Unassociated Document


    PLEDGE
      AND SECURITY AGREEMENT

     

    THIS
      PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time to
      time, the “Security
      Agreement”)
      is
      entered into as of November 2, 2007 by and among Lev Pharmaceuticals, Inc.,
      a
      Delaware corporation (“Lev”),
      and
      Lev Development Corp., a Delaware corporation (“Development”),
      (each
      a “Grantor”,
      and
      collectively, the “Grantors”),
      and
      Mast Capital Management, LLC, in its capacity as collateral agent (the
“Collateral
      Agent”)
      for
      the lenders party to the Credit Agreement referred to below.

     

    PRELIMINARY
      STATEMENT

     

    Reference
      is hereby made to the Term Loan Agreement, dated as of November 2, 2007 (as
      it
      may be amended or modified from time to time the “Credit
      Agreement”),
      by
      and among Lev and Development as joint and several borrowers (together, the
      “Borrowers”),
      the
      lenders from time to time party thereto (the “Lenders”)
      and
      Mast Capital Management, LLC, in its capacities as administrative agent and
      collateral agent for the Lenders (the “Agent”).
      The
      Grantors are entering into this Security Agreement in order to induce the
      Lenders to enter into and extend credit to the Borrowers under the Credit
      Agreement and to secure the Obligations (as such term is defined in the Credit
      Agreement).

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements, provisions
      and
      covenants set forth herein, each of the Grantors and the Collateral Agent,
      on
      behalf of the Lenders, hereby agreed as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1. Terms
      Defined in Credit Agreement.
      All
      capitalized terms used herein and not otherwise defined shall have the meanings
      assigned to such terms in the Credit Agreement.

     

    1.2. Terms
      Defined in UCC.
      Terms
      defined in the UCC which are not otherwise defined in this Security Agreement
      are used herein as defined in the UCC.

     

    1.3. Definitions
      of Certain Terms Used Herein.
      As used
      in this Security Agreement, in addition to the terms defined in the Preliminary
      Statement, the following terms shall have the following meanings:

     

    “Article”
means
      a
      numbered article of this Security Agreement, unless another document is
      specifically referenced.

     

    “Assigned
      Contracts”
means,
      collectively, all of the Grantors’ rights and remedies under, and all moneys and
      claims for money due or to become due to the Grantor under all material
      contracts and agreements to which any Grantor is a party or by which its assets
      are bound, and any and all amendments, supplements, extensions, and renewals
      thereof, including all rights and claims of the Grantors now or hereafter
      existing: (a) under any insurance, indemnities, warranties, and guarantees
      provided for or arising out of or in connection with any of the foregoing
      agreements; (b) for any damages arising out of or for breach or default under
      or
      in connection with any of the foregoing contracts; (c) to all other amounts
      from
      time to time paid or payable under or in connection with any of the foregoing
      agreements; or (d) to exercise or enforce any and all covenants, remedies,
      powers and privileges thereunder.

     

    “Chattel
      Paper”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Closing
      Date”
means
      the date of the Credit Agreement.

     

    “Collateral”
shall
      have the meaning set forth in Article II.

     

    “Collateral
      Access Agreement”
means
      any landlord waiver and consent or other agreement, in form and substance
      satisfactory to the Collateral Agent, between the Collateral Agent and any
      third
      party (including any bailee, consignee, customs broker, or other similar Person)
      in possession of any Collateral or any landlord of any Credit Party for any
      real
      property where any Collateral is located, as such landlord waiver and consent
      or
      other agreement may be amended, restated, or otherwise modified from time to
      time.

     

    “Collateral
      Report”
means
      any certificate (including any Borrowing Base Certificate), report or other
      document delivered by any Grantor to the Collateral Agent or any Lender with
      respect to the Collateral pursuant to any Loan Document.

     

    “Commercial
      Tort Claims”
means
      “commercial tort claims” as set forth in Article 9 of the UCC and shall include,
      without limitation, the existing commercial tort claims of the Grantor set
      forth
      in Exhibit
      C-2
      attached
      hereto.

     

    “Control”
shall
      have the meaning set forth in Article 8 or, if applicable, in Section 9-104,
      9-105, 9-106 or 9-107 of Article 9 of the UCC.

     

    “Deposit
      Account Control Agreement”
means
      an agreement, in form and substance satisfactory to the Collateral Agent, among
      any Credit Party, a banking institution holding such Credit Party’s funds, and
      the Collateral Agent with respect to collection and control of all deposits
      and
      balances held in a deposit account maintained by any Credit Party with such
      banking institution.

     

    “Deposit
      Accounts”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Documents”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Equipment”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Equity
      Interests”
means
      shares of capital stock, partnership interests, membership interests in a
      limited liability company, beneficial interests in a trust or other equity
      ownership interests in a Person, and any warrants, options or other rights
      entitling the holder thereof to purchase or acquire any such equity
      interest.

     

    “Event
      of Default”
means
      an event described in Section 5.1.

     

    “Exhibit”
refers
      to a specific exhibit to this Security Agreement, unless another document is
      specifically referenced.

     

    “Fixtures”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “General
      Intangibles”
shall
      have the meaning set forth in Article 9 of the UCC,

     

    “Goods”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Instruments”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Inventory”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    “Investment
      Property”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Lenders”
means
      the lenders party to the Credit Agreement and their successors and
      assigns.

     

    “Letter-of-Credit
      Rights”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “Licenses”
means,
      with respect to any Person, all of such Person’s right, title, and interest in
      and to (a) any and all licensing agreements or similar arrangements in and
      to
      its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages,
      claims, and payments now or hereafter due or payable under and with respect
      thereto, including, without limitation, damages and payments for past and future
      breaches thereof, and (c) all rights to sue for past, present, and future
      breaches thereof.

     

    “Permit(s)”
shall
      have the meaning set forth in Section
      8.19.

     

    “Pledged
      Collateral”
means
      all Instruments, Securities and other Investment Property of the Grantors,
      whether or not physically delivered to the Collateral Agent pursuant to this
      Security Agreement.

     

    “Receivables”
means,
      with respect to the Grantor, all rights to payment, whether or not earned by
      performance, for goods or other property sold, leased, licensed, assigned or
      otherwise disposed of, or services rendered, including, without limitation,
      all
      such rights constituting or evidenced by an Account, Chattel Paper, Document,
      Investment Property, Instrument, or any other right or claim to receive money
      which is a General Intangible or which is otherwise included as
      Collateral.

     

    “Section”
means
      a
      numbered section of this Security Agreement, unless another document is
      specifically referenced.

     

    “Security”
has
      the
      meaning set forth in Article 8 of the UCC.

     

    “Stock
      Rights”
means
      all dividends, instruments or other distributions and any other right or
      property which the Grantors shall receive or shall become entitled to receive
      for any reason whatsoever with respect to, in substitution for or in exchange
      for any Equity Interest constituting Collateral, any right to receive an Equity
      Interest and any right to receive earnings, in which the Grantors now have
      or
      hereafter acquire any right, issued by an issuer of such Equity
      Interest.

     

    “Supporting
      Obligations”
shall
      have the meaning set forth in Article 9 of the UCC.

     

    “UCC”
means
      the Uniform Commercial Code, as in effect from time to time, of the State of
      New
      York or
      of any
      other state the laws of which are required as a result thereof to be applied
      in
      connection with the attachment, perfection or priority of, or remedies with
      respect to, Collateral Agent’s or any Lender’s Lien on any
      Collateral.

     

    The
      foregoing definitions shall be equally applicable to both the singular and
      plural forms of the defined terms.

     

    ARTICLE
      II

    GRANT
      OF SECURITY INTEREST

     

    2.1. Grant
      of Security Interest.
      Each
      Grantor hereby pledges, assigns and grants to the Collateral Agent, on behalf
      of
      and for the ratable benefit of the Lenders, a security interest in all of its
      right, title and interest in, to and under all personal property and other
      assets, whether now owned by or owing to, or hereafter acquired by or arising
      in
      favor of such Grantor (including under any trade name or derivations thereof),
      and whether owned or consigned by or to, or leased from or to, such Grantor,
      and
      wherever located (all of which will be collectively referred to as the
“Collateral”),
      including, without limitation:

     

    
      
         

      

      
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    (i) all
      Accounts;

     

    (ii) all
      Chattel Paper;

     

    (iii) all
      Copyrights, Patents and Trademarks;

     

    (iv) all
      Documents;

     

    (v) all
      Equipment;

     

    (vi) all
      Fixtures;

     

    (vii) all
      General Intangibles;

     

    (viii) all
      Goods;

     

    (ix) all
      Instruments;

     

    (x) all
      Inventory;

     

    (xi) all
      Investment Property;

     

    (xii) all
      cash
      or cash equivalents;

     

    (xiii) all
      letters of credit, Letter-of-Credit Rights and Supporting
      Obligations;

     

    (xiv) all
      Deposit Accounts with any bank or other financial institution;

     

    (xv) all
      Commercial Tort Claims;

     

    (xvi) all
      Assigned Contracts; and

     

    (xvii) all
      accessions to, substitutions for and replacements, proceeds (including Stock
      Rights), insurance proceeds and products of the foregoing, together with all
      books and records, customer lists, credit files, computer files, programs,
      printouts and other computer materials and records related thereto and any
      General Intangibles at any time evidencing or relating to any of the
      foregoing.

     

    2.2. Security
      for Obligations.
      This
      Security Agreement secures, and the Collateral is collateral security for,
      the
      prompt and complete payment and performance in full when due, whether at stated
      maturity, by required prepayment, declaration, acceleration, demand or
      otherwise, of all Obligations of the Grantors.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    Each
      Grantor represents and warrants to the Collateral Agent and the Lenders
      that:

     

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

     

    3.1. Title,
      Perfection and Priority.
      Such
      Grantor has good and valid rights in or the power to transfer the Collateral
      and
      title to the Collateral with respect to which it has purported to grant a
      security interest hereunder, free and clear of all Liens except for Permitted
      Liens, and has full power and authority to grant to the Collateral Agent the
      security interest in such Collateral pursuant hereto. When financing statements
      have been filed in the appropriate offices against such Grantor in the locations
      listed on Exhibit
      H,
      the
      Collateral Agent will have a fully perfected first priority security interest
      in
      that Collateral of such Grantor in which a security interest may be perfected
      by
      filing, subject only to Permitted Liens.

     

    3.2. Type
      and Jurisdiction of Organization, Organizational and Identification
      Numbers.
      The
      type of entity of such Grantor, its state of organization, the organizational
      number issued to it by its state of organization and its federal employer
      identification number are set forth on Exhibit
      A.
      

     

    3.3. Principal
      Location.
      Such
      Grantor’s mailing address and the location of its place of business (if it has
      only one) or its chief executive office (if it has more than one place of
      business), is disclosed in Exhibit
      A;
      such
      Grantor has no other places of business except those set forth in Exhibit
      A.

     

    3.4. Collateral
      Locations.
      All of
      such Grantor’s locations where Collateral is located are listed on Exhibit
      A.
      All of
      said locations are owned by such Grantor except for locations (i) which are
      leased by the Grantor as lessee and designated in Part
      VII(b)
      of
Exhibit
      A
      and (ii)
      at which Inventory is held in a public warehouse or is otherwise held by a
      bailee or on consignment as designated in Part
      VII(c)
      of
Exhibit
      A.

     

    3.5. Accounts.

     

    (a) All
      of
      such Grantor’s Deposit Accounts are listed on Exhibit
      B.
      No
      Grantor has consented to, nor is otherwise aware of, any other Person (other
      than the Collateral Agent pursuant hereto) having Control over any Deposit
      Account. The Collateral Agent agrees with each Grantor that the Collateral
      Agent
      shall not give any instructions directing the disposition of funds from time
      to
      time credited to any Deposit Account or withhold any withdrawal rights from
      such
      Grantor with respect to funds from time to time credited to any Deposit Account
      unless an Event of Default has occurred and is continuing. No Grantor shall
      grant (or permit the granting of) Control of any Deposit Account to any person
      other than the Collateral Agent.

     

    (b) All
      of
      such Grantor’s Securities Accounts or Commodities Accounts are listed on
Exhibit
      B.
      No
      Grantor has consented to, nor is otherwise aware of, any other Person (other
      than the Collateral Agent pursuant hereto) having Control over any Securities
      Account or Commodities Account. The Collateral Agent agrees with each Grantor
      that the Collateral Agent shall not give any Entitlement Orders or instructions
      or directions to any issuer of uncertificated securities, Securities
      Intermediary or Commodity Intermediary, and shall not withhold its consent
      to
      the exercise of any withdrawal or dealing rights by such Grantor, unless an
      Event of Default has occurred and is continuing or, after giving effect to
      any
      such investment and withdrawal rights, would occur. No Grantor shall grant
      Control over any Investment Property to any person other than the Collateral
      Agent.

     

    3.6. Exact
      Names.
      Such
      Grantor’s name in which it has executed this Security Agreement is the exact
      name as it appears in such Grantor’s organizational documents, as amended, as
      filed with such Grantor’s jurisdiction of organization. Such Grantor has not,
      during the past five years, been known by or used any other corporate or
      fictitious name, or been a party to any merger or consolidation, or been a
      party
      to any acquisition other than as described in the SEC Reports.

     

    3.7. Letter-of-Credit
      Rights and Chattel Paper.
      Exhibit
      C-1
      lists
      all Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by
      such Grantor necessary or desirable to protect and perfect the Collateral
      Agent’s Lien on each item listed on Exhibit
      C
      (including the delivery of all originals and the placement of a legend on all
      Chattel Paper as required hereunder) has been duly taken. The Collateral Agent
      will have a fully perfected first priority security interest in the Collateral
      listed on Exhibit
      C-1,
      subject
      only to Permitted Liens.

     

    
      
         

      

      
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    3.8. Accounts
      and Chattel Paper.

     

    (a) The
      names
      of the obligors, amounts owing, due dates and other information with respect
      to
      its Accounts and Chattel Paper are and will be correctly stated in all records
      of such Grantor relating thereto and in all invoices and Collateral Reports
      with
      respect thereto furnished to the Collateral Agent by such Grantor from time
      to
      time. As of the time when each Account or each item of Chattel Paper arises,
      such Grantor shall be deemed to have represented and warranted that such Account
      or Chattel Paper, as the case may be, and all records relating thereto, are
      genuine and in all respects what they purport to be.

     

    (b) With
      respect to its Accounts, except as specifically disclosed on the most recent
      Collateral Report, (i) all Accounts of the Borrowers are Eligible Accounts;
      (ii)
      all Accounts represent bona fide sales of Inventory or rendering of services
      to
      Account Debtors in the ordinary course of such Grantor’s business and are not
      evidenced by a judgment, Instrument or Chattel Paper; (iii) there are no
      setoffs, claims or disputes existing or asserted with respect thereto and such
      Grantor has not made any agreement with any Account Debtor for any extension
      of
      time for the payment thereof, any compromise or settlement for less than the
      full amount thereof, any release of any Account Debtor from liability therefor,
      or any deduction therefrom except a discount or allowance allowed by such
      Grantor in the ordinary course of its business for prompt payment and disclosed
      to the Collateral Agent; (iv) to such Grantor’s knowledge, there are no facts,
      events or occurrences which in any way impair the validity or enforceability
      thereof or could reasonably be expected to reduce the amount payable thereunder
      as shown on such Grantor’s books and records and any invoices, statements and
      Collateral Reports with respect thereto; (v) such Grantor has not received
      any
      notice of proceedings or actions which are threatened or pending against any
      Account Debtor which might result in any adverse change in such Account Debtor’s
      financial condition; and (vi) such Grantor has no knowledge that any Account
      Debtor is unable generally to pay its debts as they become due.

     

    (c) In
      addition, with respect to all of its Accounts, (i) the amounts shown on all
      invoices, statements and Collateral Reports with respect thereto are actually
      and absolutely owing to such Grantor as indicated thereon and are not in any
      way
      contingent, other than (A) as arise pursuant to the Grantors’ agreements with
      Sanquin and any amendments, extensions or modifications thereto and (B) rights
      granted to a counterparty to inspect or approve delivery of products pursuant
      to
      an arm’s-length agreement with such counterparty; (ii) no payments have been or
      shall be made thereon except payments immediately delivered to a Collateral
      Deposit Account as required by Section
      7.1;
      and
      (iii) to such Grantor’s knowledge, all Account Debtors have the capacity to
      contract.

     

    3.9. Inventory.
      With
      respect to any of its Inventory scheduled or listed on the most recent
      Collateral Report, (a) such Inventory (other than Inventory in transit) is
      located at one of such Grantor’s locations set forth on Exhibit
      A,
      (b) no
      Inventory (other than Inventory in transit) is now, or shall at any time or
      times hereafter be stored at any other location except as permitted by
Section
      4.1(f),
      (c)
      such Grantor has good, indefeasible and merchantable title to such Inventory
      and
      such Inventory is not subject to any Lien or security interest or document
      whatsoever except for the Lien granted to the Collateral Agent, for the benefit
      of the Collateral Agent and Lenders, and except for Permitted Liens, (d) except
      as specifically disclosed in the most recent Collateral Report, such Inventory
      of the Borrowers is Inventory of good and merchantable quality, free from any
      material defects, (e) other than the license granted by Sanquin to Lev pursuant
      to that certain Exclusive License Agreement effective as of January 27, 2004,
      such Inventory is not subject to any licensing, patent, royalty, trademark,
      trade name or copyright agreements with any third parties which would require
      any consent of any third party upon sale or disposition of that Inventory or
      the
      payment of any monies to any third party upon such sale or other disposition,
      (f) to the extent that it has been produced in the United States, such Inventory
      has been produced by third parties and to the Grantors’ knowledge in accordance
      with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
      regulations and orders thereunder and (g) subject to Section
      8.19,
      the
      completion of manufacture, sale or other disposition of such Inventory by the
      Collateral Agent following an Event of Default shall not require the consent
      of
      any Person and shall not constitute a breach or default under any contract
      or
      agreement to which such Grantor is a party or to which such property is
      subject.

     

    
      
         

      

      
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    3.10. Intellectual
      Property.
      Such
      Grantor does not have any interest in, or title to, any Patent, registered
      or
      applied for Trademark registered or applied for or Copyright except as set
      forth
      in Exhibit
      D.
      This
      Security Agreement is effective to create a valid and continuing Lien and,
      upon
      filing of appropriate financing statements in the offices listed on Exhibit
      H
      and this
      Security Agreement with the United States Copyright Office and the United States
      Patent and Trademark Office, fully perfected first priority security interests
      in favor of the Collateral Agent on such Grantor’s Patents, registered
      Trademarks and registered Copyrights, such perfected security interests are
      enforceable as such as against any and all creditors of and purchasers from
      such
      Grantor; and all action necessary or desirable to protect and perfect the
      Collateral Agent’s Lien on such Grantor’s Patents, Trademarks or Copyrights
      shall have been duly taken.

     

    3.11. Filing
      Requirements.
      None of
      its Equipment is covered by any certificate of title, except for the vehicles
      described in Part I of Exhibit
      E.
      None of
      the Collateral owned by it is of a type for which security interests or liens
      may be perfected by filing under any federal statute except for (a) the vehicles
      described in Part II of Exhibit
      E
      and (b)
      Patents, Trademarks and Copyrights held by such Grantor and described in
Exhibit
      D.
      The
      legal description, county and street address of each property on which any
      Fixtures are located is set forth in Exhibit
      F
      together
      with the name and address of the record owner of each such
      property.

     

    3.12. No
      Financing Statements, Security Agreements.
      No
      financing statement or security agreement describing all or any portion of
      the
      Collateral which has not lapsed or been terminated naming such Grantor as debtor
      has been filed or is of record in any jurisdiction except (a) for financing
      statements or security agreements naming the Collateral Agent on behalf of
      the
      Lenders as the secured party and (b) as permitted by the Credit
      Agreement.

     

    3.13. Pledged
      Collateral.

     

    (a) Exhibit
      G
      sets
      forth a complete and accurate list of the Pledged Collateral. Each Grantor
      is
      the record and beneficial owner of the Pledged Collateral listed on Exhibit
      G
      as being
      owned by such Grantor, free and clear of any Liens, except for the security
      interest granted to the Collateral Agent for the benefit of the Lenders
      hereunder. Each Grantor further represents and warrants that (i) with respect
      to
      any certificates delivered to the Collateral Agent representing Equity
      Interests, either such certificates are Securities as defined in Article 8
      of
      the UCC as a result of actions by the issuer or otherwise or, if such
      certificates are not Securities, such Grantor has so informed the Collateral
      Agent so that the Collateral Agent may take steps to perfect its security
      interest therein as a General Intangible, (ii) all Pledged Collateral held
      by a
      securities intermediary is covered by a control agreement among such Grantor,
      the securities intermediary and the Collateral Agent pursuant to which the
      Collateral Agent has Control, (iii) none of the Pledged Collateral owned by
      such
      Grantor has been issued or transferred in violation of the securities
      registration, securities disclosure or similar laws of any jurisdiction to
      which
      such issuance or transfer may be subject, (iv) there are existing no options,
      warrants, calls or commitments of any character whatsoever relating to such
      Pledged Collateral or which obligate the issuer of any Equity Interest included
      in the Pledged Collateral to issue additional Equity Interests except as
      disclosed in the SEC Reports, and (v) no consent, approval, authorization,
      or
      other action by, and no giving of notice, filing with, any governmental
      authority or any other Person is required for the pledge by such Grantor of
      such
      Pledged Collateral pursuant to this Security Agreement or for the execution,
      delivery and performance of this Security Agreement by such Grantor, or for
      the
      exercise by the Collateral Agent of the voting or other rights provided for
      in
      this Security Agreement or for the remedies in respect of the Pledged Collateral
      pursuant to this Security Agreement, except as may be required in connection
      with such disposition by laws affecting the offering and sale of securities
      generally.

     

    
      
         

      

      
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    (b) Except
      as
      set forth in Exhibit
      G,
      such
      Grantor owns 100% of the issued and outstanding Equity Interests which
      constitute Pledged Collateral owned by it and none of the Pledged Collateral
      which represents Indebtedness owed to such Grantor is subordinated in right
      of
      payment to other Indebtedness or subject to the terms of an
      indenture.

     

    ARTICLE
      IV

    COVENANTS

     

    From
      the
      date of this Security Agreement, and thereafter until this Security Agreement
      is
      terminated, each Grantor agrees that:

     

    4.1. General.

     

    (a) Collateral
      Records.
      Such
      Grantor will maintain complete and accurate books and records with respect
      to
      the Collateral owned by it, and furnish to the Collateral Agent, with sufficient
      copies for each of the Lenders, updates with respect to Exhibits
      A, B, C-1, C-2, D, E, F and G
      hereto
      in accordance with Section
      4.1(c)
      and such
      other such reports relating to such Collateral as the Collateral Agent shall
      from time to time reasonably request.

     

    (b) Authorization
      to File Financing Statements; Ratification.
      Such
      Grantor hereby authorizes the Collateral Agent to file, and if requested will
      deliver to the Collateral Agent, all financing statements and other documents
      and take such other actions as may from time to time be requested by the
      Collateral Agent in order to maintain a first perfected security interest in
      and, if applicable, Control of, the Collateral owned by such Grantor. Any
      financing statement filed by the Collateral Agent may be filed in any filing
      office in any UCC jurisdiction and may (i) indicate such Grantor’s Collateral
      (1) as all assets of the Grantor 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 Security
      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 such Grantor is an organization,
      the type of organization and any organization identification number issued
      to
      such Grantor and (B) in the case of a financing statement filed as a fixture
      filing or indicating such Grantor’s Collateral as as-extracted collateral or
      timber to be cut, a sufficient description of real property to which the
      Collateral relates. Such Grantor also agrees to furnish any such information
      to
      the Collateral Agent promptly upon request. Such Grantor also ratifies its
      authorization for the Collateral Agent to have filed in any UCC jurisdiction
      any
      initial financing statements or amendments thereto if filed prior to the date
      hereof.

     

    (c) Further
      Assurances.
      Such
      Grantor will, if so requested by the Collateral Agent, furnish to the Collateral
      Agent, as often as the Collateral Agent requests, statements and schedules
      further identifying and describing the Collateral owned by it and such other
      reports and information in connection with its Collateral as the Collateral
      Agent may reasonably request, all in such detail as the Collateral Agent may
      specify. Such Grantor also agrees to take any and all actions necessary to
      defend title to the Collateral against all persons and to defend the security
      interest of the Collateral Agent in its Collateral and the priority thereof
      against any Lien not expressly permitted hereunder. Each Grantor agrees to
      deliver to the Collateral Agent supplements with respect to the information
      set
      forth in Exhibits
      A, B, C-1, C-2, D, E, F and G
      promptly
      after obtaining information which would require a material correction of or
      addition to any such Exhibit.

     

    
      
         

      

      
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    (d) Disposition
      of Collateral.
      Such
      Grantor will not sell, lease or otherwise dispose of the Collateral owned by
      it
      except for dispositions specifically permitted pursuant to Section 7. 4 of
      the
      Credit Agreement. 

     

    (e) Other
      Financing Statements.
      Such
      Grantor will not authorize the filing of any financing statement naming it
      as
      debtor covering all or any portion of the Collateral owned by it, except as
      permitted by the Credit Agreement. Such Grantor acknowledges that it is not
      authorized to file any financing statement or amendment or termination statement
      with respect to any financing statement without the prior written consent of
      the
      Collateral Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of
      the UCC.

     

    (f) Locations.
      Such
      Grantor will not (i) except as set forth in this Section
      4.1(f)
      maintain
      any Collateral owned by it at any location other than those locations listed
      on
Exhibit
      A,
      (ii)
      otherwise change, or add to, such locations without providing the Collateral
      Agent with prior written notice of such change or addition (and if requested
      by
      the Collateral Agent, such Grantor will concurrently therewith obtain a
      Collateral Access Agreement for each such location to the extent required by
      the
      Credit Agreement), or (iii) change its principal place of business or chief
      executive office from the location identified on Exhibit
      A,
      without
      providing the Collateral Agent with prior written notice of such relocation
      (and
      if requested by the Collateral Agent, such Grantor will concurrently therewith
      obtain a Collateral Access Agreement for such new location).

     

    (g) Compliance
      with Terms.
      Such
      Grantor will perform and comply with all obligations in respect of the
      Collateral owned by it and all agreements to which it is a party or by which
      it
      is bound relating to such Collateral.

     

    4.2. Receivables.

     

    (a) Certain
      Agreements on Receivables.
      Such
      Grantor will not make or agree to make any discount, credit, rebate or other
      reduction in the original amount owing on a Receivable or accept in satisfaction
      of a Receivable less than the original amount thereof, except that, prior to
      the
      occurrence of an Event of Default, such Grantor may reduce the amount of
      Accounts arising from the sale of Inventory in accordance with its present
      policies and in the ordinary course of business.

     

    (b) Collection
      of Receivables.
      Except
      as otherwise provided in this Security Agreement, such Grantor will collect
      and
      enforce, at such Grantor’s sole expense, all amounts due or hereafter due to
      such Grantor under the Receivables owned by it.

     

    (c) Delivery
      of Invoices.
      Such
      Grantor will deliver to the Collateral Agent promptly upon its request duplicate
      invoices with respect to each Account owned by it bearing such language of
      assignment as the Collateral Agent shall reasonably specify.

     

    (d) Disclosure
      of Counterclaims on Receivables.
      If (i)
      any discount, credit or agreement to make a rebate or to otherwise reduce the
      amount owing on any Receivable owned by such Grantor exists or (ii) if, to
      the
      knowledge of such Grantor, any dispute, setoff, claim, counterclaim or defense
      exists or has been asserted or threatened with respect to any such Receivable,
      such Grantor will promptly disclose such fact to the Collateral Agent in
      writing. Such Grantor shall send the Collateral Agent a copy of each credit
      memo
      in excess of $250,000 as soon as issued, and such Grantor shall promptly report
      each credit memo and each of the facts required to be disclosed to the
      Collateral Agent in accordance with this Section
      4.2(d)
      on the
      Borrowing Base Certificates submitted by it.

     

    
      
         

      

      
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    (e) Electronic
      Chattel Paper.
      Such
      Grantor shall take all steps necessary to grant the Collateral Agent Control
      of
      all electronic chattel paper in accordance with the UCC and all “transferable
      records” as defined in each of the Uniform Electronic Transactions Act and the
      Electronic Signatures in Global and National Commerce Act.

     

    4.3. Inventory
      and Equipment.

     

    (a) Maintenance
      of Goods.
      Such
      Grantor will do all things necessary to maintain, preserve, protect and keep
      its
      Inventory and the Equipment in good repair and working and saleable condition,
      except for damaged or defective goods arising in the ordinary course of such
      Grantor’s business and except for ordinary wear and tear in respect of the
      Equipment.

     

    (b) Returned
      Inventory.
      If an
      Account Debtor returns any Inventory to such Grantor when no Event of Default
      exists, then such Grantor shall promptly determine the reason for such return
      and shall issue a credit memorandum to the Account Debtor in the appropriate
      amount. Such Grantor shall immediately report to the Collateral Agent any return
      involving Inventory in an amount in excess of $250,000. Each such report shall
      indicate the reasons for the returns and the locations and condition of the
      returned Inventory. In the event any Account Debtor returns Inventory to such
      Grantor when an Event of Default exists, such Grantor, upon the request of
      the
      Collateral Agent, shall: (i) hold the returned Inventory in trust for the
      Collateral Agent; (ii) segregate all returned Inventory from all of its other
      property; (iii) dispose of the returned Inventory solely according to the
      Collateral Agent’s written instructions; and (iv) not issue any credits or
      allowances with respect thereto without the Collateral Agent’s prior written
      consent. All returned Inventory shall be subject to the Collateral Agent’s Liens
      thereon. Whenever any Inventory is returned, the related Account shall be deemed
      ineligible to the extent of the amount owing by the Account Debtor with respect
      to such returned Inventory and such returned Inventory shall be excluded from
      the Borrowing Base.

     

    (c) Inventory
      Count.
      Such
      Grantor will, to the extent required by the Grantor’s accountants, conduct a
      physical count of its Inventory at least once per Fiscal Year (or at such
      intervals as required by the Grantor’s accountants), and after and during the
      continuation of an Event of Default, at such other times as the Collateral
      Agent
      requests. Such
      Grantor, at its own expense, shall deliver to the Collateral Agent the results
      of each physical verification, which such Grantor has made, or has caused any
      other Person to make on its behalf, of all or any portion of its Inventory.
      

     

    (d) Equipment.
      Such
      Grantor shall promptly inform the Collateral Agent of any additions to or
      deletions from its Equipment which individually exceed $100,000. Such Grantor
      shall not permit any Equipment to become a fixture with respect to real property
      or to become an accession with respect to other personal property with respect
      to which real or personal property the Collateral Agent does not have a Lien.
      Such Grantor will not, without the Collateral Agent’s prior written consent, not
      to be unreasonably withheld or conditioned, alter or remove any identifying
      symbol or number on any of such Grantor’s Equipment constituting
      Collateral.

     

    (e) Titled
      Vehicles.
      Such
      Grantor will give the Collateral Agent notice of its acquisition of any vehicle
      covered by a certificate of title and deliver to the Collateral Agent, upon
      request, the original of any vehicle title certificate and provide and/or file
      all other documents or instruments necessary to have the Lien of the Collateral
      Agent noted on any such certificate or with the appropriate state
      office.

     

    
      
         

      

      
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    4.4. Delivery
      of Instruments, Securities, Chattel Paper and Documents.
      Such
      Grantor will (a) deliver to the Collateral Agent immediately upon execution
      of
      this Security Agreement the originals of all Chattel Paper (except for the
      Distribution and Manufacturing Services Agreement between Grantors and Sanquin,
      dated as of January 16, 2004 as amended), Securities (to the extent
      certificated) and Instruments constituting Collateral owned by it (if any then
      exist), (b) hold in trust for the Collateral Agent upon receipt and immediately
      thereafter deliver to the Collateral Agent any such Chattel Paper, Securities
      and Instruments constituting Collateral, (c) upon the Collateral Agent’s
      request, deliver to the Collateral Agent (and thereafter hold in trust for
      the
      Collateral Agent upon receipt and immediately deliver to the Collateral Agent)
      any Document evidencing or constituting Collateral and (d) upon the Collateral
      Agent’s request, deliver to the Collateral Agent a duly executed amendment to
      this Security Agreement, in the form of Exhibit
      I
      hereto
      (the “Amendment”),
      pursuant to which such Grantor will pledge such additional Collateral. Such
      Grantor hereby authorizes the Collateral Agent to attach each Amendment to
      this
      Security Agreement and agrees that all additional Collateral owned by it set
      forth in such Amendments shall be considered to be part of the
      Collateral.

     

    4.5. Uncertificated
      Pledged Collateral.
      Such
      Grantor will permit the Collateral Agent from time to time to cause the
      appropriate issuers (and, if held with a securities intermediary, such
      securities intermediary) of uncertificated securities or other types of Pledged
      Collateral owned by it not represented by certificates to mark their books
      and
      records with the numbers and face amounts of all such uncertificated securities
      or other types of Pledged Collateral not represented by certificates and all
      rollovers and replacements therefor to reflect the Lien of the Collateral Agent
      granted pursuant to this Security Agreement. With respect to any Pledged
      Collateral owned by it, such Grantor will take any actions necessary to cause
      (a) the issuers of uncertificated securities which are Pledged Collateral and
      (b) any securities intermediary which is the holder of any such Pledged
      Collateral, to cause the Collateral Agent to have and retain Control over such
      Pledged Collateral. Without limiting the foregoing, such Grantor will, with
      respect to any such Pledged Collateral held with a securities intermediary,
      cause such securities intermediary to enter into a control agreement with the
      Collateral Agent, in form and substance satisfactory to the Collateral Agent,
      giving the Collateral Agent Control.

     

    4.6. Pledged
      Collateral.

     

    (a) Issuance
      of Additional Securities.
      If any
      issuer of Equity Interests constituting Pledged Collateral issues additional
      Equity Interests to any Grantor, such Grantor shall promptly notify the
      Collateral Agent of such issuance of Equity Interests and to the extent such
      Equity Interests are represented by physical certificates shall promptly be
      deposited with and pledged to the Collateral Agent for itself and for the
      benefit of the Lenders in accordance with Section
      4.4
      and
4.5
      hereof.

     

    (b) Registration
      of Pledged Collateral.
      After
      the occurrence of an Event of Default, such Grantor will permit any registerable
      Pledged Collateral owned by it to be registered in the name of the Collateral
      Agent or its nominee at any time at the option Collateral Agent.

     

    (c) Exercise
      of Rights in Pledged Collateral.

     

    (i) Without
      in any way limiting the foregoing and subject to clause (ii) below, such Grantor
      shall have the right to exercise all voting rights or other rights relating
      to
      the Pledged Collateral owned by it for all purposes not inconsistent with this
      Security Agreement, the Credit Agreement or any other Loan Document;
provided
      however,
      that
      no vote
      or other right shall be exercised or action taken which would have the effect
      of
      impairing the rights of the Collateral Agent in respect of such Pledged
      Collateral.

     

    
      
         

      

      
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    (ii) Such
      Grantor will permit the Collateral Agent or its nominee at any time after the
      occurrence of an Event of Default, without notice, to exercise all voting rights
      or other rights relating to the Pledged Collateral owned by it, including,
      without limitation, exchange, subscription or any other rights, privileges,
      or
      options pertaining to any Equity Interests or Investment Property constituting
      such Pledged Collateral as if it were the absolute owner thereof.

     

    (iii) Such
      Grantor shall be entitled to collect and receive for its own use all cash
      dividends and interest paid in respect of the Pledged Collateral owned by it
      to
      the extent not in violation of the Credit Agreement other
      than
      any of
      the following distributions and payments (collectively referred to as the
“Excluded
      Payments”):
      (A)
      dividends and interest paid or payable other than in cash in respect of such
      Pledged Collateral, and instruments and other property received, receivable
      or
      otherwise distributed in respect of, or in exchange for, any Pledged Collateral;
      (B) dividends and other distributions paid or payable in cash in respect of
      such
      Pledged Collateral in connection with a partial or total liquidation or
      dissolution or in connection with a reduction of capital, capital surplus or
      paid-in capital of an issuer; and (C) cash paid, payable or otherwise
      distributed, in respect of principal of, or in redemption of, or in exchange
      for, such Pledged Collateral; provided
      however, that
      until
      actually paid, all rights to such distributions shall remain subject to the
      Lien
      created by this Security Agreement; and

     

    (iv) All
      Excluded Payments and all other distributions in respect of any of the Pledged
      Collateral owned by such Grantor, whenever paid or made, shall be delivered
      to
      the Collateral Agent to hold as Pledged Collateral and shall, if received by
      such Grantor, be received in trust for the benefit of the Collateral Agent,
      be
      segregated from the other property or funds of such Grantor, and be forthwith
      delivered to the Collateral Agent as Pledged Collateral in the same form as
      so
      received (with any necessary endorsement).

     

    4.7. Intellectual
      Property.

     

    (a) Such
      Grantor will use its best efforts to secure all consents and approvals necessary
      or appropriate for the assignment to or benefit of the Collateral Agent of
      any
      License held by such Grantor and to enforce the security interests granted
      hereunder.

     

    (b) Such
      Grantor shall notify the Collateral Agent immediately if it knows or has reason
      to know that any application or registration relating to any Patent, Trademark
      or Copyright (now or hereafter existing) may become abandoned or dedicated,
      or
      of any adverse determination or material 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) regarding such Grantor’s ownership of any Patent, Trademark or Copyright,
      its right to register the same, or to keep and maintain the same.

     

    (c) In
      no
      event shall such Grantor, either directly or through any agent, employee,
      licensee or designee, file an application for the registration of any Patent,
      Trademark or Copyright with the United States Patent and Trademark Office,
      the
      United States Copyright Office or any similar office or agency without
      giving the Collateral Agent written notice thereof contemporaneously or promptly
      thereafter (but in any event no more than 3 Business Days
      thereafter),
      and,
      upon request of the Collateral Agent, such Grantor shall execute and deliver
      any
      and all security agreements as the Collateral Agent may request to evidence
      the
      Collateral Agent’s first priority security interest on such Patent, Trademark or
      Copyright, and the General Intangibles of such Grantor relating thereto or
      represented thereby.

     

    
      
         

      

      
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    (d) Such
      Grantor shall take all actions necessary or reasonably requested by the
      Collateral Agent to maintain and pursue each application, to obtain the relevant
      registration and to maintain the registration of each of its Patents, registered
      Trademarks and registered Copyrights (now or hereafter existing), including
      the
      filing of applications for renewal, affidavits of use, affidavits of
      noncontestability and opposition and interference and cancellation proceedings,
      unless the Collateral Agent and Grantor shall agree that such Patent, Trademark
      or Copyright is not material to the conduct of such Grantor’s business. The
      Collateral Agent shall provide the Grantors with all assistance required or
      reasonably requested by the Grantors to assist the Grantors in complying with
      Grantors’ obligations herein.

     

    (e) Such
      Grantor shall, unless it shall reasonably determine that such Patent, Trademark
      or Copyright is in no way material to the conduct of its business or operations,
      promptly sue for, or take other commercially reasonable steps to protect the
      Patents, Trademarks and Copyrights against, infringement, misappropriation
      or
      dilution and to recover any and all damages for such infringement,
      misappropriation or dilution, and shall take such other actions as the
      Collateral Agent shall deem appropriate under the circumstances to protect
      such
      Patent, Trademark or Copyright. In the event that such Grantor institutes suit
      because any of its Patents, Trademarks or Copyrights constituting Collateral
      is
      infringed upon, or misappropriated or diluted by a third party, such Grantor
      shall comply with Section 4.8.

     

    4.8. Commercial
      Tort Claims.
      Such
      Grantor shall promptly, and in any event within five Business Days after the
      same is acquired by it, notify the Collateral Agent of any Commercial Tort
      Claim
      acquired by it and, unless the Collateral Agent otherwise consents, such Grantor
      shall enter into an amendment to this Security Agreement, in the form of
Exhibit
      I
      hereto,
      granting to Collateral Agent a first priority security interest in such
      commercial tort claim.

     

    4.9. Letter-of-Credit
      Rights.
      If such
      Grantor is or becomes the beneficiary of a letter of credit, it shall promptly,
      and in any event within five Business Days after becoming a beneficiary, notify
      the Collateral Agent thereof and cause the issuer and/or confirmation bank
      to
      (i) consent to the assignment of any Letter-of-Credit Rights to the Collateral
      Agent and (ii) agree to direct all payments thereunder to the Agent for
      application to the Obligations, all in form and substance reasonably
      satisfactory to the Collateral Agent.

     

    4.10. Federal,
      State or Municipal Claims.
      Such
      Grantor will promptly notify the Collateral Agent of any Collateral which
      constitutes a claim against the United States government or any state or local
      government or any instrumentality or agency thereof, the assignment of which
      claim is restricted by federal, state or municipal law.

     

    4.11. No
      Interference.
      Such
      Grantor agrees that it will not interfere with any right, power and remedy
      of
      the Collateral Agent provided for in this Security Agreement or now or hereafter
      existing at law or in equity or by statute or otherwise, or the exercise or
      beginning of the exercise by the Collateral Agent of any one or more of such
      rights, powers or remedies.

     

    4.12. Insurance.

     

    (a) All
      insurance policies required hereunder and under Section 6.5 of the Credit
      Agreement shall name the Collateral Agent (for the benefit of the Collateral
      Agent and the Lenders) as an additional insured or as loss payee, as applicable,
      and shall contain loss payable clauses or mortgagee clauses, through
      endorsements in form and substance satisfactory to the Collateral Agent, which
      provide that: (i) subject to the limitations set forth in the Credit Agreement,
      all proceeds thereunder with respect to any Collateral shall be payable to
      the
      Collateral Agent; (ii) no such insurance shall be affected by any act or neglect
      of the insured or owner of the property described in such policy; and (iii)
      such
      policy and loss payable or mortgagee clauses may be canceled, amended, or
      terminated only upon at least thirty days prior written notice given to the
      Collateral Agent.

     

    
      
         

      

      
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    (b) All
      premiums on any such insurance shall be paid when due by such Grantor, and
      copies of the policies delivered to the Collateral Agent. If such Grantor fails
      to obtain any insurance as required by this Section, the Collateral Agent may
      obtain such insurance at the Borrowers’ expense.

     

    4.13. Collateral
      Access Agreements.
      Such
      Grantor shall use its best efforts to obtain a Collateral Access Agreement,
      from
      the lessor of each leased property, mortgagee of owned property or bailee or
      consignee with respect to any warehouse, processor or converter facility or
      other location where Collateral is stored or located, which agreement or letter
      shall provide access rights, contain a waiver or subordination of all Liens
      or
      claims that the landlord, mortgagee, bailee or consignee may assert against
      the
      Collateral at that location, and shall otherwise be reasonably satisfactory
      in
      form and substance to the Collateral Agent. With respect to such locations
      or
      warehouse space leased as of the Closing Date and thereafter, if the Collateral
      Agent has not received a Collateral Access Agreement as of the Effective Time
      (or, if later, as of the date such location is acquired or leased), the
      Borrowers’ Inventory at that location shall be deemed to be ineligible and shall
      be excluded from the Borrowing Base until such time that a Collateral Access
      Agreement is obtained. After the Closing Date, no real property or warehouse
      space shall be leased by such Grantor and no Inventory shall be shipped to
      a
      processor or converter under arrangements established after the Closing Date,
      unless and until a satisfactory Collateral Access Agreement shall first have
      been obtained with respect to such location and if it has not been obtained,
      the
      Borrowers’ Inventory at that location shall be deemed to be ineligible and shall
      be excluded from the Borrowing Base until such time that a Collateral Access
      Agreement is obtained. Such Grantor shall timely and fully pay and perform
      its
      obligations under all leases and other agreements with respect to each leased
      location or third party warehouse where any Collateral is or may be
      located.

     

    4.14. Control
      Agreements.

     

    (a) Such
      Grantor will provide to the Collateral Agent a Control Agreement duly executed
      on behalf of each financial institution holding a Deposit Account of such
      Grantor. No Grantor shall establish or maintain any Deposit Account unless
      (1)
      it shall have given the Collateral Agent fifteen (15) days’ prior written notice
      of its intention to establish such new Deposit Account with a bank and (2)
      such
      bank and such Grantor shall have duly executed and delivered to the Collateral
      Agent a Control Agreement with respect to such Deposit Account, in form and
      substance reasonable satisfactory to the Collateral Agent.

     

    (b) Such
      Grantor will provide to the Collateral Agent a Control Agreement duly executed
      on behalf of each financial institution holding a Securities Account or
      Commodity Account of such Grantor. No Grantor shall hereafter establish and
      maintain any Securities Account or Commodity Account with any Securities
      Intermediary or Commodity Intermediary unless (1) it shall have given the
      Collateral Agent fifteen (15) days’ prior written notice of its intention to
      establish such new Securities Account or Commodity Account with such Securities
      Intermediary or Commodity Intermediary and (2) such Securities Intermediary
      or
      Commodity Intermediary, as the case may be, and such Grantor shall have duly
      executed and delivered a Control Agreement with respect to such Securities
      Account or Commodity Account, as the case may be, in form and substance
      reasonable satisfactory to the Collateral Agent.

     

    4.15. Change
      of Name or Location; Change of Fiscal Year.
      Such
      Grantor shall not (a) change its name as it appears in official filings in
      the
      state of its incorporation or organization, (b) change its chief executive
      office, principal place of business, mailing address, corporate offices or
      warehouses or locations at which Collateral is held or stored, or the location
      of its records concerning the Collateral as set forth in the Security Agreement,
      (c) change the type of entity that it is, (d) change its organization
      identification number, if any, issued by its state of incorporation or other
      organization, or (e) change its state of incorporation or organization, in
      each
      case, unless the Collateral Agent shall have received at least fifteen (15)
      days’ prior written notice of such change and the Collateral Agent shall have
      acknowledged in writing that either (1) such change will not adversely affect
      the validity, perfection or priority of the Collateral Agent’s security interest
      in the Collateral, or (2) any reasonable action requested by the Collateral
      Agent in connection therewith has been completed or taken (including any action
      to continue the perfection of any Liens in favor of the Collateral Agent, on
      behalf of Lenders, in any Collateral), provided
      that,
      any new
      location shall be in the continental U.S.; provided that Inventory may be stored
      in locations outside of the U.S. in the ordinary course of the Company’s
      business. 

     

    
      
         

      

      
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    ARTICLE
      V

    EVENTS
      OF DEFAULT AND REMEDIES

     

    5.1. Events
      of Default.
      The
      occurrence of any one or more of the following events shall constitute an Event
      of Default hereunder:

     

    (a) Any
      representation or warranty made by or on behalf of any Grantor under or in
      connection with this Security Agreement shall be materially false as of the
      date
      on which made.

     

    (b) The
      failure by any Grantor (other than a breach which constitutes an Event of
      Default under any other Section of this Article
      V)
      to
      perform or observe any other terms or provisions of this Security Agreement
      and
      such failure continues for thirty days after the earlier of (i) a Designated
      Financial Officer of any Grantor becoming aware of such failure or (ii) notice
      thereof to any Grantor by the Collateral Agent.

     

    (c) The
      occurrence of any “Event of Default” under, and as defined in, the Credit
      Agreement.

     

    5.2. Remedies.

     

    (a) If
      an
      Event of Default has occurred and for so long as such Event of Default is
      continuing, the Collateral Agent may exercise any or all of the following rights
      and remedies:

     

    (i) those
      rights and remedies provided in this Security Agreement, the Credit Agreement,
      or any other Loan Document; provided
      that,
      this
Section
      5.2(a)
      shall
      not be understood to limit any rights or remedies available to the Collateral
      Agent and the Lenders prior to an Event of Default;

     

    (ii) those
      rights and remedies available to a secured party under the UCC (whether or
      not
      the UCC applies to the affected Collateral) or under any other applicable law
      (including, without limitation, any law governing the exercise of a bank’s right
      of setoff or bankers’ lien) when a debtor is in default under a security
      agreement;

     

    (iii) give
      notice of sole control or any other instruction under any Deposit Account
      Control Agreement or and other control agreement with any securities
      intermediary and take any action therein with respect to such
      Collateral;

     

    (iv) without
      notice (except as specifically provided in Section
      8.1
      or
      elsewhere herein), demand or advertisement of any kind to any Grantor or any
      other Person, enter the premises of any Grantor where any Collateral is located
      (through self-help and without judicial process) to collect, receive, assemble,
      process, appropriate, sell, lease, assign, grant an option or options to
      purchase or otherwise dispose of, deliver, or realize upon, the Collateral
      or
      any part thereof in one or more parcels at public or private sale or sales
      (which sales may be adjourned or continued from time to time with or without
      notice and may take place at any Grantor’s premises or elsewhere), for cash, on
      credit or for future delivery without assumption of any credit risk, and upon
      such other terms as the Collateral Agent may deem commercially reasonable;
      and

     

    
      
         

      

      
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    (v) concurrently
      with written notice to the applicable Grantor, transfer and register in its
      name
      or in the name of its nominee the whole or any part of the Pledged Collateral,
      to exchange certificates or instruments representing or evidencing Pledged
      Collateral for certificates or instruments of smaller or larger denominations,
      to exercise the voting and all other rights as a holder with respect thereto,
      to
      collect and receive all cash dividends, interest, principal and other
      distributions made thereon and to otherwise act with respect to the Pledged
      Collateral as though the Collateral Agent was the outright owner
      thereof.

     

    (b) The
      Collateral Agent, on behalf of the Lenders, may comply with any applicable
      state
      or federal law requirements in connection with a disposition of the Collateral
      and compliance will not be considered to adversely affect the commercial
      reasonableness of any sale of the Collateral.

     

    (c) The
      Collateral Agent 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
      for the benefit of the Collateral Agent and the Lenders, the whole or any part
      of the Collateral so sold, free of any right of equity redemption, which equity
      redemption the Grantor hereby expressly releases.

     

    (d) Until
      the
      Collateral Agent is able to effect a sale, lease, or other disposition of
      Collateral, the Collateral Agent shall have the right to hold or use Collateral,
      or any part thereof, to the extent that it deems appropriate for the purpose
      of
      preserving Collateral or its value or for any other purpose deemed appropriate
      by the Collateral Agent. The Collateral Agent may, if it so elects, designate
      an
      agent or designee to take possession of Collateral and to enforce any of the
      Collateral Agent’s remedies (for the benefit of the Collateral Agent and
      Lenders), with respect to such appointment without prior notice or hearing
      as to
      such appointment.

     

    (e) Notwithstanding
      the foregoing, neither the Collateral Agent nor the Lenders shall be required
      to
      (i) make any demand upon, or pursue or exhaust any of their rights or remedies
      against, any Grantor, any other obligor, guarantor, pledgor or any other Person
      with respect to the payment of the Obligations or to pursue or exhaust any
      of
      their rights or remedies with respect to any Collateral therefor or any direct
      or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee
      of
      the Obligations or to resort to the Collateral or any such guarantee in any
      particular order, or (iii) effect a public sale of any Collateral.

     

    (f) Each
      Grantor recognizes that the Collateral Agent may be unable to effect a public
      sale of any or all the Pledged Collateral and may be compelled to resort to
      one
      or more private sales thereof in accordance with clause
      (a)
      above.
      Each Grantor also acknowledges that any private sale may result in prices and
      other terms less favorable to the seller than if such sale were a public sale
      and, notwithstanding such circumstances, agrees that any such private sale
      shall
      not be deemed to have been made in a commercially unreasonable manner solely
      by
      virtue of such sale being private. The Collateral Agent shall be under no
      obligation to delay a sale of any of the Pledged Collateral for the period
      of
      time necessary to permit any Grantor or the issuer of the Pledged Collateral
      to
      register such securities for public sale under the Securities Act of 1933,
      as
      amended, or under applicable state securities laws, even if the applicable
      Grantor and the issuer would agree to do so.

     

    
      
         

      

      
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    5.3. Grantor’s
      Obligations Upon Default.
      Upon
      the request of the Collateral Agent after the occurrence of an Event of Default,
      each Grantor will:

     

    (a) assemble
      and make available to the Collateral Agent the Collateral and all books and
      records relating thereto at any place or places specified by the Collateral
      Agent, whether at a Grantor’s premises or elsewhere;

     

    (b) permit
      the Collateral Agent, by the Collateral Agent’s representatives and Collateral
      Agents, to enter, occupy and use any premises where all or any part of the
      Collateral, or the books and records relating thereto, or both, are located,
      to
      take possession of all or any part of the Collateral or the books and records
      relating thereto, or both, to remove all or any part of the Collateral or the
      books and records relating thereto, or both, and to conduct sales of the
      Collateral, without any obligation to pay the Grantor for such use and
      occupancy;

     

    (c) prepare
      and file, or cause the issuer of any Pledged Collateral to prepare and file,
      with the Securities and Exchange Commission or any other applicable government
      agency, registration statements, a prospectus and such other documentation
      in
      connection with the Pledged Collateral as the Collateral Agent may request,
      all
      in form and substance satisfactory to the Collateral Agent, and furnish to
      the
      Collateral Agent, or cause the issuer of any Pledged Collateral to furnish
      to
      the Collateral Agent, any information regarding the Pledged Collateral in such
      detail as the Collateral Agent may specify;

     

    (d) take,
      or
      cause an issuer of Pledged Collateral to take, any and all actions necessary
      to
      register or qualify the Pledged Collateral to enable the Collateral Agent to
      consummate a public sale or other disposition of the Pledged Collateral;
      and

     

    (e) at
      its
      own expense, request that the independent certified public accountants then
      engaged by each Grantor to prepare and deliver to the Collateral Agent and
      each
      Lender, at any time, and from time to time, promptly upon the Collateral Agent’s
      request, the following reports with respect to the applicable Grantor: (i)
      a
      reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
      balances; and (iv) a test verification of such Accounts.

     

    5.4. Grant
      of Intellectual Property License.
      For the
      purpose of enabling the Collateral Agent to exercise the rights and remedies
      under this Article
      V
      at such
      time as the Collateral Agent shall be lawfully entitled to exercise such rights
      and remedies, each Grantor hereby (a) grants to the Collateral Agent, for the
      benefit of the Collateral Agent and the Lenders, an irrevocable, nonexclusive
      license (exercisable without payment of royalty or other compensation to any
      Grantor) to use, license or sublicense any Registered Proprietary Rights now
      owned or hereafter acquired by such Grantor, and wherever the same may be
      located, and including in such license access to all media in which any of
      the
      licensed items may be recorded or stored and to all computer software and
      programs used for the compilation or printout thereof and (b) irrevocably agrees
      that the Collateral Agent may sell any of such Grantor’s Inventory directly to
      any person, including without limitation persons who have previously purchased
      the Grantor’s Inventory from such Grantor and in connection with any such sale
      or other enforcement of the Collateral Agent’s rights under this Security
      Agreement, may sell Inventory which bears any Trademark owned by or licensed
      to
      such Grantor and any Inventory that is covered by any Copyright owned by or
      licensed to such Grantor and the Collateral Agent may finish any work in process
      and affix any Trademark owned by or licensed to such Grantor and sell such
      Inventory as provided herein. The Collateral Agent and the Grantors agree that
      any irrevocable, nonexclusive license granted hereunder may be used by the
      Collateral Agent only during the continuance of an Event of Default and in
      connection with the exercise the rights and remedies under this Article
      V.

     

    
      
         

      

      
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    ARTICLE
      VI

    ACCOUNT
      VERIFICATION; ATTORNEY IN FACT; PROXY

     

    6.1. Account
      Verification.
      The
      Collateral Agent may at any time, in the Collateral Agent’s own name, in the
      name of a nominee of the Collateral Agent, or in the name of any Grantor
      communicate (by mail, telephone, facsimile or otherwise) with the Account
      Debtors of any such Grantor, parties to contracts with any such Grantor and
      obligors in respect of Instruments of any such Grantor to verify with such
      Persons, to the Collateral Agent’s satisfaction, the existence, amount, terms
      of, and any other matter relating to, Accounts, Instruments, Chattel Paper,
      payment intangibles and/or other Receivables.

     

    6.2. Authorization
      for Secured Party to Take Certain Action.

     

    (a) Each
      Grantor irrevocably authorizes the Collateral Agent at any time and from time
      to
      time in the sole discretion of the Collateral Agent and appoints the Collateral
      Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor
      and to file financing statements necessary or desirable in the Collateral
      Agent’s sole discretion to perfect and to maintain the perfection and priority
      of the Collateral Agent’s security interest in the Collateral, (ii) to endorse
      and collect any cash proceeds of the Collateral, (iii) to file a carbon,
      photographic or other reproduction of this Security Agreement or any financing
      statement with respect to the Collateral as a financing statement and to file
      any other financing statement or amendment of a financing statement (which
      does
      not add new collateral or add a debtor) in such offices as the Collateral Agent
      in its sole discretion deems necessary or desirable to perfect and to maintain
      the perfection and priority of the Collateral Agent’s security interest in the
      Collateral, (iv) upon reasonable prior written notice to the Grantors, to
      contact and enter into one or more agreements with the issuers of uncertificated
      securities which are Pledged Collateral or with securities intermediaries
      holding Pledged Collateral as may be necessary or advisable to give the
      Collateral Agent Control over such Pledged Collateral, (v) to apply the proceeds
      of any Collateral received by the Collateral Agent to the Obligations as
      provided in Section 2.3 of the Credit Agreement, (vi) to discharge past due
      taxes, assessments, charges, fees or Liens on the Collateral (except for
      Permitted Liens), (vii) to contact Account Debtors for any reason, (viii) to
      demand payment or enforce payment of the Receivables in the name of the
      Collateral Agent or such Grantor and to endorse any and all checks, drafts,
      and
      other instruments for the payment of money relating to the Receivables, (ix)
      to
      sign such Grantor’s name on any invoice or bill of lading relating to the
      Receivables, drafts against any Account Debtor of the Grantor, assignments
      and
      verifications of Receivables, (x) to exercise all of such Grantor’s rights and
      remedies with respect to the collection of the Receivables and any other
      Collateral, (xi) to settle, adjust, compromise, extend or renew the Receivables,
      (xii) to settle, adjust or compromise any legal proceedings brought to collect
      Receivables, (xiii) to prepare, file and sign such Grantor’s name on a proof of
      claim in bankruptcy or similar document against any Account Debtor of such
      Grantor, (xiv) to prepare, file and sign such Grantor’s name on any notice of
      Lien, assignment or satisfaction of Lien or similar document in connection
      with
      the Receivables, (xv) to change the address for delivery of mail addressed
      to
      such Grantor to such address as the Collateral Agent may designate and to
      receive, open and dispose of all mail addressed to such Grantor and (xvi) to
      do
      all other acts and things reasonably necessary to carry out this Security
      Agreement; and such Grantor agrees to reimburse the Collateral Agent on demand
      for any payment made or any expense incurred by the Collateral Agent (including
      the reasonable fees, charges and disbursements of counsel) in connection with
      any of the foregoing; provided
      that,
      this
      authorization shall not relieve such Grantor of any of its obligations under
      this Security Agreement or under the Credit Agreement.

     

    
      
         

      

      
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    (b) All
      acts
      of said attorney or designee are hereby ratified and approved. The powers
      conferred on the Collateral Agent, for the benefit of the Collateral Agent
      and
      Lenders, under this Section
      6.2
      are
      solely to protect the Collateral Agent’s interests in the Collateral and shall
      not impose any duty upon the Collateral Agent or any Lender to exercise any
      such
      powers. The Collateral Agent agrees that, except for the powers granted in
      Section
      6.2(a)(i)-(vi),
      it
      shall not exercise any power or authority granted to it unless an Event of
      Default has occurred and is continuing. The rights granted to the Collateral
      Agent pursuant to this Section 6.2 shall be irrevocable until the date on which
      this Security Agreement is terminated in accordance with Section
      8.14.

     

    6.3. Proxy.
      EACH
      GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE COLLATERAL AGENT AS
      ITS
      PROXY AND ATTORNEY-IN-FACT (TO THE EXTENT SET FORTH IN SECTION 6.2 ABOVE) WITH
      RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED
      COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT
      TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE COLLATERAL AGENT
      AS
      PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS,
      POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL
      WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF
      SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
      MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
      NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL
      ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER
      OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR COLLATERAL AGENT THEREOF), UPON
      THE
      OCCURRENCE OF AN EVENT OF DEFAULT.

     

    6.4. Nature
      of Appointment; Limitation of Duty.
      THE
      APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS
      ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE
      ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14.
      NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE COLLATERAL AGENT, NOR
      ANY
      LENDER, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
      ADMINISTRATIVE AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY
      RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL
      NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT
      IN
      RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
      MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED
      THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT
      OR
      CONSEQUENTIAL DAMAGES.

     

    ARTICLE
      VII

    COLLECTION
      AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

     

    7.1. Application
      of Proceeds; Deficiency.
      All
      proceeds of the Collateral received by the Collateral Agent (i) after an Event
      of Default has occurred and is continuing and the Collateral Agent so elects
      and
      (ii) the exercise of remedies provided for in Article 8 of the Credit Agreement
      (or after the Term Loans have automatically become immediately due and payable),
      shall be applied to the Obligations in the order set forth in Section 2.3 of
      the
      Credit Agreement unless a court of competent jurisdiction shall otherwise
      direct. The Grantors shall remain liable for any deficiency if the proceeds
      of
      any sale or disposition of the Collateral are insufficient to pay all of the
      Obligations, including any attorneys’ fees and other expenses incurred by
      Collateral Agent or any Lender to collect such deficiency.

     

    
      
         

      

      
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    ARTICLE
      VIII

    GENERAL
      PROVISIONS

     

    8.1. Waivers.
      Each
      Grantor hereby waives notice of the time and place of any public sale or the
      time after which any private sale or other disposition of all or any part of
      the
      Collateral may be made. To the extent such notice may not be waived under
      applicable law, any notice made shall be deemed reasonable if sent to the
      Grantors, addressed as set forth in Article
      IX,
      at
      least ten (10) days prior to (i) the date of any such public sale or (ii) the
      time after which any such private sale or other disposition may be made. To
      the
      maximum extent permitted by applicable law, each Grantor waives all claims,
      damages, and demands against the Collateral Agent or any Lender arising out
      of
      the repossession, retention or sale of the Collateral, except such as arise
      solely out of the gross negligence or willful misconduct of the Collateral
      Agent
      or such Lender as finally determined by a court of competent jurisdiction.
      To
      the extent it may lawfully do so, each Grantor absolutely and irrevocably waives
      and relinquishes the benefit and advantage of, and covenants not to assert
      against the Collateral Agent or any Lender, any valuation, stay, appraisal,
      extension, moratorium, redemption or similar laws and any and all rights or
      defenses it may have as a surety now or hereafter existing which, but for this
      provision, might be applicable to the sale of any Collateral made under the
      judgment, order or decree of any court, or privately under the power of sale
      conferred by this Security Agreement, or otherwise. Except as otherwise
      specifically provided herein, each Grantor hereby waives presentment, demand,
      protest or any notice (to the maximum extent permitted by applicable law) of
      any
      kind in connection with this Security Agreement or any Collateral.

     

    8.2. Limitation
      on Collateral Agent’s and Lenders’ Duty with Respect to the
      Collateral.
      The
      Collateral Agent shall have no obligation to clean-up or otherwise prepare
      the
      Collateral for sale. The Collateral Agent and each Lender shall use reasonable
      care with respect to the Collateral in its possession or under its control.
      Neither the Collateral Agent nor any Lender shall have any other duty as to
      any
      Collateral in its possession or control or in the possession or control of
      any
      Collateral Agent or nominee of the Collateral Agent or such Lender, or any
      income thereon or as to the preservation of rights against prior parties or
      any
      other rights pertaining thereto. To the extent that applicable law imposes
      duties on the Collateral Agent to exercise remedies in a commercially reasonable
      manner, each Grantor acknowledges and agrees that it is commercially reasonable
      for the Collateral Agent (i) to fail to incur expenses deemed significant by
      the
      Collateral Agent to prepare Collateral for disposition or otherwise to transform
      raw material or work in process into finished goods or other finished products
      for disposition, (ii) to fail to obtain third party consents for access to
      Collateral to be disposed of, or to obtain or, if not required by other law,
      to
      fail to obtain governmental or third party consents for the collection or
      disposition of Collateral to be collected or disposed of, (iii) to fail to
      exercise collection remedies against Account Debtors or other Persons obligated
      on Collateral or to remove Liens on or any adverse claims against Collateral,
      (iv) to exercise collection remedies against Account Debtors and other Persons
      obligated on Collateral directly or through the use of collection agencies
      and
      other collection specialists, (v) to advertise dispositions of Collateral
      through publications or media of general circulation, whether or not the
      Collateral is of a specialized nature, (vi) to contact other Persons, whether
      or
      not in the same business as such Grantor, for expressions of interest in
      acquiring all or any portion of such Collateral, (vii) to hire one or more
      professional auctioneers to assist in the disposition of Collateral, whether
      or
      not the Collateral is of a specialized nature, (viii) to dispose of Collateral
      by utilizing internet sites that provide for the auction of assets of the types
      included in the Collateral or that have the reasonable capacity of doing so,
      or
      that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
      rather than retail markets, (x) to disclaim disposition warranties, such as
      title, possession or quiet enjoyment, (xi) to purchase insurance or credit
      enhancements to insure the Collateral Agent against risks of loss, collection
      or
      disposition of Collateral or to provide to the Collateral Agent a guaranteed
      return from the collection or disposition of Collateral, or (xii) to the extent
      deemed appropriate by the Collateral Agent, to obtain the services of other
      brokers, investment bankers, consultants and other professionals to assist
      the
      Collateral Agent in the collection or disposition of any of the Collateral.
      Each
      Grantor acknowledges that the purpose of this Section 8.2 is to provide
      non-exhaustive indications of what actions or omissions by the Collateral Agent
      would be commercially reasonable in the Collateral Agent’s exercise of remedies
      against the Collateral and that other actions or omissions by the Collateral
      Agent shall not be deemed commercially unreasonable solely on account of not
      being indicated in this Section 8.2. Without limitation upon the foregoing,
      nothing contained in this Section 8.2 shall be construed to grant any rights
      to
      any Grantor or to impose any duties on the Collateral Agent that would not
      have
      been granted or imposed by this Security Agreement or by applicable law in
      the
      absence of this Section 8.2.


    
      
         

      

      
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    8.3. Compromises
      and Collection of Collateral.
      The
      Grantors and the Collateral Agent recognize that setoffs, counterclaims,
      defenses and other claims may be asserted by obligors with respect to certain
      of
      the Receivables, that certain of the Receivables may be or become uncollectible
      in whole or in part and that the expense and probability of success in
      litigating a disputed Receivable may exceed the amount that reasonably may
      be
      expected to be recovered with respect to a Receivable. In view of the foregoing,
      each Grantor agrees that the Collateral Agent may at any time and from time
      to
      time, if an Event of Default has occurred and is continuing, compromise with
      the
      obligor on any Receivable, accept in full payment of any Receivable such amount
      as the Collateral Agent in its sole discretion shall determine or abandon any
      Receivable, and any such action by the Collateral Agent shall be commercially
      reasonable so long as the Collateral Agent acts in good faith based on
      information known to it at the time it takes any such action.

     

    8.4. Secured
      Party Performance of Debtor Obligations.
      Without
      having any obligation to do so, the Collateral Agent may perform or pay any
      obligation which any Grantor has agreed to perform or pay in this Security
      Agreement and the Grantors shall reimburse the Collateral Agent for any amounts
      paid by the Collateral Agent pursuant to this Section
      8.4.
      The
      Grantors’ obligation to reimburse the Collateral Agent pursuant to the preceding
      sentence shall be a Obligation payable on demand.

     

    8.5. Specific
      Performance of Certain Covenants.
      Each
      Grantor acknowledges and agrees that a breach of any of the covenants contained
      in Sections
      4.1(d),
      Sections
      4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10,
      4.12, 4.13, 4.14, 4.15, 4.16, 5.3, or 8.7
      or in
Article
      VII
      will
      cause irreparable injury to the Collateral Agent and the Lenders, that the
      Collateral Agent and Lenders have no adequate remedy at law in respect of such
      breaches and therefore agrees, without limiting the right of the Collateral
      Agent or the Lenders to seek and obtain specific performance of other
      obligations of the Grantors contained in this Security Agreement, that the
      covenants of the Grantors contained in the Sections referred to in this Section
      8.5 shall be specifically enforceable against the Grantors.

     

    8.6. Dispositions
      Not Authorized.
      No
      Grantor is authorized to sell or otherwise dispose of the Collateral except
      as
      set forth in Section
      4.1(d)
      and
      notwithstanding any course of dealing between any Grantor and the Collateral
      Agent or other conduct of the Collateral Agent, no authorization to sell or
      otherwise dispose of the Collateral (except as set forth in Section
      4.1(d))
      shall
      be binding upon the Collateral Agent or the Lenders unless such authorization
      is
      in writing signed by the Collateral Agent.

     

    8.7. No
      Waiver; Amendments; Cumulative Remedies.
      No
      delay or omission of the Collateral Agent or any Lender to exercise any right
      or
      remedy granted under this Security Agreement shall impair such right or remedy
      or be construed to be a waiver of any Event of Default or an acquiescence
      therein, and any single or partial exercise of any such right or remedy shall
      not preclude any other or further exercise thereof or the exercise of any other
      right or remedy. No waiver, amendment or other variation of the terms,
      conditions or provisions of this Security Agreement whatsoever shall be valid
      unless in writing signed by the Collateral Agent with the concurrence or at
      the
      direction of the Lenders required under Section 10.2 of the Credit Agreement
      and
      then only to the extent in such writing specifically set forth. All rights
      and
      remedies contained in this Security Agreement or by law afforded shall be
      cumulative and all shall be available to the Collateral Agent and the Lenders
      until the Obligations have been paid in full.

     

    
      
         

      

      
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    8.8. Limitation
      by Law; Severability of Provisions.
      All
      rights, remedies and powers provided in this Security Agreement may be exercised
      only to the extent that the exercise thereof does not violate any applicable
      provision of law, and all the provisions of this Security Agreement are intended
      to be subject to all applicable mandatory provisions of law that may be
      controlling and to be limited to the extent necessary so that they shall not
      render this Security Agreement invalid, unenforceable or not entitled to be
      recorded or registered, in whole or in part. Any provision in any this Security
      Agreement that is held to be inoperative, unenforceable, or invalid in any
      jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
      or
      invalid without affecting the remaining provisions in that jurisdiction or
      the
      operation, enforceability, or validity of that provision in any other
      jurisdiction, and to this end the provisions of this Security Agreement are
      declared to be severable.

     

    8.9. Reinstatement.
      This
      Security Agreement shall remain in full force and effect and continue to be
      effective should any petition be filed by or against any Grantor for liquidation
      or reorganization, should any Grantor become insolvent or make an assignment
      for
      the benefit of any creditor or creditors or should a receiver or trustee be
      appointed for all or any significant part of any Grantor’s assets, and shall
      continue to be effective or be reinstated, as the case may be, if at any time
      payment and performance of the Obligations, or any part thereof, is, pursuant
      to
      applicable law, rescinded or reduced in amount, or must otherwise be restored
      or
      returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
      had not been made. In the event that any payment, or any part thereof, is
      rescinded, reduced, restored or returned, the Obligations shall be reinstated
      and deemed reduced only by such amount paid and not so rescinded, reduced,
      restored or returned.

     

    8.10. Benefit
      of Agreement.
      The
      terms and provisions of this Security Agreement shall be binding upon and inure
      to the benefit of the Grantors, the Collateral Agent and the Lenders and their
      respective successors and assigns (including all persons who become bound as
      a
      debtor to this Security Agreement), except that no Grantor shall have the right
      to assign its rights or delegate its obligations under this Security Agreement
      or any interest herein, without the prior written consent of the Collateral
      Agent. No sales of participations, assignments, transfers, or other dispositions
      of any agreement governing the Obligations or any portion thereof or interest
      therein shall in any manner impair the Lien granted to the Collateral Agent,
      for
      the benefit of the Collateral Agent and the Lenders, hereunder.

     

    8.11. Survival
      of Representations.
      All
      representations and warranties of the Grantors contained in this Security
      Agreement shall survive the execution and delivery of this Security
      Agreement.

     

    8.12. Taxes
      and Expenses.
      Any
      taxes (including income taxes) payable or ruled payable by Federal or State
      authority in respect of this Security Agreement shall be paid by the Grantors,
      together with interest and penalties, if any. The Grantors shall reimburse
      the
      Collateral Agent for any and all out-of-pocket expenses and internal charges
      (including reasonable attorneys’, auditors’ and accountants’ fees and reasonable
      time charges of attorneys, paralegals, auditors and accountants who may be
      employees of the Collateral Agent) paid or incurred by the Collateral Agent
      in
      connection with the preparation, execution, delivery, administration, collection
      and enforcement of this Security Agreement and in the audit, analysis,
      administration, collection, preservation or sale of the Collateral (including
      the expenses and charges associated with any periodic or special audit of the
      Collateral). Any and all costs and expenses incurred by the Grantors in the
      performance of actions required pursuant to the terms hereof shall be borne
      solely by the Grantors.

     

    
      
         

      

      
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    8.13. Headings.
      The
      title of and section headings in this Security Agreement are for convenience
      of
      reference only, and shall not govern the interpretation of any of the terms
      and
      provisions of this Security Agreement.

     

    8.14. Termination.
      This
      Security Agreement shall continue in effect (notwithstanding the fact that
      from
      time to time there may be no Obligations outstanding) until (i) the Credit
      Agreement has terminated pursuant to its express terms and (ii) all of the
      Obligations have been indefeasibly paid and performed in full and no Commitments
      of the Lenders which would give rise to any Obligations are outstanding. Upon
      any termination or expiration of this Security Agreement, the Collateral Agent
      shall promptly following the date of such termination at the sole cost and
      expense of the Grantors (A) make such filings in all jurisdictions in which
      it
      filed or caused to be filed a financing statement or other evidence of the
      security agreements granted hereunder a termination statement regarding such
      liens and (B) terminate its rights under any Collateral Access Agreement,
      Deposit Account Control Agreement and any other similar agreement.

     

    8.15. Entire
      Agreement.
      This
      Security Agreement embodies the entire agreement and understanding between
      the
      Grantors and the Collateral Agent relating to the Collateral and supersedes
      all
      prior agreements and understandings between the Grantors and the Collateral
      Agent relating to the Collateral.

     

    8.16. CHOICE
      OF LAW.
      THIS
      SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
      INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK
      STATE CONSOLIDATED LAWS, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
      PROVISIONS) OF THE STATE OF NEW YORK.

     

    8.17. CONSENT
      TO JURISDICTION.
      EACH
      PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
      ANY
      U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION
      OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT ANY EACH PARTY
      HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
      OR
      PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
      ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
      ACTION, OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
      INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
      IN
      ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
      JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
      NOTHING IN THIS SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR
      ANY
      LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
      SECURITY AGREEMENT AGAINST ANY CREDIT PARTY OR ITS PROPERTIES IN THE COURTS
      OF
      ANY JURISDICTION.

     

    EACH
      PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
      EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW
      OR
      HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
      OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS IN
      ANY
      COURT REFERRED TO IN PARAGRAPH ABOVE. EACH OF THE PARTIES HERETO HEREBY
      IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF
      AN
      INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
      COURT.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    EACH
      PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
      PROVIDED FOR NOTICES IN THE CREDIT AGREEMENT. NOTHING IN THIS SECURITY AGREEMENT
      WILL AFFECT THE RIGHT OF ANY PARTY TO THIS SECURITY AGREEMENT TO SERVE PROCESS
      IN ANY OTHER MANNER PERMITTED BY LAW.

     

    8.18. WAIVER
      OF JURY TRIAL.
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
      TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
      THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
      ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
      OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
      WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
      INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
      AND CERTIFICATIONS IN THIS SECTION 8.18.

     

    8.19. Certain
      Regulatory Restrictions.
      Notwithstanding anything to the contrary set forth herein, certain rights,
      remedies and powers provided the Agent in this Security Agreement, such as
      actions that involve taking possession or controlling the use of human blood
      products or facilities for which a Permit is required, are subject to regulatory
      restrictions that may require the Agent to obtain the prior written consent
      or
      approval of certain state and/or federal agencies, and all provisions of this
      Security Agreement shall be limited to conform with such restrictions. For
      purposes hereof, “Permits”
means
      permits, licenses, certificates, approvals and other authorizations issued
      by a
      state and/or federal agency exercising authority over human blood products.
      Grantors shall not be held liable for any damages resulting from the exercise
      by
      the Collateral Agent of any rights under this Security Agreement in
      contravention of any Permits.

     

    8.20. Indemnity.
      Each
      Grantor hereby agrees to indemnify the Collateral Agent and the Lenders, and
      their respective successors, assigns, Collateral Agents and employees, from
      and
      against any and all liabilities, damages, penalties, suits, costs, and expenses
      of any kind and nature (including, without limitation, all expenses of
      litigation or preparation therefor whether or not the Collateral Agent or any
      Lender is a party thereto) imposed on, incurred by or asserted against the
      Collateral Agent or the Lenders, or their respective successors, assigns,
      Collateral Agents and employees, in any way relating to or arising out of this
      Security Agreement, or the manufacture, purchase, acceptance, rejection,
      ownership, delivery, lease, possession, use, operation, condition, sale, return
      or other disposition of any Collateral (including, without limitation, latent
      and other defects, whether or not discoverable by the Collateral Agent or the
      Lenders or any Grantor, and any claim for Patent, Trademark or Copyright
      infringement). The parties will adhere to the provisions of Section 10.3 of
      the
      Credit Agreement with respect to any claim for indemnification pursuant to
      this
      Security Agreement.

     

    8.21. Counterparts.
      This
      Security Agreement may be executed in any number of counterparts, all of which
      taken together shall constitute one agreement, and any of the parties hereto
      may
      execute this Security Agreement by signing any such counterpart.

     

    
      
         

      

      
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    ARTICLE
      IX

    NOTICES

     

    9.1. Sending
      Notices.
      Any
      notice required or permitted to be given under this Security Agreement shall
      be
      sent by United States mail, telecopier, personal delivery or nationally
      established overnight courier service, and shall be deemed received (a) when
      received, if sent by hand or overnight courier service, or mailed by certified
      or registered mail notices or (b) when sent, if sent by telecopier (except
      that,
      if not given during normal business hours for the recipient, shall be deemed
      to
      have been given at the opening of business on the next Business Day for the
      recipient), in each case addressed to the Grantors at the notice address set
      forth on Exhibit
      A,
      and to
      the Collateral Agent and the Lenders at the addresses set forth in accordance
      with Section 10.1 of the Credit Agreement.

     

    9.2. Change
      in Address for Notices.
      Each of
      the Grantors, the Collateral Agent and the Lenders may change the address for
      service of notice upon it by a notice in writing to the other
      parties.

     

    ARTICLE
      X

    THE
      COLLATERAL AGENT

     

    Mast
      Capital Management, LLC has been appointed as the exclusive Collateral Agent
      for
      the Lenders hereunder pursuant to Article 9 of the Credit Agreement. It is
      expressly understood and agreed by the parties to this Security Agreement that
      any authority conferred upon the Collateral Agent hereunder is subject to the
      terms of the delegation of authority made by the Lenders to the Collateral
      Agent
      pursuant to the Credit Agreement, and that the Collateral Agent has agreed
      to
      act (and any successor Collateral Agent shall act) as such hereunder only on
      the
      express conditions contained in such Article 9 of the Credit Agreement. Any
      successor Collateral Agent appointed pursuant to Article 9 of the Credit
      Agreement shall be entitled to all the rights, interests and benefits of the
      Collateral Agent hereunder.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
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    [Signature
      Page to Pledge and Security Agreement]

     

    IN
      WITNESS WHEREOF, the Grantors and the Collateral Agent have executed this
      Security Agreement as of the date first above written.

     

    
      	 	 	 
	 	GRANTORS:
	 	 
	 	LEV
              PHARMACEUTICALS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Joshua
              D.
              Schein
	 	
              
Name:
              Joshua D. Schein
	 	Title:
              Chief Executive Officer


    

     

    
      	 	 	 
	 	LEV
              DEVELOPMENT CORP.
	 
 	 
 	 
 
	 	By:  	/s/ Joshua
              D.
              Schein
	 	
              
Name:
              Joshua D. Schein
	 	Title:
              Chief Executive Officer


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    [Signature
      Page to Pledge and Security Agreement]

    


    
      	 	 	 
	 	COLLATERAL AGENT:
	 	 
	 	MAST
              CAPITAL MANAGEMENT, LLC
	 
 	 
 	 
 
	 	By:  	/s/ John
              S. Ehlinger
	 	
              
Name:
              John S. Ehlinger
	 	Title:
              Partner