**Exhibit 10.30****SECURITY AGREEMENT**     This SECURITY AGREEMENT (this “Agreement”) is made this 30th day of March 2007, amongthe Grantors listed on the signature pages hereof and those additional entities that hereafterbecome parties hereto by executing the form of Supplement attached hereto as Annex 1(collectively, jointly and severally, “Grantors” and each individually, “Grantor”),and **ABLECO FINANCE LLC**, a Delaware limited liability company (“Ableco”), in its capacity ascollateral agent for the below-defined Lender Group (together with its successors and assigns, ifany, in such capacity “Collateral Agent”).W I T N E S S E T H:     WHEREAS, pursuant to that certain Financing Agreement of even date herewith (as amended,restated, supplemented or otherwise modified from time to time, including all exhibits andschedules thereto, the “Financing Agreement”) among **LOUD TECHNOLOGIES INC.**, a Washingtoncorporation (“Parent” or “US Borrower”), and **GRACE ACQUISITIONCO LIMITED**, a companyincorporated under the laws of England and Wales with registered number 06078534 (“UKBorrower”), each subsidiary of the Parent listed on the signature pages thereto, the lendersfrom time to time party thereto (each a “Lender” and collectively, the “Lenders”),the Collateral Agent, and Ableco, as administrative agent for the Lenders (in such capacity,together with any successor administrative agent, the “Administrative Agent” and togetherwith the Collateral Agent, each an “Agent” and collectively, the “Agents”), theLender Group is willing to make certain financial accommodations available to Borrower from time totime pursuant to the terms and conditions thereof, and     WHEREAS, Collateral Agent has agreed to act as collateral agent for the benefit of the LenderGroup in connection with the transactions contemplated by this Agreement, and     WHEREAS, in order to induce the Lender Group to enter into the Financing Agreement and theother Loan Documents and to induce the Lender Group to make financial accommodations to Borrower asprovided for in the Financing Agreement, Grantors have agreed to grant a continuing securityinterest in and to the Collateral in order to secure the prompt and complete payment, observanceand performance of, among other things, the Secured Obligations, and     NOW, THEREFORE, for and in consideration of the recitals made above and other good andvaluable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, theparties hereto agree as follows:     1. Defined Terms. All capitalized terms used herein (including in thepreamble and recitals hereof) without definition shall have the meanings ascribed thereto in theFinancing Agreement. Any terms used in this Agreement that are defined in the Code shall beconstrued and defined as set forth in the Code unless otherwise defined herein or in the FinancingAgreement; provided, however, that to the extent that the Code is used to defineany term herein and such term is defined differently in different Articles of the Code, thedefinition of such term contained in Article 9 of the Code shall govern. In addition to thoseterms defined elsewhere in this Agreement, as used in this Agreement, the following terms shallhave the following meanings:          (a) “Account” means an account (as that term is defined in Article 9 of theCode).
 

 
          (b) “Account Debtor” means any Person who is obligated on an Account,chattel paper, or a general intangible.          (c) “Administrative Agent” has the meaning specified therefor in therecitals to this Agreement.          (d) “Agent” and “Agents” have the meaning specified therefor in therecitals to this Agreement.          (e) “Books” means books and records (including each Grantor’s Recordsindicating, summarizing, or evidencing such Grantor’s assets (including the Collateral) orliabilities, each Grantor’s Records relating to such Grantor’s business operations or financialcondition, and each Grantor’s goods or General Intangibles related to such information).          (f) “Borrower” means, collectively, Parent and UK Borrower.          (g) “Capital Stock” has the meaning specified therefor in the FinancingAgreement.          (h) “Cash and Cash Equivalents” has the meaning specified therefor in theFinancing Agreement.          (i) “Chattel Paper” means chattel paper (as that term is defined in theCode) and includes tangible chattel paper and electronic chattel paper.          (j) “Code” means the New York Uniform Commercial Code, as in effect fromtime to time; provided, however, that in the event that, by reason of mandatory provisions of law,any or all of the attachment, perfection, priority, or remedies with respect to Agent’s Lien on anyCollateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdictionother than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enactedand in effect in such other jurisdiction solely for purposes of the provisions thereof relating tosuch attachment, perfection, priority, or remedies.          (k) “Collateral” means, collectively, the UK Obligations Collateral and theUS Obligations Collateral.          (l) “Collateral Agent” has the meaning specified therefor in the preamble tothis Agreement.          (m) “Commercial Tort Claims” means commercial tort claims (as that term isdefined in the Code) and includes those commercial tort claims listed on Schedule 1attached hereto.          (n) “Copyrights” means any and all copyrights and copyright registrations,including (i) the copyright registrations and recordings thereof and all applications in connectiontherewith listed on Schedule 1 attached hereto and made a part hereof, (ii) all reissues,continuations, extensions or renewals thereof, (iii) all income, royalties, damages and paymentsnow and hereafter due or payable under and with respect thereto, including, payments under alllicenses entered into in connection therewith and damages and payments for past or futureinfringements thereof, (iv) the right to sue for past, present and future infringements thereof,(v) the goodwill of each Grantor’s business symbolized by the foregoing and connected therewith,and (vi) all of each Grantor’s rights corresponding thereto throughout the world.
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          (o) “Copyright Security Agreement” means each Copyright Security Agreementamong Grantors, or any of them, and Collateral Agent, for the benefit of the Lender Group, insubstantially the form of Exhibit A attached hereto, pursuant to which Grantors havegranted to Collateral Agent, for the benefit of the Lender Group, a security interest in all theirrespective Copyrights.          (p) “Deposit Account” means a “deposit account” (as that term is defined inthe Code).          (q) “Equipment” means “equipment” (as that term is defined in the Code) andincludes machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (includingmotor vehicles), computer hardware, tools, parts, and goods (other than consumer goods, farmproducts, or Inventory), wherever located, including all attachments, accessories, accessions,replacements, substitutions, additions, and improvements to any of the foregoing.          (r) “Event of Default” has the meaning specified therefor in Section9 of the Financing Agreement.          (s) “Financing Agreement” has the meaning specified therefor in the recitalto this Agreement.          (t) “General Intangibles” means general intangibles (as that term is definedin the Code) and includes payment intangibles, contract rights, rights to payment, rights arisingunder common law, statutes, or regulations, choses or things in action, goodwill (including thegoodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, Copyrights,URLs and domain names, industrial designs, other industrial or Intellectual Property orrights therein or applications therefor, whether under license or otherwise, programs, programmingmaterials, blueprints, drawings, purchase orders, customer lists, monies due or recoverable frompension funds, route lists, rights to payment and other rights under any royalty or licensingagreements, including Intellectual Property Licenses, infringement claims, computer programs,information contained on computer disks or tapes, software, literature, reports, catalogs, pensionplan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refundclaims, interests in a partnership or limited liability company which do not constitute a securityunder Article 8 of the Code, and any other personal property other than Commercial Tort Claims,money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, NegotiableCollateral, and oil, gas, or other minerals before extraction.          (u) “Grantor” and “Grantors” have the respective meanings specifiedtherefor in the recitals to this Agreement.          (v) “Guaranty” has the meaning specified therefor in the FinancingAgreement.          (w) “Insolvency Proceeding” has the meaning specified therefor in theFinancing Agreement.          (x) “Intellectual Property” means any and all Intellectual PropertyLicenses, Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, tradesecrets and customer lists.          (y) “Intellectual Property Licenses” means rights under or interests in anypatent, trademark, copyright or other intellectual property, including software license agreementswith any other party, whether the applicable Grantor is a licensee or licensor under any suchlicense agreement (but excluding any off-the-shelf software license agreement) ,including the license agreements listed on Schedule 2 attached hereto and made a parthereof, and the right to use the foregoing in connection with the enforcement of the Lender Group’srights under the Loan Documents, including the right to prepare for
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sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor andnow or hereafter covered by such licenses.          (z) “Inventory” means inventory (as that term is defined in the Code).          (aa) “Investment Related Property” means (i) any and all investment property(as that term is defined in the Code), and (ii) any and all of the following regardless of whetherclassified as investment property under the Code: all Pledged Interests, Pledged OperatingAgreements, and Pledged Partnership Agreements.          (bb) “Lender” and “Lenders” have the respective meanings specifiedtherefor in the recitals to this Agreement.          (cc) “Lender Group” means, individually and collectively, each of theLenders and each of the Agents.          (dd) “Loan Document” has the meaning specified therefore in the FinancingAgreement.          (ee) “Negotiable Collateral” means letters of credit, letter of creditrights, instruments, promissory notes, drafts and documents (as that term is defined in the Code).          (ff) “Obligations” has the meaning specified therefor in the Financing Agreement.          (gg) “Parent” has the meaning specified therefor in the recitals to this Agreement.          (hh) “Patents” means any and all patents and patent applications, including,(i) the patents and patent applications listed on Schedule 3 attached hereto and made apart hereof, (ii) all renewals thereof, (iii) all income, royalties, damages and payments now andhereafter due or payable under and with respect thereto, including, payments under all licensesentered into in connection therewith and damages and payments for past or future infringementsthereof, (iv) the right to sue for past, present and future infringements thereof, and (v) all ofeach Grantor’s rights corresponding thereto throughout the world.          (ii) “Patent Security Agreement” means each Patent Security Agreement amongGrantors, or any of them, and Collateral Agent, for the benefit of the Lender Group, insubstantially the form of Exhibit B attached hereto, pursuant to which Grantors havegranted to Collateral Agent, for the benefit of the Lender Group, a security interest in all theirrespective Patents.          (jj) “Permitted Liens” has the meaning specified therefor in the FinancingAgreement.          (kk) “Person” has the meaning specified therefor in the Financing Agreement.          (ll) “Pledged Companies” means, each Person listed on Schedule 4hereto as a “Pledged Company”, together with each other Person, all or a portion of whose CapitalStock, is acquired or otherwise owned by a Grantor after the Effective Date.          (mm) “Pledged Interests” means all of each Grantor’s right, title andinterest in and to all of the Capital Stock now or hereafter owned by such Grantor, regardless ofclass or designation, including, in each of the Pledged Companies, and all substitutions thereforand replacements thereof, all
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proceeds thereof and all rights relating thereto, including any certificates representing theCapital Stock, the right to request after the occurrence and during the continuation of an Event ofDefault that such Capital Stock be registered in the name of Collateral Agent or any of itsnominees, the right to receive any certificates representing any of the Capital Stock and the rightto require that such certificates be delivered to Collateral Agent together with undated powers orassignments of investment securities with respect thereto, duly endorsed in blank by such Grantor,all warrants, options, share appreciation rights and other rights, contractual or otherwise, inrespect thereof and of all dividends, distributions of income, profits, surplus, or othercompensation by way of income or liquidating distributions, in cash or in kind, and all cash,instruments, and other property from time to time received, receivable, or otherwise distributed inrespect of or in addition to, in substitution of, on account of, or in exchange for any or all ofthe foregoing.          (nn) “Pledged Interests Addendum” means a Pledged Interests Addendumsubstantially in the form of Exhibit C to this Agreement.          (oo) “Pledged Note” means any promissory note (as that term is defined inthe Code) issued in favor of any of the Grantors.          (pp) “Pledged Operating Agreements” means all of each Grantor’s rights,powers, and remedies under the limited liability company operating agreements of each of thePledged Companies that is a limited liability company.          (qq) “Pledged Partnership Agreements” means all of each Grantor’s rights,powers, and remedies under the partnership agreements of each of the Pledged Companies that is apartnership.          (rr) “Real Property” means any estates or interests in real property nowowned or hereafter acquired by any Grantor or any Subsidiary of any Grantor and the improvementsthereto.          (ss) “Records” means information that is inscribed on a tangible medium orwhich is stored in an electronic or other medium and is retrievable in perceivable form.          (tt) “Related Parties” means, with respect to any Indemnified Party, suchIndemnified Party and each of its officers, directors and employees          (uu) “Security Interest” means, collectively, the UK Obligations SecurityInterest and the US Obligations Security Interest.          (vv) “Secured Obligations” means each and all of the following: (a)all of the present and future obligations of Grantors arising from this Agreement, the FinancingAgreement, or the other Loan Documents (including any Guaranty), (b) all Obligations of the LoanParties, including reasonable attorneys fees and expenses and any interest, fees, or expenses thataccrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable inwhole or in part as a claim in any Insolvency Proceeding          (ww) “Securities Account” means a securities account (as that term isdefined in the Code).          (xx) “Supporting Obligations” means supporting obligations (as such term isdefined in the Code) and includes letters of credit and guaranties issued in support of Accounts,Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property.          (yy) “Trademarks” means any and all trademarks, trade names, registeredtrademarks, trademark applications, service marks, registered service marks and service markapplications, including,
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(i) the trade names, registered trademarks, trademark applications, registered service marksand service mark applications listed on Schedule 5 attached hereto and made a part hereof,(ii) all renewals thereof, (iii) all income, royalties, damages and payments now and hereafter dueor payable under and with respect thereto, including, payments under all licenses entered into inconnection therewith and damages and payments for past or future infringements or dilutionsthereof, (iv) the right to sue for past, present and future infringements and dilutions thereof,(v) the goodwill of each Grantor’s business symbolized by the foregoing or connected therewith, and(vi) all of each Grantor’s rights corresponding thereto throughout the world.          (zz) “Trademark Security Agreement” means each Trademark Security Agreementamong Grantors, or any of them, and Collateral Agent, for the benefit of the Lender Group, insubstantially the form of Exhibit D attached hereto, pursuant to which Grantors havegranted to Collateral Agent, for the benefit of the Lender Group, a security interest in all theirrespective Trademarks.          (aaa) “UK Obligations Collateral” has the meaning specified therefor inSection 2 hereof.          (bbb) “UK Obligations Proceeds” has the meaning specified therefor inSection 2 hereof.          (ccc) “UK Obligations Security Interest” has the meaning specified thereforin Section 2 hereof.          (ddd) “URL” means “uniform resource locator,” an internet web address.          (eee) “US Obligations Collateral” has the meaning specifiedtherefor in Section 2 hereof.          (fff) “US Obligations Proceeds” has the meaning specifiedtherefor in Section 2 hereof.          (ggg) “US Obligations Security Interest” has the meaning specified thereforin Section 2 hereof.     2. Grant of Security. (a) Each Grantor hereby unconditionally grants,assigns and pledges to Collateral Agent, for the benefit of the Lender Group to secure the UKObligations (including such Grantor’s Obligations in respect of all or any portion of the UKObligations pursuant to the Guaranty set forth in Section 11.01(a) of the FinancingAgreement), a continuing security interest hereinafter referred to as the “UK ObligationsSecurity Interest” in all personal property of such Grantor whether now owned or hereafteracquired or arising and wherever located, including such Grantor’s right, title, and interest inand to the following, whether now owned or hereafter acquired or arising and wherever located (the“UK Obligations Collateral”):               (i) all of such Grantor’s Accounts;               (ii) all of such Grantor’s Books;               (iii) all of such Grantor’s Chattel Paper;               (iv) all of such Grantor’s interest with respect to any Deposit Account;               (v) all of such Grantor’s Equipment and fixtures;               (vi) all of such Grantor’s General Intangibles;
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               (vii) all of such Grantor’s Inventory;               (viii) all of such Grantor’s Investment Related Property;               (ix) all of such Grantor’s Negotiable Collateral;               (x) all of such Grantor’s rights in respect of Supporting Obligations;               (xi) all of such Grantor’s interest with respect to any Commercial Tort Claims;               (xii) all of such Grantor’s money, Cash and Cash Equivalents, or other assets ofeach such Grantor that now or hereafter come into the possession, custody, or control of CollateralAgent or any other member of the Lender Group; and               (xiii) all of the proceeds and products, whether tangible or intangible, of any ofthe foregoing, including proceeds of insurance or Commercial Tort Claims covering or relating toany or all of the foregoing, and any and all Accounts, Books, Cash and Cash Equivalents, ChattelPaper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property,Negotiable Collateral, Supporting Obligations, Commercial Tort Claims, money, or other tangible orintangible property resulting from the sale, lease, license, exchange, collection, or otherdisposition of any of the foregoing, the proceeds of any award in condemnation with respect to anyof the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and allproceeds of any such proceeds, or any portion thereof or interest therein, and the proceedsthereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insuredor not insured, and, to the extent not otherwise included, any indemnity, warranty, or guarantypayable by reason of loss or damage to, or otherwise with respect to any of the foregoing UKObligations Collateral (the “UK Obligations Proceeds”). Without limiting the generality ofthe foregoing, the term “UK Obligations Proceeds” include whatever is receivable or received whenInvestment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of,whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity orguaranty payable to any Grantor or Collateral Agent from time to time with respect to any of theInvestment Related Property.          Notwithstanding anything contained in this Agreement to the contrary, the term “UK ObligationsCollateral” shall not include (i) any rights or interest in any contract, lease, permit, license,charter or license agreement covering real or personal property of any Grantor or the propertygoverned by any such contract if under the terms of such contract, lease, permit, license, charteror license agreement, or applicable law with respect thereto, the valid grant of a securityinterest or lien therein or on property governed thereby is prohibited as a matter of law or underthe terms of such contract, lease, permit, license, charter or license agreement or would cause aforfeiture thereunder and such prohibition has not been waived or the consent of the other party tosuch contract, lease, permit, license, charter or license agreement has not been obtained;provided, that, the foregoing exclusions shall in no way be construed (A) to applyif any described prohibition is unenforceable under Section 9-406, 9-407, or 9-408 of the Code orother applicable law, or (B) to limit, impair, or otherwise affect the Lender Group’s continuingsecurity interests in and liens upon any rights or interests of any Grantor in or to (x) monies dueor to become due under any described contract, lease, permit, license, charter or license agreement(including any Accounts), or (y) any proceeds from the sale, license, lease, or other dispositionsof any such contract, lease, permit, license, charter, license agreement, or Capital Stock, or (ii)any “intent to use” trademark or service mark application contained in General Intangibles ifgranting a security interest therein is deemed to invalidate, void, cancel, or abandon suchapplication; provided, that the foregoing exclusion (A) shall not apply when the grantingof a security interest in such application is no longer deemed to invalidate, void, cancel, orabandon such application, and (B) shall not limit, impair, or otherwise affect Collateral Agent’scontinuing security interests in and Liens upon any rights or interests of any Grantor in or to anyproceeds from the sale, license, lease, or other dispositions of any such application.
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          (b) Each Grantor hereby unconditionally grants, assigns and pledges to CollateralAgent, for the benefit of the Lender Group to secure the US Obligations (including suchGrantor’s Obligations in respect of all or any portion of the US Obligations pursuant to theGuaranty set forth in Section 11.01(a) of the Financing Agreement), a continuingsecurity interest hereinafter referred to as the “US Obligations Security Interest” in allpersonal property of such Grantor whether now owned or hereafter acquired or arising and whereverlocated, including such Grantor’s right, title, and interest in and to the following, whether nowowned or hereafter acquired or arising and wherever located (the “US ObligationsCollateral”):               (i) all of such Grantor’s Accounts;               (ii) all of such Grantor’s Books;               (iii) all of such Grantor’s Chattel Paper;               (iv) all of such Grantor’s interest with respect to any Deposit Account;               (v) all of such Grantor’s Equipment and fixtures;               (vi) all of such Grantor’s General Intangibles;               (vii) all of such Grantor’s Inventory;               (viii) all of such Grantor’s Investment Related Property;               (ix) all of such Grantor’s Negotiable Collateral;               (x) all of such Grantor’s rights in respect of Supporting Obligations;               (xi) all of such Grantor’s interest with respect to any Commercial Tort Claims;               (xii) all of such Grantor’s money, Cash and Cash Equivalents, or other assets ofeach such Grantor that now or hereafter come into the possession, custody, or control of CollateralAgent or any other member of the Lender Group; and               (xiii) all of the proceeds and products, whether tangible or intangible, of any ofthe foregoing, including proceeds of insurance or Commercial Tort Claims covering or relating toany or all of the foregoing, and any and all Accounts, Books, Cash and Cash Equivalents, ChattelPaper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property,Negotiable Collateral, Supporting Obligations, Commercial Tort Claims, money, or other tangible orintangible property resulting from the sale, lease, license, exchange, collection, or otherdisposition of any of the foregoing, the proceeds of any award in condemnation with respect to anyof the property of Grantors, any rebates or refunds, whether for taxes or otherwise, and allproceeds of any such proceeds, or any portion thereof or interest therein, and the proceedsthereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insuredor not insured, and, to the extent not otherwise included, any indemnity, warranty, or guarantypayable by reason of loss or damage to, or otherwise with respect to any of the foregoing USObligations Collateral (the “US Obligations Proceeds”). Without limiting the generality ofthe foregoing, the term “US Obligations Proceeds” include whatever is receivable or received whenInvestment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of,whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity orguaranty payable to any Grantor or Collateral Agent from time to time with respect to any of theInvestment Related Property.          Notwithstanding anything contained in this Agreement to the contrary, the term “US ObligationsCollateral” shall not include (i) voting Capital Stock of any first-tier Subsidiary of a Grantor or
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any other Loan Party if (A) such Subsidiary is a CFC, and (B) such Capital Stock representmore than 65% of the outstanding voting Capital Stock of such Subsidiary, (ii) any rights orinterest in any contract, lease, permit, license, charter or license agreement covering real orpersonal property of any Grantor or the property governed by any such contract if under the termsof such contract, lease, permit, license, charter or license agreement, or applicable law withrespect thereto, the valid grant of a security interest or lien therein or on property governedthereby is prohibited as a matter of law or under the terms of such contract, lease, permit,license, charter or license agreement or would cause a forfeiture thereunder and such prohibitionhas not been waived or the consent of the other party to such contract, lease, permit, license,charter or license agreement has not been obtained; provided, that, the foregoingexclusions shall in no way be construed (A) to apply if any described prohibition is unenforceableunder Section 9-406, 9-407, or 9-408 of the Code or other applicable law, or (B) to limit, impair,or otherwise affect the Lender Group’s continuing security interests in and liens upon any rightsor interests of any Grantor in or to (x) monies due or to become due under any described contract,lease, permit, license, charter or license agreement (including any Accounts), or (y) any proceedsfrom the sale, license, lease, or other dispositions of any such contract, lease, permit, license,charter, license agreement, or Capital Stock, or (iii) any “intent to use” trademark or servicemark application contained in General Intangibles if granting a security interest therein is deemedto invalidate, void, cancel, or abandon such application; provided, that the foregoingexclusion (A) shall not apply when the granting of a security interest in such application is nolonger deemed to invalidate, void, cancel, or abandon such application, and (B) shall not limit,impair, or otherwise affect Collateral Agent’s continuing security interests in and Liens upon anyrights or interests of any Grantor in or to any proceeds from the sale, license, lease, or otherdispositions of any such application.     3. Security for Obligations. The UK Obligations Security Interest createdhereby secures the payment and performance of all the UK Obligations, whether now existing orarising hereafter. The US Obligations Security Interest created hereby secures the payment andperformance of all the US Obligations, whether now existing or arising hereafter. Without limitingthe generality of the foregoing, this Agreement secures the payment of all amounts which constitutepart of the Secured Obligations and would be owed by Grantors, or any of them, to Agent, the LenderGroup or any of them, but for the fact that they are unenforceable or not allowable due to theexistence of an Insolvency Proceeding involving any Grantor.     4. Grantors Remain Liable. Anything herein to the contrary notwithstanding,(a) each of the Grantors shall remain liable under the contracts and agreements included in theCollateral, including the Pledged Operating Agreements and the Pledged Partnership Agreements, toperform all of the duties and obligations thereunder to the same extent as if this Agreement hadnot been executed, (b) the exercise by Collateral Agent or any other member of the Lender Group ofany of the rights hereunder shall not release any Grantor from any of its duties or obligationsunder such contracts and agreements included in the Collateral, and (c) none of the members of theLender Group shall have any obligation or liability under such contracts and agreements included inthe Collateral by reason of this Agreement, nor shall any of the members of the Lender Group beobligated to perform any of the obligations or duties of any Grantors thereunder or to take anyaction to collect or enforce any claim for payment assigned hereunder. Until an Event of Defaultshall occur and be continuing, except as otherwise provided in this Agreement, the FinancingAgreement, or the other Loan Documents, Grantors shall have the right to possession and enjoymentof the Collateral for the purpose of conducting the ordinary course of their respective businesses,subject to and upon the terms hereof and of the Financing Agreement and the other Loan Documents.Without limiting the generality of the foregoing, it is the intention of the parties hereto thatrecord and beneficial ownership of the Pledged Interests, including, all voting, consensual, anddividend rights, shall remain in the applicable Grantor until the occurrence of an Event ofDefault and until Collateral Agent shall notify the applicable Grantor of Collateral Agent’sexercise of voting, consensual, or dividend rights with respect to the Pledged Interests pursuantto Section 15 hereof.
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     5. Representations and Warranties. Each Grantor hereby represents andwarrants as follows:          (a) The exact legal name of each of the Grantors is set forth on the signature pagesof this Agreement or, if such Grantor has provided a written notice to Collateral Agent of a changeto its legal name pursuant to Section 7.02(c) of the Financing Agreement, as set forth insuch notice.          (b) Schedule 7 attached hereto sets forth all Real Property owned byGrantors as of the Effective Date.          (c) Such Grantor is the sole legal and beneficial owner or licensee of allIntellectual Property that is material to the conduct of its business as currently contemplated(other than non-exclusive licenses of Intellectual Property in the ordinary course of businesswhere such Grantor is the licensor). As of the Effective Date, no Grantor has any interest in, ortitle to, any material Copyrights, material Intellectual Property Licenses, material Patents,material Trademarks, or material Copyrights except as set forth on Schedules 1, 2, 3 and 5,respectively, attached hereto. This Agreement is effective to create a valid and continuing Lienon such Copyrights, Intellectual Property Licenses, Patents and registered Trademarks orTrademark applications (except for Trademark applications filed on an intent-to-use basis) and,upon filing of the Copyright Security Agreement with the United States Copyright Office and filingof the Patent Security Agreement and the Trademark Security Agreement with the United States Patentand Trademark Office, and the filing of appropriate financing statements in the jurisdictionslisted on Schedule 8 hereto, all action necessary to perfect the Security Interest in andto each Grantor’s Patents, material Trademarks, or registered Copyrights, to the extent perfectionmay be achieved in the United States or in the United Kingdom, has been taken and such perfectedSecurity Interests are enforceable to such extent as against any and all creditors of andpurchasers from any Grantor. No Grantor has any interest in any Copyright that is necessaryin connection with the operation of the Borrower’s business, except for those Copyrights,identified on Schedule 1 attached hereto which have been registered with the United StatesCopyright Office.          (d) This Agreement creates a valid security interest in the Collateral of each ofGrantors, to the extent a security interest therein can be created under the Code, securing thepayment of the Secured Obligations. Except to the extent a security interest in the Collateralcannot be perfected by the filing of a financing statement under the Code, all filings and otheractions necessary to perfect such security interest have been duly taken or will have been takenupon the filing of financing statements listing each applicable Grantor, as a debtor, andCollateral Agent, as secured party, in the jurisdictions listed next to such Grantor’s name onSchedule 8 attached hereto. Upon the making of such filings, Collateral Agent shall have afirst priority (except for Permitted Liens arising as a matter of law or granted in connection witha purchased money Indebtedness or a Capitalized Lease) perfected security interest in theCollateral of each Grantor to the extent such security interest can be perfected by the filing of afinancing statement. All action by any Grantor necessary to perfect such security interest on eachitem of Collateral has been duly taken.          (e) (i) Except for the Security Interest created hereby, each Grantor is and will atall times be the sole holder of record and the legal and beneficial owner, free and clear of allLiens other than Permitted Liens, of the Pledged Interests indicated on Schedule 4 as beingowned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after theEffective Date; (ii) all of the Pledged Interests (other than Pledged Interests received frominsolvent or troubled entities as a result of delinquent accounts) are duly authorized, validlyissued, fully paid and nonassessable and the Pledged Interests constitute or will constitute thepercentage of the issued and outstanding Capital Stock of the Pledged Companies of such Grantoridentified on Schedule 4 hereto as supplemented or modified by any Pledged InterestsAddendum or any Supplement to this Agreement; (iii) such Grantor has the right and
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requisite authority to pledge, the Investment Related Property (other than Investment RelatedProperty received from insolvent or troubled entities as a result of delinquent accounts) pledgedby such Grantor to Collateral Agent as provided herein; (iv) all actions necessary to perfect,establish the first priority (except for Permitted Liens) of, or otherwise protect, CollateralAgent’s Liens in the Investment Related Collateral, and the proceeds thereof, will have been dulytaken, (A) upon the execution and delivery of this Agreement; (B) upon the taking of possession byCollateral Agent of any certificates constituting the Pledged Interests, to the extent such PledgedInterests are represented by certificates, together with undated powers endorsed in blank by theapplicable Grantor; (C) upon the filing of financing statements in the applicable jurisdiction setforth on Schedule 8 attached hereto for such Grantor with respect to the Pledged Interestsof such Grantor that are not represented by certificates, and (D) with respect to any SecuritiesAccounts, upon the execution and delivery of Control Agreements with respect thereto; and (v) eachGrantor has delivered to Collateral Agent (or, with respect to any Pledged Interests created orobtained after the Effective Date, will deliver in accordance with Sections 6(a) and8 hereof) all certificates representing the Pledged Interests owned by such Grantor to theextent such Pledged Interests are represented by certificates, and undated powers endorsed in blankwith respect to such certificates. None of the Pledged Interests owned or held by such Grantor hasbeen issued or transferred in violation of any securities registration, securities disclosure orsimilar laws of any jurisdiction to which such issuance or transfer may be subject.          (f) No consent, approval, authorization, or other order or other action by, and nonotice to or filing with, any Governmental Authority or any other Person is required (i) for thegrant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement orfor the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for theexercise by Collateral Agent of the voting or other rights provided for in this Agreement withrespect to the Investment Related Property (other than Investment Related Property received frominsolvent or troubled entities as a result of delinquent accounts) or the remedies in respect ofthe Collateral pursuant to this Agreement, except as may be required in connection with suchdisposition of Investment Related Property by laws affecting the offering and sale of securitiesgenerally. No Intellectual Property License to which such Grantor is a party requires any consentfor such Grantor to grant the security interest granted hereunder in such Grantor’s right, title orinterest in or to any Copyrights, Patents, Trademarks or material Intellectual Property Licenses.          (g) Schedule 9 attached hereto sets forth all motor vehicles owned byGrantors as of the Effective Date, by model, model year and vehicle identification number(“VIN”).          (h) Schedule 10 attached hereto sets forth all Pledged Notes. Unlessotherwise permitted by the Financing Agreement, the proceeds of the loans evidenced by each PledgedNote have been fully disbursed, and no Grantor has any obligation to make any future advances orother disbursements under or in respect of any of the Pledged Notes.     6. Covenants. Each Grantor, jointly and severally, covenants and agreeswith Collateral Agent and the Lender Group that from and after the date of this Agreement and untilthe date of termination of this Agreement in accordance with Section 22 hereof:          (a) Possession of Collateral. In the event that any Collateral, includingproceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, orChattel Paper, and if and to the extent that perfection or priority of Collateral Agent’s SecurityInterest is dependent on or enhanced by possession, the applicable Grantor, as promptly aspracticable upon the request of Collateral Agent and in accordance with Section 8 hereof,shall execute such other documents and instruments as shall be reasonably requested by CollateralAgent or, if applicable, endorse and deliver physical possession of such Negotiable Collateral(other than items deposited or to be deposited for collection),
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Investment Related Property, or Chattel Paper to Agent, together with such undated powersendorsed in blank as shall be requested by Collateral Agent;          (b) Chattel Paper.               (i) Upon the request of the Collateral Agent, each Grantor shall as promptly aspracticable take all steps reasonably necessary to grant Collateral Agent control of all electronicChattel Paper in accordance with the Code and all “transferable records” as that term is defined inSection 16 of the Uniform Electronic Transaction Act and Section 201 of the federal ElectronicSignatures in Global and National Commerce Act as in effect in any relevant jurisdiction;               (ii) If any Grantor retains possession of any Chattel Paper or instruments (whichretention of possession shall be subject to the extent permitted hereby and by the FinancingAgreement), promptly upon the request of Collateral Agent, such Chattel Paper and instruments shallbe marked with the following legend: “This writing and the obligations evidenced or secured herebyare subject to the Security Interest of Ableco Finance LLC, as collateral agent for the benefit ofthe Lender Group”;          (c) Control Agreements.               (i) Except to the extent otherwise permitted by the Financing Agreement, eachGrantor shall obtain an authenticated Control Agreement, from each bank holding a Deposit Accountfor such Grantor;               (ii) Except to the extent otherwise permitted by the Financing Agreement, eachGrantor shall obtain authenticated Control Agreements, from each issuer of uncertificatedsecurities, securities intermediary, or commodities intermediary issuing or holding any financialassets or commodities to or for any Grantor;          (d) Letter-of-Credit Rights. Each Grantor that is or becomes thebeneficiary of a letter of credit shall promptly (and in any event within 5 Business Days afterbecoming a beneficiary), notify Collateral Agent thereof and, upon the request by Collateral Agent,enter into a tri-party agreement with Collateral Agent and the issuer or confirming bank withrespect to letter-of-credit rights (as that term is defined in the Code) assigning suchletter-of-credit rights to Collateral Agent and directing all payments thereunder to CollateralAgent’s Account, all in form and substance satisfactory to Collateral Agent;          (e) Commercial Tort Claims. Each Grantor shall promptly (and in anyevent within 5 Business Days of receipt thereof), notify Collateral Agent in writing upon incurringor otherwise obtaining a Commercial Tort Claim involving a claim in excess of $100,000 againstany third party and, upon request of Collateral Agent, promptly amend Schedule 6 to thisAgreement to describe such after-acquired Commercial Tort Claim in a manner that reasonablyidentifies such Commercial Tort Claim, and hereby authorizes the filing of additionalfinancing statements or amendments to existing financing statements and do such other acts orthings deemed necessary or desirable by Collateral Agent to give Collateral Agent a first priority,perfected security interest in any such Commercial Tort Claim;          (f) Government Contracts. If any Account or Chattel Paper arises out of acontract or contracts with the United States of America or any department, agency, orinstrumentality thereof, Grantors shall promptly (and in any event within 5 Business Days of thecreation thereof) notify Agent thereof in writing and execute any instruments or take any stepsreasonably required by Collateral Agent in order that all moneys due or to become due under suchcontract or contracts shall be assigned to
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Collateral Agent, for the benefit of the Lender Group, and notice thereof given under theAssignment of Claims Act or other applicable law;          (g) Intellectual Property.               (i) Upon request of Collateral Agent, in order to facilitate filings with the UnitedStates Patent and Trademark Office and the United States Copyright Office, each Grantor shallexecute and deliver to Collateral Agent one or more Copyright Security Agreements, TrademarkSecurity Agreements, or Patent Security Agreements to further evidence Collateral Agent’s Lien onsuch Grantor’s Patents, Trademarks, or Copyrights, and the General Intangibles of such Grantorrelating thereto or represented thereby;               (ii) Each Grantor shall have the duty, to the extent necessary or economicallydesirable in the operation of such Grantor’s business, (A) to sue for infringement,misappropriation, or dilution and to recover any and all damages for such infringement,misappropriation, or dilution, (B) to prosecute diligently any trademark application or servicemark application that is part of the Trademarks pending as of the date hereof or hereafter untilthe termination of this Agreement, (C) to prosecute diligently any patent application that is partof the Patents pending as of the date hereof or hereafter until the termination of this Agreement,and (D) to take all necessary action to preserve and maintain all of such Grantor’s Patents,Trademarks, Copyrights, Intellectual Property Licenses, and its rights therein, including thefiling of applications for renewal, affidavits of use, affidavits of noncontestability andopposition and interference and cancellation proceedings. Each Grantor shall promptly file anapplication with the United States Copyright Office for any Copyright that has not been registeredwith the United States Copyright Office if such Copyright is necessary in connection with theoperation of such Grantor’s business. Any expenses incurred in connection with the foregoing shallbe borne by the appropriate Grantor. Each Grantor further agrees not to abandon any materialPatent, Trademark, Copyright, or Intellectual Property License that is necessary or economicallydesirable in the operation of such Grantor’s business without the prior written consent ofCollateral Agent;               (iii) Grantors acknowledge and agree that the Lender Group shall have no duties withrespect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Withoutlimiting the generality of this Section 6(g), Grantors acknowledge and agree that no memberof the Lender Group shall be under any obligation to take any steps necessary to preserve rights inthe Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person,but any member of the Lender Group may do so at its option from and after the occurrence and duringthe continuance of an Event of Default, and all expenses incurred in connection therewith(including, reasonable fees and expenses of attorneys and other professionals) shall be for thesole account of Borrower and shall be chargeable to the Loan Account;               (iv) In no event shall any Grantor, either itself or through any agent, employee,licensee, or designee, file an application for the registration of any Copyright with the UnitedStates Copyright Office without giving Collateral Agent prior written notice thereof or any Patentor Trademark with the United States Patent and Trademark Office without giving Collateral Agentwritten notice thereof promptly thereafter. Promptly upon any such filing, each Grantor shallcomply with Section 6(g)(i) hereof;          (h) Investment Related Property.               (i) If any Grantor shall receive or become entitled to receive any Pledged Interests(other than Pledged Interests of little or no value that are received from insolvent or troubledentities as a result of delinquent accounts) after the Effective Date, it shall promptly (and inany event
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within 5 Business Days of receipt thereof) deliver to Collateral Agent a duly executed PledgedInterests Addendum identifying such Pledged Interests;               (ii) Upon the occurrence and during the continuance of an Event of Default,all sums of money and property paid or distributed in respect of the Investment RelatedProperty which are received by any Grantor shall be held by the Grantors in trust for the benefitof Collateral Agent segregated from such Grantor’s other property, and such Grantor shall deliversuch property forthwith to Collateral Agent in the exact form received;               (iii) [intentionally omitted];               (iv) No Grantor shall make or consent to any amendment or other modification orwaiver with respect to any Pledged Interests, Pledged Operating Agreement, or Pledged PartnershipAgreement, or enter into any agreement or permit to exist any restriction with respect to anyPledged Interests, in each case, that would materially adversely affect the rights of CollateralAgent and the other members of the Lender Group or the value of the applicableCollateral other than pursuant to the Loan Documents;               (v) Each Grantor agrees that it will cooperate with Collateral Agent in obtainingall necessary approvals and making all necessary filings under federal, state, local, or foreignlaw in connection with the Security Interest on the Investment Related Property or any sale ortransfer thereof;               (vi) As to all limited liability company or partnership interests, issued under anyPledged Operating Agreement or Pledged Partnership Agreement, all limited liability company orpartnership interests, issued each Grantor hereby represents, warrants and covenants that thePledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or tradedon securities exchanges or in securities markets, (B) do not and will not constitute investmentcompany securities, and (C) are not and will not be held by such Pledgor in a securities account.In addition, none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or anyother agreements governing any of the Pledged Interests issued under any Pledged OperatingAgreement or Pledged Partnership Agreement, provide or shall provide that such Pledged Interestsare securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevantjurisdiction;          (i) Real Property; Fixtures. Each Grantor covenants and agrees that uponthe acquisition of any fee interest in Real Property it will promptly (and in any event within 5Business Days of acquisition) notify Collateral Agent of the acquisition of such Real Property andwill grant to Collateral Agent, for the benefit of the Lender Group, a first priority Mortgage oneach fee interest in Real Property now or hereafter owned by such Grantor and shall deliver suchother documentation and opinions, in form and substance satisfactory to Collateral Agent, inconnection with the grant of such Mortgage as Collateral Agent shall request in its PermittedDiscretion, including title insurance policies, financing statements, fixture filings andenvironmental audits and such Grantor shall pay all recording costs, intangible taxes and otherfees and costs (including reasonable attorneys fees and expenses) incurred in connection therewith.Each Grantor acknowledges and agrees that, to the extent permitted by applicable law, all of theCollateral shall remain personal property regardless of the manner of its attachment or affixationto real property.          (j) Transfers and Other Liens. Grantors shall not (i) sell, assign (byoperation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any ofthe Collateral, except as expressly permitted by the Financing Agreement, or (ii) create or permitto exist any Lien upon or with respect to any of the Collateral of any of Grantors, except forPermitted Liens. The inclusion of UK Proceeds or US Proceeds in the Collateral shall not be deemedto constitute Collateral Agent’s consent to
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any sale or other disposition of any of the Collateral except as expressly permitted in thisAgreement or the other Loan Documents;          (k) Other Actions as to Any and All Collateral. Each Grantor shall promptly(and in any event within 5 Business Days of acquiring or obtaining such Collateral) notifyCollateral Agent in writing upon acquiring or otherwise obtaining any Collateral after the datehereof consisting of (i) Trademarks, Patents, Copyrights, Intellectual Property Licenses,Investment Related Property, Chattel Paper (electronic, tangible or otherwise) (providedthat such Grantor shall have no obligation to comply with this Section 6(k) withrespect to Chattel Paper until the aggregate value of such Chattel Paper in which Grantors have aninterest exceeds $100,000), documents (as defined in Article 9 of the Code) (providedthat such Grantor shall have no obligation to comply with this Section 6(k) withrespect to documents until the aggregate value of such documents in which Grantors have an interestexceeds $100,000), promissory notes (as defined in the Code) (provided that suchGrantor shall have no obligation to comply with this Section 6(k) with respect topromissory notes until the aggregate value of such promissory notes in which Grantors have aninterest exceeds $100,000), or instruments (as defined in the Code) (other than itemsdeposited or to be deposited for collection) or (ii) any amount payable under or in connection withany of the Collateral being or becoming evidenced after the date hereof by any Chattel Paper,documents, promissory notes, or instruments (other than items deposited or to be deposited forcollection) and, in each such case upon the request of Collateral Agent and in accordance withSection 8 hereof, promptly execute such other documents, or if applicable, deliver suchChattel Paper, other documents or certificates evidencing any Investment Related Property inaccordance with Section 6 hereof and do such other acts or things deemed reasonablynecessary by Collateral Agent to protect Collateral Agent’s Security Interest therein; and          (l) Motor Vehicles. Upon request of Collateral Agent, with respect to allmotor vehicles constituting Collateral and owned by any Grantors, Grantor shall deliver toCollateral Agent, a certificate of title for all such motor vehicles which fair market valueindividually or in aggregate exceeds $100,000 and shall cause those title certificates to be filed(with Collateral Agent’s lien noted thereon) in the appropriate state motor vehicle filing office.          (m) Pledged Notes. Without Collateral Agent’s prior written consent, noGrantor shall (i) waive, release, or forgive all or any portion of any obligation to pay principalor interest in respect of the Intercompany Note, (ii) agree to, assign or surrender its rights orinterests under the Intercompany Note, (iii) terminate or cancel the Intercompany Note, or (iv)materially modify, change, supplement, or amend the Intercompany Note in a manner that wouldmaterially and adversely affect the value of the Intercompany Note.     7. Relation to Other Security Documents. The provisions of this Agreementshall be read and construed with the other Loan Documents referred to below in the manner soindicated.          (a) Financing Agreement. In the event of any conflict between any provisionin this Agreement and a provision in the Financing Agreement, such provision of the FinancingAgreement shall control.          (b) Patent, Trademark, Copyright Security Agreements. The provisions of theCopyright Security Agreements, Trademark Security Agreements, and Patent Security Agreements aresupplemental to the provisions of this Agreement, and nothing contained in the Copyright SecurityAgreements, Trademark Security Agreements, or the Patent Security Agreements shall limit any of therights or remedies of Collateral Agent hereunder.
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     8. Further Assurances.          (a) Each Grantor agrees that from time to time, at its own expense, such Grantorwill promptly execute and deliver all further instruments and documents, and take all furtheraction, that may be necessary or that Collateral Agent may reasonably request, in order to perfectand protect any Security Interest granted or purported to be granted hereby or to enable CollateralAgent to exercise and enforce its rights and remedies hereunder with respect to any of theCollateral.          (b) Each Grantor authorizes the filing by Collateral Agent of financing orcontinuation statements, or amendments thereto, and such Grantor will execute and deliver toCollateral Agent such other instruments or notices, as may be necessary or as Collateral Agent mayreasonably request, in order to perfect and preserve the Security Interest granted or purported tobe granted hereby.          (c) Each Grantor authorizes Collateral Agent at any time and from time to time tofile, transmit, or communicate, as applicable, financing statements and amendments (i) describingthe Collateral as “all personal property of debtor” or “all assets of debtor” or words of similareffect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or(iii) that contain any information required by part 5 of Article 9 of the Code for the sufficiencyor filing office acceptance. Each Grantor also hereby ratifies any and all financing statements oramendments previously filed by Agent in any jurisdiction.          (d) Each Grantor acknowledges that it is not authorized to file any financingstatement or amendment or termination statement with respect to any financing statement filed inconnection with this Agreement without the prior written consent of Collateral Agent, subject tosuch Grantor’s rights under Section 9-509(d)(2) of the Code.     9. Collateral Agent’s Right to Perform Contracts. Upon the occurrence andduring the continuance of an Event of Default, Collateral Agent (or its designee) (a) may proceedto perform any and all of the obligations of any Grantor contained in any contract, lease, or otheragreement and exercise any and all rights of any Grantor therein contained as fully as such Grantoritself could, (b) shall have the right to use any Grantor’s rights under Intellectual PropertyLicenses in connection with the enforcement of the Collateral Agent’s rights hereunder, includingthe right to prepare for sale and sell any and all Inventory and Equipment now or hereafter ownedby any Grantor and now or hereafter covered by such licenses, and (c) shall have the right torequest that any Stock that is pledged hereunder be registered in the name of Collateral Agent orany of its nominees.     10. Collateral Agent Appointed Attorney-in-Fact. Each Grantor herebyirrevocably appoints Collateral Agent its attorney-in-fact, with full authority in the place andstead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event ofDefault has occurred and is continuing under the Financing Agreement, to take any action and toexecute any instrument which Collateral Agent may reasonably deem necessary or advisable toaccomplish the purposes of this Agreement, including:          (a) to ask, demand, collect, sue for, recover, compromise, receive and giveacquittance and receipts for moneys due and to become due under or in connection with the Accountsor any other Collateral of such Grantor;          (b) to receive and open all mail addressed to such Grantor and to notify postalauthorities to change the address for the delivery of mail to such Grantor to that of CollateralAgent;          (c) to receive, indorse, and collect any drafts or other instruments, documents,Negotiable Collateral or Chattel Paper;
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          (d) to file any claims or take any action or institute any proceedings whichCollateral Agent may deem necessary or desirable for the collection of any of the Collateral ofsuch Grantor or otherwise to enforce the rights of Collateral Agent with respect to any of theCollateral;          (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or inpart the purchase order of any Person obligated to such Grantor in respect of any Account of suchGrantor;          (f) to use any labels, Patents, Trademarks, trade names, URLs, domain names,industrial designs, Copyrights, advertising matter or other industrial or intellectual propertyrights, in advertising for sale and selling Inventory and other Collateral and to collect anyamounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and          (g) Collateral Agent on behalf of the Lender Group shall have the right, but shallnot be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights andIntellectual Property Licenses and, if Collateral Agent shall commence any such suit, theappropriate Grantor shall, at the request of Collateral Agent, do any and all lawful acts andexecute any and all proper documents reasonably required by Collateral Agent in aid of suchenforcement.     To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-factshall lawfully do or cause to be done by virtue of this Section 10. This power of attorneyis coupled with an interest and shall be irrevocable until this Agreement is terminated.     11. Collateral Agent May Perform. If any of Grantors fails to perform anyagreement contained herein, Collateral Agent may itself perform, or cause performance of, suchagreement, and the reasonable expenses of Collateral Agent incurred in connection therewith shallbe payable, jointly and severally, by Grantors.     12. Collateral Agent’s Duties. The powers conferred on Collateral Agenthereunder are solely to protect Collateral Agent’s interest in the Collateral, for the benefit ofthe Lender Group and shall not impose any duty upon Collateral Agent to exercise any such powers.Except for the safe custody of any Collateral in its actual possession and the accounting formoneys actually received by it hereunder, Collateral Agent shall have no duty as to any Collateralor as to the taking of any necessary steps to preserve rights against prior parties or any otherrights pertaining to any Collateral. Collateral Agent shall be deemed to have exercised reasonablecare in the custody and preservation of any Collateral in its actual possession if such Collateralis accorded treatment substantially equal to that which Collateral Agent accords its own property.     13. Collection of Accounts, General Intangibles and Negotiable Collateral.At any time upon the occurrence and during the continuation of an Event of Default, CollateralAgent or Collateral Agent’s designee may (a) notify Account Debtors of any Grantor that theAccounts, General Intangibles, Chattel Paper or Negotiable Collateral have been assigned toCollateral Agent, for the benefit of the Lender Group, or that Collateral Agent has a securityinterest therein, and (b) collect the Accounts, General Intangibles and Negotiable Collateraldirectly, and any collection costs and expenses shall constitute part of such Grantor’s SecuredObligations under the Loan Documents.     14. Disposition of Pledged Interests by Collateral Agent. None of thePledged Interests existing as of the date of this Agreement are, and none of the Pledged Interestshereafter acquired on the date of acquisition thereof will be, registered or qualified under thevarious federal or state securities laws of the United States and disposition thereof after anEvent of Default may be restricted to one or more private (instead of public) sales in view of thelack of such registration. Each Grantor understands that in connection with such disposition,Collateral Agent may approach only a restricted number of potential
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purchasers and further understands that a sale under such circumstances may yield a lowerprice for the Pledged Interests than if the Pledged Interests were registered and qualifiedpursuant to federal and state securities laws and sold on the open market. Each Grantor,therefore, agrees that: (a) if Collateral Agent shall, pursuant to the terms of this Agreement,sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, CollateralAgent shall have the right to rely upon the advice and opinion of any nationally recognizedbrokerage or investment firm (but shall not be obligated to seek such advice and the failure to doso shall not be considered in determining the commercial reasonableness of such action) as to thebest manner in which to offer the Pledged Interest or any portion thereof for sale and as to thebest price reasonably obtainable at the private sale thereof; and (b) such reliance shall beconclusive evidence that Collateral Agent has handled the disposition in a commercially reasonablemanner.     15. Voting Rights.          (a) Upon the occurrence and during the continuation of an Event of Default, (i)Collateral Agent may, at its option, and with 2 Business Days prior notice to any Grantor, and inaddition to all rights and remedies available to Collateral Agent under any other agreement, atlaw, in equity, or otherwise, exercise all voting rights, and all other ownership or consensualrights in respect of the Pledged Interests owned by such Grantor, but under no circumstances isCollateral Agent obligated by the terms of this Agreement to exercise such rights, and (ii) ifCollateral Agent duly exercises its right to vote any of such Pledged Interests, each Grantorhereby appoints Collateral Agent, such Grantor’s true and lawful attorney-in-fact and IRREVOCABLEPROXY to vote such Pledged Interests in any manner Collateral Agent deems advisable for or againstall matters submitted or which may be submitted to a vote of shareholders, partners or members, asthe case may be. The power-of-attorney granted hereby is coupled with an interest and shall beirrevocable.          (b) For so long as any Grantor shall have the right to vote the Pledged Interestsowned by it, such Grantor covenants and agrees that it will not, without the prior written consentof Collateral Agent, vote or take any consensual action with respect to such Pledged Interestswhich would materially adversely affect the rights of Collateral Agent and the other members of theLender Group or the value of the Pledged Interests.     16. Remedies. Upon the occurrence and during the continuance of an Event ofDefault:          (a) Collateral Agent may exercise in respect of the Collateral, in addition to otherrights and remedies provided for herein, in the other Loan Documents, or otherwise available to it,all the rights and remedies of a secured party on default under the Code or any other applicablelaw. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in anysuch event, Collateral Agent without demand of performance or other demand, advertisement or noticeof any kind (except a notice specified below of time and place of public or private sale) to orupon any of Grantors or any other Person (all and each of which demands, advertisements and noticesare hereby expressly waived to the maximum extent permitted by the Code or any other applicablelaw), may take immediate possession of all or any portion of the Collateral and (i) requireGrantors to, and each Grantor hereby agrees that it will at its own expense and upon request ofCollateral Agent forthwith, assemble all or part of the Collateral as directed by Collateral Agentand make it available to Collateral Agent at one or more locations where such Grantor regularlymaintains Inventory, and (ii) without notice except as specified below, sell the Collateral or anypart thereof in one or more parcels at public or private sale, at any of Collateral Agent’s officesor elsewhere, for cash, on credit, and upon such other terms as Collateral Agent may deemcommercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be requiredby law, at least 10 days notice to any of Grantors of the time and place of any public sale or thetime after which any private sale is to be made shall constitute reasonable notification andspecifically such notice shall constitute a reasonable “authenticated notification of disposition”within the meaning of Section 9-611 of
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the Code. Collateral Agent shall not be obligated to make any sale of Collateral regardlessof notice of sale having been given. Collateral Agent may adjourn any public or private sale fromtime to time by announcement at the time and place fixed therefor, and such sale may, withoutfurther notice, be made at the time and place to which it was so adjourned.          (b) Upon the occurrence and during the continuance of an Event of Default,Collateral Agent is hereby granted a license or other right to use, without liability for royaltiesor any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, tradesecrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names,industrial designs, other industrial or intellectual property or any property of a similar nature,whether owned by any of Grantors or with respect to which any of Grantors have rights underlicense, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale,advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses andall franchise agreements shall inure to the benefit of Collateral Agent.          (c) Any cash held by Collateral Agent as Collateral and all cash proceeds receivedby Collateral Agent in respect of any sale of, collection from, or other realization upon all orany part of the Collateral shall be applied against the Secured Obligations in the order set forthin the Financing Agreement. In the event the proceeds of Collateral are insufficient to satisfyall of the Secured Obligations in full, each Grantor shall remain jointly and severally liable forany such deficiency.          (d) Each Grantor hereby acknowledges that the Secured Obligations arose out of acommercial transaction, and agrees that if an Event of Default shall occur and be continuingCollateral Agent shall have the right to an immediate writ of possession without notice of ahearing. Collateral Agent shall have the right to the appointment of a receiver for the propertiesand assets of each of Grantors, and each Grantor hereby consents to such rights and suchappointment and hereby waives any objection such Grantors may have thereto or the right to have abond or other security posted by Collateral Agent.     17. Remedies Cumulative. Each right, power, and remedy of Collateral Agentas provided for in this Agreement or in the other Loan Documents or now or hereafter existing atlaw or in equity or by statute or otherwise shall be cumulative and concurrent and shall be inaddition to every other right, power, or remedy provided for in this Agreement or in the other LoanDocuments or now or hereafter existing at law or in equity or by statute or otherwise, and theexercise or beginning of the exercise by Collateral Agent, of any one or more of such rights,powers, or remedies shall not preclude the simultaneous or later exercise by Collateral Agent ofany or all such other rights, powers, or remedies.     18. Marshaling. Collateral Agent shall not be required to marshal anypresent or future collateral security (including but not limited to the Collateral) for, or otherassurances of payment of, the Secured Obligations or any of them or to resort to such collateralsecurity or other assurances of payment in any particular order, and all of its rights and remedieshereunder and in respect of such collateral security and other assurances of payment shall becumulative and in addition to all other rights and remedies, however existing or arising. To theextent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating tothe marshaling of collateral which might cause delay in or impede the enforcement of CollateralAgent’s rights and remedies under this Agreement or under any other instrument creating orevidencing any of the Secured Obligations or under which any of the Secured Obligations isoutstanding or by which any of the Secured Obligations is secured or payment thereof is otherwiseassured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives thebenefits of all such laws.     19. Indemnity and Expenses.
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          (a) Each Grantor agrees to indemnify Collateral Agent and the other members of theLender Group from and against all claims, lawsuits and liabilities (including reasonableout-of-pocket attorneys fees) growing out of or resulting from this Agreement (including,enforcement of this Agreement) or any other Loan Document to which such Grantor is a party, exceptclaims, losses or liabilities resulting from the gross negligence or willful misconduct of theRelated Party seeking indemnification as determined by a final non-appealable order of a court ofcompetent jurisdiction. This provision shall survive the termination of this Agreement and theFinancing Agreement and the repayment of the Secured Obligations.          (b) Grantors, jointly and severally, shall, upon demand, pay to Collateral Agent (orAdministrative Agent, may charge to the Loan Account) all the Lender Group out-of-pocket costs andexpenses which Collateral Agent may incur in connection with (i) the administration of thisAgreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, thesale of, collection from, or other realization upon, any of the Collateral in accordance with thisAgreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights ofCollateral Agent hereunder or (iv) the failure by any of Grantors to perform or observe any of theprovisions hereof.     20. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOANDOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BYEVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOUNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and noconsent to any departure by any of Grantors herefrom, shall in any event be effective unless thesame shall be in writing and signed by Collateral Agent, and then such waiver or consent shall beeffective only in the specific instance and for the specific purpose for which given. No amendmentof any provision of this Agreement shall be effective unless the same shall be in writing andsigned by Collateral Agent and each of Grantors to which such amendment applies.     21. Addresses for Notices. All notices and other communications providedfor hereunder shall be given in the form and manner and delivered to Collateral Agent at itsaddress specified in the Financing Agreement or Guaranty, and to any of the Grantors at theirrespective addresses specified in the Financing Agreement, as applicable, or, as to any party, atsuch other address as shall be designated by such party in a written notice to the other party.     22. Continuing Security Interest: Assignments under Financing Agreement.This Agreement shall create a continuing security interest in the Collateral and shall (a) remainin full force and effect until the Obligations have been paid in full in cash in accordance withthe provisions of the Financing Agreement and the Commitments have expired or have been terminated,(b) be binding upon each of Grantors, and their respective successors and assigns, and (c) inure tothe benefit of, and be enforceable by, Collateral Agent, and its successors, transferees andassigns. Without limiting the generality of the foregoing clause (c), any of the Lenders may, inaccordance with and to the extent permitted by the provisions of the Financing Agreement, assign orotherwise transfer all or any portion of its rights and obligations under the Financing Agreementto any other Person, and such other Person shall thereupon become vested with all the benefits inrespect thereof granted to such the Lender herein or otherwise. Upon payment in full in cash ofthe Obligations in accordance with the provisions of the Financing Agreement and the expiration ortermination of the Commitments, the Security Interest granted hereby shall terminate and thisAgreement and all rights to the Collateral shall revert to Grantors or any other Person entitledthereto. At such time, Collateral Agent will authorize the filing of appropriate terminationstatements to terminate such Security Interests. No transfer or renewal, extension, assignment, ortermination of this Agreement or of the Financing Agreement, any other Loan Document, or any otherinstrument or document executed and delivered by any Grantor to Collateral Agent nor any additional
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Loans made by any the Lender to Borrower, nor the taking of further security, nor the retakingor re-delivery of the Collateral to Grantors, or any of them, by Collateral Agent, nor any otheract of the Lender Group, or any of them, shall release any of Grantors from any obligation, excepta release or discharge executed in writing by Collateral Agent in accordance with the provisions ofthe Financing Agreement. Collateral Agent shall not by any act, delay, omission or otherwise, bedeemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing andsigned by Collateral Agent and then only to the extent therein set forth. A waiver by CollateralAgent of any right or remedy on any occasion shall not be construed as a bar to the exercise of anysuch right or remedy which Collateral Agent would otherwise have had on any other occasion.     23. GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESSEXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOANDOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OFTHE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER ORRELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITHTHE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OFNEW YORK.     24. CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTIONOR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THECOURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACHGRANTOR HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THEJURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OFANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR PROCEEDINGBROUGHT IN THE UNITED STATES OF AMERICA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANYOF THE OTHER LOAN DOCUMENTS BY THE MAILING (BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE PREPAID)OR DELIVERING OF A COPY OF SUCH PROCESS TO SUCH GRANTOR, C/O THE BORROWER, AT THE BORROWER’SADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01 OF THE FINANCING AGREEMENT. THE GRANTORS AGREETHAT A FINAL NONAPPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BEENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENTS AND THE LENDERS TO SERVE PROCESS IN ANY OTHERMANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GRANTORIN ANY OTHER JURISDICTION. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLESTEXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION ORLAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIMTHAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTORHAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OROTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GRANTOR HEREBY
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IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THEOTHER LOAN DOCUMENTS.     25. WAIVER OF JURY TRIAL, ETC. EACH GRANTOR AND COLLATERAL AGENT, ON BEHALFOF ITSELF AND EACH LENDER, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING ORCOUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR UNDER ANYAMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THEFUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIPEXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS ORCOUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GRANTOR CERTIFIES THAT NOOFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OROTHERWISE, THAT COLLATERAL AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING ORCOUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH GRANTOR HEREBY ACKNOWLEDGES THAT THISPROVISION IS A MATERIAL INDUCEMENT FOR COLLATERAL AGENT ENTERING INTO THIS AGREEMENT ON BEHALF OFITSELF AND THE LENDERS.     26. New Subsidiaries. Pursuant to Section 7.01(b) of the FinancingAgreement and subject to the exclusions contained therein, any new direct or indirect Subsidiary(whether by acquisition or creation) of any Loan Party is required to enter into this Agreement byexecuting and delivering in favor of Collateral Agent an instrument in the form of Annex 1attached hereto. Upon the execution and delivery of Annex 1 by such new Subsidiary, suchSubsidiary shall become a Grantor hereunder with the same force and effect as if originally namedas a Grantor herein. The execution and delivery of any instrument adding an additional Grantor asa party to this Agreement shall not require the consent of any Grantor hereunder. The rights andobligations of each Grantor hereunder shall remain in full force and effect notwithstanding theaddition of any new Grantor hereunder.     27. Collateral Agent. Each reference herein to any right granted to,benefit conferred upon or power exercisable by the “Collateral Agent” shall be a reference toCollateral Agent, for the benefit of the Lender Group.     28. Miscellaneous.          (a) This Agreement may be executed in any number of counterparts and by differentparties on separate counterparts, each of which, when executed and delivered, shall be deemed to bean original, and all of which, when taken together, shall constitute but one and the sameAgreement. Delivery of an executed counterpart of this Agreement by telefacsimile or otherelectronic method of transmission shall be equally as effective as delivery of an original executedcounterpart of this Agreement. Any party delivering an executed counterpart of this Agreement bytelefacsimile or other electronic method of transmission also shall deliver an original executedcounterpart of this Agreement but the failure to deliver an original executed counterpart shall notaffect the validity, enforceability, and binding effect of this Agreement. The foregoing shallapply to each other Loan Document *mutatis mutandis*.          (b) Any provision of this Agreement which is prohibited or unenforceable shall beineffective to the extent of such prohibition or unenforceability without invalidating theremaining provisions hereof in that jurisdiction or affecting the validity or enforceability ofsuch provision in any other jurisdiction.
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          (c) Headings used in this Agreement are for convenience only and shall not be usedin connection with the interpretation of any provision hereof.          (d) The pronouns used herein shall include, when appropriate, either gender and bothsingular and plural, and the grammatical construction of sentences shall conform thereto.          (e) Unless the context of this Agreement or any other Loan Document clearly requiresotherwise, the definitions of terms herein shall apply equally to the singular and plural forms ofthe terms defined. Whenever the context may require, any pronoun shall include the correspondingmasculine, feminine and neuter forms. The words “include,” “includes” and “including” shall bedeemed to be followed by the phrase “without limitation,” whether or not so expressly stated ineach such instance and the term “or” has, except where otherwise indicated, the inclusive meaningrepresented by the phrase “and/or.” The word “will” shall be construed to have the same meaningand effect as the word “shall.” Unless the context requires otherwise, (a) any definition of orreference to any agreement, instrument or other document herein shall be construed as referring tosuch agreement, instrument or other document as from time to time amended, supplemented orotherwise modified (subject to any restrictions on such amendments, supplements or modificationsset forth herein), (b) any reference herein to any Person shall be construed to include suchPerson’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words ofsimilar import, shall be construed to refer to this Agreement in its entirety and not to anyparticular provision hereof, (d) all references herein to Articles, Sections, Exhibits andSchedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to,this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaningand effect and to refer to any and all tangible and intangible assets and properties, includingcash, securities, accounts and contract rights. References in this Agreement to “determination” byany Agent include estimates honestly made by such Agent (in the case of quantitativedeterminations) and beliefs honestly held by such Agent (in the case of qualitativedeterminations). Any reference herein or in any other Loan Document to the satisfaction orrepayment in full of the Secured Obligations shall mean the repayment in full in cash (or cashcollateralization in accordance with the terms hereof) of all Secured Obligations other thanunasserted contingent indemnification Secured Obligations. Any requirement of a writing containedherein or in any other Loan Document shall be satisfied by the transmission of a Record and anyRecord so transmitted shall constitute a representation and warranty as to the accuracy andcompleteness of the information contained therein.
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          IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and throughtheir duly authorized officers, as of the day and year first above written.     **GRANTORS:****LOUD TECHNOLOGIES INC.,**