Exhibit 10.7
 
THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT AND/OR
SUBORDINATION AND INTERECREDITOR AGREEMENT IN FAVOR OF FAUNUS GROUP
INTERNATIONAL, INC. AND EACH HOLDER HEREOF BY ITS ACCEPTANCE HEREOF SHALL BE
BOUND BY THE PROVISIONS OF SUCH SUBORDINATION AGREEMENT.
 
SECURITY AGREEMENT
 
SECURITY AGREEMENT, dated as of April 12, 2011 (this “Agreement”) made by Ads in
Motion, Inc., a Delaware corporation (the “Company”), and each of the
undersigned subsidiaries of the Company from time to time, if any (each a
“Grantor” and collectively and together with the Company the “Grantors”), in
favor of Worldwide Stock Transfer LLC, a New Jersey limited liability company,
in its capacity as collateral agent (in such capacity, the “Collateral Agent”)
for itself and for the “Purchasers” (as defined below) party to the Securities
Purchase Agreement, dated as of even date herewith (as amended, restated or
otherwise modified from time to time, the “Securities Purchase Agreement”).
 
W I T N E S S E T H:
 
WHEREAS, the Company and each party listed as a “Purchaser” on Schedule I of the
Securities Purchase Agreement (collectively, the “Purchasers”) are parties to
the Securities Purchase Agreement, pursuant to which the Company shall be
required to sell, and the Purchasers shall purchase or have the right to
purchase, the “Notes” (as defined therein) issued pursuant thereto (as such
Notes may be amended, restated, replaced or otherwise modified from time to time
in accordance with the terms thereof, collectively, the “Notes”);
 
WHEREAS, pursuant to Section 5(m) hereof, certain Grantors from time to time
(other than the Company) (collectively, the “Guarantors”) may execute and
deliver one or more guarantees (each, a “Guaranty”) in form and substance
acceptable to and in favor of the Collateral Agent for the benefit of itself and
the Purchasers, with respect to the Company’s obligations under the Securities
Purchase Agreement, the Notes and the Transaction Documents (as defined below);
 
WHEREAS, it is a condition precedent to the Purchasers purchasing the Notes
issued pursuant to the Securities Purchase Agreement that the Grantors shall
have executed and delivered to the Collateral Agent this Agreement providing for
the grant to the Collateral Agent for the benefit of the Purchasers of a
security interest in all personal property of each Grantor to secure all of the
Company’s obligations under the Securities Purchase Agreement, the Notes and the
other “Transaction Documents” (as defined in the Securities Purchase Agreement)
(the “Transaction Documents”) and the Guarantors’ obligations under any such
Guaranty, as applicable; and
 
WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors.
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Purchasers to perform under the Securities Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Purchasers, as follows:
 
 
 

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SECTION 1. Definitions.
 
(a) Reference is hereby made to the Securities Purchase Agreement and the Notes
for a statement of the terms thereof.  All terms used in this Agreement and the
recitals hereto which are defined in the Securities Purchase Agreement, the
Notes or in Articles 8 or 9 of the Uniform Commercial Code as in effect from
time to time in the State of New York (the “Code”),  and which are not otherwise
defined herein shall have the same meanings herein as set forth therein;
provided that terms used herein which are defined in the Code as in effect in
the State of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as the
Collateral Agent may otherwise determine.
 
(b) The following terms shall have the respective meanings provided for in the
Code:  “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”,
“Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”,
“Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”,
“Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash
Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”,
“Record”, “Security Account”, “Software”, and “Supporting Obligations”.
 
(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 
“Capital Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.
 
“Collateral Agency Agreement” means that certain Collateral Agency Agreement
dated as of the date hereof by and among Collateral Agent, Purchasers and
Company.
 
“Controlled Account Agreement” means a control agreement, in form and substance
satisfactory to Collateral Agent, executed and delivered by a Grantor,
Collateral Agent and the applicable securities intermediary (with respect to a
Securities Account) or bank (with respect to a Deposit Account), as may be
amended, restated, supplemented, or otherwise modified from time to time.
 
“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
 
“Copyrights” means all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
 
 
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“Event of Default” shall have the meaning set forth in the Notes.
 
“FGI Agreement” means that certain Sale of Accounts and Security Agreement with
Faunus Group International dated February 8, 2011 as in effect on the date of
this Agreement.
 
“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
 
“Intellectual Property” means the Copyrights, Trademarks and Patents.
 
“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.
 
“Lien” means any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract
rights).
 
“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).
 
“Patents” means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.
 
 
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“Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.
 
“Pledged Companies” means, each Person listed on Schedule IV hereto as a
“Pledged Company,” together with each other Person all or a portion of whose
Capital Stock is acquired or otherwise owned by a Grantor after the date hereof.
 
“Pledged Interests” means all of each Grantor’s right, title and interest in and
to all of the Capital Stock now or hereafter owned by such Grantor, regardless
of class or designation, including all substitutions therefor and replacements
thereof, all proceeds thereof and all rights relating thereto, also including
any certificates representing the Capital Stock, the right to receive any
certificates representing any of the Capital Stock, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof, and the right to receive dividends, distributions of income, profits,
surplus, or other compensation by way of income or liquidating distributions, in
cash or in kind, and cash, instruments, and other property from time to time
received, receivable, or otherwise distributed in respect of or in addition to,
in substitution of, on account of, or in exchange for any or all of the
foregoing.
 
“Pledged Operating Agreements” means all of each Grantor’s rights, powers, and
remedies under the limited liability company operating agreements of each of the
Pledged Companies that are limited liability companies, as may be amended,
restated, supplemented, or otherwise modified from time to time.
 
“Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that
are partnerships, as may be amended, restated, supplemented, or otherwise
modified from time to time.
 
“Subordination Agreement” means that certain Subordination Agreement by and
among the Company, Magla Products, LLC, Magla International LLC, Faunus Group
International and the Purchasers.
 
“Trademark Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any and
all Inventory now or hereafter owned by any Grantor and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).
 
 
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“Trademarks” means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a’s,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by any Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a’s, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.
 
“US Dollar Equivalent” of an amount denominated in a currency other than U.S.
Dollars shall mean, at any time for the determination thereof, the amount of
U.S. Dollars which could be purchased with the amount of such currency involved
in such computation at the spot exchange rate thereof as set forth in the Wall
Street Journal as of such date of determination or in such other publication
acceptable to Collateral Agent.
 
SECTION 2. Grant of Security Interest.  As collateral security for all of the
“Obligations” (as defined in Section 3 hereof), each Grantor hereby pledges and
assigns to the Collateral Agent for itself and for the benefit of the
Purchasers, and grants to the Collateral Agent for itself and for the benefit of
the Purchasers a continuing security interest in, all personal property and
assets of each Grantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description,
tangible or intangible (collectively, the “Collateral”), including, without
limitation, the following:
 
(a) all Accounts;
 
(b) all Chattel Paper (whether tangible or electronic);
 
(c) the Commercial Tort Claims specified on Schedule VI hereto;
 
(d) all Deposit Accounts, all cash and other property from time to time
deposited therein and the monies and property in the possession or under the
control of the Collateral Agent or any Purchaser or any affiliate,
representative, agent or correspondent of the Collateral Agent or any such
Purchaser;
 
(e) all Documents;
 
(f) all Equipment;
 
(g) all Fixtures;
 
(h) all General Intangibles (including, without limitation, all Payment
Intangibles);
 
(i) all Goods;
 
(j) all Instruments (including, without limitation, Promissory Notes and each
certificated Security);
 
 
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(k) all Inventory;
 
(l) all Investment Property (and, regardless of whether classified as Investment
Property under the Code, all Pledged Interests, Pledged Operating Agreements and
Pledged Partnership Agreements);
 
(m) all Copyrights, Patents and Trademarks, and all Licenses;
 
(n) all Letter-of-Credit Rights;
 
(o) all Supporting Obligations;
 
(p) all other tangible and intangible personal property of each Grantor (whether
or not subject to the Code), including, without limitation, all bank and other
accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of any Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by each Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession or under the control of any Grantor or any other Person from time to
time acting for any Grantor, in each case, to the extent of such Grantors rights
therein, that at any time evidence or contain information relating to any of the
property described in the preceding clauses of this Section 2 or are otherwise
necessary or helpful in the collection or realization thereof; and
 
(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;
 
in each case howsoever any Grantor’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
 
Notwithstanding anything herein to the contrary, the term “Collateral” shall not
include in the case of a Subsidiary of such Grantor organized under the laws of
a jurisdiction other than the United States, any of the states thereof or the
District of Columbia (a “Foreign Subsidiary”), more than 65% (or such greater
percentage that, due to a change in applicable law after the date hereof, (A)
would not reasonably be expected to cause the undistributed earnings of such
Foreign Subsidiary as determined for United States federal income tax purposes
to be treated as a deemed dividend to such Foreign Subsidiary’s United States
parent and (B) would not reasonably be expected to cause any material adverse
tax consequences) of the issued and outstanding shares of Capital Stock entitled
to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it being
understood and agreed that the Collateral shall include 100% of the issued and
outstanding shares of Capital Stock not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) or other equity interest of such Foreign
Subsidiary.
 
 
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Each Grantor has agreed not to further encumber any of its Copyrights, Copyright
applications, Copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any Licenses,
Patents, Patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, Trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of such Grantor connected with and
symbolized thereby, know-how, operating manuals, trade secret rights, rights to
unpatented inventions, and any claims for damage by way of any past, present, or
future infringement of any of the foregoing, without the Collateral Agent’s
prior written consent (which consent may be withheld or given in Collateral
Agent’s sole discretion).
 
The Grantors agree that the pledge of the shares of Capital Stock acquired by a
Grantor of any and all Persons now or hereafter existing who is a Foreign
Subsidiary may be supplemented by one or more separate pledge agreements, deeds
of pledge, share charges, or other similar agreements or instruments, executed
and delivered by the relevant Grantors in favor of the Collateral Agent, which
pledge agreements will provide for the pledge of such shares of Capital Stock in
accordance with the laws of the applicable foreign jurisdiction.  With respect
to such shares of Capital Stock, the Collateral Agent may, at any time and from
time to time, in its sole discretion, take actions in such foreign jurisdictions
that will result in the perfection of the Lien created in such shares of Capital
Stock.
 
SECTION 3. Security for Obligations.  The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the “Obligations”):
 
(a) for so long as the Notes are outstanding, (i) the payment by the Company, as
and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), of all amounts from time to time owing by it
in respect of the Securities Purchase Agreement, this Agreement, the Notes and
the other Transaction Documents, and (ii) in the case of any Guarantors, the
payment by such Grantors, as and when due and payable of all “Guaranteed
Obligations” under (and as defined in) each Guaranty (if any), as applicable,
including, without limitation, in both cases, (A) all principal of and interest
on the Notes (including, without limitation, all interest that accrues after the
commencement of any Insolvency Proceeding of any Grantor, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (B) all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under this Agreement or any of the Transaction Documents (including, without
limitation, any and all collection costs of Collateral Agent or any Purchaser);
and
 
(b) for so long as the Notes are outstanding, the due performance and observance
by each Grantor of all of its other obligations from time to time existing in
respect of any of the Transaction Documents, including without limitation, with
respect to any conversion or redemption rights of the Purchasers under the
Notes.
 
 
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SECTION 4. Representations and Warranties.  Each Grantor represents and warrants
as of the date of this Agreement as follows:
 
(a) Schedule I hereto sets forth (i) the exact legal name of each Grantor, and
(ii) the state of incorporation, organization or formation and the
organizational identification number of each Grantor in such state.
 
(b) There is no pending or, to its knowledge, written notice threatening any
action, suit, proceeding or claim affecting any Grantor before any governmental
authority or any arbitrator, or any order, judgment or award issued by any
governmental authority or arbitrator, in each case, that may adversely affect
the grant by any Grantor, or the perfection, of the security interest purported
to be created hereby in the Collateral, or the exercise by the Collateral Agent
of any of its rights or remedies hereunder.
 
(c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by any Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Grantor or any property of any Grantor (including, without limitation,
all federal income and social security taxes on employees’ wages) and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with generally accepted accounting principles consistently
applied (“GAAP”).
 
(d) All Equipment, Fixtures, Goods and Inventory of each Grantor now existing
are, and all Equipment, Fixtures, Goods and Inventory of each Grantor hereafter
existing will be, located and/or based at the addresses specified therefor in
Schedule III hereto, except that each Grantor will give the Collateral Agent
written notice of any change in the location of any such Collateral within 20
days of such change, other than to locations set forth on Schedule III hereto
(or a new Schedule III delivered by Grantors to Collateral Agent from time to
time) and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon or will take such
actions as required hereunder.  Each Grantor’s chief place of business and chief
executive office, the place where each Grantor keeps its Records concerning
Accounts and all originals of all Chattel Paper are located at the addresses
specified therefor in Schedule III hereto.  None of the Accounts is evidenced by
Promissory Notes or other Instruments.  Set forth in Schedule IV hereto is a
complete and accurate list, as of the date of this Agreement, of (i) each
Promissory Note, Security and other Instrument owned by each Grantor and (ii)
each Deposit Account, Securities Account and Commodities Account of each
Grantor, together with the name and address of each institution at which each
such account is maintained, the account number for each such account and a
description of the purpose of each such account.  Set forth in Schedule II
hereto is a complete and correct list of each trade name used by each Grantor
and the name of, and each trade name used by, each person from which each
Grantor has acquired any substantial part of the Collateral.
 
 
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(e) Each Grantor has delivered to the Collateral Agent complete and correct
copies of each License described in Schedule II hereto, including all schedules
and exhibits thereto, which represents all of the Licenses existing on the date
of this Agreement.  Each such License sets forth the entire agreement and
understanding of the parties thereto relating to the subject matter thereof, and
there are no other agreements, arrangements or understandings, written or oral,
relating to the matters covered thereby or the rights of such Grantor or any of
its affiliates in respect thereof.  Each material License now existing is, and
any material License entered into in the future will be, the legal, valid and
binding obligation of the parties thereto, enforceable against such parties in
accordance with its terms.  No default under any material License by any such
party has occurred, nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.
 
(f) Each Grantor owns and controls, or otherwise possesses adequate rights to
use, all Trademarks, Patents and Copyrights, which are the only trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity necessary to conduct its
business in substantially the same manner as conducted as of the date
hereof.  Schedule II hereto sets forth a true and complete list of all
registered copyrights, issued Patents, Trademarks, and Licenses owned or used by
each Grantor as of the date hereof.  To the best knowledge of each Grantor, all
such Intellectual Property of each Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable
and has not been abandoned in whole or in part.  Except as set forth in Schedule
II, no such Intellectual Property is the subject of any licensing or franchising
agreement.  Except as set forth in Schedule II, no Grantor has any knowledge of
any conflict with the rights of others to any such Intellectual Property and, to
the best knowledge of each Grantor, each Grantor is not now infringing or in
conflict with any such rights of others in any material respect, and to the best
knowledge of each Grantor, no other Person is now infringing or in conflict in
any material respect with any such properties, assets and rights owned or used
by each Grantor.  Except as set forth in Schedule II, no Grantor has received
any notice that it is violating or has violated the trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae, rights of publicity or other intellectual property rights of
any third party.
 
(g) Each Grantor is and will be at all times the sole and exclusive owner of, or
otherwise has and will have adequate rights in, the Collateral free and clear of
any Liens, except for Permitted Liens.  No effective financing statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any recording or filing office except such as (i) may have been filed
in favor of the Collateral Agent and/or the Purchasers relating to this
Agreement or the other Transaction Documents and (ii) are securing Permitted
Liens as of the date hereof and disclosed on Schedule 4(g).
 
(h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder (and in compliance with the Subordination Agreement) will not
contravene any law or any contractual restriction binding on or otherwise
affecting each Grantor or any of its properties and will not result in or
require the creation of any Lien, upon or with respect to any of its properties.
 
 
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(i) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body, is required for
(i) the grant by each Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in Schedule V hereto, all of
which financing statements have been duly filed and are in full force and
effect, (B) with respect to Deposit Accounts, and all cash and other property
from time to time deposited therein, for the execution of a Controlled Account
Agreement with the depository institution with which such account is maintained,
as provided in Section 5(i), (C) with respect to Commodity Contracts, for the
execution of a control agreement with the commodity intermediary with which such
commodity contract is carried, as provided in Section 5(i), (D) with respect to
the perfection of the security interest created hereby in the United States
Intellectual Property and Licenses, for the recording of the appropriate
Assignment for Security, substantially in the form of Exhibit A hereto in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, (E) with respect to the perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to such foreign Intellectual Property and
Licenses, (F) with respect to the perfection of the security interest created
hereby in any Letter-of-Credit Rights, for the consent of the issuer of the
applicable letter of credit to the assignment of proceeds as provided in the
Uniform Commercial Code as in effect in the applicable jurisdiction, (G) with
respect to any action that may be necessary to obtain control of Collateral
constituting Deposit Accounts, Commodity Contracts, Electronic Chattel Paper,
Investment Property or Letter-of-Credit Rights, the taking of such actions, and
(H) the Collateral Agent having possession of all Documents, Chattel Paper,
Instruments and cash constituting Collateral (subclauses (A), (B), (C), (D),
(E), (F), (G) and (H), each a “Perfection Requirement” and collectively, the
“Perfection Requirements”).
 
(j) This Agreement creates in favor of the Collateral Agent a legal, valid and
enforceable security interest in the Collateral, as security for the
Obligations.  The Perfection Requirements result in the perfection of such
security interests.  Such security interests are, or in the case of Collateral
in which each Grantor obtains rights after the date hereof, will be, perfected,
first priority security interests, subject only to Permitted Liens and the
Perfection Requirements.  Such recordings and filings and all other action
necessary to perfect and protect such security interest have been duly taken or
will be taken as required hereunder, and, in the case of Collateral in which
each Grantor obtains rights after the date hereof, will be duly taken, except
for the Collateral Agent’s having possession of all Documents, Chattel Paper,
Instruments and cash constituting Collateral after the date hereof and the other
actions, filings and recordations described above, including the Perfection
Requirements.
 
(k) As of the date hereof, no Grantor holds any Commercial Tort Claims or has
knowledge of any pending Commercial Tort Claims, except for such Commercial Tort
Claims described in Schedule VI.
 
SECTION 5. Covenants as to the Collateral.  So long as any of the Obligations
shall remain outstanding, unless the Collateral Agent shall otherwise consent in
writing:
 
 
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(a) Further Assurances.  Each Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that the Collateral Agent may reasonably request in
order to:  (i) perfect and protect the security interest purported to be created
hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Collateral; or (iii) otherwise effect the
purposes of this Agreement, including, without limitation:  (A) marking
conspicuously all Chattel Paper and each License and, at the request of the
Collateral Agent, each of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B) delivering and pledging to the Collateral Agent
each Promissory Note, Security (subject to the limitations set forth in Section
2), Chattel Paper or other Instrument, now or hereafter owned by any Grantor,
duly endorsed and accompanied by executed instruments of transfer or assignment,
all in form and substance satisfactory to the Collateral Agent, (C) executing
and filing (to the extent, if any, that any Grantor’s signature is required
thereon) or authenticating the filing of, such financing or continuation
statements, or amendments thereto, as may be necessary or  that the Collateral
Agent may reasonably request in order to perfect and preserve the security
interest purported to be created hereby, (D) furnishing to the Collateral Agent
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral in each
case as the Collateral Agent may reasonably request, all in reasonable detail,
(E) if any Collateral shall be in the possession of a third party, notifying
such Person of the Collateral Agent’s security interest created hereby and
obtaining a written acknowledgment from such Person that such Person holds
possession of the Collateral for the benefit of the Collateral Agent, which such
written acknowledgement shall be in form and substance reasonably satisfactory
to the Collateral Agent, (F) if at any time after the date hereof, any Grantor
acquires or holds any Commercial Tort Claim, promptly notifying the Collateral
Agent in a writing signed by such Grantor setting forth a brief description of
such Commercial Tort Claim and granting to the Collateral Agent a security
interest therein and in the proceeds thereof, which writing shall incorporate
the provisions hereof and shall be in form and substance satisfactory to the
Collateral Agent, (G) upon the acquisition after the date hereof by any Grantor
of any motor vehicle or other Equipment subject to a certificate of title or
ownership (other than a Motor Vehicle or Equipment that is subject to a purchase
money security interest), causing the Collateral Agent to be listed as the
lienholder on such certificate of title or ownership and delivering evidence of
the same to the Collateral Agent in accordance with Section 5(j) hereof; and
(H) taking all actions required by the Uniform Commercial Code or by other law,
as applicable, in any relevant Uniform Commercial Code jurisdiction, or by other
law as applicable in any foreign jurisdiction.
 
(b) Location of Equipment and Inventory.  Each Grantor will keep the Equipment
and Inventory (i) at the locations specified therefor on Schedule III hereto, or
(ii) at such other locations set forth on Schedule III and with respect to which
the Collateral Agent has filed financing statements and otherwise fully
perfected its Liens thereon, or (iii) at such other locations in the United
States, provided that within 20 days following the relocation of Equipment or
Inventory to such other location or the acquisition of Equipment or Inventory,
Grantor shall deliver to the Collateral Agent a new Schedule III indicating such
new locations.
 
(c) Condition of Equipment.  Each Grantor will maintain or cause the Equipment
(necessary or useful to its business) to be maintained and preserved in good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any Equipment of any Grantor
within a commercially reasonable time after the occurrence thereof, make or
cause to be made all repairs, replacements and other improvements in connection
therewith which are necessary or desirable, consistent with past practice, or
which the Collateral Agent may request to such end.  Any Grantor will promptly
furnish to the Collateral Agent a statement describing in reasonable detail any
such loss or damage in excess of $25,000 per occurrence to any Equipment.
 
 
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(d) Taxes, Etc.  Each Grantor agrees to pay promptly when due all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.
 
(e) Insurance.
 
(i) Each Grantor will, at its own expense, maintain insurance (including,
without limitation, commercial general liability and property insurance) with
respect to the Equipment and Inventory in such amounts, against such risks, in
such form and with responsible and reputable insurance companies or associations
as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Collateral Agent.  To the
extent requested by the Collateral Agent at any time and from time to time, each
such policy for liability insurance shall provide for all losses to be paid on
behalf of the Collateral Agent and any Grantor as their respective interests may
appear, and each policy for property damage insurance shall provide for all
losses to be adjusted with, and paid directly to, the Collateral Agent.  In
addition to and without limiting the foregoing, to the extent requested by the
Collateral Agent at any time and from time to time (and, in any event, within 10
days of such request), each such policy shall in addition (A) name the
Collateral Agent as an additional insured party and/or loss payee, as
applicable, thereunder (without any representation or warranty by or obligation
upon the Collateral Agent) as its interests may appear, (B) contain an agreement
by the insurer that any loss thereunder shall be payable to the Collateral Agent
on its own account notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (C) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto, and (D) provide that at least 30 days’ prior written
notice of cancellation, lapse, expiration or other adverse change shall be given
to the Collateral Agent by the insurer.  Any Grantor will, if so requested by
the Collateral Agent, promptly (and, in any event, within 10 days of such
request) deliver to the Collateral Agent original or duplicate policies of such
insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance.  Any Grantor
will also, at the request of the Collateral Agent, promptly (and, in any event,
within 10 days of such request) execute and deliver instruments of assignment of
such insurance policies and cause the respective insurers to acknowledge notice
of such assignment.
 
(ii) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 5(e) may be paid directly to the Person who shall have
incurred liability covered by such insurance.  In the case of any loss involving
damage to Equipment or Inventory, to the extent paragraph (iii) of this Section
5(e) is not applicable, any proceeds of insurance maintained by any Grantor
pursuant to this Section 5(e) shall be paid to the Collateral Agent, any Grantor
will make or cause to be made the necessary repairs to or replacements of such
Equipment or Inventory, and any proceeds of insurance maintained by any Grantor
pursuant to this Section 5(e) (except as otherwise provided in paragraph (iii)
in this Section 5(e)) shall be paid by the Collateral Agent to any Grantor as
reimbursement for the costs of such repairs or replacements.
 
 
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(iii) Following and during the continuance of an Event of Default, all insurance
payments in respect of such Equipment or Inventory shall be paid to the
Collateral Agent and applied as specified in Section 7(b) hereof.
 
(f) Provisions Concerning the Accounts and the Licenses.
 
(i) Each Grantor will (A) give the Collateral Agent at least 30 days’ prior
written notice of any change in such Grantor’s name, identity or organizational
structure, (B) maintain its jurisdiction of incorporation, organization or
formation as set forth in Schedule I hereto, (C) immediately notify the
Collateral Agent upon obtaining an organizational identification number, if on
the date hereof such Grantor did not have such identification number, and (D)
keep adequate records concerning the Accounts and Chattel Paper and permit
representatives of the Collateral Agent during normal business hours on
reasonable notice to such Grantor, to inspect and make abstracts from such
Records and Chattel Paper.
 
(ii) Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts, other than Accounts sold to FGI pursuant to the FGI Agreement.  In
connection with such collections, any Grantor may (and, at the Collateral
Agent’s direction, will) take such action as any Grantor or the Collateral Agent
may deem necessary or advisable to enforce collection or performance of the
Accounts; provided, however, that the Collateral Agent shall have the right at
any time, to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to the Collateral Agent and to direct such account
debtors or obligors to make payment of all amounts due or to become due to any
Grantor thereunder directly to the Collateral Agent or its designated agent and,
upon such notification and at the expense of any Grantor and to the extent
permitted by law, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as any Grantor might have done.  After receipt by any Grantor of
a notice from the Collateral Agent that the Collateral Agent has notified,
intends to notify, or has enforced or intends to enforce any Grantor’s rights
against the account debtors or obligors under any Accounts as referred to in the
proviso to the immediately preceding sentence, (A) all amounts and proceeds
(including Instruments) received by any Grantor in respect of the Accounts shall
be received in trust for the benefit of the Collateral Agent hereunder, shall be
segregated from other funds of any Grantor and shall be forthwith paid over to
the Collateral Agent in the same form as so received (with any necessary
endorsement) to be applied as specified in Section 7(b) hereof, and (B) no
Grantor will adjust, settle or compromise the amount or payment of any Account
or release wholly or partly any account debtor or obligor thereof or allow any
credit or discount thereon.  In addition, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (in its sole and
absolute discretion) direct any or all of the banks and financial institutions
with which any Grantor either maintains a Deposit Account or a lockbox or
deposits the proceeds of any Accounts to send immediately to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all or a portion
of such securities, cash, investments and other items held by such
institution.  Any such securities, cash, investments and other items so received
by the Collateral Agent shall be applied as specified in accordance with Section
7(b) hereof.
 
 
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(iii) Upon the occurrence and during the continuance of any breach or default
under any material License referred to in Schedule II hereto by any party
thereto other than any Grantor, each Grantor party thereto will, promptly after
obtaining knowledge thereof, give the Collateral Agent written notice of the
nature and duration thereof, specifying what action, if any, it has taken and
proposes to take with respect thereto and thereafter will take reasonable steps
to protect and preserve its rights and remedies in respect of such breach or
default, or will obtain or acquire an appropriate substitute License.
 
(iv) Each Grantor will, at its expense, promptly deliver to the Collateral Agent
a copy of each notice or other communication received by it by which any other
party to any material License referred to in Schedule II hereto purports to
exercise any of its rights or affect any of its obligations thereunder, together
with a copy of any reply by such Grantor thereto.
 
(v) Each Grantor will exercise promptly and diligently each and every right
which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Collateral Agent, cancel, terminate,
amend or otherwise modify in any respect, or waive any provision of, any
material License referred to in Schedule II hereto.
 
(g) Transfers and Other Liens.
 
(i) Other than pursuant to the FGI Agreement and in accordance with the
Subordination Agreement, no Grantor will sell, assign (by operation of law or
otherwise), lease, license, exchange or otherwise transfer or dispose of any of
the Collateral, except (A) Inventory in the ordinary course of business, and
(B) worn out or obsolete assets, not necessary to the business.
 
(ii) No Grantor will create, suffer to exist or grant any Lien upon or with
respect to any Collateral other than a Permitted Lien.
 
(h) Intellectual Property.
 
 
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(i) If applicable, each Grantor shall duly execute and deliver the applicable
Assignment for Security in the form attached hereto as Exhibit A.  Each Grantor
(either itself or through licensees) will, and will cause each licensee thereof
to, take all action necessary to maintain all of the Intellectual Property in
full force and effect, including, without limitation, using the proper statutory
notices and markings and using the Trademarks on each applicable trademark class
of goods in order to so maintain the Trademarks in full force and free from any
claim of abandonment for non-use, and each Grantor will not (nor permit any
licensee thereof to) do any act or knowingly omit to do any act whereby any
Intellectual Property may become invalidated; provided, however, that so long as
no Event of Default has occurred and is continuing, no Grantor shall have an
obligation to use or to maintain any Intellectual Property (A) that relates
solely to any product or work, that has been, or is in the process of being,
discontinued, abandoned or terminated, (B) that is being replaced with
Intellectual Property substantially similar to the Intellectual Property that
may be abandoned or otherwise become invalid, so long as the failure to use or
maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such
replacement Intellectual Property is subject to the Lien created by this
Agreement or (C) that is substantially the same as another Intellectual Property
that is in full force, so long the failure to use or maintain such Intellectual
Property does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such other Intellectual Property is subject
to the Lien and security interest created by this Agreement.  Each Grantor will
cause to be taken all necessary steps in any proceeding before the United States
Patent and Trademark Office and the United States Copyright Office or any
similar office or agency in any other country or political subdivision thereof
to maintain each registration of the Intellectual Property (other than the
Intellectual Property described in the proviso to the immediately preceding
sentence), including, without limitation, filing of renewals, affidavits of use,
affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of maintenance fees, filing fees, taxes or other
governmental fees.  If any Intellectual Property (other than Intellectual
Property described in the proviso to the second sentence of subsection (i) of
this clause (h)) is infringed, misappropriated, diluted or otherwise violated in
any material respect by a third party, each Grantor shall (x) upon learning of
such infringement, misappropriation, dilution or other violation, promptly
notify the Collateral Agent and (y) promptly sue for infringement,
misappropriation, dilution or other violation, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property.  Each Grantor shall furnish to the Collateral Agent from
time to time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Collateral Agent
may reasonably request, all in reasonable detail and promptly upon request of
the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, each Grantor shall modify this Agreement by
amending Schedule II hereto, as the case may be, to include any Intellectual
Property and License, as the case may be, which becomes part of the Collateral
under this Agreement and shall execute and authenticate such documents and do
such acts as shall be necessary or, in the reasonable judgment of the Collateral
Agent, desirable to subject such Intellectual Property and Licenses to the Lien
and security interest created by this Agreement.  Notwithstanding anything
herein to the contrary, upon the occurrence and during the continuance of an
Event of Default, no Grantor may abandon or otherwise permit any Intellectual
Property to become invalid without the prior written consent of the Collateral
Agent, and if any Intellectual Property is infringed, misappropriated, diluted
or otherwise violated in any material respect by a third party, each Grantor
will take such action as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property.
 
 
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(ii) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for the registration of any
Trademark or Copyright or the issuance of any Patent with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof.  Upon request of the Collateral Agent, any
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent’s security interest
hereunder in such Intellectual Property and the General Intangibles of any
Grantor relating thereto or represented thereby, and each Grantor hereby
appoints the Collateral Agent its attorney-in-fact to execute and/or
authenticate and file all such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until the indefeasible payment in full in
cash of all of the Obligations in full.
 
(i) Deposit, Commodities and Securities Accounts.  (a) On or before the date
which is 30 days after the date of this Agreement, each Grantor shall cause each
bank and other financial institution with an account referred to in Schedule IV
hereto  to execute and deliver to the Collateral Agent a Controlled Account
Agreement, in form and substance satisfactory to the Collateral Agent, duly
executed by each Grantor and such bank or financial institution, or enter into
other arrangements in form and substance satisfactory to the Collateral Agent,
pursuant to which such institution shall irrevocably agree, inter alia, that
(i) it will comply at any time with the instructions originated by the
Collateral Agent to such bank or financial institution directing the disposition
of cash, Commodity Contracts, securities, Investment Property and other items
from time to time credited to such account, without further consent of each
Grantor, which instructions the Collateral Agent will not give to such bank or
other financial institution in the absence of a continuing Event of Default,
(ii) all Commodity Contracts, securities, Investment Property and other items of
each Grantor deposited with such institution shall be subject to a perfected,
first priority security interest in favor of the Collateral Agent, (iii) any
right of set off (other than recoupment of standard fees), banker’s Lien or
other similar Lien, security interest or encumbrance shall be fully waived as
against the Collateral Agent, and (iv) without limiting the above, subject to
the terms and conditions of the Subordination Agreement, upon receipt of written
notice from the Collateral Agent during the continuance of an Event of Default,
such bank or financial institution shall immediately send to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all such cash, the
value of any Commodity Contracts, securities, Investment Property and other
items held by it.  Without the prior written consent of the Collateral Agent,
each Grantor shall not make or maintain any Deposit Account, Commodity Account
or Securities Account except for the accounts set forth in Schedule IV hereto.
 
(j) Motor Vehicles.
 
(i) Upon the Collateral Agent’s written request, each Grantor shall deliver to
the Collateral Agent originals of the certificates of title or ownership for all
motor vehicles with a value in excess of $10,000, owned by it with the
Collateral Agent listed as lienholder, for the benefit of the Purchasers.
 
 
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(ii) Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact,
effective the date hereof and terminating upon the termination of this
Agreement, for the purpose of (A) executing on behalf of such Grantor title or
ownership applications for filing with appropriate state agencies to enable
motor vehicles now owned or hereafter acquired by such Grantor to be retitled
and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder).  This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash.
 
(iii) Any certificates of title or ownership delivered pursuant to the terms
hereof shall be accompanied by odometer statements for each motor vehicle
covered thereby.
 
(iv) So long as no Event of Default shall have occurred and be continuing, upon
the request of any Grantor, the Collateral Agent shall execute and deliver to
any Grantor such instruments as any Grantor shall reasonably request to remove
the notation of the Collateral Agent as lienholder on any certificate of title
for any motor vehicle; provided, however, that any such instruments shall be
delivered, and the release effective, only upon receipt by the Collateral Agent
of a certificate from any Grantor stating that such motor vehicle is to be sold
or has suffered a casualty loss (with title thereto in such case passing to the
casualty insurance company therefor in settlement of the claim for such loss)
and the amount that any Grantor will receive as sale proceeds or insurance
proceeds.  Any proceeds of such sale or casualty loss shall be paid to the
Collateral Agent hereunder immediately upon receipt, to be applied to the
Obligations then outstanding.
 
(k) Control.  Each Grantor hereby agrees to take any or all action that may be
necessary or that the Collateral Agent may reasonably request in order for the
Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of
the Code with respect to the following Collateral:  (i) Electronic Chattel
Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.
 
(l) Inspection and Reporting.  Each Grantor shall permit the Collateral Agent,
or any agent or representatives thereof or such professionals or other Persons
as the Collateral Agent may designate (at Grantors’ sole cost and expense)
(i) to examine and make copies of and abstracts from any Grantor’s records and
books of account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, Instruments, Accounts, Inventory and other assets of any
Grantor from time to time, (iii) to conduct audits, physical counts, appraisals
and/or valuations, examinations at the locations of any Grantor.  Each Grantor
shall also permit the Collateral Agent, or any agent or representatives thereof
or such professionals or other Persons as the Collateral Agent may designate to
discuss such Grantor’s affairs, finances and accounts with any of its directors,
officers, managerial employees, independent accountants or any of its other
representatives.  Without limiting the foregoing, the Collateral Agent may, at
any time, in the Collateral Agent’s own name, in the name of a nominee of the
Collateral Agent, or in the name of any Grantor communicate (by mail, telephone,
facsimile or otherwise) with the Account Debtors of such Grantor, parties to
contracts with such Grantor and/or obligors in respect of Instruments of such
Grantor to verify with such Persons, to the Collateral Agent’s satisfaction, the
existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other receivables.
 
 
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(m) Future Subsidiaries.  If any Grantor shall hereafter create or acquire any
Subsidiary (other than a Foreign Subsidiary), simultaneously with the creation
or acquisition of such Subsidiary, such Grantor shall (i) cause such Subsidiary
to become a party to this Agreement as an additional “Grantor” hereunder, (ii)
deliver to Collateral Agent revised Schedules to this Agreement, as appropriate,
(iii) cause such Subsidiary to duly execute and deliver a guaranty of the
Obligations in favor of the Collateral Agent in form and substance acceptable to
the Collateral Agent, and (iv) duly execute and/or cause to be delivered such
opinions of counsel and other documents, in form and substance acceptable to the
Collateral Agent, as the Collateral Agent shall request with respect thereto.
 
SECTION 6. Additional Provisions Concerning the Collateral.
 
(a) To the maximum extent permitted by applicable law and the Subordination
Agreement, and for the purpose of taking any action that the Collateral Agent
may deem necessary or advisable to accomplish the purposes of this Agreement,
each Grantor hereby (i) authorizes the Collateral Agent to execute any such
agreements, instruments or other documents in such Grantor’s name and to file
such agreements, instruments or other documents in such Grantor’s name and in
any appropriate filing office, (ii) authorizes the Collateral Agent at any time
and from time to time to file, one or more financing or continuation statements,
and amendments thereto, relating to the Collateral (including, without
limitation, any such financing statements that (A) describe the Collateral as
“all assets” or “all personal property” (or words of similar effect) or that
describe or identify the Collateral by type or in any other manner as the
Collateral Agent may determine regardless of whether any particular asset of
such Grantor falls within the scope of Article 9 of the Uniform Commercial Code
or whether any particular asset of such Grantor constitutes part of the
Collateral, and (B) contain any other information required by Part 5 of Article
9 of the Code for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including, without limitation,
whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor) and (iii) ratifies
such authorization to the extent that the Collateral Agent has filed any such
financing or continuation statements, or amendments thereto, prior to the date
hereof.  A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
 
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent’s discretion, to take any action and to execute any instrument
which the Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, (i) to
obtain and adjust insurance required to be paid to the Collateral Agent pursuant
to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, (iv) to file any claims or take any
action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Collateral Agent and the Purchasers with respect to
any Collateral, (v) to execute assignments, licenses and other documents to
enforce the rights of the Collateral Agent and the Purchasers with respect to
any Collateral and (vi) to verify any and all information with respect to any
and all Accounts.  This power is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash.
 
 
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(c) For the purpose of enabling the Collateral Agent to exercise rights and
remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, each
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.  Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Securities Purchase Agreement that limit the right of any Grantor to dispose of
its property, and Section 5(g) and Section 5(h) hereof, so long as no Event of
Default shall have occurred and be continuing, any Grantor may exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of its
business.  In furtherance of the foregoing, unless an Event of Default shall
have occurred and be continuing, the Collateral Agent shall from time to time,
upon the request of any Grantor, execute and deliver any instruments,
certificates or other documents, in the form so requested, which such Grantor
shall have certified are appropriate (in such Grantor’s judgment) to allow it to
take any action permitted above (including relinquishment of the license
provided pursuant to this clause (c) as to any Intellectual Property).  Further,
upon the indefeasible payment in full in cash of all of the Obligations, the
Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to
any Grantor all of the Collateral Agent’s right, title and interest in and to
the Intellectual Property, and the Licenses, all without recourse,
representation or warranty whatsoever.  The exercise of rights and remedies
hereunder by the Collateral Agent shall not terminate the rights of the holders
of any licenses or sublicenses theretofore granted by each Grantor in accordance
with the second sentence of this clause (c).  Each Grantor hereby releases the
Collateral Agent from any claims, causes of action and demands at any time
arising out of or with respect to any actions taken or omitted to be taken by
the Collateral Agent under the powers of attorney granted herein other than
actions taken or omitted to be taken through the Collateral Agent’s gross
negligence or willful misconduct, as determined by a final determination of a
court of competent jurisdiction.
 
(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Collateral Agent may itself perform, or cause performance of, such
agreement or obligation, in the name of such Grantor or the Collateral Agent,
and the expenses of the Collateral Agent incurred in connection therewith shall
be payable by such Grantor pursuant to Section 8 hereof and shall be secured by
the Collateral.
 
 
- 19 -

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

 
 
(e) The powers conferred on the Collateral Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers.  Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
 
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed,
(ii) the exercise by the Collateral Agent of any of its rights hereunder shall
not release any Grantor from any of its obligations under the Licenses or
otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not
have any obligation or liability by reason of this Agreement under the Licenses
or with respect to any of the other Collateral, nor shall the Collateral Agent
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
 
SECTION 7. Remedies Upon Event of Default.  Subject to the terms of the
Subordination Agreement, if any Event of Default shall have occurred and be
continuing:
 
(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of the Collateral, including, without limitation,
transfer into the Collateral Agent’s name or into the name of its nominee or
nominees (to the extent the Collateral Agent has not theretofore done so) and
thereafter receive, for the benefit of the Collateral Agent, all payments made
thereon, give all consents, waivers and ratifications in respect thereof and
otherwise act with respect thereto as though it were the outright owner thereof,
(ii) require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of its respective Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place or places to be designated by the
Collateral Agent that is reasonably convenient to both parties, and the
Collateral Agent may enter into and occupy any premises owned or leased by any
Grantor where the Collateral or any part thereof is located or assembled for a
reasonable period in order to effectuate the Collateral Agent’s rights and
remedies hereunder or under law, without obligation to any Grantor in respect of
such occupation, and (iii) without notice except as specified below and without
any obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale
(including, without limitation, by credit bid), at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable and/or (B) lease, license or dispose of the Collateral
or any part thereof upon such terms as the Collateral Agent may deem
commercially reasonable.  Each Grantor agrees that, to the extent notice of sale
or any other disposition of its respective Collateral shall be required by law,
at least ten (10) days’ notice to any Grantor of the time and place of any
public sale or the time after which any private sale or other disposition of its
respective Collateral is to be made shall constitute reasonable
notification.  The Collateral Agent shall not be obligated to make any sale or
other disposition of any Collateral regardless of notice of sale having been
given.  The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.  Each Grantor hereby waives any claims against the Collateral Agent
and the Purchasers arising by reason of the fact that the price at which its
respective Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Collateral Agent accepts the
first offer received and does not offer such Collateral to more than one
offeree, and waives all rights that any Grantor may have to require that all or
any part of such Collateral be marshaled upon any sale (public or private)
thereof.  Each Grantor hereby acknowledges that (i) any such sale of its
respective Collateral by the Collateral Agent shall be made without warranty,
(ii) the Collateral Agent may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, and (iii) such actions set forth in
clauses (i) and (ii) above shall not adversely affect the commercial
reasonableness of any such sale of Collateral.  In addition to the foregoing,
(1) upon written notice to any Grantor from the Collateral Agent after and
during the continuance of an Event of Default, such Grantor shall cease any use
of the Intellectual Property or any trademark, patent or copyright similar
thereto for any purpose described in such notice; (2) the Collateral Agent may,
at any time and from time to time after and during the continuance of an Event
of Default, upon 10 days’ prior notice to such Grantor, license, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any of the Intellectual Property, throughout the universe for such term
or terms, on such conditions, and in such manner, as the Collateral Agent shall
in its sole discretion determine; and (3) the Collateral Agent may, at any time,
pursuant to the authority granted in Section 6 hereof or otherwise (such
authority being effective upon the occurrence and during the continuance of an
Event of Default), execute and deliver on behalf of such Grantor, one or more
instruments of assignment of the Intellectual Property (or any application or
registration thereof), in form suitable for filing, recording or registration in
any country.
 
 
- 20 -

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(b) Any cash held by the Collateral Agent as Collateral and all Cash Proceeds
received by the Collateral Agent in respect of any sale of or collection from,
or other realization upon, all or any part of the Collateral shall be applied
(after payment of any amounts payable to the Collateral Agent pursuant to
Section 8 hereof) by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect, consistent with
the provisions of the Collateral Agency Agreement.  Any surplus of such cash or
Cash Proceeds held by the Collateral Agent and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be paid over to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
 
(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Collateral Agent and the
Purchasers are legally entitled, each Grantor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in the
Notes for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by the Collateral Agent to collect such deficiency.
 
(d) Each Grantor hereby acknowledges that if the Collateral Agent complies with
any applicable state, provincial, or federal law requirements in connection with
a disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.
 
 
- 21 -

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

 
 
(e) The Collateral Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the Collateral Agent’s rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising.  To
the extent that any Grantor lawfully may, each Grantor hereby agrees that it
will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent’s rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.
 
SECTION 8. Indemnity and Expenses.
 
(a) Each Grantor agrees, jointly and severally, to defend, protect, indemnify
and hold the Collateral Agent and each of the Purchasers, jointly and severally,
harmless from and against any and all claims, damages, losses, liabilities,
obligations, penalties, fees, costs and expenses (including, without limitation,
reasonable legal fees, costs, expenses, and disbursements of such Person’s
counsel) to the extent that they arise out of or otherwise result from this
Agreement (including, without limitation, enforcement of this Agreement), except
to the extent resulting from such Person’s gross negligence or willful
misconduct, as determined by a final judgment of a court of competent
jurisdiction.
 
(b) Each Grantor agrees, jointly and severally, to pay to the Collateral Agent
upon demand the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the
Collateral Agent may incur in connection with (i) the preparation, negotiation,
execution, delivery, recordation, administration, amendment, waiver or other
modification or termination of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
 
 
- 22 -

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

 
 
SECTION 9. Notices, Etc.  All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, e-mailed or delivered, if to
any Grantor that is a Foreign Subsidiary at the address of the Company, if to
any Grantor that is not a Foreign Subsidiary at its address specified on the
signature pages below and if to the Collateral Agent to it, at its address
specified on the signature pages below; or as to any such Person, at such other
address as shall be designated by such Person in a written notice to all other
parties hereto complying as to delivery with the terms of this Section 9.  All
such notices and other communications shall be effective (a) if sent by
certified mail, return receipt requested, when received or three days after
deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed,
when transmitted (during normal business hours) and confirmation is received,
and otherwise, the day after the notice or communication was transmitted and
confirmation is received, or (c) if delivered in person, upon delivery.  For the
avoidance of doubt, the Foreign Subsidiaries, as Grantors, hereby appoint the
Company as its agent for receipt of service of process and all notices and other
communications in the United States at the address specified below.
 
SECTION 10. Miscellaneous.
 
(a) No amendment of any provision of this Agreement shall be effective unless it
is in writing and signed by each Grantor and the Collateral Agent, and no waiver
of any provision of this Agreement, and no consent to any departure by each
Grantor therefrom, shall be effective unless it is in writing and signed by each
Grantor and the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
 
(b) No failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any of the other Transaction Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right.  The rights and remedies of the Collateral Agent or any
Purchaser provided herein and in the other Transaction Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law.  The rights of the Collateral Agent or any Purchaser under any of the other
Transaction Documents against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, any Grantor.
 
(c) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
 
(d) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect until the indefeasible payment in
full in cash of the Obligations, and (ii) be binding on each Grantor and all
other Persons who become bound as debtor to this Agreement in accordance with
Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Purchasers hereunder, to the benefit of
the Collateral Agent and the Purchasers and their respective permitted
successors, transferees and assigns.  Without limiting the generality of clause
(ii) of the immediately preceding sentence, without notice to any Grantor, the
Collateral Agent and the Purchasers may assign or otherwise transfer their
rights and obligations under this Agreement and any of the other Transaction
Documents, to any other Person and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Collateral
Agent and the Purchasers herein or otherwise.  Upon any such assignment or
transfer, all references in this Agreement to the Collateral Agent or any such
Purchaser shall mean the assignee of the Collateral Agent or such
Purchaser.  None of the rights or obligations of any Grantor hereunder may be
assigned or otherwise transferred without the prior written consent of the
Collateral Agent, and any such assignment or transfer without the consent of the
Collateral Agent shall be null and void.
 
 
- 23 -

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

 
 
(e) Upon the indefeasible payment in full in cash of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon any
Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.
 
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
 
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.  EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
 
(h) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
 
 
- 24 -

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

 
 
(i) Each Grantor irrevocably consents to the service of process of any of the
aforesaid courts in any such action, suit or proceeding by the mailing of copies
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to any Grantor at its address provided herein, such
service to become effective 10 days after such mailing.
 
(j) Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of any Grantor in any
other jurisdiction.
 
(k) Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
 
(l) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
 
(m) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
 
SECTION 11. Material Non-Public Information. Upon the delivery of any notices,
documents, information or materials to Collateral Agent by Company and/or any of
its subsidiaries or any of its or their respective officers, directors,
employees and/or agents in accordance with or pursuant to this Agreement or any
other Transaction Document, the Company shall certify or cause to be certified
in writing to Collateral Agent whether such notices, documents, information or
materials contain any material non-public information.  If Collateral
Agent  receives any such notices, documents, information or materials with such
certification that such notices, documents, information or materials contain
material non-public information and the Collateral Agent reasonably determines,
in its sole discretion, the Purchasers should receive such notices, documents,
information or materials, (x) Collateral Agent shall deliver a written notice to
the Company that Collateral Agent intends to promptly deliver such notice,
documents or other information or materials to the Purchasers, (y) the Company
shall within one (1) Business Day after any receipt of such written notice from
Collateral Agent  (A)  publicly disclose such material, non-public information
on a Current Report on Form 8-K or otherwise and (B) deliver written notice to
Collateral Agent certifying that such notice, documents, information or
materials no longer contain any material, non-public information (a “Non-Public
Certification”) and (z)  promptly following the receipt of such Non-Public
Certification, Collateral Agent shall delivery such notice, documents,
information or materials to each Purchaser.  Any delivery by Collateral Agent of
any notice, documents or other information or materials to any Purchaser shall
be deemed to be a delivery by the Company to such Purchaser for all purposes
hereunder and pursuant to any other Transaction Documents.  To the extent
Collateral Agent receives any notices, documents, information or materials from
Company and/or any of its subsidiaries or any of its or their respective
officers, directors, employees and agents without concurrent certification by
Company that such notices, documents, information or materials do not contain
any non-public information or the Company fails to deliver a Non-Public
Certification as required hereunder, Collateral Agent shall retain such items or
information and shall not deliver any such items or information to any
Purchaser, but shall deliver written notice to each Purchaser that it has
received items or information that may or may not contain material non-public
information without a certification by Company as to the contents thereof (but
without otherwise describing in any detail such items or information).  Upon
receipt of such notice, each Purchaser may  provide further instruction to
Collateral Agent  with respect to distribution of such notices, documents,
information or materials to such Purchaser (and not to any other Purchaser) and
Collateral Agent shall have no further duty with respect thereto until receipt
of such instruction from any such Purchaser.   Notwithstanding anything herein
or in any Transaction Document to the contrary, the Collateral Agent shall not
deliver to any Purchaser any documents or other information or
materials  without prior certification by Company that such notices, documents,
information or materials do not contain material non-public information, without
the prior written consent of such Purchaser (other than notices of the
occurrence of an Event of Default).
 
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 

  COMPANY:           ADS IN MOTION, INC.          
 
By:
/s/ Jordan Glatt
      Name :  Jordan Glatt       Title :  President               Address:      
       
Facsimile:
 

 

  SUBSIDIARY GRANTORS:           MAGLA INTERNATIONAL, LLC          
 
By:
/s/ Jordan Glatt
      Name :  Jordan Glatt       Title :  President               Address:      
       
Facsimile:
 

 

  MAGLA WORLDWIDE LTD.          
 
By:
/s/ Jordan Glatt
      Name :  Jordan Glatt       Title :  President               Address:      
       
Facsimile:
 

 
Security Agreement
 
 
 

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

 
 
ACCEPTED BY:
 
WORLDWIDE STOCK TRANSFER LLC, as Collateral Agent
 
By:
/s/ Jonathan Gellis
   
Name:  Jonathan Gellis
   
Title:  President
 

 
Address:
Worldwide Stock Transfer LLC
   
433 Hackensack Avenue
   
Level L
    Hackensack, NJ 07601    
Attn: Jonathan Gellis
 

 
Facsimile:   201-820-2010
Email: jgellis@wwstr.com
 
Security Agreement
 
 
 

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

 

SCHEDULE I
 
Legal Names; Organizational Identification Numbers;
States or Jurisdiction of Organization

Grantor’s Name
 
State of Organization
 
Federal Employer I.D.
 
Organizational I.D.
Magla International, LLC
 
New Jersey
 
27-4432863
 
0600368237
Ads In Motion, Inc.
 
Delaware
 
95-4856713
   
Magla Worldwide Ltd.
 
Cayman Islands
       

 
 
 

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

 

SCHEDULE II
 
Intellectual Property
 
Trademarks
 
LIST OF TRADEMARKS AND TRADEMARK REGISTRATION APPLICATIONS
 
SERIAL NO
 
REGISTRATION/APPLICATION NO.
  MARK
75897448
 
2489209
 
MEGA GRIP
75306035
 
2434450
 
NYPLEX
78170858
 
2742113
 
WARMTEC
78574851
 
3317141
 
HIDEX
78394849
 
2938240
 
UTILITY PLUS
78281627
 
2893931
 
LIL' SPROUTS
78170850
 
2856851
 
MEDI-SHIELD
78041856
 
2687488
 
LEATHER FOR WEATHER
77053136
 
3315759
 
HOMECHEM
75897426
 
2622821
 
FARM CHEM
75897427
 
2622822
 
SUPER CHEM
76016676
 
2657751
 
Trade Dress-Glove Designs
       
Yellow cloth segment on back
       
portion of glove with plurality of
       
black stripes
75528622
 
2532438
 
WET SOIL
76080428
 
2679132
 
Trade Dress-Glove Design: Black
       
Dots on Yellow Fabric
75599248
 
2370218
 
TUFF STUFF
75599247
 
2311510
 
POWER DOTS
75599246
 
2318717
 
WARM MAX
74485767
 
1919793
 
FASHION FIT
73544611
 
1436448
 
HAND HELPERS
73525856
 
1363441
 
SKIN EEZ
73181057
 
1176293
 
LOVING HANDS
73232885
 
1157357
 
EXTRA HANDS
75591132
 
2532498
 
HAND HELPERS
72066060
 
0686274
 
MAGLA
78331235
 
2897503
 
NYPLEX
72448158
 
1015527
 
EASY WIPE
73120455
 
1221765
 
MAGLA
78398387
 
3033071
 
HUSKY
78352566
 
2966694
 
PRETTY HANDS
CA 545798
      NYPLEX        
FASHION CUFF - PENDING
       
FOAM FIT - PENDING
       
OPTIDERM - ISSUED
 
   
XSORB - PENDING

 
 
 

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

 
 
Patents
 
LIST OF PATENTS
       
Patterned Non-woven Fabrics of
 
5,380,581
 
1/14/2014
Improved Tensile Strength
                 
Wear Resistant Image Printing
 
5,854,306
 
1/5/2016
on Latex Surfaces
                 
Gloves with Reinforcing Elements
 
11/934495
 
11/2/2007
(Reinforced Cell)
 
(pending application)
             
Glove Dispenser
 
 D530,224
 
10/17/2020
         
Glove
 
 D515,782
 
2/28/2020
         
Glove
 
 D515,783
 
2/28/2020
         
Glove
 
 D515,784
 
2/28/2020
         
Glove
 
 D513,655
 
1/24/2020
         
Glove
 
 D516,277
 
3/7/2020
         
Multilayer Glove
 
 D528,264
 
9/19/2020
         
Glove Clip
 
 D523,330
 
6/20/2020
         
Glove
 
 D428,214
 
7/11/2014

 
Design Patents
 
None.
 
Patent Applications Pending
 
None.
 
Copyrights
 
None.
 
 
 

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

 
 
SCHEDULE III
Locations
 
Grantor’s Name
 
Chief Executive Office
 
Chief Place of Business
 
Books and Records
 
Inventory,
Equipment, Etc.
Magla International, LLC
 
159 South St
Morristown, NJ 07960
 
3636 Taylorsville Hwy
Statesville, NC 28625
 
159 South St
Morristown, NJ 07960
 
3636 Taylorsville Hwy
Statesville, NC 28625
                 
Ads In Motion, Inc.
 
159 South St
Morristown, NJ 07960
 
3636 Taylorsville Hwy
Statesville, NC 28625
 
159 South St
Morristown, NJ 07960
 
3636 Taylorsville Hwy
Statesville, NC 28625
                 
Magla Worldwide Ltd.
 
159 South St
Morristown, NJ 07960
 
3636 Taylorsville Hwy
Statesville, NC 28625
 
159 South St
Morristown, NJ 07960
 
Not applicable.

 
 
 

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SCHEDULE IV
 
Promissory Notes, Securities, Deposit Accounts,
Securities Accounts and Commodities Accounts
 
Securities

Grantor
 
Name of Issuer / Pledged Company
 
Number
of Shares
 
Class
 
Certificate
No.(s)
Not applicable.
               

 
Deposit Accounts, Securities Accounts and Commodities Accounts

Grantor
 
 
Name and Address of Institution
 
Purpose of the Account
 
Account No.
Magla International, LLC
 
Bank Of America
540 West Madison St
Chicago, Ill
 
Disbursement Acct
NC Payroll Account
NJ Payroll Account
NC Petty Cash Account
 
5590055363 *
000533326237*
004159028072*
000532007739*
                 
Hilltop Community Bank
355 Springfield Ave
Summit, NJ 079091
 
Disbursement Acct
 
1000016536*
             
Magla Worldwide LTD
 
Bank Of America
540 West Madison St
Chicago, Ill
 
Disbursement Account
 
5800368259 **
                 
Hilltop Community Bank
355 Springfield Ave
Summit, NJ 079091
 
Disbursement Account
 
1000016579 **
 

* The name on this account is currently Magla Products, LLC, however the Company
is in the process of changing the account name to Magla International LLC.
 
** This account is expected to be closed
 
 
 

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SCHEDULE V
 
Financing Statements
 
 
 

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SCHEDULE VI
 
Commercial Tort Claims
 
None
 
 
 

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EXHIBIT A
 
Assignment For Security
 
[Trademarks] [Patents] [Copyrights]
 
WHEREAS, ______________________________ (the “Assignor”) [has adopted, used and
is using, and holds all right, title and interest in and to, the trademarks and
service marks listed on the annexed Schedule 1A, which trademarks and service
marks are registered or applied for in the United States Patent and Trademark
Office (the “Trademarks”)] [holds all right, title and interest in the letter
patents, design patents and utility patents listed on the annexed Schedule 1A,
which patents are issued or applied for in the United States Patent and
Trademark Office (the “Patents”)] [holds all right, title and interest in the
copyrights listed on the annexed Schedule 1A, which copyrights are registered in
the United States Copyright Office (the “Copyrights”)];
 
WHEREAS, the Assignor has entered into a Security Agreement, dated as of
November __, 2010 (as amended, restated or otherwise modified from time to time
the “Security Agreement”), in favor of _____________, as collateral agent for
certain purchasers (the “Assignee”);
 
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to the
Assignee and granted to the Assignee for the benefit of the Purchasers (as
defined in the Security Agreement) a continuing security interest in all right,
title and interest of the Assignor in, to and under the [Trademarks, together
with, among other things, the good-will of the business symbolized by the
Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
“Collateral”), to secure the payment, performance and observance of the
“Obligations” (as defined in the Security Agreement);
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Assignor does hereby pledge, convey, sell,
assign, transfer and set over unto the Assignee and grants to the Assignee for
the benefit of the Purchasers a continuing security interest in the Collateral
to secure the prompt payment, performance and for the benefit of the Purchasers
observance of the Obligations.
 
The Assignor does hereby further acknowledge and affirm that the rights and
remedies of the Assignee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
 
 
 

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IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed
by its officer thereunto duly authorized as of _____________, 20__
 

  [GRANTORS]          
 
By:
        Name        Title   

 
 
 

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STATE OF ____________
 
ss.:
 
COUNTY OF __________
 
On this ____ day of _______________, 20__, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
 
 
 

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SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
 
[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________
 
 
 

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SCHEDULE 4(g)
 
Effective Financing Statements
 
Jurisdiction: Delaware
Financing Statement – 10451172
Debtor: Ads In Motion, Inc.
Secured Party: Faunus Group International, Inc.
Expiration: 2/7/2016

Jurisdiction: Delaware
Financing Statement – 10533235
Debtor: Ads In Motion, Inc., Magla International, LLC, Magla Worldwide, LLC
Secured Party: Cape One Financial Master Fund, Ltd., Berdon Venture Associates,
LLC, Lee Karls, Rosta, LLC
Expiration: 2/14/2016

 
 

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