
enforceability of or render void or result in the cancellation of, any
registration issued as a result of such intent-to-use trademark applications
under applicable Law; provided that upon submission and acceptance by the USPTO
of an amendment to allege pursuant to 15 U.S.C. Section 1060(a) or any successor
provision), such intent-to-use trademark application shall be considered
Collateral; provided, further that (i) any such limitation described in the
foregoing clause (c) on the security interests granted hereunder shall only
apply to the extent that  any such prohibition or right to terminate or
accelerate or alter the Grantor’s rights could not be rendered ineffective
pursuant to the UCC or any other applicable Law

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(including Debtor Relief Laws) or principles of equity and (ii) in the event of
the termination or elimination of any such prohibition or right or the
requirement for any consent contained in any applicable Law, General Intangible,
permit, lease, license, contract or other Instrument, to the extent sufficient
to permit any such item to become Collateral hereunder, or upon the granting of
any such consent, or waiving or terminating any requirement for such consent, a
security interest in such General Intangible, permit, lease, license, contract
or other Instrument shall be automatically and simultaneously granted hereunder
and shall be included as Collateral hereunder.

The Grantors and the Agent, on behalf of the Secured Parties, hereby acknowledge
and agree that the security interest created hereby in the Collateral
(a) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (b) is not to be
construed as an assignment of any Intellectual Property.

3.

Representations and Warranties.  Each Grantor hereby represents and warrants to
the Agent, for the benefit of the Secured Parties, that until the Facility
Termination Date, that:

(a)

Ownership.  Each Grantor is the legal and beneficial owner of its Collateral and
has the right to pledge, sell, assign or transfer the same.  There exists no
Adverse Claim with respect to the Pledged Equity of such Grantor.   

(b)

Security Interest/Priority.  This Agreement creates a valid security interest in
favor of the Agent, for the benefit of the Secured Parties, in the Collateral of
such Grantor and, when properly perfected by filing, shall constitute a valid
and perfected security interest (having the priority set forth in the
Intercreditor Agreements) in such Collateral (including all uncertificated
Pledged Equity consisting of partnership or limited liability company interests
that do not constitute Securities), to the extent such security interest can be
perfected by filing under the UCC, free and clear of all Liens except for
Permitted Liens.  No Grantor has authenticated any agreement authorizing any
secured party thereunder to file a financing statement, except to perfect
Permitted Liens.  The taking possession by the Agent of the certificated
securities (if any) evidencing the Pledged Equity and all other Instruments
constituting Collateral will perfect the Agent’s security interest in (with the
priority set forth in the Intercreditor Agreements) all the Pledged Equity
evidenced by such certificated securities and such Instruments.  With respect to
any Collateral consisting of a Deposit Account, Securities Entitlement or held
in a Securities Account, upon execution and delivery by the applicable Grantor,
the applicable Securities Intermediary and the Agent of an agreement granting
control to the Agent over such Collateral, the Agent shall have a valid and
perfected security interest (having the priority set forth in the Intercreditor
Agreements) in such Collateral.

(c)

Types of Collateral.  None of the Collateral consists of, or is the Proceeds of,
(i) As-Extracted Collateral, (ii) Consumer Goods, (iii) Farm Products, (iv)
Manufactured Homes, (v) standing timber (other than standing timber located on
the Excluded Timberlands Parcels), (vi) an aircraft, airframe, aircraft engine
or related property (other than the Daussault/Sud Fan Falcon Ser E having serial
number 306 and United States registration number 205WP), (vii) an aircraft
leasehold interest, (viii) a Vessel or (ix) any other interest in or to any of
the foregoing.

(d)

Accounts.  (i) Each Account of the Grantors and the papers and documents
relating thereto are genuine and in all material respects what they purport to
be, (ii) each Account arises out of (A) a bona fide sale of goods sold and
delivered by such Grantor (or is in the process of being delivered) or
(B) services theretofore actually rendered by such Grantor to, the account
debtor named therein, (iii) no Account of a Grantor is evidenced by any
Instrument or Chattel Paper unless such Instrument or Chattel Paper, to the
extent requested by the Agent, has been endorsed over and

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delivered to, or submitted to the control of, the Agent, (iv) no surety bond was
required or given in connection with any Account of a Grantor or the contracts
or purchase orders out of which they arose, (v) the right to receive payment
under each Account is assignable, (vi) no Account Debtor has any defense,
set-off, claim or counterclaim against any Grantor that can be asserted against
the Agent, whether in any proceeding to enforce the Agent’s rights in the
Collateral otherwise, except defenses, setoffs, claims or counterclaims that are
not, in the aggregate, material to the value of the Accounts, (vii) to such
Grantor’s knowledge, there are no facts, events or occurrences which in any way
impair the validity or enforceability thereof or could reasonably be expected to
reduce the amount payable thereunder as shown on such Grantor’s books and
records and any invoices, statements and other reports delivered to the Agent
with respect thereto, (viii) no Grantor has received any notice of proceedings
or actions which are threatened or pending against any Account Debtor which
might result in any adverse change in such Account Debtor’s financial condition,
(ix) no Grantor has knowledge that any material Account Debtor (either
individually or in the aggregate) is unable generally to pay its debts as they
become due and (x) to such Grantor’s knowledge, all Account Debtors have the
capacity to contract.

(e)

Equipment and Inventory.  With respect to any Equipment and/or Inventory of a
Grantor, each such Grantor has exclusive possession and control of such
Equipment and Inventory of such Grantor except for (i) Equipment leased by such
Grantor as a lessee, (ii) Equipment or Inventory in transit with common carriers
or (iii) Equipment and/or Inventory in the possession or control of a
warehouseman, bailee or any agent or processor of such Grantor to the extent
such Grantor has complied with Section 4(e).  Except as otherwise permitted
under the Term Loan Documents, no Inventory of a Grantor is held by a Person
other than a Grantor pursuant to consignment, sale or return, sale on approval
or similar arrangement.  Collateral consisting of Inventory is of good and
merchantable quality, free from defects.  None of such Inventory is subject to
any licensing, Patent, Trademark, trade name or Copyright with any Person that
restricts any Grantor’s ability to use, manufacture, lease, sell or otherwise
dispose of such Inventory.  The completion of the manufacturing process of such
Inventory by a Person other than the applicable Grantor would be permitted under
any contract to which such Grantor is a party or to which the Inventory is
subject.

(f)

Authorization of Pledged Equity.  All Pledged Equity (i) is duly authorized and
validly issued, (ii) is fully paid and, to the extent applicable, nonassessable
and is not subject to the preemptive rights of any Person, (iii) is beneficially
owned as of record by a Grantor and (iv) constitutes all the issued and
outstanding shares of all classes of the equity of such Issuer issued to such
Grantor. The security interest in the Pledged Equity does not violate Regulation
T, U or X of the Board of Governors of the Federal Reserve System.

(g)

No Other Equity Interests, Instruments, Etc.   As of the Closing Date, (i) no
Grantor owns any certificated Equity Interests in any Subsidiary that are
required to be pledged and delivered to the Agent hereunder except as set forth
on Schedule 8.1.27(f) to the Credit Agreement (as updated from time to time in
accordance with the Credit Agreement), and (ii) no Grantor holds any
Instruments, Documents or Tangible Chattel Paper required to be pledged and
delivered to the Agent pursuant to Section 4(c)(i) of this Agreement other than
as set forth on Schedule 8.1.27(c) to the Credit Agreement (as updated from time
to time in accordance with the Credit Agreement).  All such certificated
securities, Instruments, Documents and Tangible Chattel Paper have been
delivered to the Agent to the extent (A) requested by the Agent or (B) as
required by the terms of this Agreement and the other Loan Documents.

(h)

Partnership and Limited Liability Company Interests.  Except as previously
disclosed to the Agent, none of the Collateral consisting of an interest in a
partnership or a limited

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liability company (i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is a Security
governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv)
is held in a Securities Account or (v) constitutes a Security or a Financial
Asset.

(i)

Contracts; Agreements; Licenses.  No Grantor has any material contracts,
agreements or licenses which are non-assignable by their terms, or as a matter
of law, or which prevent the granting of a security interest therein.

(j)

Consents; Etc.  No approval, consent, exemption, authorization or other action
by, notice to, or filing with, any Governmental Authority or any other Person
(including, without limitation, any stockholder, member or creditor of such
Grantor), is necessary or required for (i) the grant by such Grantor of the
security interest in the Collateral granted hereby or for the execution,
delivery or performance of this Agreement by such Grantor, (ii) the perfection
of such security interest (to the extent such security interest can be perfected
by filing under the UCC, the granting of control (to the extent required under
Section 4(c) hereof) or by filing an appropriate notice with the USPTO or the
United States Copyright Office) or (iii) the exercise by the Agent or the
Secured Parties of the rights and remedies provided for in this Agreement
(including, without limitation, as against any Issuer), except for (A) the
filing or recording of UCC financing statements or other filings under the
Assignment of Claims Act, (B) the filing of appropriate notices with the USPTO
and the United States Copyright Office, (C) obtaining control to perfect the
Liens created by this Agreement (to the extent required under Section 4(c)
hereof), (D) such actions as may be required by Laws affecting the offering and
sale of securities, (E) such actions as may be required by applicable foreign
Laws affecting the pledge of the Pledged Equity of Foreign Subsidiaries,
(F) consents, authorizations, filings or other actions which have been obtained
or made, and (G) as may be required with respect to Vehicles registered under a
certificate of title.

(k)

Commercial Tort Claims.  As of the Closing Date, no Grantor has any Commercial
Tort Claims seeking damages in excess of $100,000 other than as set forth on
Schedule 8.1.27(e) to the Credit Agreement (as updated from time to time in
accordance with the Credit Agreement).

(l)

Copyrights, Patents and Trademarks.

(i)

All material Intellectual Property of such Grantor is valid, subsisting,
unexpired, enforceable and has not been abandoned.

(ii)

No holding, decision or judgment has been rendered by any Governmental Authority
that would limit, cancel or question the validity of any material Intellectual
Property of any Grantor.

(iii)

All applications pertaining to the material Copyrights, Patents and Trademarks
of each Grantor have been duly and properly filed, and all registrations or
letters pertaining to such Copyrights, Patents and Trademarks have been duly and
properly filed and issued.

(iv)

No Grantor has made any assignment or agreement in conflict with the security
interest in the Intellectual Property of any Grantor hereunder.

(v)

Each Grantor and each of its Subsidiaries, own, or possess the right to use, all
of the Intellectual Property that is reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person.

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(vi)

No slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed by any
Grantor or any of its Subsidiaries infringes upon any rights held by any other
Person.

(vii)

No proceeding, claim or litigation regarding any of the foregoing is pending or,
to the best knowledge of such Grantor, threatened, which, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

(m)

Change of Name, Etc.  No Grantor shall change its name, organizational
identification number, identity, jurisdiction of organization, corporate
structure (to the extent permitted by Section 9.2.9 of the Credit Agreement),
form of organization or principal place of business in any manner unless it
shall have given the Agent ten (10) days prior written notice thereof (or such
lesser period of time as agreed to by the Agent), and executed and delivered to
the Agent all financing statements and financing statement amendments which the
Agent may request in connection therewith.

4.

Covenants. Each Grantor covenants that until the Facility Termination Date, that
such Grantor shall:

(a)

Maintenance of Perfected Security Interest; Further Information.

(i)  Maintain the security interest created by this Agreement as a perfected
security interest having the priority set forth in the Intercreditor Agreements
(subject only to Permitted Liens) and shall at its own cost and expense defend
such security interest against the claims and demands of all Persons whomsoever
(other than the holders of Permitted Liens).

(ii)  From time to time furnish to the Agent upon the Agent’s or any Lender’s
reasonable request statements and schedules further identifying and describing
the assets and property of such Grantor and such other reports in connection
therewith as the Agent or such Lender may reasonably request, all in reasonable
detail.

(b)

Required Notifications.  Each Grantor shall promptly, but in no event later than
five (5) Business Days after the occurrence thereof, notify the Agent, in
writing, of: (i) any Lien (other than Permitted Liens) on any of the Collateral
which would adversely affect the ability of the Agent to exercise any of its
remedies hereunder and (ii) the occurrence of any other event which could
reasonably be expected to have a material impairment on the aggregate value of
the Collateral or on the security interests created hereby.

(c)

Perfection through Possession and Control.

(i)  If any amount in excess of $100,000 payable under or in connection with any
of the Collateral shall be or become evidenced by any Instrument or Tangible
Chattel Paper or Supporting Obligation, or if any property constituting
Collateral shall be stored or shipped subject to a Document, ensure that such
Instrument, Tangible Chattel Paper, Supporting Obligation or Document is either
in the possession of such Grantor at all times or, if requested by the Agent to
perfect its security interest in such Collateral, is delivered to the Agent duly
endorsed in a manner satisfactory to the Agent.  Such Grantor shall ensure that
any Collateral consisting of Tangible Chattel Paper is marked with a legend
acceptable to the Agent indicating the Agent’s security interest in such
Tangible Chattel Paper.

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(ii)  Deliver to the Agent promptly upon the receipt thereof by or on behalf of
a Grantor, all certificates and instruments constituting Certificated Securities
or Pledged Equity.  Prior to delivery to the Agent, all such certificates
constituting Pledged Equity shall be held in trust by such Grantor for the
benefit of the Agent pursuant hereto.  All such certificates representing
Pledged Equity shall be delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, substantially in the form provided in Exhibit A hereto or other form
acceptable to the Agent.

(iii)  If any Collateral shall consist of Deposit Accounts, Electronic Chattel
Paper, Letter-of-Credit Rights, Securities Accounts or uncertificated Investment
Property, execute and deliver (and, with respect to any Collateral consisting of
a Securities Account or uncertificated Investment Property, cause the Securities
Intermediary or the Issuer, as applicable, with respect to such Investment
Property to execute and deliver) to the Agent all control agreements,
assignments, instruments or other documents as reasonably requested by the Agent
for the purposes of obtaining and maintaining Control of such Collateral.  If
any Collateral shall consist of Deposit Accounts or Securities Accounts, comply
with Section 7.4 of the Credit Agreement.

(d)

Filing of Financing Statements, Notices, etc.  Each Grantor shall at its own
cost execute and deliver to the Agent and/or file such agreements, assignments
or instruments (including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Agent may reasonably request) and do
all such other things as the Agent may reasonably deem necessary or appropriate
(i) to assure to the Agent its security interests hereunder, including (A) such
instruments as the Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC, including, without limitation, financing statements (including
continuation statements), (B) with regard to Copyrights, a Notice of Grant of
Security Interest in Copyrights substantially in the form of Exhibit B or other
form acceptable to the Agent, (C) with regard to Patents, a Notice of Grant of
Security Interest in Patents for filing with the USPTO substantially in the form
of Exhibit C or other form acceptable to the Agent and (D) with regard to
Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with
the USPTO substantially in the form of Exhibit D or other form acceptable to the
Agent, (ii) to consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Agent of its rights and interests hereunder.
 Furthermore, each Grantor also hereby irrevocably makes, constitutes and
appoints the Agent, its nominee or any other person whom the Agent may
designate, as such Grantor’s attorney in fact with full power and for the
limited purpose to prepare and file (and, to the extent applicable, sign) in the
name of such Grantor any financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Agent’s reasonable discretion would be necessary or
appropriate in order to perfect and maintain perfection of the security
interests granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable until the Facility Termination Date.  Each Grantor
hereby agrees that a carbon, photographic or other reproduction of this
Agreement or any such financing statement is sufficient for filing as a
financing statement by the Agent without notice thereof to such Grantor wherever
the Agent may in its sole discretion desire to file the same.  

(e)

Collateral Held by Warehouseman, Bailee, etc.  

(i)

If any Collateral with a value in excess of $500,000 is at any time in the
possession or control of a warehouseman, bailee or any agent or processor of
such Grantor (A) notify the Agent of such possession, (B) notify such Person in
writing of the Agent’s

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security interest for the benefit of the Secured Parties in such Collateral, (C)
instruct such Person to hold all such Collateral for the Agent’s account and
subject to the Agent’s instructions and (D) unless otherwise consented to in
writing by the Agent, use commercially reasonable efforts to obtain (1) a
written acknowledgment from such Person that it is holding such Collateral for
the benefit of the Agent and (2) such other documentation required by the Agent
(including, without limitation, subordination and access agreements).

(ii)

Perfect and protect such Grantor’s ownership interests in all Inventory stored
with a consignee against creditors of the consignee by filing and maintaining
financing statements against the consignee reflecting the consignment
arrangement filed in all appropriate filing offices, providing any written
notices required by the UCC to notify any prior creditors of the consignee of
the consignment arrangement, and using commercially reasonable efforts to take
such other actions as may be appropriate to perfect and protect such Grantor’s
interests in such inventory under Section 2-326, Section 9-103, Section 9-324
and Section 9-505 of the UCC or otherwise, which such financing statements filed
pursuant to this Section shall be assigned to the Agent, for the benefit of the
Secured Parties.

(f)

Treatment of Accounts.  Not grant or extend the time for payment of any Account,
or compromise or settle any Account for less than the full amount thereof, or
release any person or property, in whole or in part, from payment thereof, or
amend, supplement or modify any Account in any manner that could reasonably be
likely to adversely affect the value thereof, or allow any credit or discount
thereon, other than as normal and customary in the ordinary course of a
Grantor’s business.  Each Grantor will deliver to the Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of any Account.  

(g)

Commercial Tort Claims.  Execute and deliver such statements, documents and
notices and do and cause to be done all such things as may be required by the
Agent, or required by Law to create, preserve, perfect and maintain the Agent’s
security interest in any Commercial Tort Claims initiated by or in favor of any
Grantor.

(h)

Inventory.  With respect to the Inventory of each Grantor:

(i)  

At all times maintain inventory records reasonably satisfactory to the Agent,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory and such Grantor’s cost therefore and daily
withdrawals therefrom and additions thereto.

(ii)  

Produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable Laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto).

(i)

Books and Records.  Mark its books and records (and shall cause the Issuer of
the Pledged Equity of such Grantor to mark its books and records) to reflect the
security interest granted pursuant to this Agreement.  

(j)

Nature of Collateral.  At all times maintain the Collateral as personal property
and not affix any of the Collateral to any real property in a manner which would
change its nature

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from personal property to real property or a Fixture to real property, unless
the Agent shall have a perfected Lien on such Fixture or real property.

(k)

Issuance or Acquisition of Equity Interests in Partnerships or Limited Liability
Companies.  

(i)

Not without executing and delivering, or causing to be executed and delivered,
to the Agent such agreements, documents and instruments as the Agent may
reasonably require, issue or acquire any Pledged Equity consisting of an
interest in a partnership or a limited liability company that (A) is dealt in or
traded on a securities exchange or in a securities market, (B) by its terms
expressly provides that it is a Security governed by Article 8 of the UCC, (C)
is an investment company security, (D) is held in a Securities Account or (E)
constitutes a Security or a Financial Asset.

(ii)  

Without the prior written consent of the Agent, no Grantor will (A) vote to
enable, or take any other action to permit, any applicable Issuer to issue any
Investment Property or Equity Interests constituting partnership or limited
liability company interests, except for those additional Investment Property or
Equity Interests constituting partnership or limited liability company interests
that will be subject to the security interest granted herein in favor of the
Secured Parties, or (B) enter into any agreement or undertaking, except in
connection with a Disposition permitted under Section 9.2.6 of the Credit
Agreement, restricting the right or ability of such Grantor or the Agent to
sell, assign or transfer any Investment Property or Pledged Equity or Proceeds
thereof.  The Grantors will, at their own cost and expense, defend the right,
title and interest of the Agent in and to any Investment Property and Pledged
Equity against the claims and demands of all Persons whomsoever.

(iii)  

If any Grantor shall become entitled to receive or shall receive (A) any
Certificated Securities (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
ownership interests of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Investment Property, or otherwise in
respect thereof, or (B) any sums paid upon or in respect of any Investment
Property upon the liquidation or dissolution of any Issuer, such Grantor shall
accept the same as the agent of the Secured Parties, hold the same in trust for
the Secured Parties, segregated from other funds of such Grantor, and promptly
deliver the same to the Agent, on behalf of the Secured Parties, in accordance
with the terms hereof.

(l)

Intellectual Property.

(i)

Not do any act or omit to do any act whereby any material Copyright may become
invalidated and (A) not do any act, or omit to do any act, whereby any material
Copyright may become injected into the public domain; (B) notify the Agent
immediately if it knows that any material Copyright may become injected into the
public domain or of any materially adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding a Grantor’s ownership of any such Copyright or its validity; (C) take
all necessary steps as it shall deem appropriate under the circumstances, to
maintain and pursue each application (and to obtain the relevant registration)
of each material Copyright owned by a Grantor and to maintain each

CHI:2851193.2

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registration of each material Copyright owned by a Grantor including, without
limitation, filing of applications for renewal where necessary; and (D) promptly
notify the Agent of any material infringement, misappropriation, dilution or
impairment of any material Copyright of a Grantor of which it becomes aware and
take such actions as it shall reasonably deem appropriate under the
circumstances to protect such Copyright, including, where appropriate, the
bringing of suit for infringement, dilution or impairment or seeking injunctive
relief and seeking to recover any and all damages for such infringement,
misappropriation, dilution or impairment.

(ii)

Not make any assignment or agreement in conflict with the security interest in
the Copyrights of each Grantor hereunder (except as permitted by the Credit
Agreement).

(iii)

(A) 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, (B) maintain as in the past the
quality of products and services offered under such Trademark, (C) employ such
Trademark with the appropriate notice of registration, if applicable, (D) not
adopt or use any mark that is confusingly similar or a colorable imitation of
such Trademark unless the Agent, for the benefit of the Secured Parties, shall
obtain a perfected security interest in such mark pursuant to this Agreement,
and (E) not (and not permit any licensee or sublicensee thereof to) do any act
or omit to do any act whereby any such Trademark may become invalidated.

(iv)

Not do any act, or omit to do any act, whereby any material Patent may become
abandoned or dedicated.

(v)

Notify the Agent and the Secured Parties immediately if it knows that any
application or registration relating to any material Patent or Trademark may
become abandoned or dedicated, or of any materially adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the USPTO or any court or
tribunal in any country) regarding such Grantor ownership of any material Patent
or Trademark or its right to register the same or to keep and maintain the same.

(vi)

Take all reasonable and necessary steps, including, without limitation, in any
proceeding before the USPTO, 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 each material Patent and Trademark, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.

(vii)

Promptly notify the Agent and the Secured Parties after it learns that any
material Patent or Trademark included in the Collateral is infringed,
misappropriated, diluted or impaired by a third party and promptly sue for
infringement, misappropriation, dilution or impairment, to seek injunctive
relief where appropriate and to recover any and all damages for such
infringement, misappropriation, dilution  or impairment, or to take such other
actions as it shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.

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(viii)

Not make any assignment or agreement in conflict with the security interest in
the Patents or Trademarks of each Grantor hereunder (except as permitted by the
Credit Agreement).

(ix)

Grants to the Agent a royalty free license to use such Grantor’s Intellectual
Property in connection with the enforcement of the Agent’s rights hereunder, but
only to the extent any license or agreement granting such Grantor rights in such
Intellectual Property do not prohibit such use by the Agent.

Notwithstanding the foregoing, the Grantors may, in their reasonable business
judgment, fail to maintain, pursue, preserve or protect any Copyright, Patent or
Trademark which is not material to their businesses.

(m)

Equipment.  Maintain each item of Equipment in good working order and condition
(reasonable wear and tear and obsolescence excepted).

(n)

Government Contracts.  Promptly notify the Agent, in writing, if it enters into
any contract with a Governmental Authority under which such Governmental
Authority, as account debtor, owes a monetary obligation to any Grantor under
any Account.

(o)

Further Assurances.

(i)  Promptly upon the request of the Agent and at the sole expense of the
Grantors, duly execute and deliver, and have recorded, such further instruments
and documents and take such further actions as the 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, (A)
the assignment of any Material Contract, (B) with respect to Government
Contracts, assignment agreements and notices of assignment, in form and
substance satisfactory to the Agent, duly executed by any Grantors party to such
Government Contract in compliance with the Assignment of Claims Act (or
analogous state applicable Law), and (C) all applications, certificates,
instruments, registration statements, and all other documents and papers the
Agent may reasonably request and as may be required by law in connection with
the obtaining of any consent, approval, registration, qualification, or
authorization of any Person deemed necessary or appropriate for the effective
exercise of any rights under this Agreement; provided that notwithstanding the
foregoing or anything else in the Loan Documents, the Grantors shall not be
required to take the Excluded Perfection Actions.

(ii)  From time to time upon the Agent’s reasonable request, promptly furnish
such updates to the information disclosed pursuant to this Agreement and the
Credit Agreement, including any Schedules hereto or thereto, such that such
updated information is true and correct as of the date so furnished.

5.

Authorization to File Financing Statements.  Each Grantor hereby authorizes the
Agent to prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as
the Agent may from time to time deem necessary or appropriate in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC, which such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
Collateral that describes such property in any other manner as the Agent may
determine, in its sole discretion, is necessary, advisable or prudent to ensure
the perfection of the security interest in the Collateral granted herein,
including, without limitation, describing such property as “all assets,

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whether now owned or hereafter acquired” or “all personal property, whether now
owned or hereafter acquired.”  

6.

Advances.  On failure of any Grantor to perform any of the covenants and
agreements contained herein or in any other Loan Document, the Agent may, at its
sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and all other
expenditures which the Agent may make for the protection of the security hereof
or which may be compelled to make by operation of Law.  All such sums and
amounts so expended shall be repayable by the Grantors on a joint and several
basis promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the Default Rate.  No such performance of any covenant
or agreement by the Agent on behalf of any Grantor, and no such advance or
expenditure therefor, shall relieve the Grantors of any Default or Event of
Default.  The Agent may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by a Grantor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.

7.

Remedies.

(a)

General Remedies.  Upon the occurrence of an Event of Default and during
continuation thereof, the Agent on behalf of the Secured Parties shall have, in
addition to the rights and remedies provided herein, in the Loan Documents, in
any other documents relating to the Secured Obligations, or by any applicable
Law (including, but not limited to, levy of attachment, garnishment and the
rights and remedies set forth in the UCC of the jurisdiction applicable to the
affected Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
and remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further, the Agent may, with or without judicial
process or the aid and assistance of others, (i) enter on any premises on which
any of the Collateral may be located and, without resistance or interference by
the Grantors, take possession of the Collateral, (ii) dispose of any Collateral
on any such premises, (iii) require the Grantors to assemble and make available
to the Agent at the expense of the Grantors any Collateral at any place and time
designated by the Agent which is reasonably convenient to both parties,
(iv) remove any Collateral from any such premises for the purpose of effecting
sale or other disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of which each of the
Grantors hereby waives to the fullest extent permitted by Law, at any place and
time or times, 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 any or all Collateral held
by or for it at public or private sale (which in the case of a private sale of
Pledged Equity, shall be to a restricted group of purchasers who will be
obligated 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), at any exchange or broker’s board or elsewhere, by one or more
contracts, in one or more parcels, for money, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in its sole discretion
(subject to any and all mandatory legal requirements).  Each Grantor
acknowledges that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially reasonable
manner and, in the case of a sale of Pledged

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Equity, that the Agent shall have no obligation to delay sale of any such
securities for the period of time necessary to permit the Issuer of such
securities to register such securities for public sale under the Securities Act
of 1933.  The Agent or any other Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by applicable Law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold.  Neither the Agent’s compliance with applicable Law nor its
disclaimer of warranties relating to the Collateral shall be considered to
adversely affect the commercial reasonableness of any sale.  To the extent the
rights of notice cannot be legally waived hereunder, each Grantor agrees that
any requirement of reasonable notice shall be met if such notice, specifying the
place of any public sale or the time after which any private sale is to be made,
is personally served on or mailed, postage prepaid, to the Borrowers in
accordance with the notice provisions of Section 13.3 of the Credit Agreement at
least 10 days before the time of sale or other event giving rise to the
requirement of such notice.  Each Grantor further acknowledges and agrees that
any offer to sell any Pledged Equity which has been (A) publicly advertised on a
bona fide basis in a newspaper or other publication of general circulation in
the financial community of New York, New York (to the extent that such offer may
be advertised without prior registration under the Securities Act of 1933), or
(B) made privately in the manner described above shall be deemed to involve a
“public sale” under the UCC, notwithstanding that such sale may not constitute a
“public offering” under the Securities Act of 1933, and the Agent may, in such
event, bid for the purchase of such securities.  The Agent shall not be
obligated to make any sale or other disposition of the Collateral regardless of
notice having been given.  To the extent permitted by applicable Law, any
Secured Party may be a purchaser at any such sale.  To the extent permitted by
applicable Law, each of the Grantors hereby waives all of its rights of
redemption with respect to any such sale.  Subject to the provisions of
applicable Law, the Agent may postpone or cause the postponement of the sale of
all or any portion of the Collateral by announcement at the time and place of
such sale, and such sale may, without further notice, to the extent permitted by
Law, be made at the time and place to which the sale was postponed, or the Agent
may further postpone such sale by announcement made at such time and place.  To
the extent permitted by applicable Law, each Grantor waives all claims, damages
and demands it may acquire against the Agent or any Secured Party arising out of
the exercise by them of any rights hereunder except to the extent any such
claims, damages or demands result solely from the gross negligence or willful
misconduct of the Agent or any other Secured Party as determined by a final
non-appealable judgment of a court of competent jurisdiction, in each case
against whom such claim is asserted.  Each Grantor agrees that the internet
shall constitute a “place” for purposes of Section 9-610(b) of the UCC and that
any sale of Collateral to a licensor pursuant to the terms of a license
agreement between such licensor and a Grantor is sufficient to constitute a
commercially reasonable sale (including as to method, terms, manner, and time)
within the meaning of Section 9-610 of the UCC.

(b)

Remedies Relating to Accounts.  

(i)

During the continuation of an Event of Default, promptly upon the request of the
Agent, whether or not the Agent has exercised any or all of its rights and
remedies hereunder, (A) each Grantor  shall notify (such notice to be in form
and substance satisfactory to the Agent) its Account Debtors and parties to the
Material Contracts subject to a security interest hereunder that such Accounts
and the Material Contracts have been assigned to the Agent, for the benefit of
the Secured Parties and promptly upon request of the Agent, instruct all account
debtors to remit all payments in respect of Accounts to a mailing location
selected by the Agent and (B) the Agent shall have the right to enforce any
Grantor’s rights against its customers and account debtors, and the Agent or its
designee may notify any Grantor’s customers and account debtors that the
Accounts of such Grantor have been assigned to the Agent or of the Agent’s
security interest therein, and may (either in its own name or in the name of a
Grantor or both) demand, collect (including without

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limitation by way of a lockbox arrangement), receive, take receipt for, sell,
sue for, compound, settle, compromise and give acquittance for any and all
amounts due or to become due on any Account, and, in the Agent’s discretion,
file any claim or take any other action or proceeding to protect and realize
upon the security interest of the Secured Parties in the Accounts.  

(ii)

Each Grantor acknowledges and agrees that the Proceeds of its Accounts remitted
to or on behalf of the Agent in accordance with the provisions hereof shall be
solely for the Agent’s own convenience and that such Grantor shall not have any
right, title or interest in such Accounts or in any such other amounts except as
expressly provided herein.  Neither the Agent nor the Secured Parties shall have
any liability or responsibility to any Grantor for acceptance of a check, draft
or other order for payment of money bearing the legend “payment in full” or
words of similar import or any other restrictive legend or endorsement or be
responsible for determining the correctness of any remittance.  

(iii)

During the continuation of an Event of Default, (A) the Agent shall have the
right, but not the obligation, to make test verifications of the Accounts in any
manner and through any medium that it reasonably considers advisable, and the
Grantors shall furnish all such assistance and information as the Agent may
require in connection with such test verifications, (B) upon the Agent’s request
and at the expense of the Grantors, the Grantors shall cause independent public
accountants or others satisfactory to the Agent to furnish to the Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Accounts and (C) the Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to the
Agent’s satisfaction the existence, amount and terms of any Accounts.

(iv)  During the continuance of an Event of Default, upon the request of the
Agent, each Grantor shall forward to the Agent, on the last Business Day of each
week, deposit slips related to all cash, money, checks or any other similar
items of payment received by the Grantor during such week, and, if requested by
the Agent, copies of such checks or any other similar items of payment, together
with a statement showing the application of all payments on the Collateral
during such week and a collection report with regard thereto, in form and
substance satisfactory to the Agent.  

(c)

Deposit Accounts/Securities Accounts.  

(i)

While a Dominion Trigger Period is in effect, the Agent may prevent withdrawals
or other dispositions of funds in Deposit Accounts and Securities Accounts
subject to control agreements or held with any Secured Party.

(ii)

To further secure the prompt payment and performance of its Obligations, each
Borrower hereby grants to Agent a continuing security interest in and Lien upon
all amounts credited to any Deposit Account of such Borrower, including sums in
any blocked, lockbox, sweep or collection account.  Each Borrower hereby
authorizes and directs each bank or other depository to deliver to Agent, upon
request, all balances in any Deposit Account maintained for such Borrower,
without inquiry into the authority or right of Agent to make such request.

(iii)

Cash Collateral may be invested, at Agent's discretion (and with the consent of
Borrowers, as long as no Event of Default exists), but Agent shall have no duty
to do so, regardless of any agreement or course of dealing with any Borrower,
and shall have no

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responsibility for any investment or loss.  As security for its Obligations,
each Borrower hereby grants to Agent a security interest in and Lien upon all
Cash Collateral held from time to time and all proceeds thereof, whether held in
a Cash Collateral Account or otherwise.  Agent may apply Cash Collateral to the
payment of such Obligations as they become due, in such order as Agent may
elect.  Each Cash Collateral Account and all Cash Collateral shall be under the
sole dominion and control of Agent, and no Borrower or other Person shall have
any right to any Cash Collateral, until Full Payment of the Obligations.

(d)

Investment Property/Pledged Equity.  Upon the occurrence of an Event of Default
and during the continuation thereof;  the Agent shall have the right to receive
any and all cash dividends, payments or distributions made in respect of any
Investment Property or Pledged Equity or other Proceeds paid in respect of any
Investment Property or Pledged Equity, and any or all of any Investment Property
or Pledged Equity may, at the option of the Agent, be registered in the name of
the Agent or its nominee, and the Agent or its nominee may thereafter exercise
(i) all voting, corporate and other rights pertaining to such Investment
Property, or any such Pledged Equity at any meeting of shareholders, partners or
members of the relevant Issuers or otherwise and (ii) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property or Pledged Equity 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 or Pledged Equity upon
the merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate, partnership or limited liability company structure of
any Issuer or upon the exercise by any Grantor or the Agent of any right,
privilege or option pertaining to such Investment Property or Pledged Equity,
and in connection therewith, the right to deposit and deliver any and all of the
Investment Property or Pledged Equity with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
the Agent may determine), all without liability except to account for property
actually received by it; but the Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and the Agent and the other Secured
Parties shall not be responsible for any failure to do so or delay in so doing.
 In furtherance thereof, each Grantor hereby authorizes and instructs each
Issuer with respect to any Collateral consisting of Investment Property and/or
Pledged Equity to (A) comply with any instruction received by it from the Agent
in writing that (1) states that an Event of Default has occurred and is
continuing and (2) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from such Grantor, and each Grantor
agrees that each Issuer shall be fully protected in so complying following
receipt of such notice and prior to notice that such Event of Default is no
longer continuing, and (B) except as otherwise expressly permitted hereby, pay
any dividends, distributions or other payments with respect to any Investment
Property or Pledged Equity directly to the Agent.  Unless an Event of Default
shall have occurred and be continuing and the Agent shall have given notice to
the relevant Grantor of the Agent’s intent to exercise its corresponding rights
pursuant to this Section 7, each Grantor shall be permitted to receive all cash
dividends, payments or other distributions made in respect of any Investment
Property and any Pledged Equity, 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 other
corporate, company and partnership rights with respect to any Investment
Property and Pledged Equity to the extent not inconsistent with the terms of
this Agreement and the other Loan Documents.

(e)

Material Contracts.  Upon the occurrence of an Event of Default and during the
continuation thereof, the Agent shall be entitled to (but shall not be required
to):  (i) proceed to perform any and all obligations of the applicable Grantor
under any Material Contract and exercise all rights of such Grantor thereunder
as fully as such Grantor itself could, (ii) do all other acts which the Agent
may deem necessary or proper to protect its security interest granted hereunder,
provided such acts are not inconsistent with or in violation of the terms of any
of the Credit Agreement, of the

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other Loan Documents or applicable Law, and (iii) sell, assign or otherwise
transfer any Material Contract in accordance with the Credit Agreement, the
other Loan Documents and applicable Law, subject, however, to the prior approval
of each other party to such Material Contract, to the extent required under such
Material Contract.

(f)

Access.  In addition to the rights and remedies hereunder, upon the occurrence
of an Event of Default and during the continuance thereof, the Agent shall have
the right to enter and remain upon the various premises of the Grantors without
cost or charge to the Agent, and use the same, together with materials,
supplies, books and records of the Grantors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and conducting the sale of
the Collateral, whether by foreclosure, auction or otherwise.  In addition, the
Agent may remove Collateral, or any part thereof, from such premises and/or any
records with respect thereto, in order to effectively collect or liquidate such
Collateral.  If the Agent exercises its right to take possession of the
Collateral, each Grantor shall also at its expense perform any and all other
steps reasonably requested by the Agent to preserve and protect the security
interest hereby granted in the Collateral, such as placing and maintaining signs
indicating the security interest of the Agent, appointing overseers for the
Collateral and maintaining inventory records.  

(g)

Nonexclusive Nature of Remedies.  Failure by the Agent or the Secured Parties to
exercise any right, remedy or option under this Agreement, any other Loan
Document, any other document relating to the Secured Obligations, or as provided
by Law, or any delay by the Agent or the Secured Parties in exercising the same,
shall not operate as a waiver of any such right, remedy or option.  No waiver
hereunder shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Agent or the Secured Parties shall
only be granted as provided herein.  To the extent permitted by Law, neither the
Agent, the Secured Parties, nor any party acting as attorney for the Agent or
the Secured Parties, shall be liable hereunder for any acts or omissions or for
any error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder as determined by a final
non-appealable judgment of a court of competent jurisdiction.  The rights and
remedies of the Agent and the Secured Parties under this Agreement shall be
cumulative and not exclusive of any other right or remedy which the Agent or the
Secured Parties may have.

(h)

Retention of Collateral.  In addition to the rights and remedies hereunder, the
Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise
complying with the requirements of applicable Law of the relevant jurisdiction,
accept or retain the Collateral in satisfaction of the Secured Obligations.
 Unless and until the Agent shall have provided such notices, however, the Agent
shall not be deemed to have retained any Collateral in satisfaction of any
Secured Obligations for any reason.

(i)

Waiver; Deficiency.  Each Grantor hereby waives, to the extent permitted by
applicable Laws, all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable Laws in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof.  In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to which the
Agent or the Secured Parties are legally entitled, the Grantors shall be jointly
and severally liable for the deficiency, together with interest thereon at the
Default Rate, together with the costs of collection and the fees, charges and
disbursements of counsel.  Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to the Grantors or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.

(j)

Registration Rights.

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(i)  If the Agent shall determine that in order to exercise its right to sell
any or all of the Collateral it is necessary or advisable to have such
Collateral registered under the provisions of the Securities Act (any such
Collateral, the “Restricted Securities Collateral”), the relevant Grantor will
cause each applicable Issuer (and the officers and directors thereof) that is a
Grantor or a Subsidiary of a Grantor to (A) 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 Agent, necessary or advisable to register such
Restricted Securities Collateral, or that portion thereof to be sold, under the
provisions of the Securities Act, (B) use its commercially reasonable 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 such Restricted Securities Collateral, or that portion thereof to be
sold, and (C) make all amendments thereto and/or to the related prospectus
which, in the opinion of the 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 each applicable Issuer (and the officers and directors
thereof) to comply with the provisions of the securities or “Blue Sky” laws of
any and all jurisdictions which the 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 the Securities Act.

(ii)  Each Grantor agrees to use its commercially reasonable 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 Restricted Securities Collateral valid and
binding and in compliance with any and all other applicable Laws.  Each Grantor
further agrees that a breach of any of the covenants contained in this Section 7
will cause irreparable injury to the Agent and the other Secured Parties, that
the Agent and the other Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 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 under the Credit Agreement.

8.

Rights of the Agent.

(a)

Power of Attorney.  In addition to other powers of attorney contained herein,
each Grantor hereby designates and appoints the Agent, on behalf of the Secured
Parties, and each of its designees or agents, as attorney-in-fact of such
Grantor, irrevocably and with power of substitution, with authority to take any
or all of the following actions upon the occurrence and during the continuance
of an Event of Default:

(i)

to demand, collect, settle, compromise, adjust, give discharges and releases,
all as the Agent may reasonably determine;

(ii)

to commence and prosecute any actions at any court for the purposes of
collecting any Collateral and enforcing any other right in respect thereof;

(iii)

to defend, settle or compromise any action brought and, in connection therewith,
give such discharge or release as the Agent may deem reasonably appropriate;

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(iv)

to receive, open and dispose of mail addressed to a Grantor and endorse checks,
notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or
other instruments or documents evidencing payment, shipment or storage of the
goods giving rise to the Collateral of such Grantor on behalf of and in the name
of such Grantor, or securing, or relating to such Collateral;

(v)

to sell, assign, transfer, make any agreement in respect of, or otherwise deal
with or exercise rights in respect of, any Collateral or the goods or services
which have given rise thereto, as fully and completely as though the Agent were
the absolute owner thereof for all purposes;

(vi)

to adjust and settle claims under any insurance policy relating thereto;

(vii)

to execute and deliver all assignments, conveyances, statements, financing
statements, continuation financing statements, security agreements, affidavits,
notices and other agreements, instruments and documents that the Agent may
determine necessary in order to perfect and maintain the security interests and
liens granted in this Agreement and in order to fully consummate all of the
transactions contemplated herein;

(viii)

to institute any foreclosure proceedings that the Agent may deem appropriate;

(ix)

to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;

(x)

to exchange any of the Pledged Equity or other property upon any merger,
consolidation, reorganization, recapitalization or other readjustment of the
Issuer thereof and, in connection therewith, deposit any of the Pledged Equity
with any committee, depository, transfer agent, registrar or other designated
agency upon such terms as the Agent may reasonably deem appropriate;

(xi)

to vote for a shareholder resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Equity into the name of
the Agent or one or more of the Secured Parties or into the name of any
transferee to whom the Pledged Equity or any part thereof may be sold pursuant
to Section 7 hereof;

(xii)

to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;

(xiii)

to direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Agent or as the Agent shall direct;

(xiv)

to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Collateral;

(xv)

in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the Agent
may request to evidence the security interests created hereby in such
Intellectual Property and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby; and

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(xvi)

do and perform all such other acts and things as the Agent may reasonably deem
to be necessary, proper or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be
irrevocable until the Facility Termination Date.  The Agent shall be under no
duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Agent in this
Agreement, and shall not be liable for any failure to do so or any delay in
doing so.  The Agent shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction.  This power of attorney is
conferred on the Agent solely to protect, preserve and realize upon its security
interest in the Collateral and shall not impose any duty upon the Agent or any
other Secured Party to exercise any such powers.

(b)

Assignment by the Agent. The Agent may from time to time assign the Secured
Obligations to a successor Agent appointed in accordance with the Credit
Agreement, and such successor shall be entitled to all of the rights and
remedies of the Agent under this Agreement in relation thereto.

(c)

The Agent’s Duty of Care.  Other than the exercise of reasonable care to assure
the safe custody of the Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights pertaining thereto, it
being understood and agreed that the Grantors shall be responsible for
preservation of all rights in the Collateral, and the Agent shall be relieved of
all responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Grantors.  The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Agent shall not have responsibility for taking any necessary
steps to preserve rights against any parties with respect to any of the
Collateral.  In the event of a public or private sale of Collateral pursuant to
Section 7 hereof, the Agent shall have no responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Collateral, whether or not the Agent has or is
deemed to have knowledge of such matters, or (ii) taking any steps to clean,
repair or otherwise prepare the Collateral for sale.

(d)

Liability with Respect to Accounts.  Anything herein to the contrary
notwithstanding, each of the Grantors shall remain liable under each of the
Accounts 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 to each such Account.  Neither the Agent nor any Secured
Party shall have any obligation or liability under any Account (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by the Agent or any Secured Party of any payment relating to such
Account pursuant hereto, nor shall the Agent or any Secured Party be obligated
in any manner to perform any of the obligations of a Grantor under or pursuant
to any Account (or any agreement giving rise thereto), 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 under any Account
(or any agreement giving rise thereto), 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.

(e)

Releases of Collateral.  

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(i)

If any Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Agent, at
the request and sole expense of such Grantor, shall promptly execute and deliver
to such Grantor all releases and other documents, and take such other action,
reasonably necessary for the release of the Liens created hereby or by any other
Collateral Document on such Collateral.  

(ii)

The Agent may release any of the Pledged Equity from this Agreement or may
substitute any of the Pledged Equity for other Pledged Equity without altering,
varying or diminishing in any way the force, effect, lien, pledge or security
interest of this Agreement as to any Pledged Equity not expressly released or
substituted, and this Agreement shall continue as a lien (having the priority
set forth in the Intercreditor Agreements) on all Pledged Equity not expressly
released or substituted.

9.

Application of Proceeds.  After the exercise of remedies provided for in Section
10.2 of the Credit Agreement (or after the Revolving Loans have automatically
become immediately due and payable) and the L/C Obligations have been
automatically been required to be Cash Collateralized as set forth in Section
2.2.3 any payments in respect of the Secured Obligations and any proceeds of the
Collateral, when received by the Agent or any Secured Party in cash or Cash
Equivalents will be applied in reduction of the Secured Obligations in the order
set forth in the Credit Agreement.

10.

Continuing Agreement.

(a)

This Agreement shall remain in full force and effect until the Facility
Termination Date, at which time this Agreement shall be automatically terminated
(other than obligations under this Agreement which expressly survive such
termination) and the Agent shall, upon the request and at the expense of the
Grantors, forthwith release all of its liens and security interests hereunder
and shall execute and deliver all UCC termination statements and/or other
documents reasonably requested by the Grantors evidencing such termination.

(b)

This Agreement shall continue to be effective or be automatically reinstated, as
the case may be, if at any time payment, in whole or in part, of any of the
Secured Obligations is rescinded or must otherwise be restored or returned by
the Agent or any Secured Party as a preference, fraudulent conveyance or
otherwise under any Debtor Relief Law, all as though such payment had not been
made; provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable costs
and expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Agent or any Secured Party in defending and
enforcing such reinstatement shall be deemed to be included as a part of the
Secured Obligations.

11.

Amendments; Waivers; Modifications, etc.  This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 13.1 of the Credit Agreement.

12.

Successors in Interest.  This Agreement shall be binding upon each Grantor, its
successors and assigns and shall inure, together with the rights and remedies of
the Agent and the Secured Parties hereunder, to the benefit of the Agent and the
Secured Parties and their successors and permitted assigns.

13.

Notices.  All notices required or permitted to be given under this Agreement
shall be in conformance with Section 13.3 of the Credit Agreement; provided that
notices and communications to the

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Grantors shall be directed to the Grantors, at the address of the Borrowers set
forth in Section 13.3 of the Credit Agreement.

14.

Counterparts.  This Agreement may be executed in any number of counterparts,
each of which where so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument.  It shall not be necessary
in making proof of this Agreement to produce or account for more than one such
counterpart.  Delivery of an executed counterpart of a signature page of this
Agreement by fax transmission or other electronic mail transmission (e.g. “pdf”
or “tif”) shall be effective as delivery of a manually executed counterpart of
this Agreement.  Without limiting the foregoing, to the extent a manually
executed counterpart is not specifically required to be delivered, upon the
request of any party, such fax transmission or electronic mail transmission
shall be promptly followed by such manually executed counterpart.

15.

Headings.  The headings of the sections hereof are provided for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.

16.

Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL.  The
terms of Sections 13.14, 13.15 and 13.16 of the Credit Agreement with respect to
governing law, submission to jurisdiction, venue and waiver of jury trial are
incorporated herein by reference, mutatis mutandis, and the parties hereto agree
to such terms.

17.

Severability.  If any provision of this Agreement is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

18.

Entirety.  This Agreement, the other Loan Documents and the other documents
relating to the Secured Obligations represent the entire agreement of the
parties hereto and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Loan Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.

19.

Other Security.  To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Collateral (including, without
limitation, real property and securities owned by a Grantor), or by a guarantee,
endorsement or property of any other Person, then the Agent shall have the right
to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Agent shall have the right, in its
sole discretion, to determine which rights, security, liens, security interests
or remedies the Agent shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or the Secured Obligations or any of the rights of the Agent or the Secured
Parties under this Agreement, under any other of the Loan Documents or under any
other document relating to the Secured Obligations.

20.

Joinder.  At any time after the date of this Agreement, one or more additional
Persons may become party hereto by executing and delivering to the Agent a
Joinder Agreement in the form of Exhibit D to the Credit Agreement or such other
form acceptable to the Agent.  Immediately upon such execution and delivery of
such Joinder Agreement (and without any further action), each such additional
Person will become a party to this Agreement as an “Grantor” and have all of the
rights and obligations of a Grantor hereunder and this Agreement and the
schedules hereto shall be deemed amended by such Joinder Agreement.

21.

Consent of Issuers of Pledged Equity.  Any Loan Party that is an Issuer hereby
acknowledges, consents and agrees to the grant of the security interests in such
Pledged Equity by the

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applicable Grantors pursuant to this Agreement, together with all rights
accompanying such security interest as provided by this Agreement and applicable
Law, notwithstanding any anti-assignment provisions in any operating agreement,
limited partnership agreement or similar organizational or governance documents
of such Issuer.

22.

Joint and Several Obligations of Grantors.

(a)

Each of the Grantors is accepting joint and several liability hereunder in
consideration of the financial accommodations to be provided by the Lenders
under the Credit Agreement, for the mutual benefit, directly and indirectly, of
each of the Grantors and in consideration of the undertakings of each of the
Grantors to accept joint and several liability for the obligations of each of
them.

(b)

Each of the Grantors jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a primary obligor,
joint and several liability with the other Grantors with respect to the payment
and performance of all of the Secured Obligations, it being the intention of the
parties hereto that (i) all the Secured Obligations shall be the joint and
several obligations of each of the Grantors without preferences or distinction
among them and (ii) a separate action may be brought against each Grantor to
enforce this Agreement whether or not the Borrower, any other Grantor or any
other person or entity is joined as a party.

(c)

Notwithstanding any provision to the contrary contained herein, in any other of
the Loan Documents, to the extent the obligations of a Grantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Grantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation,
Debtor Relief Laws).

23.

Marshaling.  The Agent  shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any particular order,
and all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising.  To the extent that
it 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 Agent’s rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Secured Obligations or
under which any of the Secured Obligations is outstanding or by which any of the
Secured 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.

24.

Injunctive Relief.  

(a)  

Each Grantor recognizes that, in the event such Grantor fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement
or any other Loan Document, any remedy of law may prove to be inadequate relief
to the Agent and the other Secured Parties.  Therefore, each Grantor agrees that
the Agent and the other Secured Parties, at the option of the Agent and the
other Secured Parties, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.

(b)  

The Agent, the other Secured Parties and each Grantor hereby agree that no such
Person shall have a remedy of punitive or exemplary damages against any other
party to a Loan

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Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any dispute under this Agreement or any other Loan Document,
whether such dispute is resolved through arbitration or judicially.

25.

Secured Parties.  Each Secured Party that is not a party to the Credit Agreement
who obtains the benefit of this Agreement shall be deemed to have acknowledged
and accepted the appointment of the Agent pursuant to the terms of the Credit
Agreement, and with respect to the actions and omissions of the Agent hereunder
or otherwise relating hereto that do or may affect such Secured Party, the Agent
and each of its Affiliates shall be entitled to all of the rights, benefits and
immunities conferred under Article IX of the Credit Agreement.

26.

Intercreditor Agreements.  

(a)

This Agreement and the other Loan Documents and the Liens granted to the Agent
hereunder or under any other Loan Document for the benefit of the Secured
Parties in respect of the Collateral and the exercise of any right or remedy
thereof by the Agent hereunder or under any other Loan Document shall be
subject, in each case, to the terms and conditions of the Intercreditor
Agreements and, in  the  event  of  any  direct  conflict  between  the  express
 terms  and provisions of this Agreement, any other Loan Document and the
Intercreditor Agreements, the terms and provisions of the Intercreditor
Agreements shall control.

(b)

Prior to the Discharge of Term Loan Obligations, delivery or granting of
“control” (as defined in the UCC) of any Term Loan Priority Collateral to the
lenders under the Term Loan Facility pursuant to the terms of the Term Loan
Documents shall satisfy any such delivery or granting of “control” requirement
hereunder or under any other Loan Document with respect to any Term Loan
Priority Collateral to the extent that such delivery or granting of “control” is
consistent with the terms of the ABL/Term Loan Intercreditor Agreement.

(c)

Without limiting the generality of the foregoing, and notwithstanding anything
herein to the contrary, no Loan Party shall be required hereunder or under any
Loan Document to take any action with respect to the Collateral that is
inconsistent with such Loan Parties’ obligations under the Intercreditor
Agreements.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

CHI:2851193.2

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Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

GRANTORS:

 WAUSAU PAPER CORP.

By:

/s/MICHAEL C. BURANDT

Name:

Michael C. Burandt

Title:

Chairman and CEO

WAUSAU PAPER TOWEL & TISSUE, LLC

By:

/s/SHERRI L. LEMMER

Name:

Sherri L. Lemmer

Title:

Senior Vice President and

Chief Financial Officer

WAUSAU TIMBERLAND COMPANY, LLC

By:

/s/SHERRI L. LEMMER

Name:

Sherri L. Lemmer

Title:

Senior Vice President and

Chief Financial Officer

WAUSAU PAPER MILLS, LLC

By:

/s/SHERRI L. LEMMER

Name:

Sherri L. Lemmer

Title:

Senior Vice President and

Chief Financial Officer

THE SORG PAPER COMPANY

By:

/s/MICHAEL C. BURANDT

Name:

Michael C. Burandt

Title:

Chairman and CEO

THE MIDDLETOWN HYDRAULIC COMPANY

By:

/s/SHERRI L. LEMMER

Name:

Sherri L. Lemmer

Title:

Chief Financial Officer

[Signature page to Security and Pledge Agreement]

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Accepted and agreed to as of the date first above written.

BANK OF AMERICA, N.A., as Agent

By: /s/MICHAEL FINE

Name:

Michael Fine

Title:

Senior Vice President

[Signature page to Security and Pledge Agreement]

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EXHIBIT A

[FORM OF]

IRREVOCABLE EQUITY INTEREST POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
__________________ the following Equity Interests of [___________], a
[_________] [corporation] [limited liability company]:

No. of Equity Interests

Certificate No.

and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such Equity Interests and to
take all necessary and appropriate action to effect any such transfer.  The
agent and attorney-in-fact may substitute and appoint one or more persons to act
for him.  

_____________________________

By:

Name:

Title:

  

CHI:2851193.2

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EXHIBIT  B

[FORM OF]

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

COPYRIGHTS

United States Copyright Office

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
July 30, 2014 (as amended, modified, extended, restated, renewed, replaced, or
supplemented from time to time, the “Agreement”) by and among the Grantors party
thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of
America, N.A., as administrative agent (the “Agent”) for the Secured Parties
referenced therein, the undersigned Grantor has granted a continuing security
interest in and continuing lien upon the copyrights and copyright applications
shown on Schedule 1 attached hereto to the Agent for the ratable benefit of the
Secured Parties.

The undersigned Grantor and the Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing copyrights and
copyright applications (a) may only be terminated in accordance with the terms
of the Agreement and (b) is not to be construed as an assignment of any
copyright or copyright application.

Very truly yours,

[GRANTOR]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:

Name:

Title:

CHI:2851193.2

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

EXHIBIT  C

[FORM OF]

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

PATENTS

United States Patent and Trademark Office

 

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
July 30, 2014 (as amended, modified, extended, restated, renewed, replaced, or
supplemented from time to time, the “Agreement”) by and among the Grantors party
thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of
America, N.A., as administrative agent (the “Agent”) for the Secured Parties
referenced therein, the undersigned Grantor has granted a continuing security
interest in and continuing lien upon the patents and patent applications shown
on Schedule 1 attached hereto to the Agent for the ratable benefit of the
Secured Parties.

The undersigned Grantor and the Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing patents and
patent applications (a) may only be terminated in accordance with the terms of
the Agreement and (b) is not to be construed as an assignment of any patent or
patent application.

Very truly yours,

[GRANTOR]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:

Name:

Title:

CHI:2851193.2

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EXHIBIT  D

[FORM OF]

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

TRADEMARKS

United States Patent and Trademark Office

 

Ladies and Gentlemen:

Please be advised that pursuant to the Security and Pledge Agreement dated as of
July 30, 2014 (as amended, modified, extended, restated, renewed, replaced, or
supplemented from time to time, the “Agreement”) and among the Grantors party
thereto (each an “Grantor” and collectively, the “Grantors”) and Bank of
America, N.A., as administrative agent (the “Agent”) for the Secured Parties
referenced therein, the undersigned Grantor has granted a continuing security
interest in and continuing lien upon the trademarks and trademark applications
shown on Schedule 1 attached hereto to the Agent for the ratable benefit of the
Secured Parties.

The undersigned Grantor and the Agent, on behalf of the Secured Parties, hereby
acknowledge and agree that the security interest in the foregoing trademarks and
trademark applications (a) may only be terminated in accordance with the terms
of the Agreement and (b) is not to be construed as an assignment of any
trademark or trademark application.

Very truly yours,

[GRANTOR]

By:

Name:

Title:

Acknowledged and Accepted:

BANK OF AMERICA, N.A., as Agent

By:

Name:

Title:

CHI:2851193.2