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                                                                    Exhibit 10.7


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                               SECURITY AGREEMENT

                                      made

                                       by

                       ANCHOR GLASS CONTAINER CORPORATION

                                   in favor of

                               ABLECO FINANCE LLC

                           Dated as of August 30, 2002

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                               SECURITY AGREEMENT

                  SECURITY AGREEMENT, dated August 30, 2002, made by ANCHOR
GLASS CONTAINER CORPORATION, a Delaware corporation (the "Grantor"), in favor of
ABLECO FINANCE LLC, a Delaware limited liability company, as agent for the
Lenders (as defined below) party to the Term Loan Agreement referred to below
(in such capacity, the "Agent").

                              W I T N E S S E T H:

                  WHEREAS, the Grantor, the financial institution from time to
time party thereto (the "Lenders"), and the Agent are parties to a term loan
agreement, dated as of August 30, 2002 (such agreement, as amended, restated or
otherwise modified from time to time, being hereinafter referred to as the "Term
Loan Agreement");

                  WHEREAS, pursuant to the Term Loan Agreement, the Lenders have
agreed to make a term loan (the "Loan") to the Grantor in the initial aggregate
principal amount of $20,000,000;

                  WHEREAS, it is a condition precedent to the Lenders making the
Loan to the Grantor pursuant to the Term Loan Agreement, that the Grantor shall
have executed and delivered to the Agent a security agreement providing for the
grant to the Agent for the benefit of the Lenders of a security interest in all
personal property of the Grantor; and

                  WHEREAS, the Grantor has determined that the execution,
delivery and performance of this Agreement directly benefits, and is in the best
interest of, the Grantor;

                  NOW, THEREFORE, in consideration of the premises and the
agreements herein and in order to induce the Lenders to make and maintain the
Loan pursuant to the Term Loan Agreement, the Grantor hereby agrees with the
Agent as follows:

                  SECTION 1. Definitions.

                  (a)   Reference is hereby made to the Term Loan Agreement for
a statement of the terms thereof. All terms used in this Agreement and the
recitals hereto which are defined in the Term Loan Agreement or in Article 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 Agent may otherwise determine.

                  (b)   The following terms shall have the respective meanings
provided for in the Code: "Cash Proceeds", "Chattel paper", "Commercial tort
claim", "Commodity account", "Commodity contracts", "Deposit account",
"Documents", "General intangibles", "Goods", Instruments", "Inventory",
"Investment property", "Letter-of-credit rights", "Noncash Proceeds", "Payment
Intangibles", "Proceeds", "Promissory notes", "Record", "Security account",
"Software", and "Supporting obligations".

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                  (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:

                  "Accounts" means all present and future rights of the Grantor
to payment of a monetary obligation, whether or not earned by performance, which
is not evidenced by chattel paper or an instrument, (a) for property that has
been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary obligation incurred
or to be incurred, or (d) arising out of the use of a credit or charge card or
information contained in or for use with the card.

                  "Copyright Licenses" means all licenses, contracts or other
agreements, whether written or oral, naming the 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 the 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 of
America or any other country or any political subdivision thereof), and all
reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.

                  "Intellectual Property" means the Grantor's now owned and
hereafter arising or acquired : Patents, patent rights, patent applications,
Copyrights, works which are the subject matter of copyrights, copyright
registrations, Trademarks, trade names, trade styles, trademark and service mark
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.

                  "Inventory" means all of the Grantor's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by the
Grantor as lessor; (b) are held by the Grantor for sale or lease or to be
furnished under a contract of service; (c) are furnished by the Grantor under a
contract of service; or (d) consist of raw material, work in process, finished
goods or materials used or consumed in its business.

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                  "Licenses" means the Copyright Licenses, the Trademark
Licenses and the Patent Licenses.

                  "Patent Licenses" means all licenses, contracts or other
agreements, whether written or oral, naming the 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 of America or any other
country or any political subdivision thereof), and all reissues, divisions,
continuations, continuations in part and extensions or renewals thereof.

                  "Receivables" means all of the following now owned or
hereafter arising or acquired property of the Grantor: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
Payment Intangibles of the Grantor; (d) letters of credit, indemnities,
guarantees, security or other deposits and Proceeds thereof issued payable to
the Grantor or otherwise in favor of or delivered to the Grantor in connection
with any Account; or (e) all other accounts, Contract Rights, Chattel Paper,
Instruments, notes, General intangibles and other forms of obligations owing to
the Grantor, whether from the sale and lease of Goods or other property,
licensing of any property (including Intellectual Property or other General
intangibles), rendition of services or from loans or advances by the Grantor or
to or for the benefit of any third person (including loans or advances to any
Affiliates or Subsidiaries of the Grantor) or otherwise associated with any
Accounts, Inventory or general intangibles of the Grantor (including, without
limitation, choses in action, causes of action, tax refunds, tax refund claims,
any funds which may become payable to the Grantor in connection with the
termination of any Benefit Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds of insurance covering the lives of employees
on which the Grantor is a beneficiary).

                  "Records" means all of the Grantor's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral (as defined in Section 2 hereof) or any account debtor, together with
the tapes, disks, diskettes and other data and software media devices, file
cabinets or containers in or which the foregoing are stored (including any
rights of the Grantor with respect to the foregoing maintained with or by any
other person).

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                  "Trademark Licenses" means all licenses, contracts or other
agreements, whether written or oral, naming the 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 the Grantor and now or
hereafter covered by such licenses (including, without limitation, all Trademark
Licenses described in Schedule II hereto).

                  "Trademarks" means all domestic and foreign trademarks,
service marks, collective marks, certification marks, trade names, business
names, d/b/a's, Internet domain names, trade styles, designs, logos and other
source or business identifiers and all general intangibles of like nature, now
or hereafter owned, adopted, acquired or used by the 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 of America, 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 the Grantor relating to the distribution of products and services in
connection with which any of such marks are used.

                  SECTION 2. Grant of Security Interest. (a) To secure payment
and performance of all Obligations (as defined in Section 3 hereof), the Grantor
hereby grants to the Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the ratable benefit of the Lenders,
as security, all personal property of the Grantor, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Lender, collectively, the "Collateral"):

                          (i)      all Accounts;

                          (ii)     all General intangibles, including, without
                                   limitation, all Intellectual Property;

                          (iii)    all Inventory;

                          (iv)     all Chattel paper, including, without
                                   limitation, all tangible and electronic
                                   chattel paper;

                          (v)      all Instruments, including, without
                                   limitation, all Promissory notes;

                          (vi)     all Documents;

                          (vii)    all Deposit Accounts;

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                          (viii)   all letters of credit, banker's acceptances
                                   and similar instruments and including all
                                   Letter-of-credit rights;

                          (ix)     all Supporting obligations and all present
                                   and future liens, security interest, rights,
                                   remedies, title and interest in, to and in
                                   respect of Receivables and other Collateral,
                                   including (i) rights and remedies under or
                                   relating to guaranties, contracts of
                                   suretyship, letters of credit and credit and
                                   other insurance related to the Collateral,
                                   (ii) rights of stoppage in transit, replevin,
                                   repossession, reclamation and other rights
                                   and remedies of an unpaid vendor, lienor or
                                   secured party, (iii) Goods described in
                                   invoices, documents, contracts or instruments
                                   with respect to, or otherwise representing or
                                   evidencing, Receivables or other Collateral,
                                   including returned, repossessed and reclaimed
                                   Goods, and (iv) deposits by and property of
                                   Account debtors or other persons securing the
                                   obligations of account debtors;

                          (x)      all (i) Investment property (including
                                   securities, whether certificated or
                                   uncertificated, securities accounts, security
                                   entitlements, commodity contracts or
                                   commodity accounts) and (ii) monies, credit
                                   balances, deposits and other property of the
                                   Grantor now or hereafter held or received by
                                   or in transit to Agent, any Lender or its
                                   Affiliates or at any other depository or
                                   other institution from or for the account of
                                   the Grantor, whether for safekeeping, pledge,
                                   custody, transmission, collection or
                                   otherwise;

                          (xi)     all Commercial tort claims, including,
                                   without limitation, those identified on
                                   Schedule VI hereto;

                          (xii)    to the extent not otherwise described above,
                                   all Receivables;

                          (xiii)   all Records; and

                          (xiv)    all products and Proceeds of the foregoing,
                                   in any form, including insurance proceeds and
                                   all claims against third parties for loss or
                                   damage to or destruction of or involuntary
                                   conversion of any kind or nature of any or
                                   all of the other Collateral;

                  (b)   Notwithstanding anything to the contrary set forth in
Section 2(a) hereof, (i) so long as the Mortgage Note Intercreditor Agreement is
valid and enforceable as to the Grantor, the Collateral shall not include any
rights or interests other than Bank Collateral and Shared Collateral (as such
terms are defined in the Revolving Loan Agreement), and (ii) the types or items
of Collateral shall not include any rights or interest in any contract, license
or license agreement covering personal property of the Grantor, so long as under
the terms of such contract, license or license agreement, or applicable law with
respect thereto, the grant of a security interest or lien therein to the Agent
is prohibited and such prohibition has not been waived or the

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consent of the other party to such contract, license, or license agreement has
not been obtained or a lawful waiver of such prohibition under applicable law
has not been obtained; provided, that, the foregoing exclusion shall in no way
be construed to apply if any such prohibition is unenforceable under Sections
9-406, 9-407 or 9-408 of the Code or other applicable law.

                  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
(the "Obligations"):

                  (a)   the prompt payment by the Grantor, 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 Term
Loan Agreement and the other Loan Documents, including, without limitation, (i)
principal of and interest on the Loan (including, without limitation, all
interest that accrues after the commencement of any Insolvency Proceeding of the
Grantor, whether or not the payment of such interest is unenforceable or is not
allowable due to the existence of such Insolvency Proceeding) and (ii) all fees,
commissions, expense reimbursements, indemnifications and all other amounts due
or to become due under any Loan Document; and

                  (b)   the due performance and observance by the Grantor of all
of its other obligations from time to time existing in respect of the Loan
Documents.

                  SECTION 4. Representations and Warranties. The Grantor
represents and warrants as follows:

                  (a)   Schedule I hereto sets forth (i) the exact legal name of
the Grantor and (ii) the organizational identification number of the Grantor or
states that no such organizational identification number exists.

                  (b)   The Grantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state or jurisdiction of its
organization as set forth on Schedule I hereto, (ii) has all requisite power and
authority to execute, deliver and perform this Agreement and each other Loan
Document to be executed and delivered by it pursuant hereto and to consummate
the transactions contemplated hereby and thereby, and (iii) is duly qualified to
do business and is in good standing in each jurisdiction in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary except to the extent, where failure
to so qualify could not reasonably be expected to have a Material Adverse
Effect.

                  (c)   The execution, delivery and performance by the Grantor
of this Agreement and each other Loan Document to which the Grantor is a party
or will be a party (i) have been duly authorized by all necessary corporate
action, (ii) do not and will not contravene its charter or by-laws or any
applicable law or any contractual restriction binding on or otherwise affecting
the Grantor or its properties, (iii) do not and will not result in or require
the creation of any Lien upon or with respect to any of its properties except as
required under this Agreement or permitted by the Term Loan Agreement and (iv)
do not and will not result in any default,

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noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any material permit, license, authorization or approval applicable to it or its
operations or any of its properties.

                  (d)   This Agreement is, and each other Loan Document to which
the Grantor is or will be a party, when executed and delivered pursuant hereto,
will be, a legal, valid and binding obligation of the Grantor, enforceable
against the Grantor in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws.

                  (e)   There is no pending or, to the best knowledge of the
Grantor, threatened action, suit, proceeding or claim affecting the Grantor or
to which any of the properties of the Grantor is subject, before any
Governmental Authority or any arbitrator, or any order, judgment or award by any
Governmental Authority or arbitrator, that may adversely affect the grant by the
Grantor, or the perfection, of the security interest purported to be created
hereby in the Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.

                  (f)   All taxes, assessments and other governmental charges
imposed upon the Grantor or any property of the 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 GAAP.

                  (g)   All Inventory now existing is, and all Inventory
hereafter existing will be, located at the addresses specified therefor in
Schedule III hereto. The Grantor's chief place of business and chief executive
office, the place where the 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 except for the Pabst Notes. Set forth in Schedule IV
hereto is a complete and accurate list, as of the date of this Agreement, of
each Deposit Account, Securities Account and Commodities Account of the 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 (i) a complete and correct list of each trade name used by the Grantor and
(ii) the name of, and each trade name used by, each person from which the
Grantor has acquired any substantial part of the Collateral within four months
prior to the date hereof.

                  (h)   The Grantor has delivered to the Agent complete and
correct copies of each License described in Schedule II hereto, including all
schedules and exhibits thereto, which represents all of the material 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 written agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of the Grantor or any of its affiliates in respect thereof. Each License
now existing is, and each other License will be, the legal, valid and binding
obligation of the parties thereto, enforceable against such parties in

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accordance with its terms. No default thereunder by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such party.

                  (i)   The 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
Intellectual Property and Licenses owned or used by the Grantor as of the date
hereof. All such Intellectual Property 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. The Grantor does not have any knowledge of any conflict with the
rights of others to any Intellectual Property and, to the best knowledge of the
Grantor, the Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of the 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 the Grantor. The Grantor has
not 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.

                  (j)   The Grantor is and will be at all times the sole and
exclusive owners of, or otherwise have and will have adequate rights in, the
Collateral free and clear of any Lien except for (i) the Lien created by this
Agreement and (ii) the 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 (A) such as may have been filed
in favor of the Agent relating to this Agreement and (B) such as may have been
filed to perfect or protect any security interests or Liens permitted by the
Term Loan Agreement.

                  (k)   The exercise by the Agent hereunder of any of its rights
and remedies hereunder will not contravene any law or any contractual
restriction binding on or otherwise affecting the 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 except as otherwise permitted by the Term
Loan Agreement or the Collateral Agency Agreement.

                  (l)   No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other regulatory body,
or any other Person, is required for (i) the grant by the Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral or (ii) the exercise by the 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 the perfection of the security
interest created hereby in the Intellectual Property registered in the United
States, 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, (C) with
respect to the perfection of the security interest created hereby in
Intellectual Property and Licenses, for registrations and filings in
jurisdictions located

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outside of the United States and covering rights in such jurisdictions relating
to the Intellectual Property and Licenses, (D) with respect to any action that
may be necessary to obtain control in Collateral described in Sections 5(h) and
5(k) hereof, the taking of such actions and (E) the taking possession of all
Documents, Chattel paper, Instruments and cash constituting Collateral.

                  (m)   This Agreement creates in favor of the Agent a legal,
valid and enforceable security interest in the Collateral, as security for the
Obligations. The Agent's having possession of all Instruments, Documents and
Chattel paper and cash constituting Collateral and obtaining control of all
Collateral described in Sections 5(h) and 5(k) hereof from time to time, the
recording of the appropriate Assignment for Security executed pursuant hereto in
the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, and the filing of the financing statements described in
Schedule V hereto and, with respect to the Intellectual Property hereafter
existing and not covered by an appropriate Assignment for Security, the
recording in the United States Patent and Trademark Office or the United States
Copyright Office, as applicable, of appropriate instruments of assignment,
result in the perfection of such security interests. Such security interests
are, or in the case of Collateral in which the Grantor obtains rights after the
date hereof, will be, perfected, first priority security interests, subject only
to the Permitted Liens and the recording of such instruments of assignment. Such
recordings and filings and all other action necessary or desirable to perfect
and protect such security interest have been duly taken, except for (i) the
Agent's having possession of Instruments, Documents and Chattel paper and cash
constituting Collateral after the date hereof, (ii) the Agent obtaining control
of any Collateral described in Sections 5(h) and 5(k) of this Agreement after
the date hereof and (iii) the other filings and recordations described in
Section 4(l) hereof.

                  (n)   The Grantor does not hold any Commercial tort claims or
is not aware of any such pending 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 and the Term Loan Agreement and the
other Loan Documents shall not have expired or terminated, unless the Agent
shall otherwise consent in writing:

                  (a)   Further Assurances. The 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 may be necessary or
desirable or that the Agent may request in order to (i) perfect and protect the
security interest purported to be created hereby; (ii) enable the 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 Agent, each of its Records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such Chattel paper, License or Collateral is subject to the
security interest created hereby, (B) if any Account shall be evidenced by
Promissory notes or other Instruments or Chattel paper, in an aggregate face
amount exceeding $100,000, delivering and pledging to the Agent hereunder such
Promissory notes, Instruments or Chattel paper, duly endorsed and accompanied by
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent, (C) executing and filing (to the extent, if any, that
the Grantor's signature is required thereon) or authenticating the filing of,
such financing or continuation

                                      -10-
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statements, or amendments thereto, as may be necessary or desirable or that the
Agent may request in order to perfect and preserve the security interest
purported to be created hereby, (D) furnishing to the Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the 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 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
Agent, which such written acknowledgement shall be in form and substance
satisfactory to the Agent, (F) if at any time after the date hereof, the Grantor
acquires or holds any Commercial tort claim, immediately notifying the Agent in
a writing signed by the Grantor setting forth a brief description of such
Commercial tort claim and granting to the 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 Agent and (G) taking all
actions required by any earlier versions of the Uniform Commercial Code or by
other law, as applicable, in any relevant Uniform Commercial Code jurisdiction,
or by other law as applicable in any foreign jurisdiction.

                  (b)   Location of Inventory. The Grantor will keep the
Inventory (other than Inventory sold in the ordinary course of business in
accordance with Section 5(g) hereof) at the locations specified therefor in
Section 4(g) hereof or, upon not less than thirty (30) days' prior written
notice to the Agent accompanied by a new Schedule III hereto indicating each new
location of the Inventory, at such other locations in the continental United
States of America and Canada as the Grantor may elect, provided that (i) all
action has been taken to grant to the Agent a perfected, first priority security
interest in such Inventory (subject only to Permitted Liens), and (ii) the
Agent's rights in such Inventory, including, without limitation, the existence,
perfection and priority of the security interest created hereby in such
Inventory, are not adversely affected thereby.

                  (c)   Condition of Equipment. With respect to the Equipment,
except where the failure to do so would not result or could not reasonably be
expected to result in a Material Adverse Effect, the Grantor shall (a) keep the
Equipment in good order, repair, running and marketable condition (ordinary wear
and tear excepted); (b) use the Equipment with all reasonable care and caution
and in accordance with applicable standards of any insurance and in conformity
with all applicable laws; and (c) assume all responsibility and liability
arising from the use of the Equipment.

                  (d)   Taxes, Etc. The Grantor shall duly pay and discharge all
taxes, assessments, contributions and governmental charges upon or against the
Inventory, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to the
Grantor, as the case may be, and with respect to which adequate reserves have
been set aside on its books.

                  (e)   Insurance. The Grantor shall, at all times, maintain
with financially sound and reputable insurers insurance with respect to the
Inventory against loss or damage and all other insurance of the kinds and in the
amounts customarily insured against or carried by corporations of established
reputation engaged in the same or similar businesses and similarly situated.
Said policies of insurance shall be reasonably satisfactory to Agent as to form,
amount

                                      -11-
<PAGE>
and insurer. The Grantor shall furnish certificates, policies or endorsements to
Agent as Agent shall reasonably require as proof of such insurance, and, if the
Grantor fails to do so, Agent is authorized, but not required, to obtain such
insurance at the expense of the Grantor. All policies shall provide for at least
thirty (30) days' prior written notice to Agent of any cancellation or reduction
of coverage and that Agent may act as attorney for the Grantor in obtaining, and
at any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. The Grantor shall
cause Agent to be named as a loss payee and an additional insured (but without
any liability for any premiums) under such insurance policies and the Grantor
shall obtain non-contributory lender's loss payable endorsements to all
insurance policies in form and substance satisfactory to Agent. Such lender's
loss payable endorsements shall specify that the proceeds of such insurance
shall be payable to Agent as its interests may appear and further specify that
Agent and Lenders shall be paid regardless of any act or omission by the Grantor
or any of its Affiliates. Without limiting any other rights of Agent or Lenders,
any insurance proceeds received by Agent at any time may be applied to payment
of the Obligations, whether or not then due, in any order and in such manner as
Agent may determine. Upon application of such proceeds to the loans, loans may
be available subject and pursuant to the terms hereof to be used for the costs
of repair or replacement of the Inventory lost or damages resulting in the
payment of such insurance proceeds.

                  (f)   Provisions Concerning the Accounts and the Licenses.

                          (i)      The Grantor will (A) not change the Grantor's
                                   name, identity or organizational structure
                                   without the Agent's prior written consent,
                                   (B) maintain its jurisdiction of
                                   incorporation as set forth in Section 4(b)
                                   hereto and not change such jurisdiction
                                   without the Agent's prior written consent,
                                   (C) immediately notify the Agent upon
                                   obtaining an organizational identification
                                   number, if on the date hereof the Grantor did
                                   not have such identification number, and (D)
                                   keep adequate records concerning the Accounts
                                   and Chattel paper and permit representatives
                                   of the Agent pursuant to the terms of the
                                   Term Loan Agreement to inspect and make
                                   abstracts from such Records and Chattel
                                   paper.

                          (ii)     The 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. In
                                   connection with such collections, the Grantor
                                   may (and, at the Agent's direction, will)
                                   take such action as the Grantor or the Agent
                                   may deem necessary or advisable to enforce
                                   collection or performance of the Accounts;
                                   provided, however, that the Agent shall have
                                   the right at any time, upon the occurrence
                                   and during the continuance of an Event of
                                   Default, to notify the Account debtors or
                                   obligors under any Accounts of the assignment
                                   of such Accounts to the Agent and to direct
                                   such Account debtors or obligors to make
                                   payment of all amounts due or to become due
                                   to the Grantor thereunder directly to the
                                   Agent or its designated agent in accordance
                                   with the terms of the Collateral Agency
                                   Agreement and, upon such notification and

                                      -12-
<PAGE>
                                   at the expense of the 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 the Grantor might have
                                   done. After receipt by the Grantor of a
                                   notice from the Agent that the Agent has
                                   notified, intends to notify, or has enforced
                                   or intends to enforce the 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 the Grantor in respect of the
                                   Accounts shall be received in trust for the
                                   benefit of the Agent hereunder, shall be
                                   segregated from other funds of the Grantor
                                   and shall be forthwith paid over to the Agent
                                   in the same form as so received (with any
                                   necessary endorsement) to be held as cash
                                   collateral and either (i) credited to the
                                   Loan Account so long as no Event of Default
                                   shall have occurred and be continuing or (ii)
                                   if an Event of Default shall have occurred
                                   and be continuing, applied as specified in
                                   Section 7(c) hereof, and (B) the Grantor will
                                   not 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 Agent may in its sole and
                                   absolute discretion direct any or all of the
                                   banks and financial institutions with which
                                   the Grantor either maintains a Deposit
                                   Account or a lockbox or deposits the proceeds
                                   of any Accounts to send immediately to the
                                   Agent by wire transfer (to such account as
                                   the Agent shall specify, or in such other
                                   manner as the 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 Agent shall (in the
                                   sole and absolute discretion of the Agent) be
                                   held as additional Collateral for the
                                   Obligations or distributed in accordance with
                                   Section 7 hereof.

                          (iii)    The Grantor shall (i) promptly and faithfully
                                   observe and perform all of the material
                                   terms, covenants, conditions and provisions
                                   of any License referred to in Schedule II to
                                   which it is a party to be observed and
                                   performed by it, at the times set forth
                                   therein, if any, (ii) not do, permit, suffer
                                   or refrain from doing anything that could
                                   reasonably be expected to result in a default
                                   under or breach of any of the terms of any
                                   License, (iii) not cancel, surrender, modify,
                                   amend, waive or release any License in any
                                   material respect or any term, provision or
                                   right of the license thereunder in any
                                   material respect, or consent to or permit to
                                   occur any of the foregoing; except, that,
                                   subject to Section 5(f)(iv) below, the
                                   Grantor may cancel, surrender or release any
                                   License in the ordinary course of the
                                   business of the Grantor; provided, that, the
                                   Grantor shall give

                                      -13-
<PAGE>
                                   Agent not less than thirty (30) days' prior
                                   written notice of its intention to so cancel,
                                   surrender and release any such License, and
                                   such cancellation, surrender or release does
                                   not create a Material Adverse Effect (iv)
                                   give Agent prompt written notice of any
                                   License entered into by the Grantor after the
                                   date hereof, together with a true, correct
                                   and complete copy thereof and such other
                                   information with respect thereto as Agent may
                                   request, (v) give Agent prompt written notice
                                   of any material breach of any obligation, or
                                   any default, by any party under any License
                                   and deliver to Agent (promptly upon the
                                   receipt thereof by the Grantor in the case of
                                   a notice to the Grantor and concurrently with
                                   the sending thereof in the case of a notice
                                   from the Grantor) a copy of each notice of
                                   default and every other notice and other
                                   communication received or delivered by the
                                   Grantor in connection with any License which
                                   relates to the right of the Grantor to
                                   continue to use the property subject to such
                                   License, and (vi) furnish to Agent, promptly
                                   upon the request of Agent, such information
                                   and evidence as Agent may reasonably require
                                   from time to time concerning the observance,
                                   performance and compliance by the Grantor or
                                   the other party or parties thereto with the
                                   material terms, covenants or provisions of
                                   any License.

                          (iv)     The Grantor will either exercise any option
                                   to renew or extend the term of each License
                                   to which it is a party in such manner as will
                                   cause the term of such License to be
                                   effectively renewed or extended for the
                                   period provided by such option and give
                                   prompt written notice thereof to Agent or
                                   give Agent prior written notice that the
                                   Grantor does not intend to renew or extend
                                   the term of any such License or that the term
                                   thereof shall otherwise be expiring, not less
                                   than sixty (60) days prior to the date of any
                                   such non-renewal or expiration. In the event
                                   of the failure of the Grantor to extend or
                                   renew any License to which it is a party,
                                   Agent shall have, and is hereby granted, the
                                   irrevocably right and authority, at its
                                   option, to renew or extend the term of such
                                   License, whether in its own name and behalf,
                                   or in the name and behalf of a designee or
                                   nominee of Agent or in the name and behalf of
                                   the Grantor, as Agent shall determine at any
                                   time that an Event of Default shall exist or
                                   have occurred and be continuing. Agent may,
                                   but shall not be required to, perform any or
                                   all of such obligations of the Grantor under
                                   any of the Licenses, including, but not
                                   limited to, the payment of any or all sums
                                   due from the Grantor thereunder. Any sums so
                                   paid by Agent shall constitute part of the
                                   Obligations.

                  (g)   Transfers and Other Liens.

                          (i)      Except to the extent expressly permitted by
                                   Section 6.02 of the Term Loan Agreement, the
                                   Grantor will not sell, assign (by

                                      -14-
<PAGE>
                                   operation of law or otherwise), lease,
                                   license, exchange or otherwise transfer or
                                   dispose of any of the Collateral.

                          (ii)     Except to the extent expressly permitted by
                                   Section 6.02 of the Term Loan Agreement, the
                                   Grantor will not create, suffer to exist or
                                   grant any Lien upon or with respect to any
                                   Collateral.

                  (h)   Intellectual Property.

                          (i)      If applicable, the Grantor has duly executed
                                   and delivered the applicable Assignment for
                                   Security in the form attached hereto as
                                   Exhibit A. The 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 free, from any claim
                                   of abandonment for non-use, and the 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, the Grantor shall not 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. The 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 is infringed, misappropriated,
                                   diluted or

                                      -15-
<PAGE>
                                   otherwise violated in any material respect by
                                   a third party, the Grantor shall (x) upon
                                   learning of such infringement,
                                   misappropriation, dilution or other
                                   violation, promptly notify the Agent and (y)
                                   to the extent the Grantor shall deem
                                   appropriate under the circumstances, promptly
                                   sue for infringement, misappropriation,
                                   dilution or other violation, seek injunctive
                                   relief where appropriate and recover any and
                                   all damages for such infringement,
                                   misappropriation, dilution or other
                                   violation, or take such other actions as the
                                   Grantor shall deem appropriate under the
                                   circumstances to protect such Intellectual
                                   Property. The Grantor shall furnish to the
                                   Agent from time to time (but, unless an Event
                                   of Default has occurred and is continuing, no
                                   more frequently than quarterly) 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 Agent may reasonably request, all in
                                   reasonable detail and promptly upon request
                                   of the Agent, following receipt by the Agent
                                   of any such statements, schedules or reports,
                                   the 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 judgment of the 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, the
                                   Grantor may not abandon or otherwise permit
                                   any Intellectual Property to become invalid
                                   without the prior written consent of the
                                   Agent, and if any Intellectual Property is
                                   infringed, misappropriated, diluted or
                                   otherwise violated in any material respect by
                                   a third party, the Grantor will take such
                                   action as the Agent shall deem appropriate
                                   under the circumstances to protect such
                                   Intellectual Property.

                          (ii)     In no event shall the 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 Agent written notice thereof
                                   immediately following such filing. Upon
                                   request of the Agent, the Grantor shall
                                   execute, authenticate and deliver any and all
                                   assignments, agreements, instruments,
                                   documents and papers as the Agent may
                                   reasonably request to evidence the Agent's
                                   security interest hereunder in such
                                   Intellectual Property and the General
                                   intangibles of the Grantor relating thereto
                                   or represented thereby,

                                      -16-
<PAGE>
                                   and the Grantor hereby appoints the 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
                                   termination of all Commitments, the repayment
                                   of all of the Obligations in full and the
                                   termination of each of the Loan Documents.

                  (i)   Deposit, Commodities and Securities Accounts. Prior to
the date hereof, the Grantor shall cause each bank and other financial
institution referred to in Schedule IV hereto to execute and deliver to the
Agent a control agreement, in form and substance reasonably satisfactory to the
Agent, duly executed by the Grantor and such bank or financial institution, or
enter into other arrangements in form and substance satisfactory to the 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 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 the Grantor, which
instructions the Agent will not give to such bank or other financial institution
in the absence of a continuing Event of Default, (ii) all cash, Commodity
contracts, securities, Investment property and other items of the Grantor
deposited with such institution shall be subject to a perfected, first priority
security interest in favor of the Agent, subject to Permitted Liens, (iii) any
right of set off, banker's Lien or other similar Lien, security interest or
encumbrance shall be fully waived as against the Agent (other than such bank's
or financial institution's Lien on the property in the account to secure the
payment of customary bank charges and fees for the account and for returned
checks and automated clearinghouse items), and (iv) upon receipt of written
notice from the Agent during the continuance of an Event of Default, such bank
or financial institution shall immediately send to the Agent by wire transfer
(to such account as the Agent shall specify, or in such other manner as the
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 Agent, the Grantor shall not make or maintain any Deposit
Account, Commodity account or Securities account except for the accounts set
forth in Schedule IV hereto. The provisions of this paragraph 5(i) shall not
apply to (i) Deposit Accounts for which the Agent is the depositary and (ii)
Deposit Accounts specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of the Grantor's
employees.

                  (j)   Motor Vehicles.

                          (i)      The Grantor shall (a) cause all Motor
                                   Vehicles, now owned or hereafter acquired by
                                   the Grantor, which under applicable law are
                                   required to be registered, to be properly
                                   registered in the name of the Grantor and (b)
                                   cause all Motor Vehicles, now owned or
                                   hereafter acquired by the Grantor, the
                                   ownership of which under applicable law
                                   (including without limitation, any Motor
                                   Vehicle Law), is evidenced by a certificate
                                   of title or ownership, to be properly titled
                                   in the name of the Grantor.

                                      -17-
<PAGE>
                  (k)   Control. The Grantor hereby agrees to take any or all
action that may be necessary or desirable or that the Agent may request in order
for the Agent to obtain control in accordance with Sections 9-104 - 9-107 of the
Code with respect to the following Collateral: (i) Deposit accounts, (ii)
Electronic chattel paper, (iii) Investment property and (iv) Letter-of-credit
rights.

                  (l)   Inspection and Reporting. The Grantor shall permit the
Agent, or any agents or representatives thereof or such professionals or other
Persons as the Agent may designate (i) to examine and make copies of and
abstracts from the Grantor's records and books of account, (ii) to visit and
inspect its properties, (iii) to verify materials, leases, notes, Accounts,
Inventory and other assets of the Grantor from time to time, (iii) to conduct
audits, physical counts, appraisals and/or valuations, Phase I and Phase II
Environmental Site Assessments or examinations at the locations of the Grantor
and (iv) to discuss the Grantor's affairs, finances and accounts with any of its
directors, officers, managerial employees, independent accountants or any of its
other representatives, in each case as provided in the Term Loan Agreement.

                  SECTION 6. Additional Provisions Concerning the Collateral.

                  (a)   The Grantor hereby (i) authorizes the Agent to file, one
or more financing or continuation statements, and amendments thereto, relating
to the Collateral and (ii) ratifies such authorization to the extent that the
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)   The Grantor hereby irrevocably designates and appoints
Agent (and all persons designated by Agent) as the Grantor's true and lawful
attorney-in-fact, and authorizes Agent, in the Grantor's or the Agent's name,
to: (a) at any time an Event of Default exists or has occurred and is continuing
(i) demand payment on Receivables or other Collateral, (ii) enforce payment of
Receivables by legal proceedings or otherwise, (iii) exercise all of the
Grantor's rights and remedies to collect any Receivable or other Collateral,
(iv) sell or assign any Receivable upon such terms, for such amount and at such
time or times as the Agent deems advisable, (v) settle, adjust, compromise,
extend or renew an Account, (vi) discharge and release any Receivable, (vii)
prepare, file and sign the Grantor's name on any proof of claim in bankruptcy or
other similar document against an account debtor or other obligor in respect of
any Receivables or other Collateral, (viii) notify the post office authorities
to change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to the Grantor
and handle and store all mail relating to the Collateral, and (ix) do all acts
and things which are necessary, in Agent's determination, to fulfill the
Grantor's obligations under this Agreement and the other Term Loan Agreements;
(b) upon the occurrence and during the continuance of a Default or Event of
Default (i) take control in any manner of any item of payment in respect of
Receivables or constituting Collateral or otherwise received in or for deposit
in the Deposit Accounts or otherwise received by Agent or any Lender, (ii) have
access to any lockbox or postal box into which remittances from account debtors
or other obligors in respect of Receivables or other proceeds of Collateral are
sent or received, (iii) endorse the Grantor's name upon any items of payment in
respect of Receivables or constituting Collateral or

                                      -18-
<PAGE>
otherwise received by Agent and any Lender and deposit the same in Agent's
account for application to the Obligations, and (iv) endorse the Grantor's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents. The Grantor hereby releases
Agent and Lenders and their respective officers, employees and designees from
any liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Agent's or any Lender's own gross negligence or willful misconduct as determined
pursuant to a final non-appealable order of a court of competent jurisdiction.

                  (c)   For the purpose of enabling the Agent to exercise rights
and remedies hereunder, at such time as the Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, the Grantor hereby
grants to the Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to the
Grantor) to use, assign, license or sublicense any Intellectual Property now
owned or hereafter acquired by the 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 Term Loan Agreement that
limit the right of the Grantor to dispose of its property and Section 5(g)
hereof, so long as no Event of Default shall have occurred and be continuing,
the 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 Agent shall from
time to time, upon the request of the Grantor, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
the Grantor shall have certified are appropriate (in the 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 payment in full of all of the Obligations after the
cancellation or termination of the Term Loan Agreement and the other Loan
Documents, the Agent (subject to Section 10(e) hereof) shall release and
reassign to the Grantor all of the 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 Agent shall not terminate the rights of the holders of any
licenses or sublicenses theretofore granted by the Grantor in accordance with
the second sentence of this clause (c). The Grantor hereby releases the 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 Agent under the
powers of attorney granted herein other than actions taken or omitted to be
taken through the Agent's gross negligence or willful misconduct, as determined
by a final determination of a court of competent jurisdiction.

                  (d)   If the Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of the Grantor or the Agent, and the expenses of the
Agent incurred in connection therewith shall be payable by the Grantor pursuant
to Section 8 hereof and shall be secured by the Collateral.

                                      -19-
<PAGE>
                  (e)   The powers conferred on the 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 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) the
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 Agent of any of its rights hereunder shall
not release the Grantor from any of its obligations under the Licenses or
otherwise in respect of the Collateral, and (iii) the 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 Agent be obligated to
perform any of the obligations or duties of the Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

                  SECTION 7. Remedies Upon Default. If any Event of Default
shall have occurred and be continuing:

                  (a)   The Agent and the Lenders shall have all rights and
remedies provided in this Agreement, the other Loan Documents, the Code and
other applicable law, all of which rights and remedies may be exercised without
notice to or consent by the Grantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to the Agent and the Lenders hereunder, under any of
the other Loan Documents, the Code or other applicable law, are cumulative, not
exclusive and enforceable, in the Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply a court of equity for an injunction to
restrain a breach or threatened breach by the Grantor of this Agreement or any
of the other Loan Documents. The Agent may, and at the direction of the Required
Lenders shall, at any time or times, proceed directly against the Grantor to
collect the Obligations without prior recourse to the Collateral.

                  (b)   Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, the Agent may, in its
discretion, and upon the direction of the Required Lenders, shall, to the extent
permitted by applicable law (i) accelerate the payment of all Obligations and
demand immediate payment thereof to the Agent upon notice to the Grantor, for
itself and the ratable benefit of the Lenders, (ii) to extent permitted by
applicable law, with or without judicial process or the aid of assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii) to
extent permitted by applicable law, require the Grantor, at Grantor's expense,
to assemble and make available to the Agent any part or all of the Collateral at
the place and time designated by the Agent, (iv) to extent permitted by
applicable law, collect, foreclose, receive, appropriate, setoff and realize
upon any Collateral, (v) to extent permitted by applicable law, remove any or
all of the Collateral from any premises on or thereof or for any other purpose,
(vi) to extent permitted by applicable law, sell, lease, transfer, assign,
deliver or otherwise dispose of any and all

                                      -20-
<PAGE>
Collateral (including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of the Agent or
elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon
credit or for future delivery, with the Agent having the right to purchase the
whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption by the Grantor,
which right or equity of redemption is hereby expressly waived and released by
the Grantor and/or (vii) terminate this Agreement. If any of the Collateral is
sold or leased by the Agent upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefore is
finally collected by the Agent. If notice of disposition of the Collateral is
required by law, ten (10) days prior notice by the Agent to the Grantor
designating the time and place of any public sale or the time after which any
private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Grantor waives any other notice to
the extent permitted by applicable law. In the event the Agent institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of a
prejudgment remedy, the Grantor waives the posting of any bond which might
otherwise be required.

                  (c)   At any time or times that an Event of Default exists or
has occurred and is continuing, the Agent may, in its discretion, and upon the
direction of the Required Lenders, the Agent shall, enforce the rights of the
Grantor against any Account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, the Agent may, in its discretion, and upon the
discretion of the Required Lenders, the Agent shall, at such time or times (i)
notify any or all Account debtors, secondary obligors or other obligors in
respect thereof that the Receivables have been assigned to the Agent and that
the Agent has a security interest therein (on behalf of itself and each of the
Lenders) and the Agent may direct any or all Account debtors, secondary obligors
or other obligors to make payment of Receivables directly to the Agent (for the
benefit of itself and each of the Lenders), (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms of conditions, settle or adjust for Receivables or
other obligations included in the Collateral and thereby discharge or release
the Account debtor or any secondary obligor or other obligors in respect thereof
without affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Receivables or such other obligations, but without any duty to do
so, the Agent and Lenders shall not be liable for any failure to collect or
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action the Agent may deem
necessary or desirable for the protection of its interests and the interests of
the Lenders. At any time an Event of Default exists or has occurred and is
continuing, at the Agent's request, all invoices and statement sent to any
Account debtor shall state that the Accounts and such other obligations have
been assigned to the Agent and are payable directly and only to the Agent and
the Grantor shall deliver to the Agent such originals of documents evidencing
the sale and delivery of goods or the performance of services giving rise to any
Accounts as Agent may require. In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, the Grantor
shall, upon the Agent's request, hold the returned Inventory in trust for the
Agent, segregate all returned Inventory from all of its other property, dispose
of the returned Inventory solely according to the Grantor's instructions, and
not issue any credits, discounts or allowances with respect thereto without the
Agent's prior written consent.

                                      -21-
<PAGE>
                  (d)   To the extent that applicable law imposes duties on the
Agent or any Lender to exercise remedies in a commercially reasonable manner
(which duties cannot be waived under such law), the Grantor acknowledges, to
extent permitted by applicable law, and agrees, to the extent permitted by
applicable law, that it is not commercially unreasonable for the Agent or any
Lender during the continuance of an Event of Default (i) to fail to incur
expenses reasonably deemed significant by the Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as the Grantor, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure the Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
the Agent or Lenders a guaranteed return from the collection or disposition of
any of the Collateral, or (xii) to the extent deemed appropriate by Agent, to
obtain the services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. The Grantor acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by the Agent or
any Lender would not be commercially unreasonable in the exercise by the Agent
or any Lender of remedies against the Collateral and that other actions or
omissions by the Agent or any Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to the Grantor or to impose any duties on the
Agent or the Lenders that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section.

                  (e)   The Agent may apply the cash proceeds of Collateral
actually received by the Agent from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in part
and in such order as the Agent may elect, whether or not then due. The Grantor
shall remain liable to the Agent and the Lenders for the payment of any
deficiency with interest at the highest rate provided for herein and all costs
and expenses of collection or enforcement, including reasonable attorneys' fees
and expenses.

                                      -22-
<PAGE>
                  SECTION 8. Indemnity and Expenses.

                  (a)   The Grantor agrees to defend, protect, indemnify and
hold the Agent harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, legal fees, costs, expenses, and disbursements of Agent's
counsel) to the extent that they arise out of or otherwise result from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting solely and directly from the Agent's
gross negligence or willful misconduct, as determined by a final judgment of a
court of competent jurisdiction.

                  (b)   The Grantor will upon demand pay to the Agent the amount
of any and all costs and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for the Agent and of any experts and
agents (including, without limitation, any collateral trustee which may act as
agent of the Agent), which the 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 Agent hereunder, or (iv) the failure by the Grantor to
perform or observe any of the provisions hereof.

                  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 or delivered, if
to the Grantor or to the Agent, to it at its address specified in the Term Loan
Agreement; or as to any such Person, at such other address as shall be
designated by such Person in a written notice to such other Person complying as
to delivery with the terms of this Section 9. All such notices and other
communications shall be effective (i) if mailed, when received or three days
after deposited in the mails, whichever occurs first, (ii) if telecopied, when
transmitted and confirmation received, or (iii) if delivered, upon delivery.

                  SECTION 10. Miscellaneous.

                  (a)   No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the Grantor and the Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the 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 Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document 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 Agent or any Lender provided herein
and in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agent or
any Lender under any Loan Document against any party thereto are not conditional
or contingent on any attempt by such Person to exercise any of its rights under
any other Loan Document against such party or against any other Person,
including but not limited to, the Grantor.

                                      -23-
<PAGE>
                  (c)   Any provision of this Agreement which 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 later of (A) the indefeasible payment in full of the Obligations and (B) the
termination of the Term Loan Agreement and the other Loan Documents and (ii) be
binding on the 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 Agent and the Lenders hereunder, to
the benefit of the Agent and the Lenders and their respective permitted
successors, transferees and assigns. Without limiting the generality of clause
(ii) of the immediately preceding sentence, without notice to the Grantor, the
Agent and the Lenders may assign or otherwise transfer their rights and
obligations under this Agreement and any other Loan Document, to any other
Person and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Agent and the Lenders herein or
otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Agent or any such Lender shall mean the assignee of the Agent
or such Lender. None of the rights or obligations of the Grantor hereunder may
be assigned or otherwise transferred without the prior written consent of the
Agent, and any such assignment or transfer shall be null and void.

                  (e)   Upon the satisfaction in full of the Obligations and the
termination of the Term Loan Agreement and the other Loan Documents, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the Grantor and (ii) the Agent will,
upon the Grantor's request and at the Grantor's expense, (A) return to the
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 the
Grantor such documents as the 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 THERETO 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, THE GRANTOR HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND

                                      -24-
<PAGE>
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE 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)   THE GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF
THIS AGREEMENT) THE 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 OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

                  (i)   The 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 the 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
Agent to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Grantor or any property of the
Grantor in any other jurisdiction.

                  (k)   The 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.

                  (n)   Notwithstanding anything contrary the provisions of this
Agreement, the parties hereto acknowledge that (i) all rights and remedies of
the Agent and the Lenders and (ii) all obligations of the Grantor hereunder
shall be subject to the provisions of the Collateral Agency and Agreement, and
to the extent applicable, the Mortgage Note Intercreditor Agreement. In
furtherance thereof, for so long as the Revolving Loan Agreements (as defined in
the Finance Agreement) shall be in effect, in no event shall the Grantor be
required to take any action hereunder or under any of the other Loan Documents,
nor shall the Agent take any action or be vested with any rights hereunder or
under any of the other Loan Documents, in either case,

                                      -25-
<PAGE>
that would be inconsistent with, or that would cause the Grantor to be in breach
of, any provision of the Collateral Agency Agreement and to the extent
applicable, the Mortgage Note Intercreditor Agreement.

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                                      -26-
<PAGE>
                  IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be executed and delivered by its officer thereunto duly authorized, as of the
date first above written.

                                      GRANTOR:

                                      ANCHOR GLASS CONTAINER CORPORATION

                                      By:  /s/ Richard Deneau
                                         -------------------------------
                                         Name:   Richard Deneau
                                         Title:  President and Chief Operating
                                                 Officer