SECURITY AGREEMENT dated as of December 21, 2001, among MEMC ELECTRONIC
MATERIALS, INC., a Delaware corporation (the "Borrower"), each subsidiary of
Borrower listed on Schedule I hereto (each such subsidiary individually a
"Subsidiary" or a "Guarantor" and, collectively, the "Subsidiaries" or
"Guarantors"; and the Guarantors and Borrower are referred to collectively
herein as the "Grantors") and CITICORP USA, INC. as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as defined herein).

Reference is made to (a) the Revolving Credit Agreement dated as of December 21,
2001 (as amended, supplemented or otherwise modified from time to time, the
"Revolving Credit Agreement") among the Borrower, the lenders from time to time
party thereto (the "Lenders") and Citicorp USA, Inc., as administrative agent
for the Lenders (in such capacity, the "Administrative Agent") and (b) the
Guarantee Agreement dated as of December 21, 2001 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement"), among the
Guarantors and the Collateral Agent. Unless the context otherwise requires, all
capitalized terms used but not defined herein shall have the meanings set forth
in the Revolving Credit Agreement.

The Lenders have agreed to make Loans to the Borrower upon the terms and subject
to the conditions specified in the Revolving Credit Agreement. Each of the
Guarantors has agreed to guarantee, among other things, all the obligations of
the Borrower under the Revolving Credit Agreement. The obligations of the
Lenders to make Loans are conditioned upon, among other things, the execution
and delivery by the Grantors of an agreement in the form hereof to secure (a)
the due and punctual payment of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Loan Parties to the
Secured Parties under the Revolving Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Loan Parties under or pursuant to the
Revolving Credit Agreement and the other Loan Documents, (c) unless otherwise
agreed to in writing by the applicable Lender party thereto, the due and
punctual payment and performance of all obligations of the Borrower or any other
Loan Party, monetary or otherwise, under each Hedging Agreement entered into
with a counterparty that was a Lender (or an Affiliate of a Lender) at the time
such Hedging Agreement was entered into and (d) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to the Administrative Agent or any of its Affiliates and arising from
treasury, depositary and cash management services in connection with any
automated clearing house transfers of funds (all the monetary and other
obligations described in the preceding clauses (a) through (d) being
collectively called the "Revolving Credit Obligations").

Accordingly, the Grantors and the Collateral Agent, on behalf of itself and each
Secured Party (and each of their respective successors or assigns), hereby agree
as follows:

Definitions

SECTION 1.01. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:

"Account Debtor" means any Person who is or who may become obligated to any
Grantor under, with respect to or on account of an Account.

"Accounts" means all "accounts" (as defined in UCC) of any Grantor and shall
include any and all right, title and interest of any Grantor to payment for
goods and services sold or leased, including any such right evidenced by Chattel
Paper, whether due or to become due, whether or not it has been earned by
performance, and whether now or hereafter acquired or arising in the future,
including accounts receivable from Affiliates of the Grantors.

"Accounts Receivable" means all Accounts and all right, title and interest in
any returned goods, together with all rights, titles, securities and guarantees
with respect thereto, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security interests, liens and pledges,
whether voluntary or involuntary, in each case whether now existing or owned or
hereafter arising or acquired.

"Chattel Paper" has the meaning assigned to such term in the UCC.

"Collateral" means all (a) Accounts Receivable, (b) Documents, (c) Equipment,
(d) General Intangibles, (e) Inventory, (f) cash and cash accounts, (g)
Investment Property (h) Chattel Paper, (i) Instruments, (j) Deposit Accounts and
(k) Proceeds.

"Commodity Account" means an account maintained by a Commodity Intermediary in
which a Commodity Contract is carried out for a Commodity Customer.

"Commodity Contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the federal
commodities laws or (b) traded on a foreign commodity board of trade, exchange
or market, and is carried on the books of a Commodity Intermediary for a
Commodity Customer.

"Commodity Customer" means a Person for whom a Commodity Intermediary carries a
Commodity Contract on its books.

"Commodity Intermediary" means (a) a Person who is registered as a futures
commission merchant under the federal commodities laws or (b) a Person who in
the ordinary course of its business provides clearance or settlement services
for a board of trade that has been designated as a contract market pursuant to
federal commodities laws.

"Copyright License" means any written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter owned
by any Grantor or which such Grantor otherwise has the right to license, or
granting any right to such Grantor under any Copyright now or hereafter owned by
any third party, and all rights of such Grantor under any such agreement.

"Copyrights" means all of the following: (a) all copyright rights in any work
subject to the copyright laws of the United States or any other country, whether
as author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States or any
other country, including registrations, recordings, supplemental registrations
and pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.

"Deposit Accounts" has the meaning assigned to such term in the UCC.

"Documents" means all instruments, promissory notes, files, records, ledger
sheets and documents covering or relating to any of the Collateral.

"Entitlement Holder" means a Person identified in the records of a Securities
Intermediary as the Person having a Security Entitlement against the Securities
Intermediary. If a Person acquires a Security Entitlement by virtue of Section
8-501(b)(2) or (3) of the UCC, such Person is the Entitlement Holder.

"Equipment" means "equipment" (as defined in the UCC) of any Grantor and shall
include all equipment, furniture and furnishings, and all tangible personal
property similar to any of the foregoing, including tools, parts and supplies of
every kind and description, and all improvements, accessions or appurtenances
thereto, that are now or hereafter owned by any Grantor. The term Equipment
shall include Fixtures.

"Financial Asset" means (a) a Security, (b) an obligation of a Person or a
share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the UCC. As
the context requires, the term Financial Asset means either the interest itself
or the means by which a Person's claim to it is evidenced, including a
certificated or uncertificated Security, a certificate representing a Security
or a Security Entitlement.

"Fixtures" means all items of Equipment, whether now owned or hereafter
acquired, of any Grantor that become so related to particular real estate that
an interest in them arises under any real estate law applicable thereto.

"General Intangibles" means all "general intangibles" (as defined in the UCC) of
any Grantor and shall include choses in action and causes of action and all
other intangible personal property of any Grantor of every kind and nature
(other than Accounts Receivable) now owned or hereafter acquired by any Grantor,
including corporate or other business records, indemnification claims, contract
rights (including rights under leases, whether entered into as lessor or lessee,
Hedging Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.

"Instrument" has the meaning assigned to such term in the UCC.

"Intellectual Property" means all intellectual and similar property of any
Grantor of every kind and nature now owned or hereafter acquired by any Grantor,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade
secrets, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing.

"Inventory" means "inventory" (as defined in the UCC) of any Grantor and shall
include all goods of any Grantor, whether now owned or hereafter acquired, held
for sale or lease, or furnished or to be furnished by any Grantor under
contracts of service, or consumed in any Grantor's business, including raw
materials, intermediates, work in process, packaging materials, finished goods,
semi-finished inventory, scrap inventory, manufacturing supplies and spare
parts, and all such goods that have been returned to or repossessed by or on
behalf of any Grantor.

"Investment Property" means all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and Commodity Accounts of any Grantor, whether now owned or hereafter acquired
by any Grantor.

"License" means any Patent License, Trademark License, Copyright License or
other license or sublicense to which any Grantor is a party, including those
listed on Schedule III (other than those license agreements in existence on the
date hereof and listed on Schedule III and those license agreements entered into
after the date hereof, which by their terms prohibit assignment or a grant of a
security interest by such Grantor as licensee thereunder).

"Patent License" means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.

"Patents" means all of the following now owned or hereafter acquired by any
Grantor: (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office or any
similar offices in any other country, including those listed on Schedule IV, and
(b) all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

"Perfection Certificate" means a certificate substantially in the form of Annex
2 hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by an executive officer or Financial
Officer of the Borrower.

"Proceeds" means "proceeds" (as defined in the UCC) of any Grantor and shall
include any consideration received from the sale, exchange, license, lease or
other disposition of any asset or property that constitutes Collateral, any
value received as a consequence of the possession of any Collateral and any
payment received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property which constitutes Collateral, any property
collected on or distributed on account of the Collateral, any rights arising out
of the Collateral, and shall include , (a) any claim of any Grantor against any
third party for (and the right to sue and recover for and the rights to damages
or profits due or accrued arising out of or in connection with) (i) past,
present or future infringement of any Patent now or hereafter owned by any
Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor, (iii)
past, present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

"Revolving Credit Agreement" has the meaning assigned to such term in the
preliminary statement of this Agreement.

"Revolving Credit Obligations" has the meaning assigned to such term in the
preliminary statement of this Agreement.

"Secured Parties" means (a) the Lenders, (b) the Administrative Agent, (c) the
Collateral Agent, (d) each counterparty to a Hedging Agreement entered into with
the Borrower or any Loan Party if such counterparty was a Lender (or an
Affiliate of a Lender) at the time the Hedging Agreement was entered into, (e)
the beneficiaries of each indemnification obligation undertaken by any Grantor
under any Loan Document and (f) the successors and assigns of each of the
foregoing.

"Securities" means any obligations of an issuer or any shares, participations or
other interests in an issuer or in property or an enterprise of an issuer which
(a) are represented by a certificate representing a security in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer, (b) are one of a
class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the UCC.

"Securities Account" means an account to which a Financial Asset is or may be
credited in accordance with an agreement under which the Person maintaining the
account undertakes to treat the Person for whom the account is maintained as
entitled to exercise rights that comprise the Financial Asset.

"Security Entitlements" means the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.

"Security Interest" has the meaning assigned to such term in Section 2.01.

"Security Intermediary" means (a) a clearing corporation or (b) a Person,
including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.

"Texas Instruments Agreements" means the Shareholders' Agreement dated as of May
16, 1995, by and between Texas Instruments Incorporated and the Borrower, as
amended; Technology Transfer Agreement dated as of June 30, 1995, by and between
Texas Instruments Incorporated, the Borrower and MEMC Southwest Inc.; Texas
Instruments Incorporated Purchase Agreement dated as of June 30, 1995, by and
between Texas Instruments Incorporated, MEMC Southwest Inc. and the Borrower, as
amended; Master Services Agreement dated as of June 30, 1995, by and between
Texas Instruments Incorporated and MEMC Southwest Inc.; Chemical Services
Agreement dated as of June 30, 1995, by and between Texas Instruments
Incorporated and MEMC Southwest Inc.; Information Systems and Services Agreement
dated as of June 30, 1995, by and between Texas Instruments Incorporated and
MEMC Southwest Inc.; Telephone Services Agreement dated as of June 30, 1995, by
and between Texas Instruments Incorporated and MEMC Southwest Inc.; Medical
Services Agreement dated as of June 30, 1995, by and between Texas Instruments
Incorporated and MEMC Southwest Inc.; Purchasing and Inventory Services
Agreement dated as of June 30, 1995, by and between Texas Instruments
Incorporated and MEMC Southwest Inc.; Environmental, Health and Safety Services
Agreement dated as of June 30, 1995, by and between Texas Instruments
Incorporated and the Borrower; Agreement Regarding Health & Dental
Administrative Expenses dated as of June 30, 1995, by and between Texas
Instruments Incorporated and the Borrower.

"Trademark License" means any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or which any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.

"Trademarks" means all of the following: (a) all trademarks, service marks,
trade names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.

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

SECTION 1.02. Rules of Interpretation. The rules of interpretation specified in
Section 1.02 of the Revolving Credit Agreement shall be applicable to this
Agreement.

Security Interest

SECTION 2.02. Security Interest. As security for the payment or performance, as
the case may be, in full of the Revolving Credit Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under the Collateral (the "Security Interest"), provided
that the Security Interest shall not include (i) more than 65% of the issued and
outstanding voting stock of any Foreign Subsidiary, (ii) the outstanding voting
stock of MEMC Korea Company, MEMC Kulim Electronic Materials, Sdn. Bhd., MEMC
Southwest Inc. and Taisil Electronic Materials Corporation, (iii) the Texas
Instruments Agreements, or (iv) any General Intangible that is, by its terms,
not assignable, so long as the failure of the Grantors to maintain such General
Intangible would not result in a Material Adverse Effect. Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantors, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.

SECTION 2.02. No Assumption of Liability. The Security Interest is granted as
security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Collateral.

Representations and Warranties

The Grantors jointly and severally represent and warrant to the Collateral Agent
and the Secured Parties that:

SECTION 3.01. Title and Authority. Each Grantor has good and valid rights in and
title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained. The Security Interest granted
hereby is subject to the terms and conditions of that certain Option Agreement
dated September 21, 1998, as amended on September 22, 2000, September 25, 2001,
and October 25, 2001, among Tokuyama Corporation, Marubeni Corporation, Marubeni
America Corporation, the Borrower and MEMC Pasadena.

SECTION 3.02. Filings. The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein is correct and
complete in all material respects. Appropriately completed UCC financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 5 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.

(b) Each Grantor shall ensure that fully executed security agreements in the
form hereof (or short-form supplements to this Agreement in form and substance
satisfactory to the Collateral Agent) and containing a description of all
Collateral consisting of Intellectual Property shall have been received and
recorded within three months after the execution of this Agreement with respect
to United States Patents and United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and within one
month after the execution of this Agreement with respect to United States
registered Copyrights have been delivered to the Collateral Agent for recording
by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C.
Section 205 and the regulations thereunder, as applicable, and otherwise as may
be required pursuant to the laws of any other necessary jurisdiction in the
United States (or any political subdivision thereof) and its territories and
possessions, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction (other than such actions as are necessary to perfect the Security
Interest with respect to any Collateral consisting of Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired or
developed after the date hereof).

SECTION 3.03. Validity of Security Interest.. The Security Interest constitutes
(a) a legal and valid security interest in all the Collateral securing the
payment and performance of the Revolving Credit Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the UCC or other analogous applicable law in such jurisdictions and (c) a
security interest that shall be perfected in all Collateral in which a security
interest may be perfected upon the receipt and recording of this Agreement with
the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the three month period (commencing as of the date
hereof) pursuant to 35 U.S.C. Section 261 or 15 U.S.C. Section 1060 or the one
month period (commencing as of the date hereof) pursuant to 17 U.S.C. Section
205 and otherwise as may be required to pursuant to the laws of any other
necessary jurisdiction in the United States (or any political subdivision
thereof) and its territories and possessions. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, other than Liens expressly
permitted pursuant to Section 6.02 of the Revolving Credit Agreement.

SECTION 3.04. Absence of Other Liens. The Collateral is owned by the Grantors
free and clear of any Lien, except for Liens expressly permitted pursuant to
Section 6.02 of the Revolving Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the UCC or any other applicable laws covering any Collateral, (b) any
assignment in which any Grantor assigns any Collateral or any security agreement
or similar instrument covering any Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or (c) any assignment in
which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in each
case, for Liens expressly permitted pursuant to Section 6.02 of the Revolving
Credit Agreement.

Covenants

SECTION 4.01. Changes with respect to Collateral. Each of the Grantors shall
promptly notify the Collateral Agent in writing of any change (i) in its legal
name, (ii) in its jurisdiction of organization or formation, (iii) in the
location of its chief executive office or principal place of business, (iv) in
its identity or legal or organizational structure or (v) in its organization
identification number or its Federal Taxpayer Identification Number. None of the
Grantors shall effect or permit any change referred to in the preceding sentence
unless all filings have been made under the UCC or otherwise that are required
in order for the Collateral Agent to continue at all times following such change
to have a valid, legal and perfected first priority security interest in all the
Collateral (subject only to Liens expressly permitted pursuant to Section 6.02
of the Revolving Credit Agreement). Each Grantor shall promptly notify the
Collateral Agent if any material portion of the Collateral owned or held by or
on behalf of such Grantor is damaged or destroyed.

SECTION 4.02. Records.  Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent an updated Perfection Certificate, noting all material changes,
if any, since the date of the most recent Perfection Certificate.

SECTION 4.03. Protection of Security. Each Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent for the ratable benefit of the Secured Parties in the
Collateral and the priority thereof against any Lien not expressly permitted
pursuant to Section 6.02 of the Revolving Credit Agreement.

SECTION 4.04. Further Assurances. Each Grantor agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as are necessary or as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
promptly pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.

SECTION 4.05. Inspection and Verification. The Collateral Agent and such Persons
as the Collateral Agent may reasonably designate shall have the right to inspect
the Collateral, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any of the Collateral is located,
at reasonable times and intervals during normal business hours upon reasonable
advance notice to the respective Grantor and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of the Collateral. The Collateral Agent shall have the absolute right to share
any information it gains from such inspection or verification with any Secured
Party in accordance with and subject to the provisions set forth in Section 9.12
of the Revolving Credit Agreement.

SECTION 4.06. Taxes; Encumbrances. At its option, the Collateral Agent may
discharge past due taxes, assessments, charges, fees, Liens, security interests
or other encumbrances at any time levied or placed on the Collateral and not
permitted pursuant to Section 6.02 of the Revolving Credit Agreement, and may
pay for the maintenance and preservation of the Collateral, in each case to the
extent any Grantor fails to do so as required by the Revolving Credit Agreement
or this Agreement and such failure shall continue beyond any applicable notice
and cure period, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.

SECTION 4.07. Assignment of Security Interest. If at any time any Grantor shall
take a security interest in any property of an Account Debtor or any other
Person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent to the extent
permitted by any contracts or arrangements to which such property is subject.
Such assignment need not be filed of public record unless necessary to continue
the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security
interest.

SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor shall remain
liable to observe and perform all the conditions and obligations to be observed
and performed by it under each contract, agreement or instrument relating to the
Collateral, all in accordance with the terms and conditions thereof, and each
Grantor jointly and severally agrees to indemnify and hold harmless the
Collateral Agent and the Secured Parties from and against any and all liability
for such performance, provided that such indemnity shall not be available, as to
the Collateral Agent and the Secured Parties, to the extent that such liability
resulted from the gross negligence or willful misconduct of the Collateral Agent
or a Secured Party.

SECTION 4.09. Use and Disposition of Collateral. None of the Grantors shall make
or permit to be made an assignment, pledge or hypothecation of the Collateral or
shall grant any other Lien in respect of the Collateral, except as expressly
permitted by Section 6.02 of the Revolving Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory may be sold or consigned in the ordinary course of
business and (b) unless and until the Collateral Agent shall notify the Grantors
that an Event of Default shall have occurred and be continuing and that during
the continuance thereof the Grantors shall not sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use and dispose of
the Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Revolving Credit Agreement, any other Loan Document or the
Reimbursement Documentation. Without limiting the generality of the foregoing,
each Grantor agrees that it shall not permit any material Inventory to be in the
possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.

SECTION 4.10. Limitation on Modification of Accounts.  None of the Grantors
will, without the Collateral Agent's prior written consent, which consent shall
not be unreasonably withheld, grant any extension of the time of payment of any
of the Accounts Receivable, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any Person liable for
the payment thereof or allow any credit or discount whatsoever thereon, other
than extensions, credits, discounts, compromises or settlements granted or made
in the ordinary course of business and consistent with its current practices.

SECTION 4.11. Insurance. The Grantors, at their own expense, shall maintain or
cause to be maintained insurance covering physical loss or damage to the
Inventory and Equipment in accordance with Section  5.07 of the Revolving Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, but is under no obligation to,
without waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its reasonable discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this Section 4.11,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Revolving Credit Obligations secured
hereby.

SECTION 4.12. Legend. If any Accounts Receivable of any Grantor are evidenced by
Chattel Paper, such Grantor shall legend, in form and manner reasonably
satisfactory to the Collateral Agent, such Accounts Receivable and its books,
records and documents evidencing or pertaining thereto with an appropriate
reference to the fact that such Accounts Receivable have been assigned to the
Collateral Agent for the benefit of the Secured Parties and that the Collateral
Agent has a security interest therein.

SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright Collateral.
Each Grantor agrees that it will not, and will not permit any of its licensees
to, do any act, or omit to do any act, whereby any Patent which is material to
the conduct of such Grantor's business may become invalidated or dedicated to
the public, and agrees that it shall continue to mark, to the extent permitted
by existing technology, any products covered by a Patent with the relevant
patent number as necessary and sufficient to establish and preserve its maximum
rights under applicable patent laws pursuant to which each such Patent is
issued.

(b) Each Grantor (either itself or through its licensees or its sublicensees)
will, for each Trademark material to the conduct of such Grantor's business, (i)
maintain such Trademark in full force free from any claim of abandonment or
invalidity for non-use, (ii) maintain the quality of products and services
offered under such Trademark sufficient to preclude any findings of abandonment,
(iii) display such Trademark with notice of Federal or foreign registration to
the extent necessary and sufficient to establish and preserve its maximum rights
under applicable law pursuant to which each such Trademark is issued and (iv)
not knowingly use or knowingly permit the use of such Trademark in violation of
any third party rights.

(c) Each Grantor (either itself or through licensees) will, for each work
covered by a material Copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws pursuant to which each such Copyright is issued.

(d) Each Grantor shall notify the Collateral Agent immediately if it knows or
has reason to know that any such Patent, Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor's ownership of any such
Patent, Trademark or Copyright, its right to register the same, or to keep and
maintain the same.

(e) In no event shall any Grantor, either itself or through any agent, employee,
licensee or designee, file an application for any Patent, Trademark or Copyright
(or for the registration of any Trademark or Copyright) with the United States
Patent and Trademark Office, United States Copyright Office or any office or
agency in any political subdivision of the United States or in any other country
or any political subdivision thereof, unless it promptly thereafter informs the
Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as are
necessary or as the Collateral Agent may request to evidence and perfect the
Collateral Agent's security interest in such Patent, Trademark or Copyright, and
each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to
execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.

(f) Each Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.

(g) In the event that any Grantor has reason to believe that any Collateral
consisting of a Patent, Trademark or Copyright material to the conduct of any
Grantor's business has been or is about to be infringed, misappropriated or
diluted by a third party, such Grantor promptly shall notify the Collateral
Agent and shall, if consistent with good business judgment, promptly sue for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and take such other actions
as are appropriate under the circumstances to protect such Collateral.

(h) Upon and during the continuance of an Event of Default, each Grantor shall
use its best efforts to obtain all requisite consents or approvals from the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.

Power of Attorney

Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent
(and all officers, employees or agents designated by the Collateral Agent) as
such Grantor's true and lawful agent and attorney-in-fact, and in such capacity
the Collateral Agent shall have the right, with power of substitution for each
Grantor and in each Grantor's name or otherwise, for the use and benefit of the
Collateral Agent and the Secured Parties, upon the occurrence and during the
continuance of an Event of Default (a) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof; (b) to
demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require any
Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any Secured Party to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.

Remedies

SECTION 6.01. Limitation on Remedies. Notwithstanding anything to the contrary
contained in this Agreement, the Collateral Agent shall not, at the instruction
of the Administrative Agent or any Lender, commence or otherwise take any action
or proceeding to realize upon any or all of the Collateral or exercise any other
rights or enforce any other remedies available under this Agreement, any other
Loan Document, or as a matter of law unless and until (i) a Guarantor Default
has occurred and is continuing and (ii) the Administrative Agent has exhausted
all remedies available under the Guaranty.

SECTION 6.02. Remedies upon Default. Subject to Section 6.01, upon the
occurrence and during the continuance of an Event of Default, each Grantor
agrees to deliver each item of Collateral to the Collateral Agent on demand, and
it is agreed that the Collateral Agent shall have the right to take any of or
all the following actions at the same or different times: (a) with respect to
any Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the applicable Grantors to the Collateral Agent (except
to the extent assignment, transfer or conveyance thereof would result in a loss
of said Intellectual Property), or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive basis, any
such Collateral throughout the world on such terms and conditions and in such
manner as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
UCC or other applicable law. Without limiting the generality of the foregoing,
each Grantor agrees that the Collateral Agent shall have the right, subject to
the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.

The Collateral Agent shall give the Grantors 10 days' written notice (which each
Grantor agrees is a "reasonable authenticated notification of disposition"
within the meaning of Section 9-611 of the UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any Revolving
Credit Obligation then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor. For purposes hereof a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Grantor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact that
after the Collateral Agent shall have entered into such an agreement all Events
of Default shall have been remedied and the Revolving Credit Obligations paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

SECTION 6.03. Application of Proceeds. Subject to Section 6.01, the Collateral
Agent shall apply the proceeds of any collection or sale of the Collateral, as
well as any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and reasonable expenses incurred by the
Administrative Agent or the Collateral Agent (in its capacity as such hereunder
or under any other Loan Document) in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Revolving Credit
Obligations, including all court costs and the reasonable fees and expenses of
its agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf of any
Grantor and any other costs or expenses incurred in connection with the exercise
of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of the Revolving Credit Obligations and the
Reimbursement Obligations in accordance with Section 5.04 of the Intercreditor
Agreement (the amounts so applied to be distributed among the secured parties
pro rata in accordance with the amounts of the Revolving Credit Obligations
and/or Reimbursement Obligations owed to them on the date of any such
distribution)

THIRD, to the payment in full of the Indenture Obligations outstanding; and

FOURTH, to the Grantors, their successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

SECTION 6.04. Grant of License to Use Intellectual Property. Subject to Section
6.01, for the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Article at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to the Grantors)
to use, license or sub-license any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use of
such license by the Collateral Agent shall be exercised, at the option of the
Collateral Agent, upon the occurrence and during the continuation of an Event of
Default; provided that any license, sub-license or other transaction entered
into by the Collateral Agent in accordance herewith shall be binding upon the
Grantors notwithstanding any subsequent cure of an Event of Default.

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Revolving Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Borrower.

SECTION 7.02. Intercreditor Agreement. Notwithstanding anything to the contrary
contained in this Security Agreement, all rights, obligations and remedies of
the Collateral Agent set forth in this Agreement and any other Security
Documents shall be subject to the provisions set forth in the Intercreditor
Agreement.

SECTION 7.03 Security Interest Absolute. All rights of the Collateral Agent
hereunder, the Security Interest and all obligations of the Grantors hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Revolving Credit Agreement, any other Loan Document, any
agreement with respect to any of the Revolving Credit Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Revolving Credit Obligations, or any other amendment or waiver of or any consent
to any departure from the Revolving Credit Agreement, any other Loan Document or
any other agreement or instrument, (c) any exchange, release or non-perfection
of any Lien on other collateral, or any release or amendment or waiver of or
consent under or departure from any guarantee, securing or guaranteeing all or
any of the Revolving Credit Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Revolving Credit Obligations or this Agreement.

SECTION 7.04 Survival of Agreement. All covenants, agreements, representations
and warranties made by any Grantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Parties
and shall survive the making by the Lenders of the Loans, and the execution and
delivery to the Lenders of any notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in full
force and effect until this Agreement shall terminate.

SECTION 7.05 Binding Effect; Several Agreement. This Agreement shall become
effective as to any Grantor when a counterpart hereof executed on behalf of such
Grantor shall have been delivered to the Collateral Agent and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Grantor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the other Loan Documents. This
Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released with
respect to any Grantor without the approval of any other Grantor and without
affecting the obligations of any other Grantor hereunder.

SECTION 7.06. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

SECTION 7.07. Collateral Agent's Fees and Expenses; Indemnification. Each
Grantor jointly and severally agrees to pay upon demand to the Collateral Agent
the amount of any and all reasonable expenses, including the reasonable fees,
disbursements and other charges of its counsel and of any experts or agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Collateral, (iii) the
exercise, enforcement or protection of any of the rights of the Collateral Agent
hereunder or (iv) the failure of any Grantor to perform or observe any of the
provisions hereof applicable to it.

(b) Without limitation of its indemnification obligations under the other Loan
Documents, each Grantor jointly and severally agrees to indemnify the Collateral
Agent and the other Indemnitees against, and hold each of them harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
reasonable fees, disbursements and other charges of counsel, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses have resulted from the
gross negligence or willful misconduct of such Indemnitee as determined in a
final judgment by a court of competent jurisdiction.

(c) Any such amounts payable as provided hereunder shall be additional Revolving
Credit Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.07 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Collateral Agent or any Lender. All amounts due
under this Section 7.07 shall be payable on written demand therefor.

SECTION 7.08 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.09. Waivers; Amendment. No failure or delay of the Collateral Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the Collateral Agent, the Administrative Agent and the Lenders under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions of this Agreement or
any other Loan Document or consent to any departure by any Grantor therefrom
shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on any Grantor in any case shall entitle such Grantor or any other
Grantor to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Collateral Agent and the Grantor or Grantors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Revolving Credit Agreement.

SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11. Limitation on Security Interest. Anything contained in this
Agreement to the contrary notwithstanding, the obligation hereunder secured by
each Guarantor shall be limited to a maximum aggregate amount equal to the
greatest amount that would not render such Guarantor's secured obligations
hereunder subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of Title 11 of the United States Code or any provisions of
applicable state law (collectively, the "Fraudulent Transfer Laws"), in each
case after giving effect to all liabilities of such Guarantor, contingent or
otherwise, that would be taken into account in determining whether the
incurrence of the obligation would constitute a fraudulent conveyance under the
Fraudulent Transfer Laws and after giving effect, both in determining such
Guarantor's probable debt hereunder and in determining its assets, to the
existence of any rights to subrogation, contribution, reimbursement, indemnity
or similar rights of such Guarantor pursuant to (a) applicable law or (b) any
agreement, including the Indemnity, Subrogation and Contribution Agreement.

SECTION 7.12. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

SECTION 7.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract (subject to Section 7.05), and
shall become effective as provided in Section 7.05. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.

SECTION 7.14. Headings. Article and Section headings used herein are for the
purpose of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.

SECTION 7.15. Jurisdiction; Consent to Service of Process. Each Grantor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each Grantor agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Collateral Agent, the Administrative
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Grantor or
its properties in the courts of any jurisdiction.

(b) Each Grantor hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any New York
State or Federal court. Each Grantor hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 7.01. Nothing in this Agreement will
affected the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 7.16. Termination. This Agreement and the Security Interest shall
terminate when all the Revolving Credit Obligations have been indefeasibly paid
in full and the Lenders have no further commitment to lend under the Revolving
Credit Agreement, at which time the Collateral Agent shall execute and deliver
to the Grantors, at the Grantors' expense, all UCC termination statements and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.16 shall be without recourse to or warranty by the
Collateral Agent. A Grantor shall automatically be released from its obligations
hereunder and the Security Interest in the Collateral of such Grantor shall be
automatically released in the event that such Grantor ceases to be a Subsidiary
pursuant to a transaction permitted under the Loan Documents, at which time the
Collateral Agent shall execute and deliver to any Grantor, at such Grantor's
expense, all documents that such Grantor shall reasonably request to evidence
such release.

SECTION 7.17. Additional Grantors. Pursuant to Section 5.12 of the Revolving
Credit Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Revolving Credit Agreement is required
to enter in to this Agreement as a Grantor upon becoming a Subsidiary Loan
Party. Upon execution and delivery by the Collateral Agent and a Subsidiary of
an instrument in the form of Annex 3 hereto, such Subsidiary shall become a
Grantor hereunder with the same force and effect as if originally named as a
Grantor herein. The execution and delivery of any such instrument shall not
require the consent of any Grantor hereunder. The rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor as a party to this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

MEMC ELECTRONIC MATERIALS, INC.

By /s/ James M. Stolze
Name: James M. Stolze
Title: Executive Vice President,
Chief Financial Officer

By /s/ Kenneth L. Young

Name: Kenneth L. Young
Title: Treasurer

By /s/ Kenneth L.Young

Name: Kenneth L. Young, in his capacity as
Treasurer for each of the other
Guarantors listed on Schedule I hereto

CITICORP USA, INC., as Administrative
Agent and Collateral Agent

By /s/ Arnold Y. Wong

Name: Arnold Y. Wong
Title: Vice President

Schedule I to the
Security Agreement

GUARANTORS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule II to the
Security Agreement

COPYRIGHTS

DOCKET

DESCRIPTION

MW#

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule III to the
Security Agreement

LICENSES

 

TITLE OF AGREEMENT OR ITEM

EFFECTIVE DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule IV to the
Security Agreement

PATENTS

DOCKET #

TITLE

FIRST INVENTOR

 

Schedule V to the
Security Agreement

TRADEMARKS

TRADEMARK

COUNTRIES

STATUS

 

Annex 1 to the
Security Agreement

 

 

[Form of]

PERFECTION CERTIFICATE

 

Reference is made to (a) the Revolving Credit Agreement, dated as of December
21, 2001 (as amended, supplemented or otherwise modified from time to time, the
"Revolving Credit Agreement"), among MEMC ELECTRONIC MATERIALS, INC. (the
"Borrower"), the lenders from time to time party thereto (the "Lenders") and
CITICORP USA, INC., as administrative agent (in such capacity, the
"Administrative Agent") and as collateral agent (in such capacity, the
"Collateral Agent"), and (b) the Security Agreement, dated as of December 21,
2001 (as amended, supplemented or otherwise modified from time to time, the
"Security Agreement") among the Grantors and the Collateral Agent. Capitalized
terms used herein but not defined herein having the respective meanings set
forth in the Revolving Credit Agreement and the Security Agreement.

The undersigned, a Financial Officer of Borrower, hereby certify to the
Collateral Agent and each other Secured Party as follows:

1. Names. (a) The exact corporate name and jurisdiction of organization of each
Grantor, as such name appears in its respective certificate of incorporation, is
as follows:

(b) Set forth below is each other corporate name each Grantor has had in the
past five years, together with the date of the relevant change:

(c) Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.

(d) The following is a list of all other names (including trade names or similar
appellations) used by each Grantor or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past five years:

(e) Set forth below is the Federal Taxpayer Identification Number of each
Grantor:

2. Current Locations. (a) The chief executive office of each Grantor is located
at the address set forth opposite its name below:

Grantor

Mailing Address

County

State

(b) Set forth below opposite the name of each Grantor are all locations where
such Grantor maintains any books or records relating to any Accounts Receivable,
Instruments and Documents (with each location at which Chattel Paper, if any, is
kept being indicated by an "*"):

Grantor

Mailing Address

County

State

(c) Set forth below opposite the name of each Grantor are all the places of
business of such Grantor not identified in paragraph (a) or (b) above:

Grantor

Mailing Address

County

State

(d) Set forth below opposite the name of each Grantor are all the locations
where such Grantor maintains any Collateral not identified above:

Grantor

Mailing Address

County

State

(e) Set forth below opposite the name of each Grantor are the names and
addresses of all Persons other than such Grantor that have possession of any of
the Collateral of such Grantor:

Grantor

Mailing Address

County

State

3. Unusual Transactions. All Accounts Receivable have been originated by the
Grantors and all Inventory has been acquired by the Grantors in the ordinary
course of business.

4. UCC Filings. Financing statements in substantially the form of Schedule 4
hereto have been prepared for filing in the UCC filing office in each
jurisdiction where a Grantor is organized as identified in Section 1 hereof and
where any Collateral constituting fixtures is located as identified in Section 2
hereof.

5. Schedule of Filings. Attached hereto as Schedule 5 is a schedule setting
forth, with respect to the filings described in Section 4 above, each filing and
the filing office in which such filing is to be made.

6. Filing Fees. All filing fees and taxes payable in connection with the filings
described in Section 4 above have been paid or provided for.

7. Stock Ownership. Attached hereto as Schedule 7 is a true and correct list of
all the duly authorized, issued and outstanding Equity Interests of each
Subsidiary (including the Borrower) and the record and beneficial owners of such
Equity Interests. Also set forth on Schedule 7 is each Equity Interest of the
Borrower and each Subsidiary that represents 50% or less of the equity of the
entity in which such investment was made.

8. Notes. Attached hereto as Schedule 8 is a true and correct list of all notes
held by the Borrower and each Subsidiary and all intercompany notes between the
Borrower and each Subsidiary and between each Subsidiary and each other such
Subsidiary.

9. Advances. Attached hereto as Schedule 9 is (a) a true and correct list of all
advances made by the Borrower to any Subsidiary or made by any Subsidiary to the
Borrower or to any other Subsidiary, which advances will be on and after the
date hereof evidenced by one or more intercompany notes pledged to the
Collateral Agent under the Pledge Agreement and (b) a true and correct list of
all unpaid intercompany transfers of goods sold and delivered by or to the
Borrower or any Subsidiary.

10. Mortgage Filings. Attached hereto as Schedule 10 is a schedule setting
forth, with respect to each Mortgaged Property, (i) the exact corporate name of
the entity that owns such property as such name appears in its certificate of
formation, (ii) if different from the name identified pursuant to clause (i),
the exact name of the current record owner of such property reflected in the
records of the filing office for such property identified pursuant to the
following clause and (iii) the filing office in which a Mortgage with respect to
such property must be filed or recorded in order for the Collateral Agent to
obtain a perfected security interest therein.

 

 

 

IN WITNESS WHEREOF, the undersigned have duly executed this certificate on this
21st day of December, 2001.

MEMC ELECTRONIC MATERIALS, INC.

By

Name:
Title:

 

 

Annex 3 to the
Security Agreement

SUPPLEMENT NO. [ ] dated as of [ ], to the Security Agreement dated as of
December 21, 2001, among MEMC ELECTRONIC MATERIALS, INC., a Delaware corporation
(the "Borrower"), each subsidiary of Borrower listed on Schedule I thereto (each
such subsidiary individually a "Subsidiary" or a "Guarantor" and, collectively,
the "Subsidiaries" or "Guarantors"; the Guarantors and the Borrower are referred
to collectively herein as the "Grantors") and CITICORP USA, INC. as collateral
agent (in such capacity, the "Collateral Agent") for the Secured Parties (as
defined herein).

 

A. Reference is made to (a) the Revolving Credit Agreement dated as of December
21, 2001 (as amended, supplemented or otherwise modified from time to time)
among the Borrower, the lenders from time to time party thereto (the "Lenders")
and CITICORP USA, INC., as administrative agent (in such capacity, the
"Administrative Agent") and collateral agent (in such capacity, the "Collateral
Agent") and (b) the Guarantee Agreement dated as of December 21, 2001 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
Agreement"), among the Guarantors and the Collateral Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Security Agreement and the Revolving
Credit Agreement.

C. The Grantors have entered into the Security Agreement in order to induce the
Lenders to make Loans. Pursuant to Section 5.12 of the Revolving Credit
Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Revolving Credit Agreement is required
to enter in to this Agreement as a Grantor upon becoming a Subsidiary Loan
Party. Section 7.16 of the Security Agreement provides that such Subsidiaries
may become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary (the "New
Grantor") is executing this Supplement in accordance with the requirements of
the Revolving Credit Agreement to become a Grantor under the Security Agreement
in order to induce the Lenders to make additional Loans and as consideration for
Loans previously made.

Accordingly, the Collateral Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 7.17 of the Security Agreement, the New
Grantor by its signature below becomes a Grantor under the Security Agreement
with the same force and effect as if originally named therein as a Grantor and
the New Grantor hereby (a) agrees to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date hereof except to the
extent a representation and warranty expressly relates solely to a specific date
in which case such representation and warranty shall be true and correct on such
date. In furtherance of the foregoing, the New Grantor, as security for the
payment and performance in full of the Revolving Credit Obligations (as defined
in the Security Agreement), does hereby create and grant to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Grantor's right, title and interest in and to the Collateral of the New Grantor.
Each reference to a "Grantor" in the Security Agreement shall be deemed to
include the New Grantor. The Security Agreement is hereby incorporated herein by
reference.

SECTION 2. The New Grantor represents and warrants to the Collateral Agent and
the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Collateral Agent shall
have received counterparts of this Supplement that, when taken together, bear
the signatures of the New Grantor and the Collateral Agent. Delivery of an
executed signature page to this Supplement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby represents and warrants that (a) set forth on
Schedule I attached hereto is a true and correct statement of the exact
corporate name and jurisdiction of organization of the New Grantor and a true
and correct schedule of the location of any and all Collateral of the New
Grantor and (b) set forth under its signature hereto, is the true and correct
location of the chief executive office of the New Grantor.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 7.01 of the Security Agreement. All communications
and notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature below, with a copy to the Borrower.

SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the
Collateral Agent.

 

 

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed
this Supplement to the Security Agreement as of the day and year first above
written.

 

[NAME OF NEW GUARANTOR],

By_________________________________
Name:
Title:

CITICORP USA, INC., as Collateral Agent

By_________________________________
Name:
Title:

Schedule I
to Supplement No. [ ]
to the Security Agreement

LOCATION OF COLLATERAL

 

 

Description

Location