kl11029_ex10-3.htm


    
      

    

     

    Exhibit
      10.3

    
 

    THIS
      SECURITY AGREEMENT, dated as of November 15, 2007 (this
“Agreement”), is entered into by FRANKLIN CREDIT
      MANAGEMENT CORPORATION, a Delaware corporation (the
“Borrower”), and each of the entities listed on
      the signature pages hereof as loan parties or that becomes a party hereto
      pursuant to Section 7.10, in favor of THE HUNTINGTON
      NATIONAL BANK (“Lender”), successor by
      merger to Sky Bank.

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      Borrower and Lender have entered into that certain Term Loan and Security
      Agreement dated as of February 22, 1995 (as amended, restated, modified or
      supplemented from time to time, the “Term Loan
      Agreement”); and

     

    WHEREAS,
      Borrower and Lender have entered into that certain Master Credit and Security
      Agreement dated as of October 13, 2004 (as amended, restated, modified or
      supplemented from time to time, the “Master Credit
      Agreement”); and

     

    WHEREAS,
      Borrower and Lender have entered into that certain Flow Warehousing Credit
      and
      Security Agreement dated as of August 10, 2006 (as amended, restated, modified
      or supplemented from time to time, the “Flow Credit
      Agreement”); and

     

    WHEREAS,
      Borrower and Lender have entered into that certain Unconditional and Continuing
      Secured Guaranty dated as of October 18, 2005 (as amended, restated, modified
      or
      supplemented from time to time, the
“Guaranty”); and

     

    WHEREAS,
      Lender has issued various Letters of Credit from time to time for the account
      of
      Borrower, and Borrower and Lender have entered into certain letter of credit
      reimbursement agreements or applications for letters of credit (as amended,
      restated, modified or supplemented from time to time, the “Letter of Credit
      Agreements” and together with the Term Loan Agreement, the
      Master Credit Agreement, the Flow Credit Agreement, and the Guaranty,
      collectively, the “Credit
      Documents”); and

     

    WHEREAS,
      pursuant to the respective Credit Documents, Lender has agreed subject to
      certain conditions precedent, to make loans and other financial accommodations
      to Borrower from time to time; and

     

    WHEREAS,
      Lender has required as a condition, among others, of extending credit to
      Borrower or of renewing, extending, or forbearing from demanding immediate
      payment of extensions of credit to Borrower, that Borrower and each Loan Party
      enter into this Agreement; and

     

    NOW,
      THEREFORE, in consideration of
      the promises, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, Borrower and each Loan Party
      hereby agrees with Lender as follows:

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I


     

    DEFINED
      TERMS

     

    Section
      1.1  Definitions

     

    (a)  Terms
      used herein that are defined in the UCC have the meanings given to them in
      the
      UCC, including the following terms (which are capitalized herein):

     

    “Account
      Debtor”, “Accounts”, “Chattel
      Paper”, “Commercial Tort
      Claim”, “Commodity
      Account”, “Commodity
      Intermediary”, “Deposit
      Account”, “Documents”, “Entitlement
      Holder”, “Entitlement
      Order”, “Equipment”, “Financial
      Asset”, “General
      Intangibles”, “Instruments”, “Inventory”, “Investment
      Property”, “Letter-of-Credit
      Right”, “Proceeds”, “Securities
      Account”, “Securities
      Intermediary”, “Security, “Security
      Entitlement”.

     

    (b)  The
      following terms shall have the following meanings:

     

    “Additional
      Pledged Collateral” means all shares of, partnership
      interests in (whether limited or general), and limited liability company
      interests in, all securities convertible into, and warrants, options and other
      rights to purchase or otherwise acquire, stock of or interests in, either (i)
      any Person that, after the date of this Agreement, as a result of any
      occurrence, becomes a direct Subsidiary of any Loan Party or (ii) any issuer
      of
      Pledged Stock, any Partnership or any LLC that is acquired by any Loan Party
      after the date hereof; all certificates or other instruments representing any
      of
      the foregoing; all Security Entitlements of any Loan Party in respect of any
      of
      the foregoing; all additional indebtedness from time to time owed to any Loan
      Party by any obligor on the Pledged Notes and the instruments evidencing such
      indebtedness; and all interest, cash, instruments and other property or Proceeds
      from time to time received, receivable or otherwise distributed in respect
      of or
      in exchange for any of the foregoing. Additional Pledged Collateral may be
      General Intangibles or Investment Property.

     

    “Agreement” means
      this Security Agreement.

     

    “Approved
      Deposit Account” means any present or future Deposit Account
      of any Loan Party that (i) is maintained with Lender (or any affiliate thereof)
      or (ii) is subject to an effective Deposit Account Control Agreement in favor
      of
      Lender and maintained with a Deposit Account Bank. “Approved Deposit
      Account” includes all monies on deposit in a Deposit Account
      and all certificates and instruments, if any, representing or evidencing such
      Deposit Account.

     

    “Approved
      Securities Intermediary” means a Securities Intermediary or
      Commodity Intermediary acceptable to Lender and with respect to which a Loan
      Party has delivered to Lender an executed Control Account
      Agreement.

     

    “Banking
      Services” means each and any of the following bank services
      provided to any Loan Party by Lender or any of its affiliates: (a) commercial
      credit cards, (b) stored value cards and (c) treasury management services
      (including, without limitation, controlled disbursement, automated clearinghouse
      transactions, return items, overdrafts and interstate depository network
      services).

     

     

    
      
        
        

      

      
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    “Bankruptcy
      Code” means Title 11 of the United States Code (11 USC, § 101
et seq), as amended from time to time, and any successor
      statute thereto, including (unless the context requires otherwise) any rules
      or
      regulations promulgated thereunder.

     

    “Capital
      Leases” means a lease that is required to be capitalized for
      financial reporting purposes in accordance with GAAP.

     

    “Cash
      Collateral Account” means any deposit account over which
      Lender has sole dominion and control, established by Lender, in its sole
      discretion at Lender, and entitled “The Huntington National Bank, as Secured
      Party for Franklin Management Credit Corporation (Blocked Account)” or such
      similar title as Lender may approve or require.

     

    “Cash
      Equivalents” means (i) marketable direct obligations issued
      or unconditionally guaranteed by the United States of America or issued by
      any
      agency thereof and backed by the full faith and credit of the United States,
      in
      each case maturing within one (1) year from the date of acquisition thereof,
      (ii) marketable direct obligations issued by any state of the United States
      or
      any political subdivision of any such state or any public instrumentality
      thereof maturing within one (1) year from the date of acquisition thereof and,
      at the time of acquisition, having the highest rating obtainable from either
      S&P or Moody’s, and (iii) certificates of deposit or bankers’ acceptances
      maturing within one (1) year from the date of acquisition thereof either (A)
      issued by any bank organized under the laws of the United States or any state
      thereof which bank has a rating of A or A2, or better, from S&P or Moody’s,
      or (B) issued by any other bank insured by the Federal Deposit Insurance
      Corporation, (“FDIC”) provided that such certificates of deposit are
      less than or equal to, in the aggregate, the deposit insurance coverage limit
      set by the FDIC for single ownership accounts.

     

    “Collateral” has
      the meaning specified in Section 2.1.

     

    “Collection
      Account” means any Approved Deposit Account or Control
      Account in which cash and Cash Equivalents may from time to time be on deposit
      or held therein as provided in this Agreement.

     

    “Contingent
      Obligations” means any agreement, undertaking or arrangement
      by which any Loan Party assumes, guaranties, endorses, agrees to provide
      funding, or otherwise becomes or is contingently liable upon the obligation
      or
      liability of any other Loan Party.

     

    “Control
      Account” means a Securities Account or Commodity Account that
      is subject of an effective Control Account Agreement and that is maintained
      by
      any Loan Party with an Approved Securities Intermediary. “Control
      Account” includes all Financial Assets held in a Securities
      Account or a Commodity Account and all certificates and instruments, if any,
      representing or evidencing the Financial Assets contained therein.

     

    “Control
      Account Agreement” means an agreement, in form and substance
      acceptable to Lender, executed by the relevant Loan Party, Lender and the
      relevant Approved Securities Intermediary.

     

    “Copyright
      Licenses” means any written agreement naming any Loan Party
      as licensor or licensee granting any right under any Copyright, including the
      grant of any right to copy,

     

     

    
      
        
        

      

      
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    publicly
      perform, create derivative works, manufacture, distribute, exploit or sell
      materials derived from any Copyright.

     

    “Copyrights” means
      (a) all copyrights arising under the laws of the United States, any other
      country or any political subdivision thereof, whether registered or unregistered
      and whether published or unpublished, all registrations and recordings thereof
      and all applications in connection therewith, including all registrations,
      recordings and applications in the United States Copyright Office or in any
      foreign counterparts thereof, and (b) the right to obtain all renewals
      thereof.

     

    “Credit
      Documents” has the meaning specified above in the
      recitals.

     

    “Deposit
      Account Bank” means a financial institution selected or
      approved by Lender and with respect to which a Loan Party has delivered to
      Lender an executed Deposit Account Control Agreement.

     

    “Deposit
      Account Control Agreement” means an agreement, in form and
      substance acceptable to Lender, executed by the relevant Loan Party, Lender
      and
      the relevant Deposit Account Bank.

     

    “Event
      of Default” means each of the following: (a) any “Event of
      Default” shall occur under the Master Credit Agreement; (b) Borrower or any
      other Loan Party fails to perform or observe any covenant, agreement or duty
      contained in this Agreement or any other Loan Document or any default or event
      of default occurs under any Loan Document; or (c) any warranty, representation
      or other statement made or deemed to be made in this Agreement or in any Loan
      Document is false or misleading in any respect.

     

    “Excluded
      Property” means Equipment owned by any Loan Party that is,
      and continues to be, subject to a Permitted Lien listed on Schedule 8
attached hereto, if the contract or other agreement pursuant to which
      such
      Lien is granted contains an enforceable prohibition on the creation of any
      Lien
      on such Equipment in favor of Lender; and (b) equity interests (whether
      Investment Property or General Intangibles), if the organizational or operating
      documents pursuant to which such equity interests are issued or governed contain
      an enforceable prohibition on the creation of any Lien on such equity interests
      in favor of Lender; in each case, only to the extent, and for so long as, such
      prohibition is not removed, terminated or rendered unenforceable or otherwise
      deemed ineffective by applicable Law; provided,
      however, that “Excluded
      Property” shall not include (i) the right to receive any
      payment of money (including, without limitation, general intangibles for money
      due or to become due); and (ii) any proceeds, products, offspring, accessions,
      rents, profits, income, benefits, substitutions or replacements of any of the
      foregoing.

     

    “GAAP” means
      generally accepted accounting principles set forth in the opinions and
      pronouncements of the Accounting Principles Board, the American Institute of
      Certified Public Accountants and the Financial Accounting Standards Board as
      in
      effect from time to time in the United States consistently applied.

     

    “Governmental
      Authority” means any nation or government, any federal,
      state, local or other political subdivision thereof and any entity exercising
      executive, legislative, judicial,

     

     

     

    
      
        
        

      

      
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    regulatory
      or administrative authority or functions of or pertaining to government,
      including any authority or other quasi-governmental entity established to
      perform any of such functions.

     

    “Indebtedness” means,
      at any time, (i) all indebtedness, obligations or other liabilities (other
      than
      accounts payable arising in the ordinary course of business payable on terms
      customary in the trade) which in accordance with GAAP should be classified
      as
      liabilities on the balance sheet of such Person, including without limitation,
      (A) for borrowed money or evidenced by debt securities, debentures, acceptances,
      notes or other similar instruments, and any accrued interest, fees and charges
      relating thereto, (B) under profit payment agreements or in respect of
      obligations to redeem, repurchase or exchange any securities or to pay dividends
      in respect of any stock, (C) with respect to letters of credit, bankers
      acceptances, interest rate swaps or other contracts, currency agreement or
      other
      financial products, (D) to pay the deferred purchase price of property or
      services, or (E) in respect of Capital Leases; (ii) all indebtedness,
      obligations or other liabilities secured by a lien on any property, whether
      or
      not such indebtedness, obligations or liabilities are assumed by the owner
      of
      the same; and (iii) all Contingent Obligations.

     

    “Insolvency
      Proceeding” means any proceeding commenced by or against any
      Person under any provision of the Bankruptcy Code or under any other state
      or
      federal bankruptcy or insolvency law, receivership, assignment for the benefit
      of creditors, formal or informal moratorium, forbearance, composition, extension
      generally with creditors, or proceedings seeking reorganization, arrangement,
      or
      other similar relief.

     

    “Intellectual
      Property” means, collectively, all rights, priorities and
      privileges of any Loan Party relating to intellectual property, whether arising
      under United States, multinational or foreign laws or otherwise, including
      domain names, Copyrights, Copyright Licenses, Patents, Patent Licenses,
      Trademarks, Trademark Licenses and trade secrets, and all rights to sue at
      law
      or in equity for any infringement or other impairment thereof, including the
      right to receive all proceeds and damages therefrom.

     

    “Intercompany
      Note” means any promissory note evidencing loans made by any
      Loan Party to any of its Subsidiaries or another Loan Party.

     

    “Joinder
      Agreement” means a joinder agreement, in the form and
      substance acceptable to Lender, executed by Lender and the relevant Subsidiary
      that Borrower is required to cause to become a party hereto as a Loan
      Party.

     

    “Letter
      of Credit Agreements “ has the meaning specified above in the
      recitals.

     

    “Letters
      of Credit” means any letters of credit issued in connection
      with the Letter of Credit Agreements.

     

    “Law” means
      any law (including common law), constitution, statute, treaty, convention,
      regulation, rule, ordinance, order, injunction, writ, decree or award of any
      Governmental Authority.

     

    “Lien” means
      any interest in an asset securing an obligation owed to, or a claim by, any
      Person other than the owner of the asset, whether such interest shall be based
      on the common law, statute, or contract, whether such

     

     

     

    
      
        
        

      

      
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    interest
      shall be recorded or perfected, and whether such interest shall be contingent
      upon the occurrence of some future event or events or the existence of some
      future circumstance or circumstances, including the lien or security interest
      arising from any mortgage, deed of trust, encumbrance, pledge, hypothecation,
      assignment (collateral or otherwise), hypothec, deposit arrangement, security
      agreement, conditional sale, trust receipt, lease, consignment, or bailment
      for
      security purposes, judgment, claim encumbrance or statutory trust and also
      including reservations, exceptions, encroachments, easements, rights-of-way,
      covenants, conditions, restrictions, leases, and other title exceptions and
      encumbrances affecting real property.

     

    “LLC” means
      each limited liability company in which a Loan Party has an interest, including
      those set forth on Schedule 2.

     

    “LLC
      Agreement” means each operating agreement with respect to an
      LLC, as each agreement has heretofore been, and may hereafter be, amended,
      restated, supplemented or otherwise modified from time to time.

     

    “Loan
      Documents” means the Credit Documents, any agreements or
      documents evidencing or relating to the provision of any Banking Services by
      Lender for the benefit of a Loan Party, and any other agreement, document,
      or
      arrangement (whether now existing or hereafter arising) by and among Lender
      (or
      its affiliate) and one or more Loan Party.

     

    “Loan
      Party” means each of Borrower, any Subsidiary of Borrower
      that is a signatory hereto on the date of this Agreement, and any other Person
      who becomes a party to this Agreement pursuant to a Joinder Agreement (in
      accordance with Section 7.10), and their respective successors and
      assigns.

     

    “Material
      Intellectual Property” means Intellectual Property owned by
      or licensed to a Loan Party and material to such Loan Party’s
      business.

     

    “Partnership” means
      each partnership or joint venture in which a Loan Party has an interest,
      including those set forth on Schedule 2.

     

    “Partnership
      Agreement” means each partnership or joint venture agreement
      governing a Partnership, as each such agreement has heretofore been, and may
      hereafter be, amended, restated, supplemented or otherwise
      modified.

     

    “Patents” means
      (a) all letters patent of the United States, any other country or any political
      subdivision thereof and all reissues and extensions thereof, (b) all
      applications for letters patent of the United States or any other country and
      all divisions, continuations and continuations-in-part thereof and (c) all
      rights to obtain any reissues or extensions of the foregoing.

     

    “Patent
      License” means all agreements, whether written or oral,
      providing for the grant by or to any Loan Party of any right to manufacture,
      use, import, sell or offer for sale any invention covered in whole or in part
      by
      a Patent.

     

    “Permitted
      Contests” means the right of Borrower or another Loan Party
      to contest or protest any Lien (other than any such Lien that secures the
      Secured Obligations), taxes (other

     

     

    
      
        
        

      

      
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    than
      payroll taxes or taxes that are the subject of a United States federal tax
      lien), or rental payment, provided that (i) a reserve with respect to such
      obligation is established on Borrower’s or another Loan Party’s, as the case may
      be, books and records in such amount as is required under GAAP, (ii) any such
      protest is instituted promptly and prosecuted diligently by Borrower or the
      applicable other Loan Party in good faith, and (iii) Lender is satisfied in
      its
      sole, good faith discretion, that, while any such protest is pending, there
      will
      be no impairment of the enforceability, validity, or priority of any of a
      Lender’s Liens.

     

    “Permitted
      Liens” means (i) any Liens held by Lender or an affiliate of
      Lender, (ii) Liens for unpaid taxes that either are not yet delinquent, or
      do
      not constitute an Event of Default hereunder and are the subject of a Permitted
      Contest, (iii) Liens set forth on Schedule 8 to the extent of the
      Indebtedness referenced therein, (iv) the interests of lessors under operating
      leases, (v) Liens securing purchase money Indebtedness or the interests of
      lessors under Capital Leases to the extent that such Liens or interests secure
      Permitted Purchase Money Indebtedness, (vi) Liens arising by operation of law
      in
      favor of warehousemen, landlords, carriers, mechanics, materialmen, or laborers,
      incurred in the ordinary course of a Loan Party’s business and not in connection
      with the borrowing of money, and which Liens either (A) are for sums not yet
      delinquent, or (B) are the subject of Permitted Contests, (vii) Liens arising
      from deposits made in connection with obtaining worker’s compensation or other
      unemployment insurance, (viii) Liens or deposits to secure performance of bids,
      tenders, or leases incurred in the ordinary course of a Loan Party’s business
      and not in connection with the borrowing of money, (ix) Liens granted as
      security for surety or appeal bonds in connection with obtaining such bonds
      in
      the ordinary course of Borrower’s business, and (x) Liens resulting from any
      judgment or award that is not an Event of Default hereunder.

     

    “Permitted
      Purchase Money Indebtedness” means secured or unsecured
      purchase money Indebtedness (including obligations under Capital Leases)
      incurred to finance the acquisition of fixed assets or equipment, if such
      Indebtedness (i) has a scheduled maturity and is not due on demand, (ii) does
      not exceed the purchase price of the items being purchased, and (iii) is not
      secured by any property or assets other than the item or items being
      purchased.

     

    “Person” means
      any individual, corporation, firm, enterprise, partnership, trust, incorporated
      or unincorporated association, joint venture, joint stock company, limited
      liability company or any other entity of any kind or any government or political
      subdivision or any agency, department or instrumentality thereof.

     

    “Pledged
      Collateral” means, collectively, the Pledged Notes, the
      Pledged Stock, the Pledged Partnership Interests, the Pledged LLC Interests,
      any
      other Investment Property of any Loan Party, all certificates or other
      instruments representing any of the foregoing and all Security Entitlements
      of
      any Loan Party in respect of any of the foregoing. Pledged Collateral may be
      General Intangibles or Investment Property.

     

    “Pledged
      LLC Interests” means all right, title and interest of any
      Loan Party as a member of any LLC and all right, title and interest of any
      Loan
      Party in, to and under any LLC Agreement to which it is a party.

     

     

    
      
        
        

      

      
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    “Pledged
      Notes” means all right, title and interest of any Loan Party
      in the Instruments evidencing all Indebtedness owed to such Loan Party,
      including all Indebtedness described on Schedule
      2, issued by the obligors named therein.

     

    “Pledged
      Partnership Interests” means all right, title and interest of
      any Loan Party as a limited or general partner in all Partnerships and all
      right, title and interest of any Loan Party in, to and under any Partnership
      Agreements to which it is a party.

     

    “Pledged
      Stock” means the shares of capital stock owned by each Loan
      Party, including all shares of capital stock listed on Schedule
      2.

     

    “Rate
      Management Transactions” means any transaction (including an agreement with
      respect thereto) now existing or hereafter entered into among Borrower, any
      Subsidiary thereof, Lender or any affiliate of Lender, or any of its
      subsidiaries or affiliates or their successors, which is a rate swap, basis
      swap, forward rate transaction, commodity swap, commodity option, equity or
      equity index swap, equity or equity index option, bond option, interest rate
      option, foreign exchange transaction, cap transaction, floor transaction, collar
      transaction, forward transaction, currency swap transaction, cross-currency
      rate
      swap transaction, currency option or any other similar transaction (including
      any option with respect to any of these transactions) or any combination
      thereof, whether linked to one or more interest rates, foreign currencies,
      commodity prices, equity prices or other financial measures.

     

    “Secured
      Obligations” means (a) any and all indebtedness, obligations,
      and liabilities now existing or hereafter arising of Borrower or any other
      Loan
      Party to Lender (or any affiliate) or arising under or in connection with or
      evidenced by (i) the Credit Documents, this Agreement, or any other Loan
      Document, (ii) any other agreement relating to (A) letters of credit or pursuant
      to any Letter of Credit Agreement, or pursuant to any agreement or document
      relating to Banking Services, (B) any agreement in respect of any Rate
      Management Transaction, (C) any agreement for any electronic transfers, treasury
      management, cash management services and deposit and disbursement account
      liability, and (D) any agreement of guaranty, surety or indemnity issued by
      such
      Person, (b) any and all indebtedness, obligations, and liabilities, now existing
      or hereafter arising, whether absolute or contingent and however and whenever
      created, arising, evidenced or acquired, of Borrower or any other Loan Party
      owed to Lender (or any affiliate of Lender), (and in each instance in clauses
      (a)and (b) above, whether arising before or after the filing of a petition
      in
      bankruptcy and including all interest accrued after any such petition date),
      due
      or to become due, direct or indirect, absolute or contingent, and howsoever
      evidenced, held or acquired, and (c) any and all reasonable expenses and
      charges, legal or otherwise, suffered or incurred by Lender or any affiliate
      of
      Lender in collecting or enforcing any such indebtedness, obligation, and
      liability or in realizing on or protecting or preserving any security therefor,
      including, without limitation, the Lien and security interest granted by any
      Credit Document.

     

    “Securities
      Act” means the Securities Act of 1933, as
      amended.

     

    “Subsidiary” of
      a Person means any corporation, partnership, limited liability company or other
      entity in which such Person directly or indirectly owns or controls the
      securities or other

     

     

    
      
        
        

      

      
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    ownership
      interests having ordinary voting power to elect a majority of the board of
      directors, or appoint managers or other persons performing similar
      functions.

     

    “Trademark
      License” means any agreement, whether written or oral,
      providing for the grant by or to any Loan Party of any right to use any
      Trademark.

     

    “Trademarks” means
      (a) all trademarks, trade names, corporate names, company names, business names,
      fictitious business names, trade styles, service marks, logos and other source
      or business identifiers, and, in each case, all goodwill associated therewith,
      whether now existing or hereafter adopted or acquired, all registrations and
      recordings thereof and all applications in connection therewith, in each case
      whether in the United States Patent and Trademark Office or in any similar
      office or agency of the United States, any State thereof or any other country
      or
      any political subdivision thereof, or otherwise, and all common-law rights
      related thereto, and (b) the right to obtain all renewals thereof.

     

    “UCC” means
      the Uniform Commercial Code as from time to time in effect in the State of
      Ohio;
provided, however, that, in the event that, by
      reason of mandatory provisions of Law, any of the attachment, perfection or
      priority of Lender’s security interest in any Collateral is governed by the
      Uniform Commercial Code as in effect in a jurisdiction other than the State
      of
      Ohio, the term “UCC” shall mean the Uniform Commercial
      Code as in effect in such other jurisdiction for purposes of the provisions
      hereof relating to such attachment, perfection or priority and for purposes
      of
      definitions related to such provisions.

     

    “Vehicles” means
      all vehicles covered by a certificate of title law of any state.

     

    Section
      1.2  Certain
      Other Terms

     

    (a)  In
      this
      Agreement, in the computation of periods of time from a specified date to a
      later specified date, the word “from” means “from and including” and the words
“to” and “until” each mean “to but excluding” and the word “through” means “to
      and including.”

     

    (b)  The
      terms
“herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this
      Agreement as a whole and not to any particular Article, Section, subsection
      or
      clause in this Agreement.

     

    (c)  References
      herein to a Schedule, Article, Section, subsection or clause refer to the
      appropriate Schedule to, or Article, Section, subsection or clause in this
      Agreement.

     

    (d)  The
      meanings given to terms defined herein shall be equally applicable to both
      the
      singular and plural forms of such terms.

     

    (e)  Where
      the
      context requires, provisions relating to any Collateral, when used in relation
      to a Loan Party, shall refer to such Loan Party’s Collateral or any relevant
      part thereof.

     

    (f)  Any
      reference in this Agreement to a Loan Document shall include all appendices,
      exhibits and schedules thereto, and, unless specifically stated otherwise all
      amendments, restatements, supplements or other modifications thereto, and as
      the
      same may be in effect at any time such reference becomes operative.

     

     

    
      
        
        

      

      
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    (g)  The
      term
“Lender” includes its successors.

     

    (h)  References
      in this Agreement to any statute shall be to such statute as amended or modified
      and in effect from time to time.

     

    ARTICLE
      II

     

    GRANT
      OF SECURITY INTEREST

     

    Section
      2.1  Collateral

     

    For
      the
      purposes of this Agreement, all of the following property now owned or at any
      time hereafter acquired by a Loan Party or in which a Loan Party now has or
      at
      any time in the future may acquire any right, title or interests is collectively
      referred to as the “Collateral”:

     

    all
      Accounts and all rights to payment of monetary obligations, whether or not
      earned by performance, for property that has been or is to be sold, leased,
      licensed, assigned or otherwise disposed of, or for services rendered or to
      be
      rendered, to a government, state, or governmental unit; all Chattel Paper;
      all
      Deposit Accounts; all Documents; all Equipment; all General Intangibles
      (including, without limitation, all contractual rights arising under any
      purchase agreement or assignments relating to mortgage loans); all Instruments;
      all Inventory; all Investment Property; all Letter-of-Credit Rights; all
      Vehicles; the Commercial Tort Claims described on Schedule 7 and on any
      supplement thereto received by Lender; all books and records pertaining to
      the
      other property described in this Section 2.1; all other
      goods and personal property of such Loan Party, whether tangible or intangible
      and wherever located; all property of any Loan Party held by Lender, including
      all property of every description, in the possession or custody of or in transit
      to Lender for any purpose, including safekeeping, collection or pledge, for
      the
      account of such Loan Party or as to which such Loan Party may have any right
      or
      power; and to the extent not otherwise included, all Proceeds.

     

    Section
      2.2  Grant
      of Security Interest in Collateral

     

    Borrower
      and each other Loan Party, as collateral security for the full, prompt and
      complete payment and performance when due (whether at stated maturity, by
      acceleration or otherwise) of the Secured Obligations, hereby collaterally
      assigns, mortgages, pledges and hypothecates to Lender, and grants (whether
      under the UCC or otherwise) to Lender a lien on and security interest in, and
      a
      collateral assignment of, all of its right, title and interest in, to and under
      the Collateral of such Loan Party; provided,
      however, that the foregoing grant of security interest shall
      not include a security interest in any Excluded Property; provided,
      further, that, if and when any property shall cease to be
      Excluded Property, Lender shall have, and at all times after the date hereof
      deemed to have had, a security interest in such property.

     

    Section
      2.3  Cash
      Collateral Accounts

     

    Lender
      may, in its discretion, establish one or more Cash Collateral Accounts with
      Lender, one or more other Deposit Account Banks and one or more Approved
      Securities Intermediaries as it in its sole discretion shall determine. Each
      such account shall be in the name of Lender (but may also have words referring
      to each Loan Party and such account’s purpose).

     

     

     

    
      
        
        

      

      
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    Each
      Loan
      Party agrees that each such Cash Collateral Account shall be under the sole
      dominion and control of Lender. Lender shall be the sole Entitlement Holder
      with
      respect to each Securities Account constituting a Cash Collateral Account and
      the only Persons authorized to give Entitlement Orders with respect thereto.
      Neither Borrower nor any other Loan Party or Person claiming on behalf of or
      through Borrower or any other Loan Party shall have any right to demand payment
      of any funds held in any Cash Collateral Account at any time prior to the
      termination of all outstanding Letters of Credit and the indefeasible payment
      in
      full of all Secured Obligations.  During the continuance of an Event
      of Default, Lender shall apply all funds on deposit in any Cash Collateral
      Account as Lender may elect.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      Lender to enter into or maintain the Credit Documents, each Loan Party hereby
      represents and warrants each of the following to Lender:

     

    Section
      3.1  Title;
      No Other Liens

     

    Except
      for the Lien granted to Lender pursuant to this Agreement and the other
      Permitted Liens, such Loan Party is the record and beneficial owner of the
      Pledged Collateral pledged by it hereunder constituting Instruments or
      certificated securities, is the Entitlement Holder of all such Pledged
      Collateral constituting Investment Property held in a Securities Account and
      has
      rights in or the power to transfer each other item of Collateral in which a
      Lien
      is granted by it hereunder, free and clear of any Lien.

     

    Section
      3.2  Perfection
      and Priority

     

    The
      security interest granted pursuant to this Agreement shall constitute a valid
      and continuing perfected security interest in favor of Lender in the Collateral
      for which perfection is governed by the UCC or filing with the United States
      Copyright Office upon (i) the completion of the filings and other actions
      specified on Schedule 3 which, in the case of all filings and other
      documents referred to on such schedule, have been delivered to Lender in
      completed and duly executed form), (ii) the delivery to Lender of all Collateral
      consisting of Instruments and certificated securities, in each case properly
      endorsed for transfer to Lender or in blank, (iii) the execution of Control
      Account Agreements with respect to Investment Property not in certificated
      form,
      (iv) the execution of Deposit Account Control Agreements with respect to all
      Deposit Accounts and (v) all appropriate filings having been made with the
      United States Copyright Office. Such security interest shall be prior to all
      other Liens on the Collateral except for Permitted Liens having priority over
      Lender’s Lien by operation of law or otherwise, as permitted under this
      Agreement or any other Loan Documents.

     

    Section
      3.3  Name;
      Jurisdiction of Organization; Chief Executive
      Office

     

    Except
      as
      set forth on Schedule 1, within the five-year period
      preceding the date hereof, such Loan Party has not had, or operated in any
      jurisdiction, under any trade name, fictitious name or other name other than
      its
      legal name, and Such Loan Party’s jurisdiction of

     

     

    
      
        
        

      

      
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    organization,
      organizational identification number, if any, and the location of such Loan
      Party’s chief executive office or sole place of business is specified on
Schedule 1.

     

    Section
      3.4  Inventory
      and Equipment

     

    Such
      Loan
      Party’s Inventory and Equipment (other than mobile goods and Inventory or
      Equipment in transit) are kept at the locations listed on Schedule 4 as
      supplemented pursuant to the terms hereof.

     

    Section
      3.5  Pledged
      Collateral

     

    (a)  The
      Pledged Stock, Pledged Partnership Interests and Pledged LLC Interests pledged
      hereunder by such Loan Party are listed on Schedule 2 and constitute
      that percentage of the issued and outstanding equity of all classes of each
      issuer thereof as set forth on Schedule 2.

     

    (b)  All
      of
      the Pledged Stock, Pledged Partnership Interests and Pledged LLC Interests
      have
      been duly and validly issued and are fully paid and nonassessable.

     

    (c)  Each
      of
      the Pledged Notes constitutes the legal, valid and binding obligation of the
      obligor with respect thereto, enforceable in accordance with its terms, subject
      to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium and other similar laws relating to or affecting creditors’ rights
      generally, and general equitable principles (whether considered in a proceeding
      in equity or at law).

     

    (d)  Except
      for Pledged Collateral and Additional Pledged Collateral not required to be
      delivered to Lender pursuant to Section 4.7, all Pledged
      Collateral and, if applicable, any Additional Pledged Collateral, consisting
      of
      certificated securities or Instruments has been delivered to Lender in
      accordance with Section 4.4(a).

     

    (e)  All
      Pledged Collateral held by a Securities Intermediary in a Securities Account
      is
      in a Control Account.

     

    (f)  Other
      than the Pledged Partnership Interests and the Pledged LLC Interests that
      constitute General Intangibles, there is no Pledged Collateral other than (i)
      that represented by certificated securities or Instruments in the possession
      of
      Lender, or (ii) that consisting of Financial Assets currently held in a Control
      Account.

     

    Section
      3.6  Accounts

     

    No
      amount
      in excess of $100,000 payable to such Loan Party under or in connection with
      any
      Account is evidenced by any Instrument or Chattel Paper that has not been
      delivered to Lender, properly endorsed for transfer, to the extent delivery
      is
      required by Section 4.4.

     

    Section
      3.7  Intellectual
      Property

     

    (a)  Schedule
      5 lists all Material Intellectual Property of such Loan Party, separately
      identifying that owned by such Loan Party and that licensed to such Loan Party.
      The Material

     

     

     

    
      
        
        

      

      
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    Intellectual
      Property set forth on Schedule 5 for such Loan Party constitutes all of
      the intellectual property rights necessary to conduct its business.

     

    (b)  All
      Material Intellectual Property owned by such Loan Party is valid, subsisting,
      unexpired and enforceable, has not been adjudged invalid and has not been
      abandoned and the use thereof in the business of such Loan Party does not
      infringe the intellectual property rights of any other Person.

     

    (c)  Except
      as
      set forth in Schedule 5, none of the Material
      Intellectual Property owned by such Loan Party is the subject of any licensing
      or franchise agreement pursuant to which such Loan Party is the licensor or
      franchisor.

     

    (d)  No
      holding, decision or judgment has been rendered by any Governmental Authority
      that would limit, cancel or question the validity of, or such Loan Party’s
      rights in, any Material Intellectual Property.

     

    (e)  Except
      as
      set forth in Schedule 5, no action or proceeding seeking
      to limit, cancel or question the validity of any Material Intellectual Property
      owned by such Loan Party or such Loan Party’s ownership interest therein is
      pending or, to the knowledge of such Loan Party, threatened. There are no
      claims, judgments or settlements to be paid by such Loan Party relating to
      the
      Material Intellectual Property.

     

    Section
      3.8  Deposit
      Accounts; Securities
      Accounts

     

    The
      only
      Deposit Accounts or Securities Accounts maintained by any Loan Party are those
      listed on Schedule 6 as supplemented pursuant to the terms hereof,
      which sets forth such information separately for each Loan Party.

     

    Section
      3.9  Commercial
      Tort Claims

     

    The
      only
      existing or potential Commercial Tort Claims of any Loan Party existing
      (regardless of whether the amount, defendant or other material facts can be
      determined and regardless of whether such Commercial Tort Claim has been
      asserted, threatened or has otherwise been made known to the obligee thereof
      or
      whether litigation has been commenced for such claims) are those listed on
      Schedule 7 as supplemented pursuant to the terms hereof, which sets
      forth such information separately for each Loan Party.

     

    ARTICLE
      IV

     

    COVENANTS

     

    Each
      Loan
      Party agrees with Lender to the following, as long as any Secured Obligation
      remains outstanding or Lender has any obligation to extend credit to any Loan
      Party under any Loan Document, and, in each case, unless Lender otherwise
      consents in writing:

     

     

    
      
        
        

      

      
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    Section
      4.1  Generally

     

    Such
      Loan
      Party shall (a) except for the security interest created by this Agreement,
      not
      create or suffer to exist any Lien upon or with respect to any Collateral,
      except Permitted Liens, (b) not use or permit any Collateral to be used
      unlawfully or in violation of any provision of this Agreement, any other Loan
      Document, any applicable Law or any policy of insurance covering the Collateral,
      (c) not sell, transfer or assign (by operation of law or otherwise) any
      Collateral except as permitted under the Loan Documents or otherwise within
      the
      ordinary course of its business, (d) not enter into any agreement or undertaking
      restricting the right or ability of such Loan Party or Lender to sell, assign
      or
      transfer any Collateral except as permitted under the Loan Documents and (e)
      promptly notify Lender of its entry into any agreement or assumption of
      undertaking that restricts the ability to sell, assign or transfer any
      Collateral.

     

    Section
      4.2  Maintenance
      of Perfected Security Interest; Further
      Documentation

     

    (a)  Such
      Loan
      Party shall maintain the security interest created by this Agreement as a
      perfected security interest having at least the priority described in
Section 3.2 and shall defend such security interest against the claims
      and demands of all Persons.

     

    (b)  Such
      Loan
      Party shall furnish to Lender from time to time statements and schedules further
      identifying and describing the Collateral and such other reports in connection
      with the Collateral as Lender may reasonably request, all in reasonable
      detail.

     

    (c)  At
      any
      time and from time to time, upon the written request of Lender, and at the
      sole
      expense of such Loan Party, such Loan Party shall promptly and duly execute
      and
      deliver, and have recorded, such further instruments and documents and take
      such
      further action as Lender may reasonably request for the purpose of obtaining
      or
      preserving the full benefits of this Agreement and of the rights and powers
      herein granted, including the filing of any financing or continuation statement
      under the UCC (or other similar laws) in effect in any jurisdiction with respect
      to the security interest created hereby and the execution and delivery of
      Deposit Account Control Agreements and Control Account Agreements.

     

    Section
      4.3  Changes
      in Locations, Name,
      Etc.

     

    (a)  Except
      upon 15 days’ prior written notice to Lender and delivery to Lender of (i) all
      additional documents reasonably requested by Lender to maintain the validity,
      perfection and priority of the security interests provided for herein and (ii)
      if applicable, a written supplement to Schedule 4 showing any
      additional location at which Inventory or Equipment shall be kept, such Loan
      Party shall not do any of the following:

     

    (i)  permit
      any Inventory or Equipment to be kept at a location other than those listed
      on
Schedule 4, except for Inventory or Equipment in transit
      to and from such locations;

     

    (ii)  change
      its jurisdiction of organization or the location of its chief executive office
      or sole place of business from that referred to in Section
      3.3; or

     

     

    
      
        
        

      

      
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    (iii)  change
      its name, identity or corporate structure to such an extent that any financing
      statement filed in connection with this Agreement would become seriously
      misleading.

     

    (b)  Such
      Loan
      Party shall keep and maintain at its own cost and expense satisfactory and
      complete records of the Collateral, including a record of all payments received
      and all credits granted with respect to the Collateral and all other dealings
      with the Collateral. Except to the extent any such Vehicle is Excluded Property,
      if requested by Lender, the security interest of Lender shall be noted on the
      certificate of title of each Vehicle.

     

    Section
      4.4  Pledged
      Collateral

     

    (a)  Such
      Loan
      Party shall (i) deliver to Lender, all certificates and Instruments representing
      or evidencing any Pledged Collateral (including Additional Pledged Collateral),
      whether now existing or hereafter acquired, in suitable form for transfer by
      delivery or, as applicable, accompanied by such Loan Party’s endorsement, where
      necessary, or duly executed instruments of transfer or assignment in blank,
      all
      in form and substance satisfactory to Lender, together, in respect of any
      Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
      Loan Parties, in substantially form substance acceptable to Lender or such
      other
      documentation acceptable to Lender and (ii) maintain all other Pledged
      Collateral constituting Investment Property in a Control Account. Such Loan
      Party authorizes Lender to attach each Pledge Amendment to this Agreement.
      From
      and after the occurrence and during the continuance of an Event of Default,
      Lender shall have the right, at any time in its discretion and without notice
      to
      any Loan Party, to transfer to or to register in its name or in the name of
      its
      nominees any Pledged Collateral. Lender shall have the right at any time to
      exchange any certificate or instrument representing or evidencing any Pledged
      Collateral for certificates or instruments of smaller or larger
      denominations.

     

    (b)  Except
      as
      provided in Article V, such Loan Party shall be entitled
      to receive all cash dividends paid in respect of the Pledged Collateral (other
      than liquidating or similar dividends) with respect to the Pledged Collateral.
      Any sums paid upon or in respect of any Pledged Collateral upon the liquidation
      or dissolution of any issuer of any Pledged Collateral, any distribution of
      capital made on or in respect of any Pledged Collateral or any property
      distributed upon or with respect to any Pledged Collateral pursuant to the
      recapitalization or reclassification of the capital of any issuer of Pledged
      Collateral or pursuant to the reorganization thereof shall, unless otherwise
      subject to a perfected security interest in favor of Lender, be delivered to
      Lender to be held by it hereunder as additional collateral security for the
      Secured Obligations. If any sum of money or property so paid or distributed
      in
      respect of any Pledged Collateral shall be received by such Loan Party, such
      Loan Party shall, until such money or property is paid or delivered to Lender,
      hold such money or property in trust for Lender, segregated from other funds
      of
      such Loan Party, as additional security for the Secured
      Obligations.

     

    (c)  Except
      as
      provided in Article V, such Loan Party shall be entitled
      to exercise all voting, consent and corporate rights with respect to the Pledged
      Collateral; provided, however, that no vote
      shall be cast, consent given or right exercised or other action taken by such
      Loan Party that would impair the Collateral, be inconsistent with or result
      in
      any violation of any

     

     

     

    
      
        
        

      

      
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    provision
      of this Agreement or any other Loan Document or, without prior notice to Lender,
      enable or permit any issuer of Pledged Collateral to issue any stock or other
      equity securities of any nature or to issue any other securities convertible
      into or granting the right to purchase or exchange for any stock or other equity
      securities of any nature of any issuer of Pledged Collateral.

     

    (d)  Such
      Loan
      Party shall not grant control over any Investment Property to any Person other
      than Lender.

     

    (e)  In
      the
      case of each Loan Party that is an issuer of Pledged Collateral, such Loan
      Party
      agrees to be bound by the terms of this Agreement relating to the Pledged
      Collateral issued by it and shall comply with such terms insofar as such terms
      are applicable to it. In the case of each Loan Party that is a partner in a
      Partnership, such Loan Party hereby consents to the extent required by the
      applicable Partnership Agreement to the pledge by each other Loan Party,
      pursuant to the terms hereof, of the Pledged Partnership Interests in such
      Partnership and to the transfer of such Pledged Partnership Interests to Lender
      or its nominee and to the substitution of Lender or its nominee as a substituted
      partner in such Partnership with all the rights, powers and duties of a general
      partner or a limited partner, as the case may be. In the case of each Loan
      Party
      that is a member of an LLC, such Loan Party hereby consents to the extent
      required by the applicable LLC Agreement to the pledge by each other Loan Party,
      pursuant to the terms hereof, of the Pledged LLC Interests in such LLC and
      to
      the transfer of such Pledged LLC Interests to Lender or its nominee and to
      the
      substitution of Lender or its nominee as a substituted member of the LLC with
      all the rights, powers and duties of a member of the LLC in
      question.

     

    (f)  Such
      Loan
      Party shall not agree to any amendment of an LLC Agreement or Partnership
      Agreement that in any way adversely affects the perfection of the security
      interest of Lender in the Pledged Partnership Interests or Pledged LLC Interests
      pledged by such Loan Party hereunder, including any amendment electing to treat
      the membership interest or partnership interest of such Loan Party as a security
      under Article 8 of the UCC.

     

    Section
      4.5  Control
      Accounts; Approved Deposit
      Accounts

     

    (a)  Such
      Loan
      Party shall (i) deposit in an Approved Deposit Account all cash received by
      such
      Loan Party, (ii) not establish or maintain any Securities Account that is not
      a
      Control Account and (iii) not establish or maintain any Deposit Account other
      than with a Deposit Account Bank, Lender or an affiliate of Lender; provided,
      however, that any Loan Party may maintain payroll, withholding tax and other
      fiduciary accounts with Lender or an affiliate thereof in Deposit Accounts
      that
      are not Approved Deposit Accounts.

     

    (b)  Such
      Loan
      Party shall instruct each Account Debtor or other Person obligated to make
      a
      payment to such Loan Party under a General Intangible to make payment, or to
      continue to make payment, as the case may be, to an Approved Deposit Account
      and
      shall deposit in an Approved Deposit Account all Proceeds of such Accounts
      and
      General Intangibles received by such Loan Party from any other Person
      immediately upon receipt.

     

    (c)  In
      the
      event (i) such Loan Party or any Approved Securities Intermediary or Deposit
      Account Bank shall, after the date hereof, terminate an agreement with respect
      to the

     

     

     

    
      
        
        

      

      
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    maintenance
      of a Control Account or Approved Deposit Account for any reason, (ii) Lender
      shall demand such termination as a result of the failure of an Approved
      Securities Intermediary or Deposit Account Bank to comply with the terms of
      the
      applicable Control Account Agreement or Deposit Account Control Agreement,
      or
      (iii) Lender determines in its sole good faith discretion that the financial
      condition of an Approved Securities Intermediary or Deposit Account Bank, as
      the
      case may be, has materially deteriorated, such Loan Party agrees to notify
      all
      of its obligors that were making payments to such terminated Control Account
      or
      Approved Deposit Account, as the case may be, to make all future payments to
      another Control Account or Approved Deposit Account, as the case may
      be.

     

    (d)  Lender
      agrees that it shall not provide any instruction with respect to any Approved
      Deposit Account or Control Account unless an Event of Default has occurred
      and
      is continuing.

     

    Section
      4.6  Accounts

     

    (a)  Such
      Loan
      Party shall not, other than in the ordinary course of business consistent with
      its past practice, (i) grant any extension of the time of payment of any
      Account, (ii) compromise or settle any Account for less than the full amount
      thereof, (iii) release, wholly or partially, any Person liable for the payment
      of any Account, (iv) allow any credit or discount on any Account or (v) amend,
      supplement or modify any Account in any manner that could adversely affect
      the
      value thereof.

     

    (b)  Lender
      shall have the right to make test verifications of the Accounts in any manner
      and through any medium that Lender reasonably considers advisable, and such
      Loan
      Party shall furnish all such assistance and information as Lender may reasonably
      require in connection therewith. At any time and from time to time, upon
      Lender’s request and at the expense of the relevant Loan Party, such Loan Party
      shall cause independent public accountants or others satisfactory to Lender
      to
      furnish to Lender reports showing reconciliations, aging and test verifications
      of, and trial balances for, the Accounts.

     

    Section
      4.7  Delivery
      of Instruments and Chattel Paper

     

    If
      any
      amount in excess of $100,000 payable under or in connection with any Collateral
      owned by such Loan Party shall be or become evidenced by an Instrument or
      Chattel Paper, such Loan Party shall immediately deliver such Instrument or
      Chattel Paper to Lender, duly indorsed in a manner satisfactory to Lender,
      or,
      if consented to by Lender, shall mark all such Instruments and Chattel Paper
      with the follow legend:  “This writing and the obligations evidenced
      or secured hereby are subject to the security interest of The Huntington
      National Bank”.

     

    Section
      4.8  Intellectual
      Property

     

    (a)  Such
      Loan
      Party (either itself or through licensees) shall (i) continue to use each
      Trademark that is Material Intellectual Property in order to maintain such
      Trademark in full force and effect with respect to each class of goods for
      which
      such Trademark is currently used, free from any claim of abandonment for
      non-use, (ii) maintain as in the past the quality of products and services
      offered under such Trademark, (iii) use such Trademark with the appropriate
      notice of registration and all other notices and legends required by applicable
      Law, (iv) not adopt or use

     

     

     

    
      
        
        

      

      
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    any
      mark
      that is confusingly similar or a colorable imitation of such Trademark unless
      Lender shall obtain a perfected security interest in such mark pursuant to
      this
      Agreement and (v) not (and not permit any licensee or sublicensee thereof to)
      do
      any act or knowingly omit to any act whereby such Trademark may become
      invalidated or impaired in any way.

     

    (b)  Such
      Loan
      Party (either itself or through licensees) shall not do any act, or omit to
      do
      any act, whereby any Patent that is Material Intellectual Property may become
      forfeited, abandoned or dedicated to the public.

     

    (c)  Such
      Loan
      Party (either itself or through licensees) (i) shall not (and shall not permit
      any licensee or sublicensee thereof to) do any act or omit to do any act whereby
      any portion of the Copyrights that is Material Intellectual Property may become
      invalidated or otherwise impaired and (ii) shall not (either itself or through
      licensees) do any act whereby any portion of the Copyrights that is Material
      Intellectual Property may fall into the public domain.

     

    (d)  Such
      Loan
      Party (either itself or through licensees) shall not do any act, or omit to
      do
      any act, whereby any trade secret that is Material Intellectual Property may
      become publicly available or otherwise unprotectable.

     

    (e)  Such
      Loan
      Party (either itself or through licensees) shall not do any act that knowingly
      uses any Material Intellectual Property may fall into the public
      domain

     

    (f)  Such
      Loan
      Party shall notify Lender immediately if it knows, or has reason to know, that
      any application or registration relating to any Material Intellectual Property
      may become forfeited, abandoned or dedicated to the public, or of any adverse
      determination or development (including the institution of, or any such
      determination or development in, any proceeding in the United States Patent
      and
      Trademark Office, the United States Copyright Office or any court or tribunal
      in
      any country) regarding such Loan Party’s ownership of, right to use, interest
      in, or the validity of, any Material Intellectual Property or such Loan Party’s
      right to register the same or to own and maintain the same.

     

    (g)  Whenever
      such Loan Party, either by itself or through any agent, licensee or designee,
      shall file an application for the registration of any Intellectual Property
      with
      the United States Patent and Trademark Office, the United States Copyright
      Office or any similar office or agency within or outside the United States,
      such
      Loan Party shall report such filing to Lender within five Business Days after
      the last day of the fiscal quarter in which such filing occurs. Upon request
      of
      Lender, such Loan Party shall execute and deliver, and have recorded, all
      agreements, instruments, documents and papers as Lender may request to evidence
      Lender’s security interest in any Copyright, Patent or Trademark and the
      goodwill and general intangibles of such Loan Party relating thereto or
      represented thereby.

     

    (h)  Such
      Loan
      Party shall take all reasonable actions necessary or requested by Lender,
      including in any proceeding before the United States Patent and Trademark
      Office, the United States Copyright Office or any similar office or agency,
      to
      maintain and pursue each application (and to obtain the relevant registration)
      and to maintain each registration of any Copyright, Trademark or Patent that
      is
      Material Intellectual Property, including filing of

     

     

     

    
      
        
        

      

      
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    applications
      for renewal, affidavits of use, affidavits of incontestability and opposition
      and interference and cancellation proceedings.

     

    (i)  In
      the
      event that any Material Intellectual Property is infringed upon or
      misappropriated or diluted by a third party, such Loan Party shall notify Lender
      promptly after such Loan Party learns thereof. Such Loan Party shall take
      appropriate action in response to such infringement, misappropriation of
      dilution, including promptly bringing suit for infringement, misappropriation
      or
      dilution and to recover all damages for such infringement, misappropriation
      of
      dilution, and shall take such other actions as may be appropriate in its
      reasonable judgment under the circumstances to protect such Material
      Intellectual Property.

     

    (j)  Unless
      otherwise agreed to by Lender, such Loan Party shall execute and deliver to
      Lender for filing in (i) the United States Copyright Office a short-form
      copyright security agreement in form and substance acceptable to Lender, (ii)
      in
      the United States Patent and Trademark Office a short-form patent security
      agreement in form and substance acceptable to Lender and (iii) the United States
      Patent and Trademark Office a short-form trademark security agreement in form
      and substance acceptable to Lender.

     

    Section
      4.9  Vehicles

     

    Upon
      the
      request of Lender, on or before the date of this Agreement and within ten (10)
      days after the date of acquisition of any Vehicle acquired after the date
      hereof, such Loan Party shall execute a short-form motor vehicle security
      agreement, in form and substance acceptable to Lender, specifically describing
      each Vehicle owned by such Loan Party. In addition, upon the request of Lender,
      within 30 days after the date of such request and, with respect to any Vehicle
      acquired by such Loan Party subsequent to the date of any such request, within
      30 days after the date of acquisition thereof, such Loan Party shall (i) file
      all applications for certificates of title or ownership indicating Lender’s
      first priority security interest in the Vehicle covered by such certificate
      and
      any other necessary documentation, in each office in each jurisdiction that
      Lender shall deem advisable to perfect its security interests in the
      Vehicles.

     

    Section
      4.10  Notice
      of Commercial Tort Claims

     

    Such
      Loan
      Party agrees that, if it shall acquire any interest in any Commercial Tort
      Claim
      (whether from another Person or because such Commercial Tort Claim shall have
      come into existence), (i) such Loan Party shall, immediately upon such
      acquisition, deliver to Lender, in each case in form and substance satisfactory
      to Lender, a notice of the existence and nature of such Commercial Tort Claim
      and deliver a supplement to Schedule 7 containing a specific
      description of such Commercial Tort Claim, certified by such Loan Party as
      true,
      correct and complete, (ii) the provision of Section 2.1 shall apply to
      such Commercial Tort Claim (and the Loan Parties authorize Lender to supplement
      such schedule with a description of such Commercial Tort Claim if such Loan
      Party fails to deliver the supplement described in clause (i)) and
      (iii) such Loan Party shall execute and deliver to Lender, in each case in
      form
      and substance satisfactory to Lender, any certificate, agreement and other
      document, and take all other action, deemed by Lender to be reasonably necessary
      or appropriate for Lender to obtain a first-priority, perfected security
      interest in all such Commercial Tort Claims. Any supplement to Schedule 7
delivered pursuant to this Section 4.10 shall become part of
Schedule 7 for all

     

     

     

    
      
        
        

      

      
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    purposes
      hereunder other than, absent a written consent of Lender, for purpose of the
      representations and warranties set forth in Section 3.9.

     

    ARTICLE
      V

     

    REMEDIAL
      PROVISIONS

     

    Section
      5.1  Code
      and Other Remedies

     

    During
      the continuance of an Event of Default, Lender may exercise, in addition to
      all
      other rights and remedies granted to Lender in this Agreement and in any other
      instrument or agreement securing, evidencing or relating to the Secured
      Obligations, all rights and remedies of a secured party under the UCC or any
      other applicable Law. Without limiting the generality of the foregoing, Lender,
      without demand of performance or other demand, presentment, protest,
      advertisement or notice of any kind (except any notice required by Law referred
      to below) to or upon any Loan Party or any other Person (all and each of which
      demands, defenses, advertisements and notices are hereby waived), may in such
      circumstances forthwith collect, receive, appropriate and realize upon any
      Collateral, and may forthwith sell, lease, assign, give option or options to
      purchase, or otherwise dispose of and deliver any Collateral (or contract to
      do
      any of the foregoing), in one or more parcels at public or private sale or
      sales, at any exchange, broker’s board or office of Lender or elsewhere upon
      such terms and conditions as it may deem advisable and at such prices as it
      may
      deem best, for cash or on credit or for future delivery without assumption
      of
      any credit risk. Lender shall have the right upon any such public sale or sales,
      and, to the extent permitted by Law, upon any such private sale or sales, to
      purchase the whole or any part of the Collateral so sold, free of any right
      or
      equity of redemption in any Loan Party, which right or equity is hereby waived
      and released. Each Loan Party further agrees, at Lender’s request, to assemble
      the Collateral and make it available to Lender at places that Lender shall
      reasonably select, whether at such Loan Party’s premises or elsewhere. Lender
      shall apply the net proceeds of any action taken by it pursuant to this
Section 5.1, after deducting all reasonable costs and
      expenses of every kind incurred in connection therewith or incidental to the
      care or safekeeping of any Collateral or in any way relating to the Collateral
      or the rights of Lender hereunder, including reasonable attorneys’ fees and
      disbursements, to the payment in whole or in part of the Secured Obligations,
      in
      such order as the Loan Documents shall prescribe (or if no such order is
      prescribed therein, then in such order as Lender may elect), and only after
      such
      application and after the payment by Lender of any other amount required by
      any
      provision of Law, need Lender account for the surplus, if any, to any Loan
      Party. To the extent permitted by applicable Law, each Loan Party waives all
      claims, damages and demands it may acquire against Lender arising out of the
      exercise by them of any rights hereunder.  If any notice o proposed
      sale or other disposition of Collateral shall be required by Law, such notice
      shall be deemed reasonable and proper if given at least 10 days before such
      sale
      or other disposition.

     

    Section
      5.2  Accounts
      and Payments in Respect of General Intangibles

     

    (a)  If
      required by Lender in writing at any time during the continuance of an Event
      of
      Default, each Loan Party shall cause all payment of Accounts or payment in
      respect of General Intangibles to be directed to a Cash Collateral Account,
      and
      if collected by any Loan Party, each such payment shall be forthwith deposited
      by such Loan Party in the exact form received, duly

     

     

    
      
        
        

      

      
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    indorsed
      by such Loan Party to Lender if required, in a Cash Collateral Account. Until
      so
      turned over, each such payment shall be held by such Loan Party in trust for
      Lender, segregated from other funds of such Loan Party. Each such deposit of
      Proceeds of Accounts and payments in respect of General Intangibles shall be
      accompanied by a report identifying in reasonable detail the nature and source
      of the payments included in the deposit.

     

    (b)  At
      Lender’s request in writing, during the continuance of an Event of Default, each
      Loan Party shall deliver to Lender all original and other documents evidencing,
      and relating to, the agreements and transactions that gave rise to the Accounts
      or payments in respect of General Intangibles, including all original orders,
      invoices and shipping receipts.

     

    (c)  Lender
      may, without notice, at any time during the continuance of an Event of Default,
      limit or terminate the authority of a Loan Party to collect its Accounts or
      amounts due under General Intangibles or any thereof.

     

    (d)  Lender
      in
      its own name or in the name of others may at any time during the continuance
      of
      an Event of Default communicate with Account Debtors to verify with them to
      Lender’s satisfaction the existence, amount and terms of any Account or amounts
      due under any General Intangible.

     

    (e)  Upon
      the
      request of Lender in writing at any time after the occurrence of an Event of
      Default, each Loan Party shall notify Account Debtors that the Accounts or
      General Intangibles have been collaterally assigned to Lender and that payments
      in respect thereof shall be made directly to Lender or to a Cash Collateral
      Account. In addition, Lender may at any time during the continuance of an Event
      of Default enforce such Loan Party’s rights against such Account Debtors and
      obligors of General Intangibles.

     

    (f)  Anything
      herein to the contrary notwithstanding, each Loan Party shall remain liable
      under each of the Accounts and payments in respect of General Intangibles to
      observe and perform all the conditions and obligations to be observed and
      performed by it thereunder, all in accordance with the terms of any agreement
      giving rise thereto. Lender shall not have any obligation or liability under
      any
      agreement giving rise to an Account or a payment in respect of a General
      Intangible by reason of or arising out of this Agreement or the receipt by
      Lender of any payment relating thereto, nor shall Lender be obligated in any
      manner to perform any obligation of any Loan Party under or pursuant to any
      agreement giving rise to an Account or a payment in respect of a General
      Intangible, to make any payment, to make any inquiry as to the nature or the
      sufficiency of any payment received by it or as to the sufficiency of any
      performance by any party thereunder, to present or file any claim, to take
      any
      action to enforce any performance or to collect the payment of any amounts
      that
      may have been assigned to it or to which it may be entitled at any time or
      times.

     

    Section
      5.3  Pledged
      Collateral

     

    (a)  During
      the continuance of an Event of Default, upon notice by Lender to the relevant
      Loan Party or Loan Parties, (i) Lender shall have the right to receive any
      Proceeds of the Pledged Collateral and make application thereof to the Secured
      Obligations in the order set forth in the Loan Documents (or if no such order
      is
      set forth therein, then in such order as Lender may

     

     

     

    
      
        
        

      

      
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    elect)
      and (ii) Lender or its nominee may exercise (A) any voting, consent, corporate
      and other right pertaining to the Pledged Collateral at any meeting of
      shareholders, partners or members, as the case may be, of the relevant issuer
      or
      issuers of Pledged Collateral or otherwise and (B) any right of conversion,
      exchange and subscription and any other right, privilege or option pertaining
      to
      the Pledged Collateral as if it were the absolute owner thereof (including
      the
      right to exchange at its discretion any of the Pledged Collateral upon the
      merger, consolidation, reorganization, recapitalization or other fundamental
      change in the corporate structure of any issuer of Pledged Collateral, the
      right
      to deposit and deliver any Pledged Collateral with any committee, depositary
      transfer agent, registrar or other designated agency upon such terms and
      conditions as Lender may determine), all without liability except to account
      for
      property actually received by it; provided, however, that Lender shall have
      no
      duty to any Loan Party to exercise any such right, privilege or option and
      shall
      not be responsible for any failure to do so or delay in so doing.

     

    (b)  In
      order
      to permit Lender to exercise the voting and other consensual rights that they
      may be entitled to exercise pursuant hereto and to receive all dividends and
      other distributions that they may be entitled to receive hereunder, (i) each
      Loan Party shall, promptly execute and deliver (or cause to be executed and
      delivered) to Lender all such proxies, dividend payment orders and other
      instruments as Lender may from time to time reasonably request and (ii) without
      limiting the effect of clause (i) above, such Loan Party hereby grants to Lender
      an irrevocable proxy to vote all or any part of the Pledged Collateral and
      to
      exercise all other rights, powers, privileges and remedies to which a holder
      of
      the Pledged Collateral would be entitled (including giving or withholding
      written consents of shareholders, partners or members, as the case may be,
      calling special meetings of shareholders, partners or members, as the case
      may
      be, and voting at such meetings), which proxy shall be effective, automatically
      and without the necessity of any action (including any transfer of any Pledged
      Collateral on the record books of the issuer thereof) by any other Person
      (including the issuer of such Pledged Collateral or any officer or agent
      thereof) during the continuance of an Event of Default and which proxy shall
      only terminate upon the payment in full of the Secured Obligations.

     

    (c)  Each
      Loan
      Party hereby expressly authorizes and instructs each issuer of any Pledged
      Collateral pledged hereunder by such Loan Party with to (i) comply with any
      instruction received by it from Lender in writing that (A) states that an Event
      of Default has occurred and is continuing and (B) is otherwise in accordance
      with the terms of this Agreement, without any other or further instructions
      from
      such Loan Party, and each Loan Party agrees that such issuer shall be fully
      protected in so complying and (ii) unless otherwise expressly permitted hereby,
      pay any dividend or other payment with respect to the Pledged Collateral
      directly to Lender.

     

    Section
      5.4  Proceeds
      to be Turned Over To Lender

     

    All
      Proceeds received by Lender hereunder during the continuance of an Event of
      Default shall be held by Lender in a Cash Collateral Account. All Proceeds
      while
      held by Lender in a Cash Collateral Account (or by such Loan Party in trust
      for
      Lender) shall continue to be held as collateral security for the Secured
      Obligations and shall not constitute payment thereof until applied to the
      payment of the Secured Obligations.

     

     

     

    
      
        
        

      

      
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    Section
      5.5  Sale
      of Pledged Collateral

     

    (a)  Each
      Loan
      Party recognizes that Lender may be unable to effect a public sale of any
      Pledged Collateral by reason of certain prohibitions contained in the Securities
      Act and applicable state securities laws or otherwise or may determine that
      a
      public sale is impracticable or not commercially reasonable and, accordingly,
      may resort to one or more private sales thereof to a restricted group of
      purchasers that shall be obliged to agree, among other things, to acquire such
      securities for their own account for investment and not with a view to the
      distribution or resale thereof.  Each Loan Party acknowledges and
      agrees that any such private sale may result in prices and other terms less
      favorable than if such sale were a public sale and, notwithstanding such
      circumstances, agrees that any such private sale shall be deemed to have been
      made in a commercially reasonable manner. Lender shall be under no obligation
      to
      delay a sale of any Pledged Collateral for the period of time necessary to
      permit the issuer thereof to register such securities for public sale under
      the
      Securities Act, or under applicable state securities laws, even if such issuer
      would agree to do so.

     

    (b)  Each
      Loan
      Party agrees to use its best efforts to do or cause to be done all such other
      acts as may be necessary to make such sale or sales of all or any portion of
      the
      Pledged Collateral pursuant to this Section 5.5 valid and binding and
      in compliance with all other applicable Law.  Each Loan Party further
      agrees that a breach of any covenant contained in this Section 5.5 will
      cause irreparable injury to Lender, that Lender has no adequate remedy at law
      in
      respect of such breach and, as a consequence, that each and every covenant
      contained in this Section 5.5 shall be specifically enforceable against
      such Loan Party, and such Loan Party hereby waives and agrees not to assert
      any
      defense against an action for specific performance of such covenants except
      for
      a defense that no Event of Default has occurred under any Loan
      Document.

     

    Section
      5.6  Deficiency

     

    Each
      Loan
      Pall remain liable for any deficiency if the proceeds of any sale or other
      disposition of the Collateral are insufficient to pay the Secured Obligations
      and the reasonable fees and disbursements of any attorney employed by Lender
      to
      collect such deficiency.

     

    ARTICLE
      VI

     

    LENDER

     

    Section
      6.1  Lender’s
      Appointment as Attorney-in-Fact

     

    (a)  Each
      Loan
      hereby irrevocably constitutes and appoints Lender and any officer or agent
      thereof, with full power of substitution, as its true and lawful
      attorney-in-fact with full irrevocable power and authority in the place and
      stead of such Loan Party and in the name of such Loan Party or in its own name,
      for the purpose of carrying out the terms of this Agreement, to take any
      appropriate action and to execute any document or instrument that may be
      necessary or desirable to accomplish the purposes of this Agreement, and,
      without limiting the generality of the foregoing, each Loan Party hereby gives
      Lender the power and right, on behalf of such Loan Party, without notice to
      or
      assent by such Loan Party, to do any of the following:

     

     

    
      
        
        

      

      
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    (i)  in
      the
      name of such Loan Party or its own name, or otherwise, take possession of and
      indorse and collect any check, draft, note, acceptance or other instrument
      for
      the payment of moneys due under any Account or General Intangible or with
      respect to any other Collateral and file any claim or take any other action
      or
      proceeding in any court of law or equity or otherwise deemed appropriate by
      Lender for the purpose of collecting any such moneys due under any Account
      or
      General Intangible or with respect to any other Collateral whenever
      payable;

     

    (ii)  in
      the
      case of any Intellectual Property, execute and deliver, and have recorded,
      any
      agreement, instrument, document or paper as Lender may request to evidence
      Lender’s security interest in such Intellectual Property and the goodwill and
      General Intangibles of such Loan Party relating thereto or represented
      thereby;

     

    (iii)  pay
      or
      discharge taxes and Liens levied or placed on or threatened against the
      Collateral, effect any repair or pay or discharge any insurance called for
      by
      the terms of this Agreement (including all or any part of the premiums therefor
      and the costs thereof);

     

    (iv)  execute,
      in connection with any sale provided for in Section 5.1 or Section
      5.5, any endorsement, assignment or other instrument of
      conveyance or transfer with respect to the Collateral; or

     

    (v)   (A)
      direct any party liable for any payment under any Collateral to make payment
      of
      any moneys due or to become due thereunder directly to Lender or as Lender
      shall
      direct, (B) ask or demand for, collect, and receive payment of and receipt
      for,
      any moneys, claims and other amounts due or to become due at any time in respect
      of or arising out of any Collateral, (C) sign and indorse any invoice, freight
      or express bill, bill of lading, storage or warehouse receipt, draft against
      debtors, assignment, verification, notice and other document in connection
      with
      any Collateral, (D) commence and prosecute any suit, action or proceeding at
      law
      or in equity in any court of competent jurisdiction to collect any Collateral
      and to enforce any other right in respect of any Collateral, (E) defend any
      suit, action or proceeding brought against such Loan Party with respect to
      any
      Collateral, (F) settle, compromise or adjust any such suit, action or proceeding
      and, in connection therewith, give such discharges or releases as Lender may
      deem appropriate, (G) assign any Copyright, Patent or Trademark (along with
      the
      goodwill of the business to which any such Trademark pertains) throughout the
      world for such term or terms, on such conditions, and in such manner as Lender
      shall in its sole discretion determine, including the execution and filing
      of
      any document necessary to effectuate or record such assignment and (H)
      generally, sell, transfer, pledge and make any agreement with respect to or
      otherwise deal with any Collateral as fully and completely as though Lender
      was
      the absolute owner thereof for all purposes, and do, at Lender’s option and such
      Loan Party’s expense, at any time, or from time to time, all acts and things
      that Lender deems necessary to protect, preserve or realize upon the Collateral
      and Lender’s security interests therein and to effect the intent of this
      Agreement, all as fully and effectively as such Loan Party might
      do.

     

     

    
      
        
        

      

      
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    (b)  If
      any
      Loan Party fails to perform or comply with any of its agreements contained
      herein, Lender, at its option, but without any obligation so to do, may perform
      or comply, or otherwise cause performance or compliance, with such
      agreement.

     

    (c)  The
      expenses of Lender incurred in connection with actions undertaken as provided
      in
      this Section 6.1, together with interest thereon at a
      rate per annum equal to the highest rate per annum at which interest would
      then
      be payable on any past due amount under any Credit Document from the date of
      payment by Lender to the date reimbursed by the relevant Loan Party, shall
      be
      payable by such Loan Party to Lender on demand.

     

    (d)  Each
      Loan
      Party hereby ratifies all that said attorneys shall lawfully do or cause to
      be
      done by virtue hereof. All powers, authorizations and agencies contained in
      this
      Agreement are coupled with an interest and are irrevocable until this Agreement
      is terminated and the security interests created hereby are
      released.

     

    Section
      6.2  Duty
      of Lender

     

    Lender’s
      sole duty with respect to the custody, safekeeping and physical preservation
      of
      the Collateral in its possession shall be to deal with it in the same manner
      as
      the same man Lender deals with similar property for its own account. Neither
      Lender, nor any of its respective officers, directors, employees or agents
      shall
      be liable for failure to demand, collect or realize upon any Collateral or
      for
      any delay in doing so or shall be under any obligation to sell or otherwise
      dispose of any Collateral upon the request of any Loan Party or any other Person
      or to take any other action whatsoever with regard to any Collateral. The powers
      conferred on Lender hereunder are solely to protect Lender’s interest in the
      Collateral and shall not impose any duty upon Lender to exercise any such
      powers. Lender shall be accountable only for amounts that Lender actually
      receives as a result of the exercise of such powers, and neither Lender nor
      any
      of Lender’s officers, directors, employees or agents shall be responsible to any
      Loan Party for any act or failure to act hereunder, except for Lender’s gross
      negligence or willful misconduct.

     

    Section
      6.3  Financing
      Statements

     

    Each
      Loan
      Party hereby authorizes Lender to file, and if requested will deliver to Lender,
      all financing statements and other documents and take such other actions as
      may
      from time to time be requested by Lender in order to maintain a first perfected
      security interest in and, if applicable, control of, the Collateral. Any
      financing statement filed by Lender may be filed in any filing office in any
      UCC
      jurisdiction and may (i) indicate the Collateral (1) as all assets of each
      Loan
      Party or words of similar effect, regardless of whether any particular asset
      comprised in the Collateral falls within the scope of Article 9 of the UCC
      or
      such jurisdiction, or (2) by any other description which reasonably approximates
      the description contained in this Agreement, and (ii) contain any other
      information required by part 5 of Article 9 of the UCC for the sufficiency
      or
      filing office acceptance of any financing statement or amendment, including
      (A)
      whether any Loan Party is an organization, the type of organization and any
      organization identification number issued to each Loan Party and (B) in the
      case
      of a financing statement filed as a fixture filing or indicating Collateral
      as
      as-extracted collateral or timber to be cut, a sufficient description of real
      property to which the Collateral relates. Each Loan Party also agrees to furnish
      any such information to Lender promptly upon request. Each Loan Party
      also

     

     

     

    
      
        
        

      

      
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    ratifies
      its authorization for Lender to have filed in any UCC jurisdiction any initial
      financing statements or amendments thereto if filed prior to the date
      hereof.

     

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    Section
      7.1  Amendments
      in Writing

     

    None
      of
      the terms or provisions of this Agreement may be waived, amended, restated,
      supplemented or otherwise modified without the written consent of Lender and
      eachh Loan Party.

     

    Section
      7.2  Notices

     

    All
      communications under this Agreement shall be in writing and shall be sent by
      facsimile or by a nationally recognized overnight delivery service (i) if to
      Lender, at the address set forth below Lender’s signature to this Agreement, or
      at such other address as may have been furnished in writing to Borrower, by
      Lender; and (ii) if to Borrower or any other Loan Party, at the address set
      forth below Borrower’s signature to this Agreement, or at such other address as
      may have been furnished in writing to Lender by Borrower. Any notice so
      addressed and sent by telecopier shall be deemed to be given when confirmed,
      and
      any notice sent by nationally recognized overnight delivery service shall be
      deemed to be given the next day after the same is delivered to such
      carrier.

     

    Section
      7.3  No
      Waiver by Course of Conduct; Cumulative
      Remedies

     

    Lender
      shall not by any act (except by a written instrument pursuant to Section
      7.1), delay, indulgence, omission or otherwise be deemed td
      any hereunder or to have acquiesced in any Event of Default. No failure to
      exercise, nor any delay in exercising, on the part of Lender, any right, power
      or privilege hereunder shall operate as a waiver thereof. No single or partial
      exercise of any right, power or privilege hereunder shall preclude any other
      or
      further exercise thereof or the exercise of any other right, power or privilege.
      A waiver by Lender of any right or remedy hereunder on any one occasion shall
      not be construed as a bar to any right or remedy that Lender would otherwise
      have on any future occasion. The rights and remedies herein provided are
      cumulative, may be exercised singly or concurrently and are not exclusive of
      any
      other rights or remedies provided by Law.

     

    Section
      7.4  Successors
      and Assigns

     

    This
      Agreement shall be binding upon the successors and assigns of Borrower and
      each
      other Loan Party and shall inure to the benefit of Lender and its respective
      successors and assigns; provided, however, that
      no Loan Party may assign, transfer or delegate any of its rights or obligations
      under this Agreement without the prior written consent of Lender.

     

     

    
      
        
        

      

      
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    Section
      7.5  Counterparts

     

    This
      Agreement may be executed by one or more of the parties to this Agreement on
      any
      number of separate counterparts (including by telecopy), each of which when
      so
      executed shall be deemed to be an original and all of which taken together
      shall
      constitute one and the same agreement. Signature pages may be detached from
      multiple counterparts and attached to a single counterpart so that all signature
      pages are attached to the same document. Delivery of an executed counterpart
      by
      telecopy shall be effective as delivery of a manually executed
      counterpart.

     

    Section
      7.6  Severability

     

    Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    Section
      7.7  Section
      Headings

     

    The
      Article and Section titles contained in this Agreement are, and shall be,
      without substantive meaning or content of any kind whatsoever and are not part
      of the agreement of the parties hereto.

     

    Section
      7.8  Entire
      Agreement

     

    This
      Agreement together with the other Loan Documents represents the entire agreement
      of the parties and supersedes all prior agreements and understandings relating
      to the subject matter hereof

     

    Section
      7.9  Governing
      Law

     

    This
      agreement and the rights and obligations of the parties hereto shall be governed
      by, and construed and interpreted in accordance with, the law of the State
      of
      Ohio, without regard to its conflict of law principles.

     

    Section
      7.10  Additional
      Loan Parties

     

    Borrower
      hereby agrees and covenants that it will cause each of Borrower’s Subsidiaries
      that are not a signatory hereto on the date of this Agreement to execute and
      deliver to Lender a Joinder Agreement in form and substance acceptable to Lender
      and shall thereafter for all purposes be a party hereto and have the same
      rights, benefits and obligations as a Loan Party party hereto on the date of
      this Agreement.

     

    Section
      7.11  Reinstatement

     

    Each
      Loan
      Party further agrees that, if any payment made by any Loan Party or other Person
      and applied to the Secured Obligations is at any time annulled, avoided, set
      aside,

     

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    rescinded,
      invalidated, declared to be fraudulent or preferential or otherwise required
      to
      be refunded or repaid, or the proceeds of Collateral are required to be returned
      by Lender to such Loan Party, its estate, trustee, receiver or any other party,
      including any Loan Party, under any bankruptcy law, state or federal law, common
      law or equitable cause, then, to the extent of such payment or repayment, any
      Lien or other Collateral securing such liability shall be and remain in full
      force and effect, as fully as if such payment had never been made or, if prior
      thereto the Lien granted hereby or other Collateral securing such liability
      hereunder shall have been released or terminated by virtue of such cancellation
      or surrender, such Lien or other Collateral shall be reinstated in full force
      and effect, and such prior cancellation or surrender shall not diminish,
      release, discharge, impair or otherwise affect any Lien or other Collateral
      securing the obligations of any Loan Party in respect of the amount of such
      payment.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

     

     

    
 

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


     

    IN
      WITNESS WHEREOF, the undersigned has caused this Security Agreement to be duly
      executed and delivered as of the date first above written.

     

    FRANKLIN
      CREDIT MANAGEMENT CORPORATION

    


    


    By:
      /s/ Thomas
      Axon                    
         

         Name:
      Thomas Axon

         Title:  
      Chairman & President

    


    [Address:
      Franklin Credit Management Corporation

    


    Fax
      Number: (    )________________

    


    Each
      Loan
      Party listed on Schedule A attached hereto:

    


    By:
      /s/ Thomas
      Axon                     
         

    


    Name:
      Thomas Axon

    


                                    Title
      : Chairman
& President,
      as an
      authorized

                                        
officer
      of, and on
      behalf of, each Loan Party

                                         listed
      on
Schedule A attached hereto

    


    [Address:
      c/o Franklin Credit Management Corporation


    


    Fax
      Number: (    )_________________

     

    ACCEPTED
      AND AGREED

    as
      of the
      date first above written:

    


    THE
      HUNTINGTON NATIONAL BANK,

    successor
      by merger to Sky Bank

    


    


    By:
      /s/ Marty E.
      Adams                                                                

    Name:
      Marty E.
      Adams                                                                

    Title:
      President

    


    [Address:
      The Huntington National Bank

     

    
      Fax
        Number: (    )_________________

    

    
 

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    SCHEDULE
      A

     

     

    [List
      of
      other Loan Parties]

     

     

     

    
 

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    


    SCHEDULE
      A TO FRANKLIN SECURITY AGREEMENT

     

    COMPANY
      SUBSIDIARIES

    EXECUTING
      SECURITY AGREEMENT

    


    
      	
              FCMC
                2000 B CORP.

              FCMC
                2000 C CORP.

              FCMC
                2000 D CORP.

              FCMC
                2001 A CORP.

              FCMC
                2001 B CORP

              FCMC
                2001 C CORP.

              FCMC
                2001 D CORP.

              FCMC
                2001 E CORP.

              FCMC
                2001 F CORP.

              FCMC
                2002 A CORP.

              FCMC
                2002 B CORP.

              FCMC
                2002 C CORP.

              FCMC
                2002 D CORP.

              FCMC
                2002 E CORP.

              FCMC
                2002 F CORP.

              FCMC
                2002 G CORP.

              FCMC
                2002 H CORP.

              FCMC
                2003 A CORP.

              FCMC
                2003 B CORP.

              FCMC
                2003 C CORP.

              FCMC
                2003 D CORP.

              FCMC
                2003 E CORP.

              FCMC
                2003 F CORP.

              FCMC
                2003 G CORP.

              FCMC
                2003 H CORP.

              FCMC
                2003 I CORP.

              FCMC
                2003 J CORP.

              FCMC
                2003 K CORP.

              FCMC
                2004 A CORP

              FCMC
                2004 B CORP.

              FCMC
                2004 C CORP.

              FCMC
                2004 D CORP.

              FCMC
                2004 E CORP.

              FCMC
                2004 F CORP.

              FCMC
                2004 G CORP.

              FCMC
                2004 H CORP.

              FCMC
                2004 I CORP.

              FCMC
                2004 J CORP.

              FCMC
                2004 K CORP.

              FCMC
                2004 L CORP.

              FCMC
                2004 M CORP.

              FCMC
                2005 A CORP.

              FCMC
                2005 B CORP.

            	
              FCMC
                2005 C CORP.

              FCMC
                2005 D CORP.

              FCMC
                2005 E CORP.

              FCMC
                2005 F CORP.

              FCMC
                2005 G CORP.

              FCMC
                2005 H CORP.

              FCMC
                2005 I CORP.

              FCMC
                B-ONE 2004 A CORP.

              FCMC
                B-ONE 2004 B CORP.

              FCMC
                B-ONE 2004 C CORP.

              FCMC
                B-ONE 2004 D CORP.

              FCMC
                B-ONE 2004 E CORP.

              FCMC
                B-ONE 2004 F CORP.

              FLOW
                2000A CORP.

              FLOW
                2000B CORP.

              FLOW
                2000C CORP.

              FLOW
                2000D CORP.

              FLOW
                2000E CORP.

              FLOW
                2000F CORP.

              FLOW
                2001 A CORP.

              FLOW
                2001 B CORPORATION

              FLOW
                2001 C CORPORATION

              FLOW
                2001 D CORP

              FLOW
                2001 E CORPORATION

              FLOW
                2001 F CORPORATION

              FLOW
                2001 G CORPORATION

              FLOW
                2001 H CORP.

              FLOW
                2001 I CORP.

              FLOW
                2001 J CORP.

              FLOW
                2001 K CORP

              FLOW
                2001 L CORP.

              FLOW
                2002 A CORP.

              FLOW
                2002 B CORP.

              FLOW
                2002 C CORP.

              FLOW
                2002 D CORP.

              FLOW
                2002 E CORP.

              FLOW
                2002 F CORP.

              FLOW
                2002 G CORP.

              FLOW
                2002 H CORP.

              FLOW
                2002 I CORP.

              FLOW
                2002 J CORP.

              FLOW
                2002 K CORP.

              FLOW
                2002 L CORP.

            	
              FLOW
                2003 A CORP.

              FLOW
                2003 B CORP.

              FLOW
                2003 C CORP.

              FLOW
                2003 D CORP.

              FLOW
                2003 E CORP.

              FLOW
                2003 F CORP.

              FLOW
                2003 G CORP.

              FLOW
                2003 H CORP.

              FLOW
                2003 I CORP.

              FLOW
                2003 J CORP.

              FLOW
                2003 K CORP.

              FLOW
                2003 L CORP.

              FLOW
                2003 M CORP.

              FLOW
                2004 A CORP.

              FLOW
                2004 B CORP.

              FLOW
                2004 C CORP.

              FLOW
                2004 D CORP.

              FLOW
                2004 E CORP.

              FLOW
                2004 F CORP.

              FLOW
                2004 G CORP.

              FLOW
                2004 H CORP.

              FLOW
                2004 I CORP.

              FLOW
                2005 A CORP.

              FLOW
                2005 B CORP.

              FLOW
                2005 C CORP.

              FLOW
                2005 D CORP.

              FLOW
                2005 E CORP.

              FLOW
                2005 F CORP

              FLOW
                2005 G CORP

              FLOW
                2005 H CORP

              FLOW
                2005 I CORP

              FLOW
                2005 J CORP

              FLOW
                99-70 CORP.

              FLOW
                99-76 CORP.

              FLOW
                99-88 CORP.

              FLOW
                99-92 CORP.

            


    

     

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    
 

    
      	
              CAL
                SECOND 49 CORPORATION

              CAPE
                77 CORP.

              COAST
                56 CORPORATION

              COAST
                62 CORPORATION

              EMERGE
                64 CORPORATION

              JACKSON
                UNION 28 CORPORATION

              MORGAN
                85 CORP.

              PANCAL
                93 CORP.

              PARK
                86 CORP.

              PARK
                94 CORP.

              SHELTON
                46 CORPORATION

              NEW
                HAVEN 40 CORPORATION

              FIRSTGOLD
                69 CORP.

              ACCU
                95 CORP.

              ACCU
                99 CORP.

              ACREDIT
                75 CORP.

              ARK
                38 CORPORATION

              BEACH
                FUNDING CORP.

              BRANFORD
                55 CORPORATION

              CAPT
                47 CORPORATION

              CENTURY
                78 CORP.

              COAST
                74 CORP.

              COAST
                96 CORP.

              DAPT
                51 CORPORATION

              EMGOLD
                67 CORP.

              EMOD
                65 CORP.

              EMSEC
                66 CORP.

              ERICSSON
                ASSOCIATES INC.

              FIRSTCO
                80 CORP.

              FORT
                GRANITE 44 CORPORATION

              FREE
                73 CORP.

              FREE
                81 CORP.

              GARFIELD
                48 CORPORATION

              GREEN
                89 CORP.

              GREENWICH
                FIRST CORPORATION

              GREENWICH
                MANAGEMENT CORPORATION

              HARRISON
                FINANCIAL CORPORATION

              HOME
                FED 57 CORPORATION

              IVY
                CITY 72 CORP.

              JERSEY
                45 CORPORATION

              KEARNY
                39 CORPORATION

              KEARNY
                61 CORPORATION

              MADISON
                54 CORPORATION

              MASS
                FED 29 CORPORATION

              MODGOLD
                68 CORP.

              NEW
                HAVEN 53 CORPORATION

              NEW
                HAVEN 63 CORPORATION

              NORTH
                FORK 41 CORPORATION

            	
              NY
                APT. 33 CORPORATION

              PAN
                CAL 98 CORP.

              PANCAL
                82 CORP.

              PARK
                97 CORP.

              PENN
                100B CORP.

              PENN
                100 CORP.

              POINT
                91 CORP.

              RAPID
                POINT 60 CORPORATION

              ST.
                PETE 43 CORPORATION

              TAMPA
                79 CORP.

              VANTAGE
                90 CORP.

              WELL
                84 CORP.

              WFB
                83 CORP.

              STATES
                87 CORP.

              FCMC
                2005 J CORP.

              FCMC
                2005 K CORP.

              FCMC
                2005 L CORP.

              FCMC
                2005 M CORP.

              FCMC
                2005 N CORP.

              FCMC
                2005 O CORP.

              FCMC
                2005 P CORP.

              FCMC
                2005 Q CORP.

              FCMC
                2005 R CORP.

              FCMC
                2005 S CORP.

              FCMC
                2006 A CORP.

              FCMC
                2006 B CORP.

              FCMC
                2006 C CORP.

              FCMC
                2006 D CORP.

              FCMC
                2006 E CORP.

              FCMC
                2006 F CORP.

              FCMC
                2006 G CORP.

              FCMC
                2006 H CORP.

              FCMC
                2006 I CORP.

              FCMC
                2006 J CORP.

              FCMC
                2006 K CORP.

              FCMC
                2006 L CORP.

              FCMC
                2006 M CORP.

              FCMC
                2006 N CORP.

              FCMC
                2006 O CORP.

              FCMC
                2006 P CORP.

              FCMC
                2006 Q CORP.

              FCMC
                2006 R CORP.

              FCMC
                2006 S CORP.

              FCMC
                2006 T CORP.

              FCMC
                2006 U CORP.

              FCMC
                2006 V CORP.

              FCMC
                2006 W CORP.

              FCMC
                2006 X CORP.

              FCMC
                2006 Y CORP.

            


    

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              FCMC
                2006 Z CORP.

              FCMC
                2007 A CORP.

              FCMC
                2007 B CORP.

              FCMC
                2007 C CORP.

              FCMC
                2007 D CORP.

              FCMC
                2007 E CORP.

              FCMC
                2007 F CORP.

              FCMC
                2007 G CORP.

              FCMC
                2007 H CORP.

              FCMC
                2007 I CORP.

              FCMC
                2007 J CORP.

              FCMC
                2007 K CORP.

              FCMC
                2007 L CORP.

              FCMC
                2007 M CORP.

              FCMC
                2007 N CORP

              FCMC
                2007 O CORP.

              FCMC
                2007 P CORP.

              FCMC
                2007 Q CORP.

              FCMC
                2007 R CORP.

              FCMC
                2007 S CORP.

              FCMC
                2007 T CORP.

              FCMC
                2007 U CORP

              FCMC
                2007 V CORP.

              FCMC
                2007 W CORP.

              FCMC
                2007 X CORP.

              FCMC
                2007 Y CORP.

              FCMC
                2007 Z CORP

              FCMC
                2007 AA CORP.

              FCMC
                2007 AB CORP.

              FCMC
                2007 AC CORP.

              FLOW
                2006 A CORP.

              FLOW
                2006 B CORP.

              FLOW
                2006 C CORP.

              FLOW
                2006 D CORP.

              FLOW
                2006 E CORP.

              FLOW
                2006 F CORP.

              FLOW
                2006 G CORP.

              FLOW
                2006 H CORP.

              FLOW
                2007 A CORP.

              FLOW
                2007 B CORP

              FLOW
                2007 C CORP.

              FLOW
                2007 D CORP.

              RONTEX
                CORPORATION

            	
              Greenwich
                Funding Corporation

              Harrison
                Funding Corp.

              FCMC
                2003 B Investors One Corp.

              6
                Harrison Corp.

              FCMC
                2003 A People’s Choice Home Loan Corp.

              FCMC
                2003 C Decision One Corp.

              FCMC
                2003 C Encore Corp.

              FCMC
                Corporate Refinance

              Harrison
                Financial Assoc. Inc.

              Harrison
                First Corp.

              Master
                Flow Purchase 98 Corp.

              Tribeca
                Lending Corp.

            


    

     

    
 

    33