EXHIBIT 10.5

 

Execution Copy

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”), dated as of July 18, 2005, among AAI
CORPORATION, a Maryland corporation (the “Borrower”), UNITED INDUSTRIAL
CORPORATION, a Delaware corporation (“UIC”), the Subsidiaries of the Borrower
signatory hereto and each other subsidiary of the Borrower hereafter a party
hereto (Borrower, UIC, each Subsidiary of the Borrower a party hereto and each
other Subsidiary of the Borrower hereafter becoming a party hereto shall be
collectively known as the “Grantors”, and individually as a “Grantor”), in favor
of SUNTRUST BANK, a Georgia banking corporation, as the Administrative Agent
(the “Administrative Agent”), on its behalf and on behalf of the other banks and
lending institutions (the “Lenders”) from time to time party to the Revolving
Credit Agreement, dated as of the date hereof, by and among the Borrower, UIC,
the Administrative Agent, the Lenders, and SunTrust Bank, as Issuing Bank and as
Swingline Lender (as amended, restated, supplemented, or otherwise modified from
time to time, the “Credit Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to establish
a revolving credit facility in favor of the Borrower; and

 

WHEREAS, it is a condition precedent to the obligations of the Administrative
Agent, the Issuing Bank, the Swingline Lender, and the Lenders under the Credit
Agreement that the Grantors enter into this Agreement to (i) secure all
obligations of the Borrower under the Credit Agreement, (ii) secure the
obligations of each Subsidiary of the Borrower under the Subsidiary Guaranty
Agreement and all other Loan Documents to which each such Subsidiary is a party,
(iii) secure all obligations of UIC under the Parent Guaranty Agreement and all
other Loan Documents to which UIC is a party and (iv) secure all Hedging
Obligations owed to the Administrative Agent, any Lender or any of their
affiliates to the extent expressly permitted by the Credit Agreement, and the
Grantors desire to satisfy such condition precedent.

 

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

 

SECTION 1.01.  DEFINITIONS.  CAPITALIZED TERMS DEFINED IN THE CREDIT AGREEMENT
AND NOT OTHERWISE DEFINED HEREIN, WHEN USED IN THIS AGREEMENT SHALL HAVE THE
RESPECTIVE MEANINGS PROVIDED FOR IN THE CREDIT AGREEMENT.  THE FOLLOWING
ADDITIONAL TERMS, WHEN USED IN THIS AGREEMENT, SHALL HAVE THE FOLLOWING
MEANINGS:

 

“Account Debtor” shall mean any person or entity that is obligated under an
Account.

 

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

 

“Accounts” shall mean all “accounts” (as defined in the UCC) now owned or
hereafter acquired by any Grantor or in which any Grantor has or acquires any
rights, and, in any event, shall mean and include, without limitation, (a) all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to any Grantor arising from the sale or lease
of goods or other property by any Grantor or the performance of services by any
Grantor (including, without limitation, any such obligation which might be
characterized as an account, contract right or general intangible under the UCC
in effect in any jurisdiction), (b) all of each Grantor’s rights in, to and
under all purchase and sales orders for goods, services or other property, and
all of each Grantor’s rights to any goods, services or other property
represented by any of the foregoing (including returned or repossessed goods and
unpaid sellers’ rights of rescission, replevin, reclamation and rights to
stoppage in transit), (c) all monies due to or to become due to any Grantor
under all contracts for the sale, lease or exchange of goods or other property
or the performance of services by any Grantor (whether or not yet earned by
performance on the part of such Grantor), and (d) all collateral security and
guarantees of any kind given to any Grantor with respect to any of the
foregoing.

 

“Chattel Paper” shall mean all “chattel paper” (as defined in the UCC) owned or
acquired by any Grantor or in which any Grantor has or acquires any rights.

 

“Collateral” shall mean, collectively, all of the following:

 

(i)                                     all Accounts;

 

(ii)                                  all Chattel Paper;

 

(iii)                               all Deposit Accounts;

 

(iv)                              all Documents;

 

(v)                                 all Equipment;

 

(vi)                              all Fixtures;

 

(vii)                           all General Intangibles;

 

(viii)                        all Instruments;

 

(ix)                                all Inventory;

 

(x)                                   all Investment Property;

 

(xi)                                all money, cash or cash equivalents;

 

(xii)                             all other goods and personal property, whether
tangible or  intangible;

 

2

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

 

(xiii)                          all Supporting Obligations and Letter-of-Credit
Rights of            any Grantor;

 

(xiv)                         all books and records pertaining to any of the
Collateral (including, without limitation, credit files, Software, computer
programs, printouts and other computer materials and records but excluding
customer lists); and

 

(xv)                            All products and Proceeds of all or any of the
Collateral described in clauses (i) through (xiv) hereof.

 

“Copyright License” shall mean any and all rights of any Grantor under any
written agreement granting any right to use any Copyright or Copyright
registration.

 

“Copyrights” shall mean all of the following now owned or hereafter acquired by
any Grantor or in which any Grantor now has or hereafter acquires any rights:
(a) all copyrights and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.

 

“Deposit Accounts” shall mean all “deposit accounts” (as defined in the UCC) now
owned or hereafter acquired by any Grantor or in which any Grantor has or
acquires any rights, or other receipts, of any Grantor covering, evidencing or
representing rights or interest in such deposit accounts.

 

“Documents” shall mean all “documents” (as defined in the UCC) now owned or
hereafter acquired by any Grantor or in which any Grantor has or acquires any
rights, or other receipts, of any Grantor covering, evidencing or representing
goods.

 

“Equipment” shall mean all “equipment” (as defined in the UCC) now owned or
hereafter acquired by any Grantor and wherever located, and, in any event, shall
include without limitation all machinery, furniture, furnishings, processing
equipment, conveyors, machine tools, engineering processing equipment,
manufacturing equipment, materials handling equipment, trade fixtures, trucks,
trailers, forklifts, vehicles, computers and other electronic data processing
and other office equipment of any Grantor, and any and all additions,
substitutions and replacements of any of the foregoing, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto, all fuel therefore and all manuals, drawings, instructions,
warranties and rights with respect thereto.

 

“Event of Default” shall have the meaning set forth for such term in Section 7
hereof.

 

“General Intangibles” shall mean all “general intangibles” (as defined in the
UCC) now owned or hereafter acquired by any Grantor or in which any Grantor has
or acquires

 

3

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

 

any rights and, in any event, shall include all right, title and interest in or
under all contracts, all customer lists, Licenses, Copyrights, Trademarks,
Patents, and all applications therefor and reissues, extensions or renewals
thereof, rights in Intellectual Property, interests in partnerships, joint
ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience, processes,
models, drawings, materials and records, goodwill (including the goodwill
associated with any Trademark or Trademark License), all rights and claims in or
under insurance policies (including insurance for fire, damage, loss and
casualty, whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax refunds
and other payments, rights of indemnification, all books and records,
correspondence, credit files, invoices, tapes, cards, computer runs, domain
names, prospect lists, customer lists and other papers and documents.

 

“Instruments” shall mean all “instruments” (as defined in the UCC) now owned or
hereafter acquired by any Grantor or in which any Grantor has or acquires any
rights and, in any event, shall include all promissory notes, all certificates
of deposit and all letters of credit evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts or other obligations owed to any Grantor.

 

“Intellectual Property” shall mean all of the following now owned or hereafter
acquired by any Grantor or in which any Grantor has or acquires any rights:
(a) all Patents, patent rights and patent applications, Copyrights and copyright
applications, Trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, applications for registration of trademarks,
trade names and service marks, fictitious names registrations and trademark,
trade name and service mark registrations, and all derivations thereof; and
(b) Patent Licenses, Trademark Licenses, Copyright Licenses and other licenses
to use any of the items described in the preceding clause (a), and any other
items necessary to conduct or operate the business of each Grantor.

 

“Inventory” shall mean all “inventory” (as defined in the UCC) now owned or
hereafter acquired by any Grantor or in which any Grantor has or acquires any
rights and, in any event, shall include all goods owned or held for sale or
lease to any other Persons.

 

“Investment Property” shall mean all “investment property” (as defined in the
UCC) now owned or hereafter acquired by any Grantor or in which any Grantor has
or acquires any rights and, in any event, shall include all “certificated
securities”, “uncertificated securities”, “security entitlements”, “securities
accounts”, “commodity contracts” and “commodity accounts” (as all such terms are
defined in the UCC) of each Grantor; provided, that Investment Property shall
not include any securities of Detroit Stoker Company, a Michigan corporation,
now or hereafter owned by UIC.

 

“Letter-of-Credit Rights” shall mean “letter-of-credit rights” (as defined in
the UCC), now owned or hereafter acquired by any Grantor, including rights to
payment or

 

4

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

 

performance under a letter of credit, whether or not any Grantor, as
beneficiary, has demanded or is entitled to demand payment or performance.

 

“License” shall mean any Copyright License, Patent License, Trademark License or
other license of rights or interests of each Grantor in Intellectual Property.

 

“Patent License” shall mean any written agreement now owned or hereafter
acquired by any Grantor or in which any Grantor has or acquires any rights
granting any right with respect to any property, process or other invention on
which a Patent is in existence.

 

“Patents” shall mean all of the following now owned or hereafter acquired by any
Grantor or in which any Grantor has or acquires any rights: (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 applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any State or Territory thereof, or any other country; and
(b) all reissues, continuations, continuations-in-part and extensions thereof.

 

“Proceeds” shall mean all “proceeds” (as defined in the UCC) of, and all other
profits, rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
realization upon, the Collateral, and, in any event, shall mean and include all
claims against third parties for loss of, damage to or destruction of, or for
proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of any Collateral, and any condemnation or requisition
payments with respect to any Collateral and the following types of property
acquired with cash proceeds:  Accounts, Inventory, General Intangibles,
Documents, Instruments and Equipment.

 

“Secured Obligations” shall mean (i) all Obligations of the Borrower under the
Credit Agreement and the other Loan Documents (whether for principal, interest,
fees, expenses, indemnity or reimbursement payments, or otherwise as provided
therein), (ii) all obligations of the Borrower, monetary or otherwise, pursuant
to any Hedging Transaction incurred to limit interest rate or fee fluctuation
with respect to the Loans and Letters of Credit entered into with a Specified
Hedge Provider, (iii) all obligations of each other Grantor under the Subsidiary
Guaranty Agreement or the Parent Guaranty Agreement, as applicable, and all
other Loan Documents to which such other Grantor is a party to (whether for
principal, interest, fees, expenses, indemnity or reimbursement payments, or
otherwise), (iv) all renewals, extensions, refinancings and modifications
thereof, and (v) all reasonable costs and expenses incurred by the
Administrative Agent in connection with the exercise of its rights and remedies
hereunder (including reasonable attorneys’ fees).  Where the context requires,
any affiliate of a Lender which is party to a Hedging Transaction entered into
to limit interest rate or fee fluctuations with respect to the Loans and Letters
of Credit shall be deemed to be a “Lender” for purposes of this Agreement and
such affiliate shall only be required to be an affiliate of a Lender at the time
the relevant Hedging Transaction is entered into in order for such Hedging
Transaction to be eligible to be designated as a “Secured Obligation”.

 

5

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

 

“Secured Parties” shall mean, collectively, the Administrative Agent, the
Lenders and the Specified Hedge Providers.

 

“Security Interests” shall mean the security interests granted to the
Administrative Agent on its behalf and on behalf of the Secured Parties pursuant
to Section 3, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.

 

“Software” shall mean all “software” (as defined in the UCC), now owned or
hereafter acquired by any Grantor, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

 

“Specified Hedge Provider” shall mean each party to a Hedging Transaction
entered into to limit interest rate or fee fluctuations with respect to the
Loans and Letters of Credit if at the date of entering into such Hedging
Transaction such person was a Lender or an Affiliate of a Lender and such person
executes and delivers to the Administrative Agent a letter agreement in form and
substance acceptable to the Administrative Agent pursuant to which such person
(i) appoints the Administrative Agent as its agent under the applicable Loan
Documents and (ii) agrees to be bound by the provisions of Article IX and X of
the Credit Agreement.

 

“Supporting Obligations” means all “supporting obligations” (as defined in the
UCC), including letters of credit and guaranties issued in support of Accounts,
Chattel Paper, Documents, General Intangibles, Instruments, or Investment
Property.

 

“Trademark License” shall mean any written agreement now owned or hereafter
acquired by any Grantor or in which any Grantor has or acquires any such rights
granting to any Grantor any right to use any Trademark.

 

“Trademarks” shall mean all of the following now owned or hereafter acquired by
any Grantor or in which any Grantor has or acquires any such rights: (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, (ii) all reissues, extensions or
renewals thereof and (iii) all goodwill associated with or symbolized by any of
the foregoing.

 

“UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in
the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for

 

6

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

 

purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.

 

“United States” or “U.S.” shall mean the United States of America, any of the
fifty states thereof, and the District of Columbia.

 

SECTION 2.  Representations and Warranties.  Each Grantor represents and
warrants to the Administrative Agent, for the benefit of Secured Parties, as
follows:

 

(A)                                  SUCH GRANTOR HAS RIGHTS IN AND THE POWER TO
TRANSFER EACH ITEM OF THE COLLATERAL UPON WHICH IT PURPORTS TO GRANT A LIEN
HEREUNDER AND HAS GOOD AND MARKETABLE TITLE TO ALL OF ITS COLLATERAL, FREE AND
CLEAR OF ANY LIENS OTHER THAN LIENS EXPRESSLY PERMITTED UNDER SECTION 7.2 OF THE
CREDIT AGREEMENT.

 

(B)                                 OTHER THAN FINANCING STATEMENTS, SECURITY
AGREEMENTS, OR OTHER SIMILAR OR EQUIVALENT DOCUMENTS OR INSTRUMENTS WITH RESPECT
TO LIENS EXPRESSLY PERMITTED UNDER SECTION 7.2 OF THE CREDIT AGREEMENT, NO
FINANCING STATEMENT, MORTGAGE, SECURITY AGREEMENT OR SIMILAR OR EQUIVALENT
DOCUMENT OR INSTRUMENT EVIDENCING A LIEN ON ALL OR ANY PART OF THE COLLATERAL IS
ON FILE OR OF RECORD IN ANY JURISDICTION.  NONE OF THE COLLATERAL IS IN THE
POSSESSION OF A PERSON (OTHER THAN ANY GRANTOR) ASSERTING ANY CLAIM THERETO OR
SECURITY INTEREST THEREIN, EXCEPT THAT THE ADMINISTRATIVE AGENT OR ITS DESIGNEE
MAY HAVE POSSESSION OF COLLATERAL AS CONTEMPLATED HEREBY.

 

(C)                                  WHEN UCC FINANCING STATEMENTS IN
APPROPRIATE FORM ARE FILED IN THE OFFICES SPECIFIED ON SCHEDULE I ATTACHED
HERETO, THE SECURITY INTERESTS SHALL CONSTITUTE VALID AND PERFECTED SECURITY
INTERESTS IN THE COLLATERAL, PRIOR TO ALL OTHER LIENS AND RIGHTS OF OTHERS
THEREIN EXCEPT FOR THE LIENS EXPRESSLY PERMITTED UNDER SECTION 7.2 OF THE CREDIT
AGREEMENT, TO THE EXTENT THAT A SECURITY INTEREST THEREIN MAY BE PERFECTED BY
FILING PURSUANT TO THE UCC, ASSUMING THE PROPER FILING AND INDEXING THEREOF.

 

(D)                                 ALL INVENTORY AND EQUIPMENT IS INSURED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE CREDIT AGREEMENT.

 

(E)                                  NONE OF THE COLLATERAL CONSTITUTES, OR IS
THE PROCEEDS OF, “FARM PRODUCTS” (AS DEFINED IN THE UCC).

 

(F)                                    SCHEDULE II CORRECTLY SETS FORTH EACH
GRANTOR’S STATE OF INCORPORATION, TAXPAYER IDENTIFICATION NUMBER, ORGANIZATIONAL
IDENTIFICATION NUMBER AND CORRECT LEGAL NAME INDICATED ON THE PUBLIC RECORD OF
SUCH GRANTOR’S JURISDICTION OF ORGANIZATION WHICH SHOWS SUCH GRANTOR TO BE
ORGANIZED.

 

(G)                                 THE PERFECTION CERTIFICATE, WHICH IS
ATTACHED HERETO AS SCHEDULE III, CORRECTLY SETS FORTH (I) ALL NAMES AND
TRADENAMES THAT EACH GRANTOR HAS USED WITHIN THE LAST FIVE YEARS AND THE NAMES
OF ALL PERSONS THAT HAVE MERGED INTO OR BEEN ACQUIRED BY EACH GRANTOR, (II) THE
CHIEF EXECUTIVE OFFICES OF EACH GRANTOR OVER THE LAST FIVE YEARS, (III) ALL
OTHER LOCATIONS IN WHICH TANGIBLE ASSETS OF EACH GRANTOR HAVE BEEN LOCATED IN
THE LAST FIVE YEARS, (IV) THE NAME OF EACH BANK AT WHICH EACH GRANTOR MAINTAINS
DEPOSIT ACCOUNTS, THE STATE OF ORGANIZATION OF EACH

 

7

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

 

SUCH BANK, AND THE ACCOUNT NUMBERS FOR EACH DEPOSIT ACCOUNT, (V) ALL LETTERS OF
CREDIT UNDER WHICH EACH GRANTOR IS A BENEFICIARY, (VI) ALL THIRD PARTIES WITH
POSSESSION OF ANY INVENTORY OR EQUIPMENT OF EACH GRANTOR AND (VII) EACH
GRANTOR’S MAILING ADDRESS.

 

(H)                                 WITH RESPECT TO THE ACCOUNTS, EXCEPT AS
SPECIFICALLY DISCLOSED TO THE ADMINISTRATIVE AGENT, (I) THEY REPRESENT BONA FIDE
SALES OF INVENTORY OR RENDERING OF SERVICES TO ACCOUNT DEBTORS IN THE ORDINARY
COURSE OF SUCH GRANTOR’S BUSINESS AND ARE NOT EVIDENCED BY A JUDGMENT,
INSTRUMENT OR CHATTEL PAPER; (II) THERE ARE NO SETOFFS, CLAIMS OR DISPUTES
EXISTING OR ASSERTED WITH RESPECT THERETO EXCEPT AS HAVE ARISIN IN THE ORDINARY
COURSE OF BUSINESS AND SUCH GRANTOR HAS NOT MADE ANY AGREEMENT WITH ANY ACCOUNT
DEBTOR FOR ANY EXTENSION OF TIME FOR THE PAYMENT THEREOF, ANY COMPROMISE OR
SETTLEMENT FOR LESS THAN THE FULL AMOUNT THEREOF, ANY RELEASE OF ANY ACCOUNT
DEBTOR FROM LIABILITY THEREFOR, OR ANY DEDUCTION THEREFROM EXCEPT A DISCOUNT OR
ALLOWANCE ALLOWED BY SUCH GRANTOR IN THE ORDINARY COURSE OF ITS BUSINESS FOR
PROMPT PAYMENT; (III) 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 ADMINISTRATIVE AGENT WITH RESPECT THERETO; (IV) SUCH GRANTOR
HAS NOT 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; AND (V) SUCH GRANTOR HAS NO KNOWLEDGE
THAT ANY ACCOUNT DEBTOR IS UNABLE GENERALLY TO PAY ITS DEBTS AS THEY BECOME
DUE.  FURTHER WITH RESPECT TO THE ACCOUNTS (I) THE AMOUNTS SHOWN ON SUCH RECORDS
AND ALL INVOICES, STATEMENTS AND COLLATERAL REPORTS WHICH MAY BE DELIVERED TO
THE ADMINISTRATIVE AGENT WITH RESPECT THERETO ARE ACTUALLY AND ABSOLUTELY OWING
TO SUCH GRANTOR AS INDICATED THEREON AND ARE NOT IN ANY WAY CONTINGENT; AND
(II) TO SUCH GRANTOR’S KNOWLEDGE, ALL ACCOUNT DEBTORS HAVE THE CAPACITY TO
CONTRACT.

 

(I)                                     WITH RESPECT TO ANY INVENTORY, (I) SUCH
INVENTORY IS LOCATED AT ONE OF THE GRANTOR’S LOCATIONS SET FORTH ON THE
PERFECTION CERTIFICATE, (II) NO INVENTORY IS NOW, OR SHALL AT ANY TIME OR TIMES
HEREAFTER BE STORED AT ANY OTHER LOCATION WITHOUT THE ADMINISTRATIVE AGENT’S
PRIOR CONSENT, AND IF THE ADMINISTRATIVE AGENT GIVES SUCH CONSENT, SUCH GRANTOR
WILL CONCURRENTLY THEREWITH OBTAIN, TO THE EXTENT REQUIRED BY THE CREDIT
AGREEMENT, BAILEE, LANDLORD AND MORTGAGEE AGREEMENTS, (III) SUCH GRANTOR HAS
GOOD, INDEFEASIBLE AND MERCHANTABLE TITLE TO SUCH INVENTORY AND SUCH INVENTORY
IS NOT SUBJECT TO ANY LIEN OR SECURITY INTEREST OR DOCUMENT WHATSOEVER EXCEPT
FOR THE LIEN GRANTED TO THE ADMINISTRATIVE AGENT AND EXCEPT FOR PERMITTED
ENCUMBRANCES, (IV) EXCEPT AS SPECIFICALLY DISCLOSED TO THE ADMINISTRATIVE AGENT,
SUCH INVENTORY IS OF GOOD AND MERCHANTABLE QUALITY, FREE FROM ANY DEFECTS,
(V) SUCH INVENTORY IS NOT SUBJECT TO ANY LICENSING, PATENT, ROYALTY, TRADEMARK,
TRADE NAME OR COPYRIGHT AGREEMENTS WITH ANY THIRD PARTIES WHICH WOULD REQUIRE
ANY CONSENT OF ANY THIRD PARTY UPON SALE OR DISPOSITION OF THAT INVENTORY OR THE
PAYMENT OF ANY MONIES TO ANY THIRD PARTY UPON SUCH SALE OR OTHER DISPOSITION,
AND (VI) THE COMPLETION OF MANUFACTURE, SALE OR OTHER DISPOSITION OF SUCH
INVENTORY BY THE ADMINISTRATIVE AGENT FOLLOWING AN EVENT OF DEFAULT SHALL NOT
REQUIRE THE CONSENT OF ANY PERSON AND SHALL NOT CONSTITUTE A BREACH OR DEFAULT
UNDER ANY CONTRACT OR AGREEMENT TO WHICH SUCH GRANTOR IS A PARTY OR TO WHICH
SUCH PROPERTY IS SUBJECT.

 

(J)                                     SUCH GRANTOR DOES NOT HAVE ANY INTEREST
IN, OR TITLE TO, ANY PATENT, TRADEMARK OR COPYRIGHT EXCEPT AS SET FORTH IN THE
PERFECTION CERTIFICATE.  THIS SECURITY

 

8

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

 

AGREEMENT IS EFFECTIVE TO CREATE A VALID AND CONTINUING LIEN ON AND, UPON FILING
OF THE COPYRIGHT SECURITY AGREEMENTS WITH THE UNITED STATES COPYRIGHT OFFICE AND
FILING OF THE PATENT SECURITY AGREEMENTS AND THE TRADEMARK SECURITY AGREEMENTS
WITH THE UNITED STATE PATENT AND TRADEMARK OFFICE, PERFECTED SECURITY INTERESTS
IN FAVOR OF THE ADMINISTRATIVE AGENT IN SUCH GRANTOR’S PATENTS, TRADEMARKS AND
COPYRIGHTS AND SUCH PERFECTED SECURITY INTERESTS ARE ENFORCEABLE AS SUCH AS
AGAINST ANY AND ALL CREDITORS OF AND PURCHASERS FROM SUCH GRANTOR.  UPON FILING
OF THE COPYRIGHT SECURITY AGREEMENTS WITH THE UNITED STATES COPYRIGHT OFFICE AND
FILING OF THE PATENT SECURITY AGREEMENTS AND THE TRADEMARK SECURITY AGREEMENTS
WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE AND THE FILING OF APPROPRIATE
FINANCING STATEMENTS LISTED ON SCHEDULE I HERETO, ALL ACTION NECESSARY OR
DESIRABLE TO PROTECT AND PERFECT THE ADMINISTRATIVE AGENT’S LIEN ON SUCH
GRANTOR’S PATENTS, TRADEMARKS OR COPYRIGHTS SHALL HAVE BEEN DULY TAKEN.

 

SECTION 3.  The Security Interests.  In order to secure the full and punctual
payment and performance of the Secured Obligations in accordance with the terms
thereof, each Grantor hereby pledges, assigns, hypothecates, sets over and
conveys to the Administrative Agent on its behalf and on behalf of the Secured
Parties and grants to the Administrative Agent on its behalf and on behalf of
the Secured Parties a continuing security interest in and to, all of its rights
in and to all Collateral now or hereafter owned or acquired by such Grantor or
in which such Grantor now has or hereafter has or acquires any rights, and
wherever located.  The Security Interests are granted as security only and shall
not subject the Administrative Agent or any other Secured Party to, or transfer
to the Administrative Agent or any other Secured Party, or in any way affect or
modify, any obligation or liability of the Grantor with respect to any
Collateral or any transaction in connection therewith.

 

SECTION 4.  Further Assurances; Covenants.

 

(A)                                  GENERAL.

 

(I)                                     NO GRANTOR SHALL CHANGE THE LOCATION OF
ITS CHIEF EXECUTIVE OFFICE OR PRINCIPAL PLACE OF BUSINESS UNLESS IT SHALL HAVE
GIVEN THE ADMINISTRATIVE AGENT THIRTY (30) DAYS PRIOR NOTICE THEREOF, AS WELL AS
EXECUTED AND DELIVERED TO THE ADMINISTRATIVE AGENT ALL FINANCING STATEMENTS AND
FINANCING STATEMENT AMENDMENTS WHICH THE ADMINISTRATIVE AGENT MAY REASONABLY
REQUEST IN CONNECTION THEREWITH.  NO GRANTOR SHALL CHANGE THE LOCATIONS, OR
ESTABLISH NEW LOCATIONS, WHERE IT KEEPS OR HOLDS ANY OF THE COLLATERAL OR ANY
RECORDS RELATING THERETO FROM THE APPLICABLE LOCATIONS DESCRIBED IN THE
PERFECTION CERTIFICATE ATTACHED HERETO AS SCHEDULE III UNLESS SUCH GRANTOR SHALL
HAVE GIVEN THE ADMINISTRATIVE AGENT THIRTY (30) DAYS PRIOR NOTICE OF SUCH CHANGE
OF LOCATION.  THE FOREGOING COVENANT SHALL NOT APPLY TO ANY COLLATERAL
(INCLUDING TRUCKS) PERFECTED BY RECORDATION OF THE ADMINISTRATIVE AGENT’S LIEN
ON THE APPROPRIATE CERTIFICATE OF TITLE.

 

(II)                                  NO GRANTOR SHALL CHANGE ITS NAME,
ORGANIZATIONAL IDENTIFICATION NUMBER, IDENTITY, JURISDICTION OF ORGANIZATION, OR
CORPORATE STRUCTURE IN ANY MANNER UNLESS IT SHALL HAVE GIVEN THE ADMINISTRATIVE
AGENT THIRTY (30) DAYS PRIOR WRITTEN NOTICE THEREOF, AND EXECUTED AND DELIVERED
TO THE ADMINISTRATIVE AGENT ALL

 

9

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

 

FINANCING STATEMENTS AND FINANCING STATEMENT AMENDMENTS WHICH THE ADMINISTRATIVE
AGENT MAY REASONABLY REQUEST IN CONNECTION THEREWITH.  NO GRANTOR SHALL MERGE OR
CONSOLIDATE INTO, OR TRANSFER ANY OF THE COLLATERAL TO, ANY OTHER PERSON OTHER
THAN ANOTHER GRANTOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUIRED LENDERS.

 

(III)                               EACH GRANTOR HEREBY AUTHORIZES THE
ADMINISTRATIVE AGENT, ITS COUNSEL OR ITS REPRESENTATIVE, AT ANY TIME AND FROM
TIME TO TIME, TO FILE FINANCING STATEMENTS AND AMENDMENTS THAT DESCRIBE THE
COLLATERAL COVERED BY SUCH FINANCING STATEMENTS AS “ALL ASSETS OF THE GRANTOR”,
“ALL PERSONAL PROPERTY OF THE GRANTOR” OR WORDS OF SIMILAR EFFECT, IN SUCH
JURISDICTIONS AS THE ADMINISTRATIVE AGENT MAY DEEM NECESSARY OR DESIRABLE IN
ORDER TO PERFECT THE SECURITY INTERESTS GRANTED BY SUCH GRANTOR UNDER THIS
AGREEMENT.  EACH GRANTOR WILL, FROM TIME TO TIME, AT ITS EXPENSE, EXECUTE,
DELIVER, FILE AND RECORD ANY STATEMENT, ASSIGNMENT, INSTRUMENT, DOCUMENT,
AGREEMENT OR OTHER PAPER AND TAKE ANY OTHER ACTION (INCLUDING, WITHOUT
LIMITATION, ANY FILINGS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE,
COPYRIGHT OR PATENT FILINGS AND ANY FILINGS OF FINANCING OR CONTINUATION
STATEMENTS UNDER THE UCC) THAT FROM TIME TO TIME MAY BE NECESSARY, OR THAT THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, IN ORDER TO CREATE, PRESERVE,
UPGRADE IN RANK (TO THE EXTENT REQUIRED HEREBY), PERFECT, CONFIRM OR VALIDATE
THE SECURITY INTERESTS OR TO ENABLE THE ADMINISTRATIVE AGENT TO OBTAIN THE FULL
BENEFITS OF THIS AGREEMENT, OR TO ENABLE THE ADMINISTRATIVE AGENT TO EXERCISE
AND ENFORCE ANY OF ITS RIGHTS, POWERS AND REMEDIES HEREUNDER WITH RESPECT TO ANY
OF ITS COLLATERAL.  EACH GRANTOR HEREBY AUTHORIZES THE ADMINISTRATIVE AGENT TO
EXECUTE AND FILE FINANCING STATEMENTS, FINANCING STATEMENT AMENDMENTS OR
CONTINUATION STATEMENTS ON BEHALF OF SUCH GRANTOR.  EACH GRANTOR AGREES THAT A
CARBON, PHOTOGRAPHIC, PHOTOSTATIC OR OTHER REPRODUCTION OF THIS AGREEMENT OR OF
A FINANCING STATEMENT IS SUFFICIENT AS A FINANCING STATEMENT.  GRANTORS SHALL
PAY THE COSTS OF, OR INCIDENTAL TO, ANY RECORDING OR FILING OF ANY FINANCING
STATEMENTS, FINANCING STATEMENT AMENDMENTS OR CONTINUATION STATEMENTS NECESSARY
IN THE SOLE DISCRETION OF THE ADMINISTRATIVE AGENT, TO PERFECT THE
ADMINISTRATIVE AGENT AND SECURED PARTIES’ SECURITY INTEREST IN THE COLLATERAL.

 

(IV)                              EXCEPT AS SET FORTH IN THE PERFECTION
CERTIFICATE ATTACHED HERETO AS SCHEDULE III, NO GRANTOR SHALL PERMIT ANY OF ITS
TANGIBLE ASSETS, INCLUDING WITHOUT LIMITATION, ITS INVENTORY AND EQUIPMENT, TO
BE IN THE POSSESSION OF ANY OTHER PERSON UNLESS PURSUANT TO AN AGREEMENT IN FORM
AND SUBSTANCE SATISFACTORY TO THE ADMINISTRATIVE AGENT (A) SUCH PERSON HAS
ACKNOWLEDGED THAT (1) IT HOLDS POSSESSION OF SUCH INVENTORY, EQUIPMENT AND OTHER
TANGIBLE ASSETS, AS THE CASE MAY BE, FOR THE ADMINISTRATIVE AGENT’S BENEFIT,
SUBJECT TO THE ADMINISTRATIVE AGENT’S INSTRUCTIONS, AND (2) SUCH PERSON DOES NOT
HAVE A LIEN IN SUCH INVENTORY, EQUIPMENT OR OTHER TANGIBLE ASSETS, (B) SUCH
PERSON AGREES NOT TO HOLD SUCH INVENTORY, EQUIPMENT OR OTHER TANGIBLE ASSETS ON
BEHALF OF ANY OTHER PERSON AND (C) SUCH PERSON AGREES THAT, AFTER THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT AND UPON REQUEST BY THE
ADMINISTRATIVE AGENT TO ISSUE AND DELIVER TO THE ADMINISTRATIVE AGENT WAREHOUSE
RECEIPTS, BILLS OF LADING OR ANY

 

10

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

 

SIMILAR DOCUMENTS RELATING TO SUCH COLLATERAL IN THE ADMINISTRATIVE AGENT’S NAME
AND IN FORM AND SUBSTANCE ACCEPTABLE TO THE ADMINISTRATIVE AGENT.

 

(V)                                 NO GRANTOR SHALL (A) SELL, TRANSFER, LEASE,
EXCHANGE, ASSIGN OR OTHERWISE DISPOSE OF, OR GRANT ANY OPTION, WARRANT OR OTHER
RIGHT WITH RESPECT TO, ANY OF ITS COLLATERAL OTHER THAN SALES OF ASSETS
PERMITTED UNDER SECTION 7.6 OF THE CREDIT AGREEMENT; OR (B) CREATE, INCUR OR
SUFFER TO EXIST ANY LIEN WITH RESPECT TO ANY COLLATERAL, EXCEPT FOR THE LIENS
EXPRESSLY PERMITTED UNDER SECTION 7.2 OF THE CREDIT AGREEMENT.

 

(VI)                              EACH GRANTOR WILL, PROMPTLY UPON REQUEST,
PROVIDE TO THE ADMINISTRATIVE AGENT ALL INFORMATION AND EVIDENCE IT MAY
REASONABLY REQUEST CONCERNING THE COLLATERAL, TO ENABLE THE ADMINISTRATIVE AGENT
TO ENFORCE THE PROVISIONS OF THIS AGREEMENT.

 

(VII)                           EACH GRANTOR SHALL TAKE ALL ACTIONS NECESSARY OR
REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT IN ORDER TO MAINTAIN THE
PERFECTED STATUS OF THE SECURITY INTERESTS.

 

(VIII)                        EXECEPT AS OTHERWISE PROVIDED IN SECTION 14
HEREIN, NO GRANTOR SHALL FILE ANY AMENDMENT TO OR TERMINATION OF A FINANCING
STATEMENT NAMING ANY GRANTOR AS DEBTOR AND THE ADMINISTRATIVE AGENT AS SECURED
PARTY, OR ANY CORRECTION STATEMENT WITH RESPECT THERETO, IN ANY JURISDICTION
UNTIL SUCH TIME AS THE SECURED OBLIGATIONS HAVE BEEN SATISFIED AND THE
ADMINISTRATIVE AGENT AND THE SECURED PARTIES HAVE RELEASED THEIR SECURITY
INTERESTS GRANTED HEREUNDER.

 

(IX)                                EACH GRANTOR SHALL TAKE ALL STEPS REASONABLY
NECESSARY TO GRANT THE ADMINISTRATIVE AGENT CONTROL OF ALL ELECTRONIC CHATTEL
PAPER IN ACCORDANCE WITH THE UCC AND ALL “TRANSFERABLE RECORDS” AS DEFINED IN
EACH OF THE UNIFORM ELECTRONIC TRANSACTIONS ACT AND THE ELECTRONIC SIGNATURES IN
GLOBAL AND NATIONAL COMMERCE ACT.

 

(B)                                 ACCOUNTS, ETC.

 

(I)                                     EACH GRANTOR SHALL USE ALL REASONABLE
EFFORTS CONSISTENT WITH PRUDENT BUSINESS PRACTICE TO CAUSE TO BE COLLECTED FROM
ITS ACCOUNT DEBTORS, AS AND WHEN DUE, ANY AND ALL AMOUNTS OWING UNDER OR ON
ACCOUNT OF EACH ACCOUNT (INCLUDING, WITHOUT LIMITATION, ACCOUNTS WHICH ARE
DELINQUENT, SUCH ACCOUNTS TO BE COLLECTED IN ACCORDANCE WITH LAWFUL COLLECTION
PROCEDURES) AND APPLY FORTHWITH UPON RECEIPT THEREOF ALL SUCH AMOUNTS AS ARE SO
COLLECTED TO THE OUTSTANDING BALANCE OF SUCH ACCOUNT.  THE COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES ACTUALLY INCURRED) OF
COLLECTION OF ACCOUNTS INCURRED BY SUCH GRANTOR OR THE ADMINISTRATIVE AGENT
SHALL BE BORNE BY THE GRANTORS.

 

(II)                                  UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, UPON REQUEST OF THE ADMINISTRATIVE AGENT,
EACH GRANTOR WILL PROMPTLY

 

11

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

 

NOTIFY (AND EACH GRANTOR HEREBY AUTHORIZES THE ADMINISTRATIVE AGENT SO TO
NOTIFY) EACH ACCOUNT DEBTOR IN RESPECT OF ANY ACCOUNT OR INSTRUMENT THAT SUCH
COLLATERAL HAS BEEN ASSIGNED TO THE ADMINISTRATIVE AGENT HEREUNDER, AND THAT ANY
PAYMENTS DUE OR TO BECOME DUE IN RESPECT OF SUCH COLLATERAL ARE TO BE MADE
DIRECTLY TO THE ADMINISTRATIVE AGENT OR ITS DESIGNEE.

 

(III)                               EACH GRANTOR WILL PERFORM AND COMPLY IN ALL
MATERIAL RESPECTS WITH ALL OF ITS OBLIGATIONS IN RESPECT OF ACCOUNTS,
INSTRUMENTS AND GENERAL INTANGIBLES.

 

(C)                                  EQUIPMENT, ETC.  EACH GRANTOR SHALL,
(I) WITHIN TEN (10) DAYS AFTER A WRITTEN REQUEST BY THE ADMINISTRATIVE AGENT, IN
THE CASE OF EQUIPMENT NOW OWNED, AND (II) FOLLOWING A REQUEST BY THE
ADMINISTRATIVE AGENT PURSUANT TO SUBCLAUSE (I) ABOVE, WITHIN TEN (10) DAYS AFTER
ACQUIRING ANY OTHER EQUIPMENT, DELIVER TO THE ADMINISTRATIVE AGENT, ANY AND ALL
CERTIFICATES OF TITLE, AND APPLICATIONS THEREFOR, IF ANY, OF SUCH EQUIPMENT AND
SHALL CAUSE THE ADMINISTRATIVE AGENT TO BE NAMED AS LIENHOLDER ON ANY SUCH
CERTIFICATE OF TITLE AND APPLICATIONS.  NO GRANTOR SHALL PERMIT ANY SUCH ITEMS
TO BECOME A FIXTURE TO REAL ESTATE OR AN ACCESSION TO OTHER PERSONAL PROPERTY
UNLESS SUCH REAL ESTATE OR PERSONAL PROPERTY IS THE SUBJECT OF A FIXTURE FILING
(AS DEFINED IN THE UCC) CREATING A FIRST PRIORITY PERFECTED LIEN IN FAVOR OF THE
ADMINISTRATIVE AGENT.

 

(D)                                 PATENTS, TRADEMARKS, ETC.  EACH GRANTOR
SHALL NOTIFY THE ADMINISTRATIVE AGENT PROMPTLY UPON THE OCCURRENCE OF EACH OF
THE FOLLOWING (I) SUCH GRANTOR’S ACQUISITION AFTER THE DATE OF THIS AGREEMENT OF
ANY MATERIAL INTELLECTUAL PROPERTY AND (II) SUCH GRANTOR’S OBTAINING KNOWLEDGE,
THAT ANY APPLICATION OR REGISTRATION RELATING TO ANY MATERIAL INTELLECTUAL
PROPERTY OWNED BY OR LICENSED TO SUCH GRANTOR IS REASONABLY LIKELY TO BECOME
ABANDONED OR DEDICATED, OR OF ANY MATERIAL ADVERSE DETERMINATION OR DEVELOPMENT
(INCLUDING, WITHOUT LIMITATION, THE INSTITUTION OF, OR ANY SUCH DETERMINATION OR
DEVELOPMENT IN, ANY PROCEEDING IN THE UNITED STATES COPYRIGHT OFFICE, THE UNITED
STATES PATENT AND TRADEMARK OFFICE OR ANY COURT) REGARDING SUCH GRANTOR’S
OWNERSHIP OF ANY MATERIAL INTELLECTUAL PROPERTY, ITS RIGHT TO REGISTER THE SAME,
OR TO KEEP AND MAINTAIN THE SAME.

 

(E)                                  DEPOSIT ACCOUNTS, CHATTEL PAPER, INVESTMENT
PROPERTY AND LETTERS OF CREDIT.

 

(I)                                     NO GRANTOR SHALL OPEN OR MAINTAIN ANY
DEPOSIT ACCOUNTS OTHER THAN THOSE LISTED ON THE PERFECTION CERTIFICATE ATTACHED
HERETO AS SCHEDULE III AND SUCH OTHER DEPOSIT ACCOUNTS AS SUCH GRANTOR SHALL
OPEN AND MAINTAIN PRIOR NOTICE TO AND IF REQUIRED UNDER THE CREDIT AGREEMENT,
SUBJECT TO CONTROL AGREEMENTS, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO
THE ADMINISTRATIVE AGENT.

 

(II)                                  NO GRANTOR SHALL BECOME THE BENEFICIARY OF
ANY LETTERS OF CREDIT, UNLESS THE ISSUER OF THE LETTER OF CREDIT HAS CONSENTED
TO THE ASSIGNMENT OF THE PROCEEDS OF SUCH LETTER OF CREDIT TO THE ADMINISTRATIVE
AGENT WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, SUCH ASSIGNMENT TO BE IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT.

 

(III)                               EACH GRANTOR, AT ANY TIME AND FROM TIME TO
TIME, WILL (A) TAKE SUCH

 

12

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

 

STEPS AS THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST FROM TIME TO TIME FOR
THE ADMINISTRATIVE AGENT TO OBTAIN “CONTROL” OF ANY INVESTMENT PROPERTY OR
ELECTRONIC CHATTEL PAPER, WITH ANY AGREEMENTS ESTABLISHING CONTROL TO BE IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT, AND
(B) OTHERWISE TO INSURE THE CONTINUED PERFECTION AND PRIORITY OF THE
ADMINISTRATIVE AGENT’S SECURITY INTEREST IN ANY OF THE COLLATERAL AND OF THE
PRESERVATION OF ITS RIGHTS THEREIN.

 

(F)                                    COMMERCIAL TORT CLAIMS.  IF ANY GRANTOR
SHALL AT ANY TIME ACQUIRE A “COMMERCIAL TORT CLAIM” (AS SUCH TERM IS DEFINED IN
THE UCC) WITH A CLAIM FOR DAMAGES THAT COULD REASONABLY BE EXPECTED TO BE IN
EXCESS OF $100,000, SUCH GRANTOR SHALL PROMPTLY NOTIFY THE ADMINISTRATIVE AGENT
THEREOF IN A WRITING, PROVIDING A REASONABLE DESCRIPTION AND SUMMARY THEREOF,
AND SHALL EXECUTE A SUPPLEMENT TO THIS AGREEMENT GRANTING A SECURITY INTEREST IN
SUCH COMMERCIAL TORT CLAIM TO THE ADMINISTRATIVE AGENT.

 

SECTION 5.  Reporting and Recordkeeping.  Each Grantor covenants and agrees with
the Administrative Agent that from and after the date of this Agreement and
until the Secured Obligations have been indefeasibly paid in full in cash:

 

(a)                                  Maintenance of Records Generally.  Each
Grantor will keep and maintain at its own cost and expense records of its
Collateral, complete in all material respects, including, without limitation, a
record of all payments received and all credits granted with respect to the
Collateral and all other dealings with its Collateral.  Each Grantor will mark
its books and records pertaining to its Collateral to evidence this Agreement
and the Security Interests.  All Chattel Paper will be marked with the following
legend:  “This writing and the obligations evidenced or secured hereby are
subject to the security interest of SunTrust Bank, as Administrative Agent.” 
For the Administrative Agent’s further security, each Grantor agrees that the
Administrative Agent shall have a security interest in all of such Grantor’s
books and records pertaining to its Collateral and, upon the occurrence and
during the continuation of any Event of Default, such Grantor shall deliver and
turn over full and complete copies of any such books and records to the
Administrative Agent or to its representatives at any time on demand of the
Administrative Agent.  Upon reasonable notice from the Administrative Agent,
each Grantor shall permit any representative of the Administrative Agent, to
inspect such books and records and will provide photocopies thereof to the
Administrative Agent subject to the limitations as provided in the Credit
Agreement.

 

(b)                                 Special Provisions Regarding Maintenance of
Records and Reporting Re: Accounts, Inventory and Equipment;

 

(I)                                     EACH GRANTOR SHALL KEEP COMPLETE AND
ACCURATE RECORDS OF ITS ACCOUNTS.  UPON THE REASONABLE REQUEST OF THE
ADMINISTRATIVE AGENT, AND PRIOR TO AN EVENT OF DEFAULT NO MORE FREQUENTLY THAN
ONE TIME PER CALENDAR QUARTER, SUCH GRANTOR SHALL DELIVER TO THE ADMINISTRATIVE
AGENT ALL DOCUMENTS, INCLUDING, WITHOUT LIMITATION, REPAYMENT HISTORIES AND
PRESENT STATUS REPORTS, RELATING TO ITS ACCOUNTS SO SCHEDULED AND SUCH OTHER
MATTERS AND INFORMATION RELATING TO THE STATUS OF ITS THEN EXISTING ACCOUNTS AS
THE ADMINISTRATIVE AGENT SHALL REASONABLY

 

13

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

 

REQUEST.

 

(II)                                  IN THE EVENT ANY AMOUNTS DUE AND OWING IN
EXCESS OF $250,000 IN THE AGGREGATE ARE IN DISPUTE BETWEEN ANY ACCOUNT DEBTOR
AND ANY GRANTOR, SUCH GRANTOR SHALL PROVIDE THE ADMINISTRATIVE AGENT WITH
WRITTEN NOTICE THEREOF PROMPTLY AFTER SUCH GRANTOR’S LEARNING THEREOF EXPLAINING
IN DETAIL THE REASON FOR THE DISPUTE, ALL CLAIMS RELATED THERETO AND THE AMOUNT
IN CONTROVERSY.

 

(III)                               EACH GRANTOR SHALL MAINTAIN ITEMIZED
RECORDS, ACCURATE IN ALL MATERIAL RESPECTS, ITEMIZING AND DESCRIBING THE KIND,
TYPE, QUALITY, QUANTITY, LOCATION AND BOOK VALUE OF ITS INVENTORY AND EQUIPMENT
AND SHALL, UPON REQUEST BY THE ADMINISTRATIVE AGENT, FURNISH THE ADMINISTRATIVE
AGENT WITH A CURRENT SCHEDULE CONTAINING THE FOREGOING INFORMATION.

 

(IV)                              EACH GRANTOR WILL PROMPTLY UPON, BUT IN NO
EVENT LATER THAN TWENTY (20) BUSINESS DAYS AFTER:

 

(A)  Such Grantor’s learning thereof, inform the Administrative Agent, in
writing, of any material delay in such Grantor’s performance of any of its
obligations to any Account Debtor and of any assertion of any claims, offsets or
counterclaims by any Account Debtor and of any allowances, credits or other
monies granted by such Grantor to any Account Debtor, in each case involving
amounts in excess of $250,000 in the aggregate for all Accounts of such Account
Debtor; and

 

(B)  Such Grantor’s receipt or learning thereof, furnish to and inform the
Administrative Agent of all material adverse information relating to the
financial condition of any Account Debtor with respect to Accounts exceeding
$250,000 in the aggregate; and

 

(V)                                 SUCH GRANTOR WILL PROMPTLY NOTIFY THE
ADMINISTRATIVE AGENT IN WRITING IF ANY ACCOUNT, THE FACE VALUE OF WHICH EXCEEDS
$250,000, ARISES OUT OF A CONTRACT WITH THE UNITED STATES OF AMERICA, OR ANY
DEPARTMENT, AGENCY, SUBDIVISION OR INSTRUMENTALITY THEREOF, OR OF ANY STATE (OR
DEPARTMENT, AGENCY, SUBDIVISION OR INSTRUMENTALITY THEREOF) WHERE SUCH STATE HAS
A STATE ASSIGNMENT OF CLAIMS ACT OR OTHER LAW COMPARABLE TO THE FEDERAL
ASSIGNMENT OF CLAIMS ACT, AND WILL TAKE ANY ACTION REQUIRED OR REASONABLY
REQUESTED BY THE ADMINISTRATIVE AGENT TO GIVE NOTICE OF THE ADMINISTRATIVE
AGENT’S SECURITY INTEREST IN SUCH ACCOUNTS UNDER THE PROVISIONS OF THE FEDERAL
ASSIGNMENT OF CLAIMS ACT OR ANY COMPARABLE LAW OR ACT ENACTED BY ANY STATE OR
LOCAL GOVERNMENTAL AUTHORITY; AND

 

(VI)                              SUCH GRANTOR AT ITS EXPENSE WILL CAUSE
INDEPENDENT PUBLIC ACCOUNTANTS FROM KPMG OR ANY NATIONALLY RECOGNIZED FIRM OR
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT TO PREPARE AND DELIVER TO
THE ADMINISTRATIVE AGENT AT ANY TIME AND FROM TIME TO TIME PROMPTLY UPON THE
ADMINISTRATIVE AGENT’S REQUEST MADE WHEN ANY EVENT OF DEFAULT EXISTS, THE

 

14

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

 

FOLLOWING REPORTS: (A) A RECONCILIATION OF ALL OF ITS ACCOUNTS, (B) AN AGING OF
ALL OF ITS ACCOUNTS, (C) TRIAL BALANCES, AND (D) A TEST VERIFICATION OF SUCH
ACCOUNTS.

 

(c)                                  Further Identification of Collateral.  Each
Grantor will if so requested by the Administrative Agent furnish to the
Administrative Agent, as often as the Administrative Agent reasonably requests
but in no event more frequently than once per calendar quarter, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.

 

(d)                                 Notices.  In addition to the notices
required by Section 5(b) hereof, each Grantor will advise the Administrative
Agent promptly, but in no event later than thirty (30) days after the occurrence
thereof, in reasonable detail, (i) of any Lien or claim made or asserted against
any of the Collateral that is not expressly permitted by the terms of the Credit
Agreement, and (ii) of the occurrence of any other event which would have a
material adverse effect on the aggregate value of the Collateral or on the
validity, perfection or priority of the Security Interests.

 

SECTION 6.  General Authority.  Each Grantor hereby irrevocably appoints the
Administrative Agent its true and lawful attorney, with full power of
substitution, in the name of such Grantor, the Administrative Agent or
otherwise, for the sole use and benefit of the Administrative Agent on its
behalf and on behalf of the Secured Parties, but at such Grantor’s expense, to
exercise, at any time (subject to the proviso below) all or any of the following
powers:

 

(i)                                     to file the financing statements,
financing statement amendments and continuation statements referred to in
Section 4(a)(iii),

 

(ii)                                  to demand, sue for, collect, receive and
give acquittance for any and all monies due or to become due with respect to any
Collateral or by virtue thereof,

 

(iii)                               to settle, compromise, compound, prosecute
or defend any action or proceeding with respect to any Collateral,

 

(iv)                              to sell, transfer, assign or otherwise deal in
or with the Collateral or the proceeds or avails thereof, as fully and
effectually as if the Administrative Agent were the absolute owner thereof, and

 

(v)                                 to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with reference to the
Collateral.

 

provided, however, that the powers described in clauses (ii), (iii), (iv) and
(v) above may be exercised by the Administrative Agent only if an Event of
Default then exists.

 

SECTION 7.  Events of Default.  Each of the following specified events shall
constitute an Event of Default under this Agreement:

 

15

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

 

(a)                                  The existence or occurrence of any “Event
of Default” as provided under the terms of the Credit Agreement;

 

(b)                                 Any representation or warranty made by or on
behalf of any Grantor under or pursuant to this Agreement shall have been false
or misleading in any material respect when made; or

 

(c)                                  Any Grantor shall fail to observe or
perform any covenant or agreement set forth in this Agreement other than those
referenced in paragraphs (a) and (b) above, and if such failure is capable of
being remedied, such failure shall remain unremedied for thirty (30) days.

 

SECTION 8.  Remedies upon Event of Default.

 

(a)                                  If any Event of Default has occurred and is
continuing, the Administrative Agent may, without further notice, exercise all
rights and remedies under this Agreement or any other Loan Document or that are
available to a secured creditor under the UCC or that are otherwise available at
law or in equity, at any time, in any order and in any combination, including to
collect any and all Secured Obligations from the Grantors, and, in addition, the
Administrative Agent may sell the Collateral or any part thereof at public or
private sale, for cash, upon credit or for future delivery, and at such price or
prices as the Administrative Agent may deem satisfactory.  The Administrative
Agent shall give the Borrower not less than ten days’ prior written notice of
the time and place of any sale or other intended disposition of Collateral,
except any Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market.  Each Grantor
agrees that any such notice constitutes “reasonable notification” within the
meaning of Section 9-611 of the UCC (to the extent such Section or any successor
provision under the UCC is applicable).

 

(b)                                 The Administrative Agent may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if
such Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations or if
otherwise permitted under applicable law, at any private sale) and thereafter
hold the same, absolutely, free from any right or claim of whatsoever kind. 
Each Grantor agrees during an Event of Default to execute and deliver such
documents and take such other action as the Administrative Agent deems necessary
or advisable in order that any such sale may be made in compliance with law. 
Upon any such sale the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold.  Each
purchaser at any such sale shall hold the Collateral so sold to it absolutely,
free from any claim or right of any kind, including any equity or right of
redemption of the Grantors.  To the extent permitted by law, each Grantor hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted.  The notice (if any)
of such sale shall (1) in case of a public sale, state the time and place fixed
for such sale, and (2) in the case of a private sale, state the day after which
such sale may be consummated.  Any such public sale shall be held at such time
or times within ordinary business hours and at such place or places as the
Administrative Agent may fix in the notice of such sale.  At any such sale
Collateral may

 

16

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

 

be sold in one lot as an entirety or in separate parcels, as the Administrative
Agent may determine.  The Administrative Agent shall not be obligated to make
any such sale pursuant to any such notice.  The Administrative 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 the sale, and such sale may be made at any time or place to which the
same may be so adjourned.  In case of any sale of all or any part of the
Collateral on credit or for future delivery, such Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for such Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice.  The Administrative Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent jurisdiction.  The
Grantors shall remain liable for any deficiency.

 

(c)                                  For the purpose of enforcing any and all
rights and remedies under this Agreement, the Administrative Agent may
(i) require any Grantor to, and each Grantor agrees that it will, at the joint
and several expense of the Grantors, and upon the request of the Administrative
Agent, forthwith assemble all or any part of its Collateral as directed by the
Administrative Agent and make it available at a place designated by the
Administrative Agent which is, in the Administrative Agent’s opinion, reasonably
convenient to the Administrative Agent and such Grantor, whether at the premises
of such Grantor or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace, any
premise where any such Collateral is or may be located and, without charge or
liability to the Administrative Agent, seize and remove such Collateral from
such premises, (iii) have access to and use such Grantor’s books and records,
computers and software relating to the Collateral, and (iv) prior to the
disposition of any of the Collateral, store or transfer such Collateral without
charge in or by means of any storage or transportation facility owned or leased
by such Grantor, process, repair or recondition such Collateral or otherwise
prepare it for disposition in any manner and to the extent the Administrative
Agent deems appropriate and, in connection with such preparation and
disposition, use without charge any trademark, trade name, copyright, patent or
technical process used such Grantor.

 

(d)                                 Without limiting the generality of the
foregoing, if any Event of Default has occurred and is continuing:

 

(i)                                     the Administrative Agent may (without
assuming any obligations or liability thereunder), at any time and from time to
time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of any Grantor in, to and under
any Licenses and take or refrain from taking any action under any thereof, and
each Grantor hereby releases the Administrative Agent from, and agrees to hold
the Administrative Agent free and harmless from and against any claims arising
out of, any lawful action so taken or omitted to be taken with respect thereto
except for the Administrative Agent’s gross negligence or willful misconduct as
determined by a final and nonappealable decision of a court of competent
jurisdiction; and

 

17

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

 

(ii)                                  upon request by the Administrative Agent,
each Grantor agrees to execute and deliver to the Administrative Agent powers of
attorney, in form and substance satisfactory to the Administrative Agent, for
the implementation of any lease, assignment, license, sublicense, grant of
option, sale or other disposition of any Intellectual Property.  In the event of
any such disposition pursuant to this Section, each Grantor shall supply its
know-how and expertise relating to the manufacture and sale of the products
bearing Trademarks or the products or services made or rendered in connection
with Patents or Copyrights, and its customer lists and other records relating to
such Intellectual Property and to the distribution of said products, to the
Administrative Agent.

 

SECTION 9.  Limitation on Duty of Administrative Agent in Respect of
Collateral.  Beyond reasonable care in the custody thereof, the Administrative
Agent shall have no duty as to any Collateral of any Grantor in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.  The Administrative Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral of the Grantors in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property, and the Administrative Agent shall not
be liable or responsible for any loss or damage to any of the Grantors’
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Administrative Agent in good faith.

 

SECTION 10.  Application of Proceeds.  The proceeds of any sale of, or other
realization upon, all or any part of the Collateral of the Grantors shall be
applied by the Administrative Agent in the manner set forth in Section 8.2 of
the Credit Agreement.

 

SECTION 11.  Concerning the Administrative Agent.  The provisions of Article IX
of the Credit Agreement shall inure to the benefit of the Administrative Agent
in respect of this Agreement and shall be binding upon the parties to the Credit
Agreement in such respect.  In furtherance and not in derogation of the rights,
privileges and immunities of the Administrative Agent therein set forth:

 

(a)                                  The Administrative Agent is authorized to
take all such action as is provided to be taken by it as the Administrative
Agent hereunder or otherwise permitted under the Credit Agreement and all other
action reasonably incidental thereto.  As to any matters not expressly provided
for herein or therein, the Administrative Agent may request instructions from
the Lenders and shall act or refrain from acting in accordance with written
instructions from the Required Lenders or, in the absence of such instructions,
in accordance with its discretion.

 

(b)                                 The Administrative Agent shall not be
responsible for the existence, genuineness or value of any of the Grantors’
Collateral or for the validity, perfection, priority or enforceability of the
Security Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part.  The Administrative Agent shall have no
duty to ascertain or inquire as to the performance or observance of any of the
terms of this Agreement by the

 

18

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

 

Grantors.

 

SECTION 12.  Appointment of Co-Administrative Agents.  At any time or times, in
order to comply with any legal requirement in any jurisdiction, the
Administrative Agent may appoint another bank or trust company or one or more
other Persons reasonably acceptable to the Required Lenders and, so long as no
Event of Default has occurred or is continuing, the Borrower, either to act as
co-agent or co-agents, jointly with the Administrative Agent, or to act as
separate agent or agents on behalf of the Administrative Agent and the Secured
Parties with such power and authority as may be necessary for the effectual
operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Administrative Agent, include
provisions for the protection of such co-agent or separate agent similar to the
provisions of Section 10).

 

SECTION 13.  Expenses.  In the event that any Grantor fails to comply with the
provisions of the Credit Agreement, this Agreement or any other Loan Document,
such that the value of any of its Collateral or the validity, perfection, rank
or value of the Security Interests are thereby diminished or potentially
diminished or put at risk in any material way, the Administrative Agent may, but
shall not be required to, effect such compliance on behalf of such Grantor, and
the Grantors shall jointly and severally reimburse the Administrative Agent for
the reasonable and actual costs thereof on demand.  All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping such Collateral, any and all excise, stamp,
intangibles, transfer, property, sales, and use taxes imposed by any state,
federal, or local authority or any other governmental authority on any of such
Collateral, or in respect of periodic appraisals and inspections of such
Collateral, or in respect of the sale or other disposition thereof, shall be
borne and paid by the Grantors jointly and severally; and if the Grantors fail
promptly to pay any portion thereof when due, the Administrative Agent may, at
its option, but shall not be required to, pay the same and charge the Grantors’
accounts therefor, and the Grantors agree jointly and severally to reimburse the
Administrative Agent therefor on demand.  All sums so paid or incurred by the
Administrative Agent for any of the foregoing and any and all other sums for
which the Grantors may become liable hereunder and all costs and expenses
(including reasonable attorneys’ fees, legal expenses and court costs) incurred
by the Administrative Agent in enforcing or protecting the Security Interests or
any of its rights or remedies thereon shall be payable by the Grantors on demand
and shall bear interest (after as well as before judgment) until paid at the
default rate of interest set forth in the Credit Agreement and shall be
additional Secured Obligations hereunder.

 

SECTION 14.  Termination of Security Interests; Release of Collateral.  Upon the
repayment in full in cash of all Secured Obligations (other than those Secured
Obligations relating to the Hedging Obligations), termination of all commitments
of the Lenders under the Credit Agreement and the cash collateralization of the
LC Exposure, the Security Interests shall terminate and all rights to the
Collateral shall revert to the Grantors.  Upon any such termination of the
Security Interests or release of such Collateral, the Administrative Agent will,
at the expense of the Borrower, execute and deliver to the Borrower such
documents as the Grantors shall reasonably request, but without recourse or
warranty to the Administrative Agent, including but not limited to written
authorization to file termination statements to evidence the termination of the
Security Interests in such Collateral.

 

19

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

 

SECTION 15.  Notices.  All notices, requests and other communications to the
Grantors or the Administrative Agent hereunder shall be delivered in the manner
required by the Credit Agreement and shall be sufficiently given to the
Administrative Agent or any Grantor if addressed or delivered to them at, in the
case of the Administrative Agent and the Borrower, its addresses and telecopier
numbers specified in the Credit Agreement and in the case of any other Grantors,
at their respective addresses and telecopier numbers provided in the Subsidiary
Guaranty Agreement or the Parent Guaranty Agreement, as applicable.  All such
notices and communications shall be deemed to have been duly given at the times
set forth in the Credit Agreement.

 

SECTION 16.  No Waiver; Remedies Cumulative.

 

(a)                                  No failure or delay of the Administrative
Agent of any kind in exercising any power, right or remedy hereunder and no
course of dealing between any Grantor on the one hand and the Administrative
Agent or any holder of any Note on the other hand shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy hereunder or under any other Loan Document, or any abandonment or
discontinuance of steps to enforce such a power, right or remedy, preclude any
other or further exercise thereof or the exercise of any other power, right or
remedy.  The rights of the Administrative Agent hereunder and of 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 provision
of this Agreement or consent to any departure by any Grantor therefrom shall in
any event be effective unless the same shall be permitted by
subsection (b) below, and then such waiver and consent shall be effective only
in the specific instance and for the purpose for which given.  No notice or
demand on any Grantor in any case shall entitle such Grantor to any other or
further notice in similar or other circumstances.

 

(b)                                 Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to a written agreement
entered into between the Grantors with respect to which such waiver, amendment
or modification relates and the Administrative Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).

 

SECTION 17.  Successors and Assigns.  This Agreement is for the benefit of the
Administrative Agent and the Secured Parties and their permitted successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the indebtedness
so assigned, may be transferred with such indebtedness.  This Agreement shall be
binding on the Grantors and their successors and assigns; provided, however,
that no Grantor may assign any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent and the Lenders.

 

SECTION 18.  Governing Law; Jurisdiction; Consent to Service of Process.

 

(A)                                  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF NEW YORK.

 

20

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

 

(B)                                 EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES COURTS LOCATED WITHIN THE
SOUTHERN DISTRICT IN THE STATE OF NEW YORK, AND OF ANY STATE COURT OF THE STATE
OF NEW YORK LOCATED IN NEW YORK COUNTY AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, 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
COURT OR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SUCH FEDERAL COURT.  EACH
OF THE PARTIES HERETO 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 ADMINISTRATIVE AGENT, THE ISSUING BANK
OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(C)                                  EACH PARTY TO THIS AGREEMENT IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING DESCRIBED IN
PARAGRAPH (B) OF THIS SECTION AND BROUGHT IN ANY COURT REFERRED TO IN PARAGRAPH
(B) OF THIS SECTION.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                                 Each party to this Agreement irrevocably
consents to the service of process in the manner provided for notices in
Section 10.1 of the Credit Agreement.  Nothing in this Agreement will affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law.

 

SECTION 19.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(i) 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 (ii) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 20.  Severability.  Any provision of this Agreement held to be illegal,
invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such illegality, invalidity or unenforceability
without affecting the legality, validity or

 

21

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

 

enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 21.  Counterparts; Integration.  This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.  This Agreement constitutes
the entire agreement among the parties hereto regarding the subject matters
hereof and supersedes all prior agreements and understandings, oral or written,
regarding such subject matter.

 

SECTION 22.  Additional Grantors.  Pursuant to Section 5.10 of the Credit
Agreement, each Subsidiary that is required to become a Subsidiary Loan Party
after the date of the Credit Agreement is required to enter into this Agreement
as a Grantor upon becoming such a Subsidiary Loan Party.  Upon execution and
delivery after the date hereof by the Administrative Agent and such Subsidiary
of an instrument in the form of Exhibit A, 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 instrument adding an
additional Grantor as a party to this Agreement shall not require the consent of
any other 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.

 

[Signature Page Follows]

 

22

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

 

IN WITNESS WHEREOF, the Grantors have caused this Agreement to be duly executed
and delivered by their duly authorized officers as of the day and year first
above written.

 

 

 

AAI SERVICES CORPORATION

 

 

 

 

 

By:

/s/

 

 

 

Name:

 

 

Title:

 

 

 

 

 

AAI/ACL TECHNOLOGIES, INC.

 

 

 

 

 

By:

/s/

 

 

 

Name:

 

 

Title:

 

 

 

 

 

UNITED INDUSTRIAL CORPORATION

 

 

 

 

 

By:

/s/

 

 

 

Name:

 

 

Title:

 

 

 

 

 

AAI CORPORATION

 

 

 

 

 

By:

/s/

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

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