SCHEDULE 1
                             LIST OF LENDING OFFICES


Brown Brothers Harriman & Co.
140 Broadway
New York, NY 10005
Attention: John Neff
Telephone: (212) 493-7975
Facsimile: (212) 493-8726



LaSalle Bank National Association
135 South LaSalle Street
Chicago, IL 60603
Attention:  Zennie Lynch
Telephone:  (312) 904-6960
Facsimile:  (312) 904-0409








                                       51
<PAGE>



                                  SCHEDULE 5.3



                             FOREIGN QUALIFICATIONS




                                       52
<PAGE>



                                  SCHEDULE 5.7

                               MATERIAL LITIGATION




                                       53
<PAGE>




                                  SCHEDULE 5.9

                                      LIENS





                                       54
<PAGE>




                                  SCHEDULE 5.18

                          LIST OF EMPLOYMENT AGREEMENTS



                                       55
<PAGE>



                                  SCHEDULE 5.19

                             LIST OF DIVIDENDS PAID






                                       56
<PAGE>




                                  SCHEDULE 6.14

                             LIST OF LEASED PREMISES





                                       57
<PAGE>






                                                                       EXHIBIT A
                                  FORM OF NOTE


$                                                                         , 2003
 ------------------------                                    -------------------
                                                              New York, New York


     MEMBERWORKS INCORPORATED (the "Company"), for value received, hereby
unconditionally promises to pay to the order of _________________________ (the
"Lender") at the office of BROWN BROTHERS HARRIMAN & CO. (the "Agent") located
at 140 Broadway, New York, New York, for the account of the appropriate Lending
Office of the Lender, the principal sum of __________ Dollars ($________) or, if
less, the unpaid principal amount loaned by the Lender to the Company pursuant
to the Agreement referred to below, in lawful money of the United States of
America and in immediately available funds, on the date(s) and in the manner
provided in said Agreement. The Company also promises to pay interest on the
unpaid principal balance hereof, for the period such balance is outstanding, at
said principal office for the account of said Lending Office, in like money, at
the rates of interest, on the date(s) and in the manner provided in said
Agreement; and to pay interest on any overdue principal and interest at the rate
set for in said Agreement.

     The date, type, amount and maturity date for each Loan made by the Lender
to the Company under the Agreement referred to below, and each payment of
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note (or, at the discretion of the Lender, at any other
time), endorsed by the Lender on the schedule attached hereto or any
continuation thereof or otherwise recorded and maintained in its internal
records. The failure to make or any error in making any such endorsement shall
not limit, extinguish or in any way modify the Company's obligations under the
Credit Agreement or this Note, including, without limitation, the obligation of
the Company to repay the Lender's Loans, together with interest thereon,
strictly in accordance with the terms of the Credit Agreement and this Note.

     This is a Note referred to in that certain Credit Agreement dated as of
March 31, 2003, among the Company, the lenders party thereto (the "Lenders") and
the Agent (as hereafter amended from time to time, the "Agreement") and
evidences the Loans made by the Lender thereunder and is entitled to the
benefits thereof. All terms not defined herein shall have the meanings given to
them in the Agreement.

     The Agreement provides for the acceleration of the maturity of this Note
upon the occurrence of certain Events of Default and for optional prepayments on
the terms and conditions specified therein.

     The Company waives presentment, notice of dishonor, protest and any other
notice or formality with respect to this Note.

     No waiver of any right or remedy under this Note shall in any event be
effective unless the same shall be in writing and signed by the Lenders, as
required by the Agreement, and the Company, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


<PAGE>

     In accordance with the provisions of the Agreement, the Company shall
reimburse the Lender on demand for all reasonable costs, expenses and charges
(including without limitation, reasonable fees and charges of external legal
counsel for the Lender incurred by the Lender in connection with the
preparation, performance or enforcement of this Note.

     This Note shall be binding on the Company and its permitted successors and
assigns and shall inure to the benefit of the Lender and its permitted
successors and assigns, provided that the Company may not delegate any
obligations hereunder without the prior written consent of the Lender.

     THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

     IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed as of the day and year first above written.

                                                        MEMBERWORKS INCORPORATED

                                                        By:_____________________
                                                           Name:
                                                           Title:




                                       2
<PAGE>





                                    Schedule
                                    --------

              Principal          Payments or
Date          Amount and         Prepayments of    Balance          Notation
of Loan       Type of Loan       Principal         Outstanding      Made By
-------       ------------       --------------    -----------      ---------




                                       3
<PAGE>



                                                                     EXHIBIT B-1
                           FORM OF NOTICE OF BORROWING


   Brown Brothers Harriman & Co.,
       as Agent
   140 Broadway
   New York, New York 10005-1101

   Attention:     John Neff
                  Facsimile No.: (212) 493-8726

     Re: Notice of Borrowing

   Gentlemen:

     Pursuant to Subsection 2.2 of the Credit Agreement dated as of March 31,
2003 (the "Credit Agreement") among the undersigned, the lenders parties
thereto, and you, as agent for such lenders, we hereby give you irrevocable
notice that we request a Borrowing as follows:

         1.   Amount of Borrowing:         $_____________________________.


         2.   Date of Borrowing:            _____________________________, 200_.

         3.   Type of Loan
              (Base Rate or
              Eurodollar Rate):             ______________________________


         4.   Interest Period Duration:
              (For Eurodollar Rate Loans)   ______________________________

         5.   Aggregate Principal Amount
              Previously Borrowed:         $______________________________

         6.   Remaining Commitment
              after this Borrowing:        $______________________________

     The undersigned hereby certifies that the following statements are true and
correct on and as of the date hereof, and will be true and correct on and as of
the date of Borrowing, before and after giving effect thereto and to the
application of the proceeds therefrom:

     (a) the representations and warranties of the undersigned contained in the
Credit Agreement and the Related Documents, and in any certificate, document of
financial or other statement furnished at any time under of in connection with
the Credit Agreement or any Related Document, are true and correct with the same
effect as if made on and as of such date of Borrowing (except to the extent that
such representations and warranties expressly relate to an earlier date);

                                       4
<PAGE>

     (b) no failure to perform any of its obligations under the Credit Agreement
or any Related Document exists or shall result from such proposed Borrowing; and

     (c) each of the other conditions precedent set forth in Subsection 4.2 have
been satisfied and complied with.

     Capitalized terms used but not defined shall have the respective meanings
given to them in the Credit Agreement.

     Dated this_________day of______________ , 200_.

                                                        MEMBERWORKS INCORPORATED

                                                        By:_____________________
                                                           Name:
                                                           Title:


                                       5
<PAGE>







                                                                     EXHIBIT B-2

                      Notice of Continuation or Conversion


                                                __________,_



   Brown Brothers Harriman and Co.,
      as Agent
   140 Broadway
   New York, NY 10005-1101

     Attention: John Neff
                Facsimile No.: (212) 493-8726

     Re:  Credit Agreement dated as of March 31, 2003 (the "Agreement") among
          MemberWorks Incorporated (the "Company") and Brown Brothers Harriman
          and Co., as Agent for the Lenders party thereto.


     Ladies and Gentlemen:

     Pursuant to Subsection 2.7 of the Agreement, the undersigned Company hereby
gives you irrevocable notice that the Company requests the Conversion or
Continuation of a Loan under the Agreement, and in that connection Company sets
forth below the information relating to such Loan:

     Name of Company:                             ___________________

     Conversion/Continuation
     Date:                                        ___________________

     Aggregate Principal
     Amount to be Converted or
     Continued                                    ___________________

     Type of Loan (Base Rate,
     or Eurodollar Rate):                         ___________________

     Interest Period Duration:
     (For Eurodollar Rate Loans)                  ___________________

     The undersigned officer on behalf of the Company hereby certifies that:

     (a) the representations and warranties contained in Article 5 of the
Agreement are true and correct in all material respects on and as of the date
hereof (or, if such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date); and


<PAGE>

     (b) there does not exist any Default or Event of Default under the
Agreement.

All capitalized terms used in this notice not otherwise defined herein shall
have the same meaning as assigned to them in the Agreement.

                                                        MEMBERWORKS INCORPORATED

                                                        By:_____________________

                                                        Name:
                                                        Title:





                                       2
<PAGE>








                                                                       EXHIBIT C

                           FORM OF SECURITY AGREEMENT


     SECURITY AGREEMENT dated as of March 31, 2003 between MEMBERWORKS
INCORPORATED, a Delaware corporation (the "Company"), and BROWN BROTHERS
HARRIMAN & CO., as collateral agent (the "Collateral Agent") for (i) the lenders
parties to the Credit Agreement referred to below (the "Lenders") and (ii) Brown
Brothers Harriman & Co., as agent (in such capacity, the "Agent") for such
Lenders.

                              W I T N E S S E T H:


     WHEREAS, pursuant to that certain Credit Agreement dated as of March 31,
2003 among the Company, the Lenders and the Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
the Lenders have agreed to make loans to the Company; and

     WHEREAS, it is a condition to the obligations of the Lenders under the
Credit Agreement that the Company shall have executed and delivered this
Security Agreement to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company hereby
agrees with the Collateral Agent, for the ratable benefit of the Lenders and the
Agent, as follows:

     SECTION 1. Defined Terms.

     (a) As used herein, the following terms shall have the following meanings:

     "Accounts": shall mean (i) any "account", as such term is defined in the
UCC, now owned or hereafter acquired by the Company or in which the Company has
any rights or interest, howsoever evidenced, whether or not yet earned by
performance on the part of the Company, including, without limitation, all
moneys due or to become due to the Company under all contracts for the sale or
lease of goods and/or the performance of services by it, any and all accounts
receivable and other forms of obligations now owned or hereafter received or
acquired by or belonging or owing to the Company and (ii) all of the Company's
rights relating to or arising from the foregoing (including unpaid seller's
rights of rescission, replevin, reclamation and stopping in transit and rights
to returned, reclaimed or repossessed goods) and all collateral security and
guarantees of any kind with respect to any of the foregoing and any insurance
policies or rights relating to the foregoing.

     "Assigned Agreements": shall mean each of the agreements listed in Item
4(a) of the Perfection Certificate, in each case as amended, supplemented or
otherwise modified from time to time.


<PAGE>

     "Chattel Paper": shall mean any and all "chattel paper", as defined in the
UCC, now or hereafter owned by the Company or in which the Company has any
rights or interests.

     "Collateral": shall have the meaning specified in Section 2 of this
Security Agreement.

     "Commercial Tort Claim": shall mean any "commercial tort claim", as such
term is defined in the UCC, now or hereafter possessed by the Company or in
which the Company has any rights or interest.

     "Contract": shall mean, with respect to an Account, any agreement relating
to the terms of payment or the terms of performance thereof.

     "Deposit Account": shall mean any "deposit account", as such term is
defined in the UCC, now or hereafter belonging to the Company or in which the
Company has any rights or interest.

     "Documents": shall mean any and all "documents" as defined in the UCC now
or hereafter owned by the Company or in which the Company has any rights or
interest.

     "Equipment": shall mean (i) any "equipment", as such term is defined in the
UCC, now owned or hereafter acquired by the Company or in which the Company has
any rights or interest, howsoever evidenced, and shall include all machinery,
equipment, office machinery, furniture, fixtures, conveyors, tools, materials,
storage and handling equipment, computer equipment and hardware, including
central processing units, terminals, drives, memory units, printers, keyboards,
screens, peripherals and input or output devices, automotive equipment, trucks,
molds, dies, stamps, motor vehicles and other equipment of every kind and
nature, wherever situated, together with all additions and accessions thereto,
and (ii) all replacements and all accessories and parts therefor, all manuals,
blueprints, know-how, warranties and records in connection therewith, all rights
against suppliers, warrantors, manufacturers, sellers, lessors or others in
connection therewith, and all substitutes for any of the foregoing.

     "General Intangibles": shall mean (i) any "general intangibles", as such
term is defined in the UCC, now or hereafter owned by the Company or in which
the Company has any interest or rights and, in any event, shall mean and
include, but not be limited to, all contract rights, customer and member lists,
rights to any membership fees and renewals, rights in intellectual property,
licenses, permits, copyrights and patents and any applications therefor, good
will, designs, blueprints, rights of indemnification, contribution or
subrogation, tax refunds and rights to receive tax refunds, designs, plans,
blueprints, insurance and insurance proceeds, royalties, computer tapes,
computer programs and software, trade secrets, logos, causes of action,
judgments and other claims against third parties, and (ii) all instruments and
documents representing any of the foregoing, and all rights in any goods they
may represent and all books, ledgers and files with respect to any of the
foregoing.

     "Instrument": shall mean any "instrument", as such term is defined in the
UCC, now or hereafter owned by the Company or in which the Company has any
rights or interest.

     "Inventory": shall mean any "inventory", as such term is defined in the
UCC, now or hereafter owned by the Company or in which the Company has any
rights or interest and, in any event, shall mean and include, but not be limited
to, all inventory, merchandise, goods and other personal property (including
goods in transit) which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in the Company's
business, or the processing, packaging, delivery or shipping of the same, all
finished goods, and all such property the sale or other disposition of which has
given rise to Accounts and which has been returned to or repossessed or stopped
in transit by the Company.


                                       2
<PAGE>


     "Investment Property": shall mean "investment property", as such term is
defined in the UCC, now or hereafter owned by the Company or in which the
Company has any rights or interest.

     "Perfection Certificate": shall mean the certificate attached hereto as
Exhibit A and thereby made a part of this Security Agreement, as completed and
supplemented with the schedules and attachments contemplated thereby.

         "Proceeds": shall mean "proceeds", as such term is defined in the UCC
and, in any event, shall mean and include, but not be limited to, the following
at any time whatsoever arising or receivable: (i) whatever is received upon any
collection, sale, lease, license, exchange or other disposition of any of the
Collateral, and any property into which any of the Collateral is converted,
whether cash or non-cash proceeds, (ii) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Company from time to time with
respect to any of the Collateral, (iii) any and all payments (in any form
whatsoever) made or due or payable to the Company from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any other Person), and (iv) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.

     "Security Agreement": shall mean this Security Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.

     "UCC": shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.

     (b) Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings given to them in the Credit Agreement.

     SECTION 2. Grant of Security Interest. As security for the prompt and
complete payment and performance when due of all the Obligations, the Company
hereby sells, assigns, conveys, mortgages, pledges, hypothecates and transfers
to the Collateral Agent, for the ratable benefit of the Lenders and the Agent,
and hereby grants to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, a lien on and continuing security interest in, all the
Company's right, title and interest in, to and under all property and assets of
the Company, whether now owned or hereafter acquired or arising and wheresoever
located (all of which being hereinafter collectively called the "Collateral"),
including, but not limited to, the following:

                                       3
<PAGE>

     (i) all Accounts, including, without limitation, all rights of the Company
under any Contracts relating thereto;

     (ii) All Assigned Agreements, including, without limitation, (A) all moneys
due and to become due thereunder, (B) all damages arising out of or for breach
or default in respect of such agreements, (C) all other amounts from time to
time paid or payable under or in connection with such agreements and (D) the
right of the Company to terminate such agreements or to perform and to exercise
all remedies thereunder;

     (iii) all money, Instruments and Chattel Paper;

     (iv) all Investment Property and all rights, privileges and immunities of
the Company in respect of or otherwise relating to such Investment Property;

     (v) all Inventory and Equipment;

     (vi) all General Intangibles;

     (vii) all Documents;

     (viii) all Commercial Tort Claims;

     (ix) all Deposit Accounts;

     (x) all other assets and property of the Company now or hereafter owned by
the Company or in which the Company has any right, title or interest, whether
tangible or intangible and wheresoever located including without limitation, all
rights and interests of the Company in memberships sold by the Company or any of
its Subsidiaries and all contracts evidencing such memberships; and

     (xi) all Proceeds and products of any or all of the foregoing.


     SECTION 3. Limitation on Collateral Agent's Obligations. It is expressly
agreed by the Company that, anything herein to the contrary notwithstanding, the
Company shall remain liable under all contracts and agreements included in or
giving rise to the Collateral to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with and pursuant to the terms and provisions thereof, as if this Security
Agreement had not been executed. Neither the Collateral Agent, any Lender nor
the Agent shall have any obligation or liability under any such contract or
agreement by reason of or arising out of this Security Agreement or the granting
to the Collateral Agent, for the ratable benefit of the Lenders and the Agent,
of a Lien thereon or the receipt by the Collateral Agent, for the ratable
benefit of the Lenders and the Agent, of any payment relating thereto pursuant
to the terms hereof, nor shall the Collateral Agent, any Lender or the Agent be
required or obligated in any manner to perform or fulfill any of the obligations
of the Company under or pursuant to any such contract or other agreement, or to
make any payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by any party
thereunder, or to present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                                       4
<PAGE>

     SECTION 4. Representations and Warranties. The Company hereby represents
and warrants to the Collateral Agent, the Lenders and the Agent that:

     (a) This Security Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.

     (b) The Company is the sole legal and beneficial owner of the Collateral,
free and clear of any and all Liens, except for the Liens granted to the
Collateral Agent pursuant hereto and the Liens described in Subsection 7.1 of
the Credit Agreement.

     (c) The information set forth in the Perfection Certificate is true,
correct and complete.

     (d) Upon filing UCC termination statements with respect to each of the
financing statements attached as Schedule 6 (b) to the Perfection Certificate,
there will be no security agreement, financing statement, equivalent security or
lien instrument or continuation statement executed by the Company or, to the
best of its knowledge, any other Person covering all or any part of the
Collateral on file or of record in any public office, except such as may have
been filed by the Company in favor of the Collateral Agent, for the ratable
benefit of the Lenders and the Agent, pursuant to this Security Agreement.

     (e) This Security Agreement creates a valid lien on the Collateral in favor
of the Collateral Agent, for the ratable benefit of the Lender and the Agent,
securing the payment of the Obligations. Upon filing UCC financing statements
naming the Company as debtor and the Collateral Agent as secured party in the
jurisdictions listed on Schedule 7 to the Perfection Certificate and taking
possession of all Collateral for which possession is required in order to
perfect a security interest, all action necessary to perfect the security
interest of the Collateral Agent, for the ratable benefit of the Lenders and the
Agent, will have been taken and such security interest will have priority over
all other Liens, except perfected Liens arising in connection with any
Capitalized Lease entered into by the Company prior to the date hereof; provided
that, unless so requested by the Collateral Agent pursuant to Section 10 of this
Security Agreement, the Company need not take any action to establish "control"
(within the meaning of the UCC) by the Collateral Agent over any Deposit Account
or Investment Property as to which control may be necessary or desirable in
order to perfect the security interest created hereby.

     SECTION 5. Covenants. The Company covenants and agrees with the Collateral
Agent, the Lenders and the Agent that from and after the date of this Security
Agreement and until the Obligations are fully satisfied and the Commitments
terminated:

     (a) The Company will not change (i) its name, identity or jurisdiction of
organization in any manner, or (ii) the locations of its places of business or
the locations where it keeps or holds any Collateral (other than Inventory in
transit) or records relating thereto from the applicable location described in
the Perfection Certificate, unless the Company shall have given the Collateral
Agent at least 30 days' prior written notice thereof and shall have delivered to
the Collateral Agent UCC financing statements properly prepared (and signed or
otherwise authenticated, if required) for filing in each jurisdiction in which
any such filing is required in order to perfect the Lien created by this
Security Agreement in the Collateral affected by the change of name, identity,
jurisdiction or location and shall have taken all action necessary or requested
by the Collateral Agent to amend any financing statement or continuation
statement so that it is not seriously misleading.

                                       5
<PAGE>

     (b) The Company will keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including, without
limitation, a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral. The
Company will mark its books and records pertaining to the Collateral to evidence
this Security Agreement and the Liens and security interests granted hereby. All
Chattel Paper will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
Brown Brothers Harriman & Co., as Collateral Agent." As further security, the
Company agrees that the Collateral Agent, for the ratable benefit of the Lenders
and the Agent, shall have a special property interest in all of the Company's
books and records pertaining to the Collateral and upon the occurrence of an
Event of Default the Company shall deliver and turn over any such books and
records to the Collateral Agent or to its representatives or agents on demand of
the Collateral Agent.

     (c) The Company will, without unreasonable delay, furnish to the Collateral
Agent from time to time upon the Collateral Agent's request therefor, such
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably require.

     (d) The Company will advise the Collateral Agent promptly, in reasonable
detail, (i) of any Lien on or asserted against any of the Collateral (other than
Liens permitted under Subsection 7.1 of the Credit Agreement), and (ii) of the
occurrence of any other material event which would adversely affect the
aggregate value of the Collateral or the security interests created hereunder.

     (e) If any of the Collateral shall now or hereafter be, or be evidenced by,
an Instrument or Document, the Company shall deliver to the Collateral Agent a
certificate identifying such Instrument or Document. Upon the Collateral Agent's
request, the Company shall deliver to the Collateral Agent the originals of all
Collateral constituting Instruments with a face value or market value of greater
than or equal to $2,000,000 in the aggregate or constituting Documents or
Chattel Paper, in each case duly endorsed or accompanied by an appropriate
instrument of transfer or assignment.

     SECTION 6. Special Provisions Relating to Accounts.

     (a) The amount represented by the Company to the Collateral Agent from time
to time as owing by each account debtor or by all account debtors in respect of
the Accounts will at such time be the correct amount actually and
unconditionally owing by such account debtors thereunder. No amounts payable
under or in connection with any of the Accounts are evidenced by promissory
notes or other Instruments.

                                       6
<PAGE>

     (b) The Company will not amend, modify, terminate or waive any provision of
any Account or Contract if such actions, singly or in the aggregate, could
reasonably be expected to materially adversely affect the aggregate value of the
Collateral or the security interests created hereunder.

     (c) At any time after the occurrence of an Event of Default, the Collateral
Agent may, and at the Collateral Agent's request the Company shall, notify
account debtors and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, pursuant hereto and to direct such Persons to make
payment of all amounts due or to become due to the Company under such Accounts
or Contracts directly to the Collateral Agent.

     (d) The Collateral Agent shall have the right (which right may not be
exercised any more frequently than once a fiscal quarter unless a Default has
occurred in which case it may be exercised as frequently as the Collateral Agent
may require), at the Company's expense, to make test verifications of the
Accounts in any reasonable manner, and the Company agrees to furnish all such
assistance and information as the Collateral Agent may reasonably require in
connection therewith. The Company at its expense will cause independent
accountants satisfactory to the Collateral Agent to furnish to the Collateral
Agent, promptly upon the Collateral Agent's request (which request shall be made
no more frequently than annually unless a Default has occurred in which case it
may be exercised as frequently as the Collateral Agent may require), the
following reports: (i) reconciliation of all Accounts, (ii) an aging of all
Accounts, (iii) trial balances, and (iv) a test verification of such Accounts.

     SECTION 7. Special Provisions Relating to the Assigned Agreements.

     (a) Each Assigned Agreement is in full force and effect and no default
exists thereunder. The grant of the security interest in the Assigned Agreements
to the Collateral Agent pursuant hereto and the exercise by the Collateral Agent
of any of its rights and remedies hereunder with respect to the Assigned
Agreements will not violate any of the terms or provisions of the Assigned
Agreements.

     (b) The Company shall, at its own expense:

     (i) perform and observe all the terms and provisions of each Assigned
Agreement to be performed or observed by it, maintain each Assigned Agreement in
full force and effect and enforce each Assigned Agreement in accordance with its
terms, in each case except to the extent otherwise permitted pursuant to
paragraph (c) below; and

     (ii) from time to time furnish to the Collateral Agent such information and
reports regarding the Assigned Agreements as the Collateral Agent may reasonably
request and upon the request of the Collateral Agent, make to each other party
to each Assigned Agreement such demands and requests for information and reports
or for action as the Company is entitled to make under such Assigned Agreement.

                                       7
<PAGE>

     (c) The Company shall not cancel or terminate any Assigned Agreement or
amend, modify, waive or otherwise change any material term or condition of any
Assigned Agreement if such actions, singly or in the aggregate, could reasonably
be expected to materially adversely effect the aggregate value of the Collateral
or the security interests granted hereunder.

     SECTION 8. Special Provisions Relating to Equipment.

     (a) Except with respect to Equipment the Company deems is no longer used or
useful in the conduct of its business, the Company shall cause the Equipment to
be maintained and preserved in good condition, repair and working order,
ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or in the case of any loss or damage to any
Equipment, as quickly as practicable after the occurrence thereof, make or cause
to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. The Company shall
promptly furnish to the Collateral Agent a statement respecting any material
loss or damage to any of the Equipment.

     (b) The Company shall furnish to the Collateral Agent, promptly upon the
request of the Collateral Agent, a report detailing changes in excess of $50,000
in the amount and condition of the Equipment, including purchases, depreciation,
sales and losses.

     SECTION 9. Special Provisions Relating to Investment Property.

     (a) Subject to the provisions of the Credit Agreement, the Company may at
any time transfer, sell, redeem, close open trades or otherwise liquidate any of
the Investment Property.

     (b) The Collateral Agent shall have the right, at any time upon the
occurrence and during the continuance of an Event of Default and without notice
to the Company, to transfer to or to register in the name of the Collateral
Agent or any of its nominees any or all of the Investment Property. In addition,
the Collateral Agent shall have the right at any such time to exchange
certificates or instruments representing or evidencing any Investment Property
for certificates or instruments of smaller or larger denominations.

     (c) So long as no Event of Default has occurred and is continuing, the
Company shall be entitled to vote or consent with respect to the Investment
Property in any manner not inconsistent with the Credit Agreement, this Security
Agreement or any other Related Document. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the
exclusive right to vote all Investment Property. The Company hereby grants to
the Collateral Agent, for the ratable benefit of the Lenders and the Agent, an
irrevocable proxy to vote all Investment Property, which proxy shall be
effective immediately upon the occurrence of an Event of Default, and upon
request of the Collateral Agent, the Company agrees to deliver to the Collateral
Agent such further evidence of such irrevocable proxy or such further
irrevocable proxy to vote any Investment Property as the Collateral Agent may
request.

     SECTION 10. Further Assurances. At any time and from time to time, upon the
written request of the Collateral Agent, and at the sole expense of the Company,
the Company will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the Collateral Agent
may require to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the UCC with respect to the Liens
granted hereby, transferring Collateral for which possession is necessary to
perfect a security interest to the Collateral Agent's possession, establishing
"control" (within the meaning of the UCC) by the Collateral Agent over
Collateral as to which control is necessary or desirable to perfect the security
interest of the Collateral Agent hereunder, and obtaining waivers from landlords
and mortgagees. The Company also hereby authorizes the Collateral Agent to file
any such financing or continuation statement without the signature of the
Company to the extent permitted by applicable law.

                                       8
<PAGE>

     SECTION 11. Collateral Agent's Appointment as Attorney-in-Fact.

     (a) The Company hereby irrevocably constitutes and appoints the Collateral
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of the Company
and in the name of the Company or in its own name, from time to time in the
Collateral Agent's discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby gives the Collateral Agent the power and
right, on behalf of the Company, without prior notice to or assent by the
Company to do the following:

     (i) upon the occurrence and continuance of any Event of Default, to ask,
demand, collect, receive and give acquittances and receipts for any and all
moneys due and to become due under any Collateral and, in the name of the
Company or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Collateral Agent for the purpose of collecting any and all
such moneys due under any Collateral whenever payable and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Collateral whenever payable;

     (ii) to pay or discharge any taxes not paid by the Company when due or
Liens levied or placed on or threatened against the Collateral, to effect any
repairs or any insurance called for by the terms of this Security Agreement and
to pay all or any part of the premiums therefor and the costs thereof; and

     (iii) upon the occurrence and continuance of any Event of Default, (A) to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due and to become due thereunder directly to the
Collateral Agent or as the Collateral Agent shall direct; (B) to receive payment
of and receipt for any and all moneys, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other documents
relating to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding brought against
the Company with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described above and, in connection therewith, to
give such discharges or releases as the Collateral Agent may deem appropriate;
and (G) generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Collateral Agent was the absolute owner thereof for all purposes, and to do,
at the Collateral Agent's option and the Company's expense, at any time, or from
time to time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent's
security interest, for the ratable benefit of the Lenders and the Agent,
therein, in order to effect the intent of this Security Agreement, all as fully
and effectively as the Company might do.

                                       9
<PAGE>

     The Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable until all Obligations of the Company
to the Collateral Agent, the Lenders and the Agent have been fully and
completely satisfied and the Commitments terminated.

     (b) The powers conferred on the Collateral Agent hereunder are solely to
protect its and the Lenders' and Agent's interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The Collateral Agent
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers and neither it nor any Lender or the Agent nor any
of their respective partners, officers, directors, employees or agents shall be
responsible to the Company for any act or failure to act, except for its own
gross negligence or willful misconduct.

     (c) The Company also authorizes the Collateral Agent, each Lender and the
Agent, at any time and from time to time, to execute, in connection with the
sale provided for in paragraph (b) of Section 13 of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

     SECTION 12. Performance of Company's Obligations. If the Company fails to
perform or comply with any of its agreements contained herein, the Collateral
Agent, any Lender or the Agent may (but shall not be obligated to) perform or
comply, or otherwise cause performance or compliance, with such agreement, and
the Collateral Agent, such Lender or the Agent may from time to time take any
other action which it deems necessary for the maintenance, preservation or
protection of any of the Collateral or the Collateral Agent's Liens, for the
ratable benefit of the Lenders and the Agent, thereon. The cost and expenses of
the Collateral Agent, such Lender or the Agent (including, without limitation,
the fees and disbursements of counsel to the Collateral Agent, such Lender or
the Agent) incurred in connection with any of the foregoing, together with
interest thereon at the rate provided for in Subsection 8.4 of the Credit
Agreement, shall be payable by the Company to the Collateral Agent, such Lender
or the Agent on demand and shall constitute Obligations secured hereby.

                                       10
<PAGE>

     SECTION 13. Remedies, Rights Upon Default.

     (a) If an Event of Default shall occur and be continuing:

     (i) All payments received by the Company under or in connection with any of
the Collateral shall be held by the Company in trust for the Collateral Agent,
for the ratable benefit of the Lenders and the Agent, shall be segregated from
other funds of the Company and shall forthwith upon receipt by the Company, be
turned over to the Collateral Agent, in the same form as received by the Company
(duly endorsed by the Company to the Collateral Agent, if required); and

     (ii) Any and all such payments so received by the Collateral Agent (whether
from the Company or otherwise) may, in the sole discretion of the Collateral
Agent, be held by the Collateral Agent as collateral security for, and/or then
or at any time thereafter applied in whole or in part by the Collateral Agent,
against all or any part of the Obligations in such order as the Agent and the
Lenders shall elect. Any balance of such payments held by the Collateral Agent
and remaining after payment in full of all the Obligations shall be paid over to
the Company or to whomsoever may be lawfully entitled to receive the same.

     (b) If any Event of Default shall occur and be continuing, the Collateral
Agent may in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, exercise all rights and remedies of a secured
party under the UCC. Without limiting the generality of the foregoing, the
Company expressly agrees that upon the occurrence of an Event of Default, the
Collateral Agent, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Company or any other person (all and each
of which demands, advertisements and/or notices are hereby expressly waived to
the extent permitted by law), may forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange or broker's board or at any of the Collateral Agent's offices or
elsewhere at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. If any consent, approval
or authorization of, or filing with, any Governmental Authority or any other
Person should be necessary to effectuate any sale or other disposition of the
Collateral, or any partial disposition of the Collateral, the Company agrees to
execute all such applications and other instruments as may be required in
connection with securing any such consent, approval or authorization, and will
otherwise use its best efforts to secure the same; provided, however, that the
Company shall not be required to register any Investment Property under the
Securities Act of 1933, as amended (the "Act"), or the securities laws of any
state. The Collateral Agent, each Lender and the 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 the whole or any part of said Collateral
so sold, free of any right or equity of redemption which right or equity of
redemption the Company hereby waives and releases. The Company further agrees,
at the Collateral Agent's request, to assemble the Collateral and make it
available to the Collateral Agent at such places which the Collateral Agent
shall select, whether at the Company's premises or elsewhere. The Collateral
Agent may apply the proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safe keeping
or otherwise of any or all of the Collateral or in any way relating to the
rights of the Collateral Agent hereunder, including reasonable attorneys' fees
and legal expenses, to the payment in whole or in part of the Obligations, in
such order as the Lenders and the Agent may elect, the Company remaining liable
for any deficiency remaining unpaid after such application, and only after so
paying over such proceeds, and after the payment by the Collateral Agent of any
other amount required by any provision of law, need the Collateral Agent account
for the surplus, if any, to the Company. To the extent permitted by applicable
law, the Company waives all claims, damages, and demands against the Collateral
Agent, the Lenders and the Agent arising out of the repossession, retention or
sale of the Collateral. The Company agrees that, to the extent notice of sale
shall be required by law, at least five Business Days' notice to the Company
(which notification shall be deemed given when mailed, postage prepaid,
addressed to the Company at its address set forth in Subsection 10.2 of the
Credit Agreement) of the time and place of any public sale or of the time after
which a private sale may take place shall constitute reasonable notification of
such matters. No notification need be given to the Company if the Company, after
the occurrence of a Default, has signed a statement renouncing or modifying any
right to notification of sale or other intended disposition. The Company shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all amounts to which the Collateral
Agent, the Lenders and the Agent are entitled, the Company also being liable for
the fees of any attorneys employed by the Collateral Agent, any Lenders or the
Agent to collect such deficiency.

                                       11
<PAGE>

     (c) The Company also agrees to pay all costs of the Collateral Agent,
including reasonable attorneys' fees and disbursements, incurred with respect to
the collection of any of the Obligations and the enforcement of any of its
rights hereunder.

     (d) The Company hereby waives presentment, demand, protest or any notice
(to the extent permitted by applicable law) of any kind in connection with this
Security Agreement or any Collateral.

     SECTION 14. Collateral Agent's Duties. The Collateral Agent shall have no
duty of care with respect to the Collateral, except that the Collateral Agent
shall exercise reasonable care with respect to Collateral or any income thereon
in the custody of the Collateral Agent or any agent or nominee of the Collateral
Agent. The Collateral Agent shall be deemed to have exercised reasonable care if
such property is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, or if the Collateral Agent takes such
action with respect to the Collateral as the Company shall request in writing,
but no failure to comply with any such request nor any omission to do any such
act requested by the Company shall be deemed a failure to exercise reasonable
care, nor shall the Collateral Agent's failure to take steps to preserve rights
against any parties or property be deemed a failure to have exercised reasonable
care with respect to Collateral in the Collateral Agent's custody.

     SECTION 15. Notices. Notices to the parties hereto shall be given in
accordance with the provisions of Subsection 10.2 of the Credit Agreement.

                                       12
<PAGE>

     SECTION 16. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     SECTION 17. No Waiver; Cumulative Remedies. The Collateral Agent, the
Lenders and the Agent shall not by any act, delay, omission or otherwise be
deemed to have waived any of their respective rights or remedies hereunder and
no waiver shall be valid unless in writing, signed by the Collateral Agent, with
the consent of the Agent and the Lenders, and then only to the extent therein
set forth. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent, the Lenders or the Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of the Collateral Agent, the Lenders or the Agent, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law or in any other agreement with respect to the Obligations. None
of the terms or provisions of this Security Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by the
Collateral Agent, and consented to by the Lenders and the Agent.

     SECTION 18. Successors and Assigns; Governing Law. This Security Agreement
and all obligations of the Company hereunder shall be binding upon the
successors and assigns of the Company, and shall, together with the rights and
remedies of the Collateral Agent, the Lenders and the Agent hereunder, inure to
the benefit of the Collateral Agent, the Lenders and the Agent and their
respective successors and assigns. The Company may not assign any of its rights
or obligations hereunder without the consent of the Collateral Agent, the
Lenders and the Agent.

     SECTION 19. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

     SECTION 20. WAIVER OF JURY TRIAL. THE COMPANY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS SECURITY AGREEMENT.

                                       13
<PAGE>






     IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.

                                                       MEMBERWORKS INCORPORATED

                                                       By:______________________
                                                          Name:
                                                          Title:


                                                       BROWN BROTHERS HARRIMAN &
                                                       CO., as Collateral Agent

                                                       By:______________________
                                                          Name:
                                                          Title:



                                       14
<PAGE>


                                                                       EXHIBIT A
                                                                     to Security
                                                                       Agreement


                             PERFECTION CERTIFICATE


     Capitalized terms used but not defined herein have the meanings provided in
the Security Agreement dated March 31, 2003 between MEMBERWORKS INCORPORATED
(the "Company") and Brown Brothers Harriman & Co., as collateral agent on behalf
of the Lenders and the Agent referred to therein.

     1. Names. (a) The exact name of the Company as that name appears on its
Certificate of Incorporation is as follows:


Source:  UCC ss. 9-503

     (b) The following is a list of all other names (including trade names or
similar appellations) used by the Company, or any other business or organization
to which the Company became the successor by merger, consolidation, acquisition,
change in form, nature or jurisdiction of organization or otherwise, now or at
any time during the past five years:


Source:  UCCss.ss.9-507(c); 9-705(c)

     2. Organization. (a) The Company's jurisdiction of organization is:


Source:  UCCss.ss.9-301; 9-307

     (b) The following is the Company's organizational identification number:


Source:  UCC ss. 9-516(b)(5)

     3. Locations. (a) The chief executive office of the Company has been
located at the following address(es) at all times during the past five years:

Mailing Address                 County                       State           Zip
________________________________________________________________________________

<PAGE>






Source:  Former UCCss.ss.9-103(3); 9-103(4); 9-401(6); UCCss.9-705(c)

     (b) The following are all places of business of the Company:

Mailing Address                 County                       State           Zip
________________________________________________________________________________







     (c) The following are all locations in which the Company maintains
originals of, or any books or records relating to, any of the Collateral:

Mailing Address                 County                       State           Zip
________________________________________________________________________________








     (d) The following are the names and addresses of all persons or entities
other than the Company (and other than lessees from the Company in the ordinary
course of business), such as other secured parties, consignees, warehousemen or
other bailees, which have possession or are intended to have possession of any
of the Collateral:


Source:  UCCss.ss.9-109(a); 9-312(d); 9-313; 9-330

     4. Identification of Collateral other than Investment Property. (a)
Attached hereto as Schedules 4(a) is a complete list of all Assigned Agreements.

     (b) Attached hereto as Schedule 4(b) is a list of all Deposit Accounts of
the company.

     (c) Attached hereto as Schedule 4(c) is a complete list and description
from the accounting records of the Company of all Collateral consisting of
Equipment.

     (d) Attached hereto as Schedule 4(d) is a current and complete list of all
Collateral consisting of Instruments, Documents and Chattel Paper with a value
in excess of $50,000.

     5. Fixtures. Attached hereto as Schedule 5 is the information required by
UCC ss. 9-502(b)(3) of each state in which any of the Collateral consisting of
fixtures are or are to be located.

                                       2
<PAGE>

Source:  UCCss.ss.9-301(3); 9-501 and 9-502(b)(3)

     6. File Search Reports. Attached hereto as Schedule 6(a) is a true copy of
an official search report from the Uniform Commercial Code filing officer (or
from an experienced Uniform Commercial Code search organization acceptable to
the Collateral Agent) in each jurisdiction identified in paragraphs 2 or 3(a)
above. Attached hereto as Schedule 6(b) is a true copy of each financing
statement or other filing identified in such search reports.

     7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule setting
forth the filing offices in the jurisdictions identified in paragraphs 2 and 5
above where Uniform Commercial Code financing statements are required to be
filed in order to perfect the security interest of the Collateral Agent, for the
ratable benefit of the Lenders and the Agent, in all Collateral in which a
security interest may be perfected by filing, including, without limitation,
Collateral consisting of fixtures.




                                       3
<PAGE>


                                                                       EXHIBIT D

                           FORM OF SUBSIDIARY GUARANTY


     GUARANTY (the "Guaranty") made as of ____________ 200_ by ____________, a
_______________ corporation (the "Guarantor"), in favor of (i) the lenders (the
"Lenders") parties to the Credit Agreement referred to below, and (ii) BROWN
BROTHERS HARRIMAN & CO., as agent for such Lenders (the "Agent").

                              W I T N E S S E T H:


     WHEREAS, the Guarantor is a wholly-owned subsidiary of MemberWorks
Incorporated, a Delaware corporation (the "Company"); and

     WHEREAS, the Company has entered into a Credit Agreement dated as of March
31, 2003 (as amended, modified and supplemented from time to time, the "Credit
Agreement") with the Lenders and the Agent pursuant to which the Lenders have
agreed to make Loans to the Company; and

     WHEREAS, the Guarantor is willing to Guaranty the obligations of the
Company under the Credit Agreement and the Related Documents to which the
Company is a party;

     NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantor hereby agrees as follows:

     SECTION 1. DEFINITIONS

     1.1 Defined Terms. Capitalized terms used but not defined herein shall have
the meanings provided in the Credit Agreement.

     SECTION 2. GUARANTY

     2.1 Guaranty of Obligations. The Guarantor hereby unconditionally and
irrevocably guarantees (as primary obligor and not merely as surety) to the
Lenders and the Agent the full payment by the Company, when due (whether at
stated maturity, by acceleration or otherwise), of all the Obligations. The
Guarantor hereby agrees that it will forthwith pay any such Obligations
immediately upon demand by the Agent or any Lender.

     2.2 Costs and Expenses. The Guarantor further irrevocably and
unconditionally agrees to pay any and all reasonable costs and expenses
(including, without limitation, attorneys' fees and disbursements) incurred by
any of the Lenders or the Agent in enforcing their respective rights or remedies
under this Guaranty or in connection with this Guaranty.

     2.3 Guaranty Absolute. This Guaranty is an unconditional and absolute
guaranty of payment (and not merely of collection) and shall apply to all of the
Obligations without limitation as to either amount or period of time. The
Obligations shall be conclusively presumed to have been created in reliance on
this Guaranty. This Guaranty shall be enforceable against the Guarantor, its
successors and assigns, without the necessity of making any demand of the
Company or taking any action or resorting to any suit or proceeding against the
Company or any other party or exhausting any other security or collateral. The
Guarantor guarantees that all the Obligations will be paid strictly in
accordance with the terms of the Credit Agreement and the Related Documents to
which the Company is a party, regardless of any law, regulation or order, now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Lenders or the Agent with respect thereto and notwithstanding any
claim, defense or right of set-off the Company, the Guarantor or any other
Person may have against the Agent or any Lender subject only to the defense of
payment in full of such Obligations.

<PAGE>

     2.4 Waivers. The Guarantor waives (i) the right to have the Lenders or the
Agent pursue any other remedy or enforce any other rights, (ii) the right to
receive notice of acceptance of this Guaranty or notice of the incurrence,
existence or non- payment of any of the Obligations and (iii) presentment,
demand, notice of dishonor, protest or any other notice or demand to which the
Guarantor might otherwise be entitled. The Guarantor shall not be exonerated or
discharged from liability hereunder by any time or grace period given to the
Company or by any other indulgence or concession granted to the Company,
including, without limitation, any such period, indulgence or concession
whatsoever affecting or preventing a recovery of the Obligations which, but for
this provision, might operate to exonerate or discharge the Guarantor from its
obligations hereunder. If the Company merges or consolidates with or into
another entity, loses its separate legal identity or ceases to exist, the
Guarantor shall nonetheless continue to be liable for the payment of all the
Obligations.

     2.5 Guaranty Not Affected by Changes. This Guaranty shall be a continuing
guaranty, and the obligations and liability of the Guarantor hereunder shall in
no way be affected, impaired, released, reduced or discharged by reason of the
occurrence of any of the following, although without further notice to or
consent of the Guarantor:

     (a) the amendment, modification or supplement (whether material or
otherwise) of any of the Obligations, the Credit Agreement or any of the Related
Documents;

     (b) the assertion of any of the rights or remedies of the Lenders or the
Agent under the Credit Agreement or any of the Related Documents;

     (c) the failure, omission or delay on the part of the Lenders or the Agent
to enforce, assert or exercise any right, power or remedy conferred on or
available to the Lenders or the Agent under the Credit Agreement or any of the
Related Documents;

     (d) any bankruptcy, insolvency, reorganization, arrangement, assignment for
the benefit of creditors, receivership or trusteeship affecting the Company;

     (e) any lack of validity or enforceability of any of the Obligations, the
Credit Agreement, any of the Related Documents or any other agreement or
instrument relating thereto;

                                       2
<PAGE>

     (f) any release or amendment or waiver of or consent to or departure from
any other guaranty or security for all or any of the Obligations; or

     (g) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, the Company or the Guarantor.

     This Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time, any payment of any amounts payable by the Company is
rescinded or must otherwise be returned by the Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made. If an event permitting the acceleration
of any of the Obligations of the Company shall at any time have occurred and be
continuing and such acceleration shall at such time be prevented by reason of
the pendency against the Company of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes of this Guaranty and its
obligations hereunder, the Obligations of the Company shall be deemed to have
been accelerated and the Guarantor shall forthwith pay such Obligations, and the
other obligations hereunder, without any further notice or demand (including
interest which but for the filing of a petition in bankruptcy with respect to
the Company, would accrue on the Obligations).

     In furtherance of the foregoing, the Guarantor hereby acknowledges,
understands and accepts that the Total Commitment under the Credit Agreement may
be increased and additional Lenders may become a party to the Credit Agreement
and in such event, this Guaranty shall be deemed to Guaranty and any associated
security arrangements shall be deemed to secure, any additional obligations
arising from such increase in the Total Commitment and the addition of
additional Lenders to the Credit Agreement.

     2.6 Payments. Each payment to be made by the Guarantor under this Guaranty
or in connection herewith to any Person shall be made without set-off or
deduction of any kind whatsoever and also shall be made free and clear of, and
without deduction or withholding for or on account of, any tax, reserve, levy or
duty of, or imposed by, any governmental or taxing authority in any jurisdiction
unless the Guarantor is required to make such a payment subject to the deduction
or withholding of such tax, in which case the amount payable by the Guarantor in
respect of which such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the making of such
deduction or withholding such other Person receives and retains (free from any
liability in respect of any such deduction or withholding) a net amount equal to
the amount which it would have received and so retained had no such deduction or
withholding been made or required to be made. The provisions of this Subsection
2.6 shall survive termination of the Commitments and the payment in full of the
Obligations.

     2.7 Subrogation. The Guarantor expressly waives any and all rights of
subrogation, reimbursement, contribution, exoneration and indemnity
(contractual, statutory or otherwise) arising from the existence or performance
of this Guaranty and the Guarantor irrevocably waives any right to enforce any
remedy which the Agent or the Lenders now have or may hereafter have against the
Company, and waives any benefit of, and any right to participate in, any
security now or hereafter held by the Collateral Agent, the Agent or any Lender.
The provisions of this Subsection 2.7 shall survive the termination of the
Commitments and the payment in full of the Obligations.

                                       3
<PAGE>

     SECTION 3. REPRESENTATIONS AND WARRANTIES

     The Guarantor represents and warrants to the Agent and the Lenders that:

     3.1 Organization. It is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified as a foreign corporation and in good standing in each jurisdiction
where the nature of its business or ownership of its properties makes such
qualification necessary.

     3.2 Power and Authority. It has full power, authority and legal right to
own its property and conduct its business and to execute and deliver this
Guaranty and perform its obligations hereunder and has taken all necessary
corporate action to authorize its execution, delivery and performance of this
Guaranty.

     3.3 Binding Effect. This Guaranty has been duly executed and delivered by
it and constitutes its legal, valid, and binding obligation enforceable against
it in accordance with its terms.

     3.4 Consent. No consent of any other Person (including, without limitation,
its stockholders or creditors) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any Governmental Authority, domestic or foreign, is required
to be obtained by it in connection with the execution, delivery or performance
of this Guaranty.

     3.5 Non-contravention. The execution, delivery and performance of this
Guaranty will not violate or contravene any provision of its certificate of
incorporation or by-laws, or of any securities issued by it, or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which it is a party or which purports to be binding upon it or upon any of its
assets, and will not result in the creation or imposition of any Lien on any of
its assets. The execution, delivery or performance of this Guaranty will not
violate or contravene any provision of any applicable law or regulation, or of
any order, judgment, writ, award or decree of any court, arbitrator or
Governmental Authority, domestic or foreign.

     3.6 Litigation. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending, or to the best of its
knowledge, threatened by or against it or any of its properties or revenues (a)
which if adversely determined may have a material adverse effect on its
business, operations, prospects, properties or condition (financial or
otherwise) or on its ability to perform its obligations under this Guaranty or
(b) which questions the validity or enforceability of this Guaranty.

     SECTION 4. NOTICE OF CERTAIN EVENTS

     4.1 Notice of Adverse Change. For so long as this Guaranty shall remain in
effect, the Guarantor agrees to promptly, and in any event within five (5)
Business Days after obtaining knowledge thereof, notify the Agent and the
Lenders of any event which could reasonably be expected to have a material
adverse affect on the business, operations, prospects, properties or condition
(financial or otherwise) of the Guarantor or on its ability to perform its
obligations hereunder or under any of the other Related Documents to which it is
a party.

                                       4
<PAGE>

     SECTION 5. MISCELLANEOUS

     5.1 Parties. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and inure to the benefit of the Agent and the Lenders and
their successors and assigns. The Guarantor may not assign any of its rights or
obligations hereunder without the written consent of the Agent and the Lenders.

     5.2 Remedies Cumulative. All of the rights and remedies of the Lenders and
the Agent under this Guaranty and the Credit Agreement and the other Related
Documents are intended to be distinct, separate and cumulative and no such right
or remedy is intended to be an exclusion of or a waiver of any of the others.
All rights and remedies may be enforced concurrently, separately, in any order
and in any combination.

     5.3 Survival. All representations, warranties and agreements made herein
and in statements or certificates delivered pursuant hereto shall continue in
full force and effect until all of the obligations of the Guarantor under this
Guaranty shall be fully performed in accordance with the terms hereof, and until
the payment in full of all of the Obligations of the Company under the Credit
Agreement and the Related Documents to which it is a party in accordance with
the terms and provisions of such agreements and the termination of the
Commitments under the Credit Agreement.

     5.4 Severability; Amendments; Headings. If any term of this Guaranty or any
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty and any other application of such term shall not be affected thereby.
Any term of this Guaranty may be amended, waived, discharged or terminated only
by an instrument in writing signed by the Agent and the Lenders. The headings in
this Guaranty are for purposes of reference only and shall not limit or define
the meaning hereof.

     5.5 Governing Law; Waiver of Jury Trial; Submission to Jurisdiction.

     (a) This Guaranty shall be governed by and construed in accordance with the
law of the State of New York. EACH OF THE GUARANTOR, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
LITIGATION IN CONNECTION WITH THIS GUARANTY AS TO WHICH THE GUARANTOR, THE AGENT
OR ANY OF THE LENDERS SHALL BE ADVERSE PARTIES.

     (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE
BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK FOR NEW YORK COUNTY OR OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, EACH OF THE GUARANTOR, THE AGENT AND
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS. EACH OF THE GUARANTOR, THE AGENT


                                       5
<PAGE>



AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO. EACH OF
THE GUARANTOR, THE AGENT, AND THE LENDERS WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF THE STATE OF NEW YORK.

                                       6
<PAGE>


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



                                                    ____________________________

                                                    By:_________________________
                                                         Name:
                                                         Title:



                                       7
<PAGE>


                                                                       EXHIBIT E

                      FORM OF SUBSIDIARY SECURITY AGREEMENT


     SECURITY AGREEMENT dated as of _________ __, ____ between __________, a
__________ corporation (the "Guarantor"), and BROWN BROTHERS HARRIMAN & CO., as
collateral agent (the "Collateral Agent") for (i) the lenders parties to the
Credit Agreement referred to below (the "Lenders") and (ii) Brown Brothers
Harriman & Co., as agent (in such capacity, the "Agent") for such Lenders.

                              W I T N E S S E T H:


     WHEREAS, the Guarantor is a wholly-owned subsidiary of MemberWorks
Incorporated, a Delaware corporation (the "Company"); and

     WHEREAS, the Company has entered into a Credit Agreement dated as of March
31, 2003 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") with the Lenders and Agent pursuant to
which the Lenders have agreed to make loans to the Guarantor; and

     WHEREAS, the Guarantor has executed and delivered a Guaranty dated ________
__, ____ (as the same may be amended, supplemented or otherwise modified from
time to time, the "Subsidiary Guarantee") in favor of the Lenders and the Agent
guaranteeing the prompt and complete payment by the Company of its obligations
under the Credit Agreement and the Related Documents to which it is a party; and

     WHEREAS, in order to secure the obligations of the Guarantor under the
Subsidiary Guaranty, the Guarantor has agreed to execute and deliver this
Security Agreement in favor of the Collateral Agent, for the ratable benefit of
the Lenders and the Agent;

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby
agrees with the Collateral Agent, for the ratable benefit of the Lenders and the
Agent, as follows:

     SECTION 1. Defined Terms.

     (a) As used herein, the following terms shall have the following meanings:

     "Accounts": shall mean (i) any "account", as such term is defined in the
UCC, now owned or hereafter acquired by the Guarantor or in which the Guarantor
has any rights or interest, howsoever evidenced, whether or not yet earned by
performance on the part of the Guarantor, including, without limitation, all
moneys due or to become due to the Guarantor under all contracts for the sale or
lease of goods and/or the performance of services by it, any and all accounts
receivable and other forms of obligations now owned or hereafter received or
acquired by or belonging or owing to the Guarantor and (ii) all of the
Guarantor's rights relating to or arising from the foregoing (including unpaid
seller's rights of rescission, replevin, reclamation and stopping in transit and
rights to returned, reclaimed or repossessed goods) and all collateral security
and guarantees of any kind with respect to any of the foregoing and any
insurance policies or rights relating to the foregoing.


<PAGE>

     "Assigned Agreements": shall mean each of the agreements listed in Item
4(a) of the Perfection Certificate, in each case as amended, supplemented or
otherwise modified from time to time.

     "Chattel Paper": shall mean any and all "chattel paper", as defined in the
UCC, now or hereafter owned by the Guarantor or in which the Guarantor has any
rights or interest.

     "Collateral": shall have the meaning specified in Section 2 of this
Security Agreement.

     "Commercial Tort Claim": shall mean any "commercial tort claim", as such
term is defined in the UCC, now or hereafter possessed by the Guarantor or in
which the Guarantor has any rights or interest.

     "Contract": shall mean, with respect to an Account, any agreement relating
to the terms of payment or the terms of performance thereof.

     "Deposit Account": shall mean any "deposit account", as such term is
defined in the UCC, now or hereafter belonging to the Guarantor or in which the
Guarantor has any rights or interest.

     "Documents": shall mean any and all "documents" as defined in the UCC now
or hereafter owned by the Guarantor or in which the Guarantor has any rights or
interest.

     "Equipment": shall mean (i) any "equipment", as such term is defined in the
UCC, now owned or hereafter acquired by the Guarantor or in which the Guarantor
has any rights or interest, howsoever evidenced, and shall include all
machinery, equipment, office machinery, furniture, fixtures, conveyors, tools,
materials, storage and handling equipment, computer equipment and hardware,
including central processing units, terminals, drives, memory units, printers,
keyboards, screens, peripherals and input or output devices, automotive
equipment, trucks, molds, dies, stamps, motor vehicles and other equipment of
every kind and nature, wherever situated, together with all additions and
accessions thereto, and (ii) all replacements and all accessories and parts
therefor, all manuals, blueprints, know-how, warranties and records in
connection therewith, all rights against suppliers, warrantors, manufacturers,
sellers, lessors or others in connection therewith, and all substitutes for any
of the foregoing.

     "General Intangibles": shall mean (i) any "general intangibles", as such
term is defined in the UCC, now or hereafter owned by the Guarantor or in which
the Guarantor has any interest or rights and, in any event, shall mean and
include, but not be limited to, all contract rights, customer and member lists,
rights in intellectual property, licenses, permits, copyrights and patents and
any applications therefor, good will, designs, blueprints, rights of
indemnification, contribution or subrogation, tax refunds and rights to receive
tax refunds, designs, plans, blueprints, insurance and insurance proceeds,
royalties, computer tapes, computer programs and software, trade secrets, logos,
causes of action, judgments and other claims against third parties, and (ii) all
instruments and documents representing any of the foregoing, and all rights in
any goods they may represent and all books, ledgers and files with respect to
any of the foregoing.
                                        2
<PAGE>



     "Instrument": shall mean any "instrument", as such term is defined in the
UCC, now or hereafter owned by the Guarantor or in which the Guarantor has any
rights or interest.

     "Inventory": shall mean any "inventory", as such term is defined in the
UCC, now or hereafter owned by the Guarantor or in which the Guarantor has any
rights or interest and, in any event, shall mean and include, but not be limited
to, all inventory, merchandise, goods and other personal property (including
goods in transit) which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in the
Guarantor's business, or the processing, packaging, delivery or shipping of the
same, all finished goods, and all such property the sale or other disposition of
which has given rise to Accounts and which has been returned to or repossessed
or stopped in transit by the Guarantor.

     "Investment Property": shall mean "investment property", as such term is
defined in the UCC, now or hereafter owned by the Guarantor or in which the
Guarantor has any rights or interest.

     "Obligations": shall mean any and all of the debts, obligations and
liabilities of the Guarantor to the Agent or the Lenders provided for or arising
under the Subsidiary Guaranty, this Security Agreement or any other document,
agreement or instrument executed and delivered in connection with the Subsidiary
Guaranty or this Security Agreement (including, without limitation, the
obligation to pay all amounts owing by the Company under the Credit Agreement
and the Related Documents to which it is a party and to pay all costs and
expenses incurred by the Agent or the Lenders in enforcing any remedies or
rights under the Subsidiary Guaranty, including attorneys fees and
disbursements), whether now existing or hereafter arising, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished and
later increased, created or incurred.

     "Perfection Certificate": shall mean the certificate attached hereto as
Exhibit A and thereby made a part of this Security Agreement, as completed and
supplemented with the schedules and attachments contemplated thereby.

     "Proceeds": shall mean "proceeds", as such term is defined in the UCC and,
in any event, shall mean and include, but not be limited to, the following at
any time whatsoever arising or receivable: (i) whatever is received upon any
collection, sale, lease, license, exchange or other disposition of any of the
Collateral, and any property into which any of the Collateral is converted,
whether cash or non-cash proceeds, (ii) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Guarantor from time to time with
respect to any of the Collateral, (iii) any and all payments (in any form
whatsoever) made or due or payable to the Guarantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any other Person), and (iv) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.

                                       3
<PAGE>

     "Security Agreement": shall mean this Security Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.

     "UCC": shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.

     (b) Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings given to them in the Credit Agreement.

     SECTION 2. Grant of Security Interest. As security for the prompt and
complete payment and performance when due of all the Obligations, the Guarantor
hereby sells, assigns, conveys, mortgages, pledges, hypothecates and transfers,
to the Collateral Agent, for the ratable benefit of the Lenders and the Agent,
and hereby grants to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, a lien on and continuing security interest in, all the
Guarantor's right, title and interest in, to and under all property and assets
of the Guarantor, whether now owned or hereafter acquired or arising and
wheresoever located (all of which being hereinafter collectively called the
"Collateral"), including, but not limited to, the following:

     (i) all Accounts, including, without limitation, all rights of the
Guarantor under any Contracts relating thereto;

     (ii) All Assigned Agreements, including, without limitation, (A) all moneys
due and to become due thereunder, (B) all damages arising out of or for breach
or default in respect of such agreements, (C) all other amounts from time to
time paid or payable under or in connection with such agreements and (D) the
right of the Guarantor to terminate such agreements or to perform and to
exercise all remedies thereunder;

     (iii) all money, Instruments and Chattel Paper;

     (iv) all Investment Property and all rights, privileges and immunities of
the Guarantor in respect of or otherwise relating to any Investment Property;

     (v) all Inventory and Equipment;

     (vi) all General Intangibles;

     (vii) all Documents;

     (viii) all Commercial Tort Claims;

     (ix) all Deposit Accounts;

                                       4
<PAGE>

     (x) all other assets and property of the Guarantor now or hereafter owned
by the Guarantor or in which the Guarantor has any right, title or interest,
whether tangible or intangible and wheresoever located; and

     (xi) all Proceeds and products of any or all of the foregoing.

     SECTION 3. Limitation on Collateral Agent's Obligations. It is expressly
agreed by the Guarantor that, anything herein to the contrary notwithstanding,
the Guarantor shall remain liable under all contracts and agreements included in
or giving rise to the Collateral to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with and pursuant to the terms and provisions thereof, as if this Security
Agreement had not been executed. Neither the Collateral Agent, any Lender nor
the Agent shall have any obligation or liability under any such contract or
agreement by reason of or arising out of this Security Agreement or the granting
to the Collateral Agent, for the ratable benefit of the Lenders and the Agent,
of a Lien thereon or the receipt by the Collateral Agent of any payment relating
thereto pursuant to the terms hereof, nor shall the Collateral Agent, any Lender
or the Agent be required or obligated in any manner to perform or fulfill any of
the obligations of the Guarantor under or pursuant to any such contract or other
agreement, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party thereunder, or to present or file any claim, or to take
any action to collect or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times.

     SECTION 4. Representations and Warranties. The Guarantor hereby represents
and warrants to the Collateral Agent, the Lenders and the Agent that:

     (a) This Security Agreement has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor, enforceable in accordance with its terms.

     (b) The Guarantor is the sole legal and beneficial owner of the Collateral,
free and clear of any and all Liens, except for the Liens granted to the
Collateral Agent pursuant hereto and the Liens described in Subsection 7.1 of
the Credit Agreement.

     (c) The information set forth in the Perfection Certificate is true,
correct and complete.

     (d) Upon filing UCC termination statements with respect to each of the
financing statements attached as Schedule 6(b) to the Perfection Certificate,
there will be no security agreement, financing statement, equivalent security or
lien instrument or continuation statement executed by the Guarantor or, to the
best of its knowledge, any other Person covering all or any part of the
Collateral on file or of record in any public office, except such as may have
been filed by the Guarantor in favor of the Collateral Agent, for the ratable
benefit of the Lenders and the Agent, pursuant to this Security Agreement;
provided that the Collateral Agent shall not take possession of any Pledged
Securities for which possession may be required in order to perfect a security
interest.

                                       5
<PAGE>

     (e) This Security Agreement creates a valid lien on the Collateral in favor
of the Collateral Agent, for the ratable benefit of the Lenders and the Agent,
securing the payment of the Obligations. Upon filing UCC financing statements
naming the Guarantor as debtor and the Collateral Agent as secured party in the
jurisdictions listed on Schedule 7 to the Perfection Certificate and taking
possession of all Collateral for which possession is required in order to
perfect a security interest, all action necessary to perfect the security
interest of the Collateral Agent, for the ratable benefit of the Lenders and the
Agent, will have been taken and such security interest will have priority over
all other Liens; provided that, unless so requested by the Collateral Agent
pursuant to Section 10 of this Security Agreement, the Guarantor need not take
any action to establish "control" (within the meaning of the UCC) by the
Collateral Agent over any Deposit Account or Investment Property as to which
control may be necessary or desirable in order to perfect the security interest
created hereby.

     SECTION 5. Covenants. The Guarantor covenants and agrees with the
Collateral Agent, the Lenders and the Agent that from and after the date of this
Security Agreement and until the Obligations are fully satisfied and the
Commitments terminated:

     (a) The Guarantor will not change (i) its name, identity or jurisdiction of
organization, or (ii) the locations of its places of business or the locations
where it keeps or holds any Collateral (other than Inventory in transit) or
records relating thereto from the applicable location described in the
Perfection Certificate, unless the Guarantor shall have given the Collateral
Agent at least 30 days' prior written notice thereof and shall have delivered to
the Collateral Agent UCC financing statements properly prepared (and signed or
otherwise authenticated, if required) for filing in each jurisdiction in which
any such filing is required in order to perfect the Lien created by this
Security Agreement in the Collateral affected by the change of name, identity,
jurisdiction or location and shall have taken all action necessary or requested
by the Collateral Agent to amend any financing statement or continuation
statement so that it is not seriously misleading.

     (b) The Guarantor will keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including, without
limitation, a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral. The
Guarantor will mark its books and records pertaining to the Collateral to
evidence this Security Agreement and the liens and security interests granted
hereby. All Chattel Paper will be marked with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of Brown Brothers Harriman & Co., as Collateral Agent." As
further security, the Guarantor agrees that the Collateral Agent, for the
ratable benefit of the Lenders and the Agent, shall have a special property
interest in all of the Guarantor's books and records pertaining to the
Collateral and upon the occurrence of an Event of Default the Guarantor shall
deliver and turn over any such books and records to the Collateral Agent or to
its representatives or agents on demand of the Collateral Agent.

     (c) The Guarantor will without unreasonable delay furnish to the Collateral
Agent from time to time, upon the Collateral Agent's request therefor, such
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably require.

                                       6
<PAGE>

     (d) The Guarantor will advise the Collateral Agent promptly, in reasonable
detail, (i) of any Lien on or asserted against any of the Collateral, (other
than Liens permitted under Subsection 7.1 of the Credit Agreement), and (ii) of
the occurrence of any other material event which would adversely affect the
aggregate value of the Collateral or the security interests created hereunder.

     (e) If any of the Collateral shall now or hereafter be, or be evidenced by,
an Instrument or Document, the Guarantor shall deliver to the Collateral Agent a
certificate identifying such Instrument or Document. Upon the Collateral Agent's
request, the Guarantor shall deliver to the Collateral Agent the originals of
all Collateral constituting Instruments with a face value or market value of
greater than or equal to $2,000,000 in the aggregate or constituting Documents
or Chattel Paper, in each case duly endorsed or accompanied by an appropriate
instrument of transfer or assignment.

     SECTION 6. Special Provisions Relating to Accounts.

     (a) The amount represented by the Guarantor to the Collateral Agent from
time to time as owing by each account debtor or by all account debtors in
respect of the Accounts will at such time be the correct amount actually and
unconditionally owing by such account debtors thereunder. No amounts payable
under or in connection with any of the Accounts are evidenced by promissory
notes or other Instruments.

     (b) The Guarantor will not amend, modify, terminate or waive any provision
of any Account or Contract if such actions, singly or in the aggregate, could
reasonably be expected to materially adversely affect the aggregate value of the
Collateral or the security interests created hereunder.

     (c) At any time after the occurrence of an Event of Default, the Collateral
Agent may, and at the Collateral Agent's request the Guarantor shall, notify
account debtors and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, pursuant hereto and to direct such Persons to make
payment of all amounts due or to become due to the Guarantor under such Accounts
or Contracts directly to the Collateral Agent.

     (d) The Collateral Agent shall have the right (which right may not be
exercised any more frequently than once a fiscal quarter unless a Default has
occurred in which case it may be exercised as frequently as the Collateral Agent
may require) , at the Guarantor's expense, to make test verifications of the
Accounts in any reasonable manner, and the Guarantor agrees to furnish all such
assistance and information as the Collateral Agent may reasonably require in
connection therewith. The Guarantor at its expense will cause independent
accountants satisfactory to the Collateral Agent to furnish to the Collateral
Agent, promptly upon the Collateral Agent's request (which request shall be made
no more frequently than annually unless a Default has occurred, in which case it
may be exercised as frequently as the Collateral Agent may require), the
following reports: (i) reconciliation of all Accounts, (ii) an aging of all
Accounts, in (iii) trial balances, and (iv) a test verification of such
Accounts.

     SECTION 7. Special Provisions Relating to the Assigned Agreements.

                                       7
<PAGE>

     (a) Each Assigned Agreement is in full force and effect and no default
exists thereunder. The grant of the security interest in the Assigned Agreements
to the Collateral Agent pursuant hereto and the exercise by the Collateral Agent
of any of its rights and remedies hereunder with respect to the Assigned
Agreements will not violate any of the terms or provisions of the Assigned
Agreements.

     (b) The Guarantor shall, at its own expense:

     (i) perform and observe all the terms and provisions of each Assigned
Agreement to be performed or observed by it, maintain each Assigned Agreement in
full force and effect and enforce each Assigned Agreement in accordance with its
terms, in each case except to the extent otherwise permitted pursuant to
paragraph (c) below; and

     (ii) from time to time furnish to the Collateral Agent such information and
reports regarding the Assigned Agreements as the Collateral Agent may reasonably
request and upon the request of the Collateral Agent, make to each other party
to each Assigned Agreement such demands and requests for information and reports
or for action as the Guarantor is entitled to make under such Assigned
Agreement.

     (c) The Guarantor shall not cancel or terminate any Assigned Agreement or
amend, modify, waive or otherwise change any material term or condition of any
Assigned Agreement if such actions, singly or in the aggregate, could reasonably
be expected to materially adversely effect the aggregate value of the Collateral
or the security interests granted hereunder.

     SECTION 8. Special Provisions Relating to Equipment.

     (a) Except with respect to Equipment that the Guarantor deems is no longer
used or useful in the conduct of its business, the Guarantor shall cause the
Equipment to be maintained and preserved in good condition, repair and working
order, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall forthwith, or in the case of any loss or damage
to any Equipment, as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end. The Guarantor
shall promptly furnish to the Collateral Agent a statement respecting any
material loss or damage to any of the Equipment.

     (b) The Guarantor shall furnish to the Collateral Agent, promptly upon the
request of the Collateral Agent, a report detailing changes in excess of $50,000
in the amount and condition of the Equipment, including purchases, depreciation,
sales and losses.

     SECTION 9. Special Provisions Relating to Investment Property.

     (a) The Collateral Agent shall have the right, at any time upon the
occurrence and during the continuance of an Event of Default and without notice
to the Guarantor, to transfer to or to register in the name of the Collateral
Agent or any of its nominees any or all of the Investment Property. In addition,
the Collateral Agent shall have the right at any such time to exchange
certificates or instruments representing or evidencing any Investment Property
for certificates or instruments of smaller or larger denominations.

                                       8
<PAGE>

     (b) So long as no Event of Default has occurred and is continuing, the
Guarantor shall be entitled to vote or consent with respect to the Investment
Property in any manner not inconsistent with the Credit Agreement, this Security
Agreement or any other Related Document. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the
exclusive right to vote the Investment Property. The Guarantor hereby grants to
the Collateral Agent, for the ratable benefit of the Lenders and the Agent, an
irrevocable proxy to vote all Investment Property, which proxy shall be
effective immediately upon the occurrence of an Event of Default, and upon
request of the Collateral Agent, the Guarantor agrees to deliver to the
Collateral Agent such further evidence of such irrevocable proxy or such further
irrevocable proxy to vote any Investment Property as the Collateral Agent may
request.

     SECTION 10. Further Assurances. At any time and from time to time, upon the
written request of the Collateral Agent, and at the sole expense of the
Guarantor, the Guarantor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as the
Collateral Agent may require to obtain the full benefits of this Security
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the UCC
with respect to the Liens granted hereby, transferring Collateral for which
possession is necessary to perfect a security interest to the Collateral Agent's
possession, establishing "control" (within the meaning of the UCC) by the
Collateral Agent over Collateral as to which control is necessary or desirable
to perfect the security interest of the Collateral Agent hereunder, and
obtaining waivers from landlords and mortgagees. The Guarantor also hereby
authorizes the Collateral Agent to file any such financing or continuation
statement without the signature of the Guarantor to the extent permitted by
applicable law.

     SECTION 11. Collateral Agent's Appointment as Attorney-in-Fact.

     (a) The Guarantor hereby irrevocably constitutes and appoints the
Collateral Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Guarantor and in the name of the Guarantor or in its own name, from
time to time in the Collateral Agent's discretion, for the purpose of carrying
out the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby gives the Collateral Agent the
power and right, on behalf of the Guarantor, without prior notice to or assent
by the Guarantor to do the following:

     (i) upon the occurrence and continuance of any Event of Default, to ask,
demand, collect, receive and give acquittance and receipts for any and all
moneys due and to become due under any Collateral and, in the name of the
Guarantor or its own name or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Collateral Agent for the purpose of collecting any and all
such moneys due under any Collateral whenever payable and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Collateral whenever payable;

                                       9
<PAGE>

     (ii) to pay or discharge any taxes not paid by the Guarantor when due or
Liens levied or placed on or threatened against the Collateral, to effect any
repairs or any insurance called for by the terms of this Security Agreement and
to pay all or any part of the premiums therefor and the costs thereof; and

     (iii) upon the occurrence and continuance of any Event of Default, (A) to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due and to become due thereunder directly to the
Collateral Agent or as the Collateral Agent shall direct; (B) to receive payment
of and receipt for any and all moneys, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral; (C) to
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other documents
relating to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding brought against
the Guarantor with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Collateral Agent may deem
appropriate; and (G) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent was the absolute owner thereof for all
purposes, and to do, at the Collateral Agent's option and the Guarantor's
expense, at any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and the Collateral Agent's security interest, for the ratable benefit
of the Lenders and the Agent, therein, in order to effect the intent of this
Security Agreement, all as fully and effectively as the Guarantor might do.

     The Guarantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable until all of the Obligations have been
fully and completely satisfied and the Commitments terminated.

     (b) The powers conferred on the Collateral Agent hereunder are solely to
protect its and the Lenders' and the Agent's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Collateral
Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers and neither it nor any Lender or the Agent
nor any of their respective partners, officers, directors, employees or agents
shall be responsible to the Guarantor for any act or failure to act, except for
its own gross negligence or willful misconduct.

                                       10
<PAGE>


     (c) The Guarantor also authorizes the Collateral Agent, each Lender and the
Agent, at any time and from time to time, to execute, in connection with the
sale provided for in paragraph (b) of Section 13 of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.


     SECTION 12. Performance of Guarantor's Obligations. If the Guarantor fails
to perform or comply with any of its agreements contained herein, the Collateral
Agent, any Lender or the Agent may (but shall not be obligated to) perform or
comply, or otherwise cause performance or compliance, with such agreement, and
the Collateral Agent, such Lender or the Agent may from time to time take any
other action which it deems necessary for the maintenance, preservation or
protection of any of the Collateral or the Collateral Agent's Liens, for the
ratable benefit of the Lenders and the Agent, thereon. The cost and expenses of
the Collateral Agent, such Lender or the Agent (including, without limitation,
the fees and disbursements of counsel to the Collateral Agent, such Lender or
the Agent) incurred in connection with any of the foregoing, together with
interest thereon at the rate provided for in Subsection 8.4 of the Credit
Agreement, shall be payable by the Guarantor to the Collateral Agent, such
Lender or the Agent on demand and shall constitute Obligations secured hereby.

     SECTION 13. Remedies, Rights Upon Default.

     (a) If an Event of Default shall occur and be continuing:

     (i) All payments received by the Guarantor under or in connection with any
of the Collateral shall be held by the Guarantor in trust for the Collateral
Agent, for the ratable benefit of the Lenders and the Agent, shall be segregated
from other funds of the Guarantor and shall forthwith upon receipt by the
Guarantor, be turned over to the Collateral Agent, in the same form as received
by the Guarantor (duly endorsed by the Guarantor to the Collateral Agent, if
required); and

     (ii) Any and all such payments so received by the Collateral Agent (whether
from the Guarantor or otherwise) may, in the sole discretion of the Collateral
Agent, be held by the Collateral Agent as collateral security for, and/or then
or at any time thereafter applied in whole or in part by the Collateral Agent,
against all or any part of the Obligations in such order as the Agent and the
Lenders shall elect. Any balance of such payments held by the Collateral Agent
and remaining after payment in full of all the Obligations shall be paid over to
the Guarantor or to whomsoever may be lawfully entitled to receive the same.

     (b) If any Event of Default shall occur and be continuing, the Collateral
Agent may in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, exercise all rights and remedies of a secured
party under the UCC. Without limiting the generality of the foregoing, the
Guarantor expressly agrees that upon the occurrence of an Event of Default, the
Collateral Agent, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Guarantor or any other person (all and
each of which demands, advertisements and/or notices are hereby expressly waived
to the extent permitted by law), may forthwith collect, receive, appropriate and
realize upon the Collateral, or any part


                                       11
<PAGE>

thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of the
Collateral Agent's offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
If any consent, approval or authorization of, or filing with, any Governmental
Authority or any other Person should be necessary to effectuate any sale or
other disposition of the Collateral, the Guarantor agrees to execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization, and will otherwise use its
best efforts to secure the same; provided however, that the Guarantor shall not
be required to register any of the Investment Property under the Securities Act
of 1933, as amended ("the Act") or the Securities laws of any state. The
Collateral Agent, each Lender and the 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 the whole or any part of said Collateral so sold,
free of any right or equity of redemption which right or equity of redemption
the Guarantor hereby waives and releases. The Guarantor further agrees, at the
Collateral Agent's request, to assemble the Collateral and make it available to
the Collateral Agent at such places which the Collateral Agent shall select,
whether at the Guarantor's premises or elsewhere. The Collateral Agent may apply
the proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care, safe keeping or otherwise of
any or all of the Collateral or in any way relating to the rights of the
Collateral Agent hereunder, including reasonable attorneys' fees and legal
expenses, to the payment in whole or in part of the Obligations, in such order
as the Lenders and the Agent may elect, the Guarantor remaining liable for any
deficiency remaining unpaid after such application, and only after so paying
over such proceeds, and after the payment by the Collateral Agent of any other
amount required by any provision of law, need the Collateral Agent account for
the surplus, if any, to the Guarantor. To the extent permitted by applicable
law, the Guarantor waives all claims, damages, and demands against the
Collateral Agent, the Lenders and the Agent arising out of the repossession,
retention or sale of the Collateral. The Guarantor agrees that, to the extent
notice of sale shall be required by law, at least five Business Days' notice to
the Guarantor (which notification shall be deemed given when mailed, postage
prepaid, addressed to the Guarantor at its address set forth below its signature
to this Security Agreement) of the time and place of any public sale or of the
time after which a private sale may take place shall constitute reasonable
notification of such matters. No notification need be given to the Guarantor if
the Guarantor, after the occurrence of a Default, has signed a statement
renouncing or modifying any right to notification of sale or other intended
disposition. The Guarantor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all amounts to which the Collateral Agent, the Lenders and the Agent are
entitled, the Guarantor also being liable for the fees of any attorneys employed
by the Collateral Agent, any Lender or the Agent to collect such deficiency.

     (c) The Guarantor also agrees to pay all costs of the Collateral Agent,
including reasonable attorneys' fees and disbursements, incurred with respect to
the collection of any of the Obligations and the enforcement of any of its
rights hereunder.

                                       12
<PAGE>

     (d) The Guarantor hereby waives presentment, demand, protest or any notice
(to the extent permitted by applicable law) of any kind in connection with this
Security Agreement or any Collateral.

     SECTION 14. Collateral Agent's Duties. The Collateral Agent shall have no
duty of care with respect to the Collateral, except that the Collateral Agent
shall exercise reasonable care with respect to Collateral or any income thereon
in the custody of the Collateral Agent or any agent or nominee of the Collateral
Agent. The Collateral Agent shall be deemed to have exercised reasonable care if
such property is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, or if the Collateral Agent takes such
action with respect to the Collateral as the Guarantor shall request in writing,
but no failure to comply with any such request nor any omission to do any such
act requested by the Guarantor shall be deemed a failure to exercise reasonable
care, nor shall the Collateral Agent's failure to take steps to preserve rights
against any parties or property be deemed a failure to have exercised reasonable
care with respect to Collateral in the Collateral Agent's custody.

     SECTION 15. Notices. Any written communication or document to be made or
delivered by one party to another pursuant to this Agreement shall (unless
otherwise specified herein or such other party has, by not less than 15 days'
prior written notice to the communicating party specified another address or
facsimile number) be made or delivered to such other party at the address or
facsimile number identified with its signature below. All such communications
and documents shall, when transmitted by overnight delivery or transmitted by
facsimile, be effective when delivered for overnight delivery or transmitted by
facsimile (to be promptly confirmed by sender by telephone), respectively, or if
delivered by other means, upon delivery.

     SECTION 16. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     SECTION 17. No Waiver; Cumulative Remedies. The Collateral Agent, the
Lenders and the Agent shall not by any act, delay, omission or otherwise be
deemed to have waived any of their respective rights or remedies hereunder and
no waiver shall be valid unless in writing, signed by the Collateral Agent, with
the consent of the Agent and the Lenders, and then only to the extent therein
set forth. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent, the Lenders or the Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of the Collateral Agent, the Lenders or the Agent, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law or in any other agreement with respect to the Obligations. None
of the terms or provisions of this Security Agreement may be waived, altered,
modified or amended except by an instrument in writing, duly executed by the
Collateral Agent, and consented to by the Lenders and the Agent.

                                       13
<PAGE>

     SECTION 18. Successors and Assigns; Governing Law. This Security Agreement
and all obligations of the Guarantor hereunder shall be binding upon the
successors and assigns of the Guarantor, and shall, together with the rights and
remedies of the Collateral Agent, the Lenders and the Agent hereunder, inure to
the benefit of the Collateral Agent, the Lenders and the Agent and their
respective successors and assigns. The Guarantor may not assign any of its
rights or obligations hereunder without the consent of the Collateral Agent, the
Lenders and the Agent.

     SECTION 19. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

     SECTION 20. WAIVER OF JURY TRIAL. THE Guarantor HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS SECURITY AGREEMENT.

                                       14
<PAGE>


     IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.


                                            COVERDELL & COMPANY, INC.


                                           By:__________________________________
                                              Name:
                                              Title:

                                            Address:

                                            c/o MemberWorks Incorporated
                                            680 Washington Blvd., Suite 1100
                                            Stamford, Connecticut 06901
                                            Attention:  George W.M. Thomas, Esq.
                                            Tel:     (203) 324-7635
                                            Fax:     (203) 969-0872

                                            BROWN BROTHERS HARRIMAN
                                            & CO., as Collateral Agent


                                          By: __________________________________
                                              Name:
                                              Title:

                                            Address:

                                            140 Broadway
                                            New York, New York  10005
                                            Attention:  John Neff
                                            Tel:     212-493-7975
                                            Fax:     212-493-8726




                                       15
<PAGE>


                                                                       EXHIBIT A
                                                                     to Security
                                                                       Agreement


                             PERFECTION CERTIFICATE


     Capitalized terms used but not defined herein have the meanings provided in
the Security Agreement dated ________ between ________________ (the "Guarantor")
and Brown Brothers Harriman & Co., as collateral agent on behalf of the Lenders
and the Agent referred to therein.

     1. Names. (a) The exact name of the Guarantor as that name appears on its
Certificate of Incorporation is as follows:


Source:  UCC ss. 9-503

     (b) The following is a list of all other names (including trade names or
similar appellations) used by the Guarantor, or any other business or
organization to which the Guarantor became the successor by merger,
consolidation, acquisition, change in form, nature or jurisdiction of
organization or otherwise, now or at any time during the past five years:


Source:  UCCss.ss.9-507(c); 9-705(c)

     2. Organization. (a) The Guarantor's jurisdiction of organization is:


Source:  UCCss.ss.9-301; 9-307

     (b) The following is the Guarantor's organizational identification number:


Source:  UCC ss. 9-516(b)(5)

     3. Locations. (a) The chief executive office of the Guarantor has been
located at the following address(es) at all times during the past five years:

Mailing Address                 County                       State           Zip
________________________________________________________________________________

<PAGE>







Source:  Former UCCss.ss.9-103(3); 9-103(4); 9-401(6); UCCss.9-705(c)

     (b) The following are all places of business of the Guarantor:

Mailing Address                 County                       State           Zip
________________________________________________________________________________







     (c) The following are all locations in which the Guarantor maintains
originals of, or any books or records relating to, any of the Collateral:

Mailing Address                 County                       State           Zip
________________________________________________________________________________








     (d) The following are the names and addresses of all persons or entities
other than the Guarantor (and other than lessees from the Guarantor in the
ordinary course of business), such as other secured parties, consignees,
warehousemen or other bailees, which have possession or are intended to have
possession of any of the Collateral:


Source:  UCCss.ss.9-109(a); 9-312(d); 9-313; 9-330

     4. Identification of Collateral other than Investment Property. (a)
Attached hereto as Schedules 4(a) is a complete list of all Assigned Agreements.

     (b) Attached hereto as Schedule 4(b) is a list of all Deposit Accounts of
the company.

     (c) Attached hereto as Schedule 4(c) is a complete list and description
from the accounting records of the Guarantor of all Collateral consisting of
Equipment.

     (d) Attached hereto as Schedule 4(d) is a current and complete list of all
Collateral consisting of Instruments, Documents and Chattel Paper with a value
in excess of $50,000.

     5. Fixtures. Attached hereto as Schedule 5 is the information required by
UCC ss. 9-502(b)(3) of each state in which any of the Collateral consisting of
fixtures are or are to be located.

                                       2
<PAGE>

Source:  UCCss.ss.9-301(3); 9-501 and 9-502(b)(3)

     6. File Search Reports. Attached hereto as Schedule 6(a) is a true copy of
an official search report from the Uniform Commercial Code filing officer (or
from an experienced Uniform Commercial Code search organization acceptable to
the Collateral Agent) in each jurisdiction identified in paragraphs 2 or 3(a)
above. Attached hereto as Schedule 6(b) is a true copy of each financing
statement or other filing identified in such search reports.

     7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule setting
forth the filing offices in the jurisdictions identified in paragraphs 2 and 5
above where Uniform Commercial Code financing statements are required to be
filed in order to perfect the security interest of the Collateral Agent, for the
ratable benefit of the Lenders and the Agent, in all Collateral in which a
security interest may be perfected by filing, including, without limitation,
Collateral consisting of fixtures.




                                       3
<PAGE>





                                                                       EXHIBIT F

                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT


     ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") dated as of
______________, _____ between ____________________________ ("Assignor") and
_______________________ ("Assignee"). All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in the
Credit Agreement referred to below.

                              W I T N E S S E T H:


     WHEREAS, the Assignor is a party to a Credit Agreement, dated as of March
31, 2003 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among MemberWorks Incorporated, a Delaware corporation, the
lenders parties thereto (including Assignor) (the "Lenders") and Brown Brothers
Harriman & Co., as agent (in such capacity, the "Agent") for such Lenders; and

     WHEREAS, the Assignee proposes to assume all of the rights and obligations
of the Assignor under the Credit Agreement and the Related Documents in respect
of the portion of the Assignor's Commitment and outstanding Loans, if any, under
the Credit Agreement as set forth in Item 6(c) of Annex I (the "Assignee's
Share").

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:

     1. Assignment. Effective on the Assignment Effective Date (as defined
below), the Assignor hereby assigns to the Assignee, without recourse and
without representation or warranty (other than expressly provided herein), that
dollar amount listed in Item 6(c) of Annex I hereto as the "Assignee's Share"
(which shall be an amount permitted under Subsection 10.6(c) of the Credit
Agreement) of the Assignor's rights, title, interest and obligations arising
under the Credit Agreement and the Related Documents in respect of the
Assignor's Commitment and Loans, including, without limitation (but subject to
paragraph 4(a) hereof), in the case of the assignment of outstanding Loans, all
rights of the Assignor with respect to the Assignee's Share of such outstanding
Loans.

     2. Assumption. Effective on the Assignment Effective Date, the Assignee
hereby assumes from the Assignor all of the Assignor's obligations arising under
the Credit Agreement relating to the Assignee's Share. Effective on the
Assignment Effective Date, the Assignor shall be released from all of its
obligations under the Credit Agreement relating to the Assignee's Share pursuant
to the terms of the Credit Agreement.

     3. Assignments; Participations. On and after the Assignment Effective Date,
the Assignee may assign all or any part of the rights granted to it as an
Assignee hereunder in accordance with the applicable provisions of Subsection
10.6(c) of the Credit Agreement. On and after the Assignment Effective Date, the
Assignee may sell or grant participations in all or any part of the rights
granted to it as an Assignee hereunder in accordance with the applicable
provisions of Subsection 10.6(b) of the Credit Agreement.

<PAGE>

     4. Payment of Interest and Fees to Assignee.

     (a) Interest is payable by the Company in respect of the Assignee's Share
of the Loans at the rates set forth in Subsection 2.6 of the Credit Agreement. A
facility fee is payable by the Company in respect of the Assignee's Commitment
at the rate set forth in Subsection 3.1(c) of the Credit Agreement. All interest
on any Loan attributable to the Assignee's Share and all facility fees
attributable to the Assignee's Share, which, in each case, accrues on and after
the Assignment Effective Date shall be paid directly to the Assignee.
Notwithstanding anything to the contrary contained above, all payments with
respect to the Assignee's Share made or accrued to but not including the
Assignment Effective Date shall be for the account of the Assignor.

     (b) Notwithstanding anything to the contrary contained in this Agreement,
if and when the Assignor receives or collects any payment of interest on any
Loan attributable to the Assignee's Share or any payment of the facility fee
attributable to the Assignee's Share which, in any such case, is required to be
paid to the Assignee pursuant to clause (a) above, the Assignor shall distribute
to the Assignee such payment but only to the extent such interest or facility
fee accrued on or after the Assignment Effective Date.

     (c) Notwithstanding anything to the contrary contained in this Agreement,
if and when the Assignee receives or collects any payment of interest on any
Loan or any payment of the facility fee which, in any such case, is required to
be paid to the Assignor pursuant to this paragraph 4, the Assignee shall
distribute to the Assignor such payment.

     5. Payments on Assignment, Effective Date. In consideration of the
assignment by the Assignor to the Assignee of the Assignee's Share, the Assignee
agrees to pay to the Assignor on or prior to the Assignment Effective Date an
amount specified by the Assignor in writing on or prior to the Assignment
Effective Date.

     6. Effectiveness. The Assignment hereunder shall become effective on the
date (the "Assignment Effective Date") on which (i) the Assignor and the
Assignee shall have signed a copy hereof (whether the same or different copies)
and, in the case of the Assignee, shall have delivered the same to the Assignor,
(ii) the Assignee shall have paid to the Assignor the amount described in
paragraph 5 hereof, (iii) the Agent shall have signed a copy hereof, and (iv)
the Assignor shall have paid to the Agent an assignment fee as provided in the
Credit Agreement.

     7. Issuance of New Notes on the Assignment Effective Date. On or after the
Assignment Effective Date, upon the request of the Assignor or the Assignee, a
new Note will be issued to the Assignor and/or the Assignee, as the case may be.
On the Assignment Effective Date, the Assignee shall be deemed a "Lender" for
all purposes under the Credit Agreement and the Related Documents, and shall be
subject to and shall benefit from all of the rights and obligations of a Lender
under the Credit Agreement and the Related Documents, and the address of the
Assignee for notice purposes shall be as set forth in Item 7 of Annex I hereto.

                                       2
<PAGE>

     8. Representations and Warranties. (a) Each of the Assignor and the
Assignee represents and warrants to the other party that as of the date hereof:

     (ii) it has full power and authority, and has taken all action necessary,
to execute and deliver this Agreement and to fulfill its obligations under, and
to consummate the transactions contemplated by, this Agreement;

     (iii) the making and performance by it of this Agreement and all documents
required to be executed and delivered by it hereunder do not and will not
violate any law or regulation of the jurisdiction of its incorporation or any
other law or regulation applicable to it;

     (iv) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation; and

     (v) all approvals, authorizations, or other actions by, or filings with,
any governmental authority necessary for the validity or enforceability of its
obligations under this Agreement have been obtained.

     (d) The Assignor represents and warrants to the Assignee that the
Assignee's Share is subject to no Liens created by the Assignor.

     9. Expenses. The Assignor and the Assignee agree that each party shall bear
its own expenses in connection with the preparation and execution of this
Agreement.

     10. Miscellaneous. (a) The Assignor shall not be responsible to the
Assignee for the execution (by any party other than the Assignor),
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Credit Agreement or Related Documents or for any
representations, warranties, recitals or statements made therein or in any
written or oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents made or furnished or made available
by the Assignor to the Assignee or by or on behalf of the Company to the
Assignor or the Assignee in connection with the Credit Agreement or Related
Documents and the transactions contemplated thereby. The Assignor shall not be
required to ascertain or inquire as to the performance or observance of any of
the terms, conditions, provisions, covenants or agreements contained in the
Credit Agreement or any of the Related Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any
Default.

     (b) The Assignee represents and warrants that it (i) has made its own
independent investigation, without reliance upon the Agent, the Assignor or any
other Lender, of the financial condition and affairs of the Company in
connection with this Agreement, the making of the Loans and the assignment of
the Assignee's Share hereunder to the Assignee and (ii) has made and shall
continue to make its own appraisal of the creditworthiness of the Company. The
Assignor shall have no duty or responsibility either initially or on a
continuing basis to make any such investigation or any such appraisal on behalf
of the Assignee or to provide the Assignee with any credit or other information
with respect thereto whether coming into its possession before the making of any
Loan or at any time or times thereafter and shall further have no responsibility
with respect to the accuracy of, or the completeness of, any information
provided to the Assignee, whether by the transferor or by or on behalf of any
other Person.

                                       3
<PAGE>

     (c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

     (d) No term or provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
all parties hereto.

     (e) This Agreement may be executed in two or more counterparts, each of
which shall be an original but all of which, taken together, shall constitute
one and the same instrument.

     (f) The Assignor may at any time or from time to time grant to others
assignments or participations in its Commitment or Loans but not in the portions
thereof sold as an assignment to the Assignee pursuant to this Agreement.

     (g) All payments hereunder or in connection herewith shall be made in
Dollars and in immediately available funds, if payable to the Assignor, to the
account of the Assignor at its offices as designated in Item 8 of Annex I
hereto, and, if payable to the Assignee, to the account of the Assignee, as
designated in Item 8 of Annex I hereto.

     (h) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither of
the parties hereto may assign or transfer any of its rights or obligations under
this Agreement without the prior consent of the other party. The preceding
sentence shall not limit the right of the Assignee to assign all or part of the
Assignee's Share, if assigned in the manner contemplated by the Credit Agreement
and paragraph 3 hereof.

     (i) All representations and warranties made herein and indemnities provided
for herein shall survive the consummation of the transactions contemplated
hereby.

     (j) To the fullest extent they may effectively do so, the parties hereto
agree that any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity of enforceability of such provision
in any other jurisdiction.

                                       4
<PAGE>









     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                                   _____________________________
                                                   as Assignor

                                                   By:__________________________
                                                       Name:
                                                       Title:
                                                       Date:

                                                   _____________________________
                                                   as Assignee

                                                   By:__________________________
                                                       Name:
                                                       Title:
                                                       Date:



We hereby consent to the foregoing
assignment and acknowledge receipt
of notice thereof:

BROWN BROTHERS HARRIMAN & CO.,
as Agent

         By:  ______________________________________
         Name:
         Title:





                                       5
<PAGE>


                                     ANNEX I
                                       to
                       Assignment and Assumption Agreement


1. Company: MemberWorks Incorporated

2. Date of Credit Agreement: March 31, 2003

3. Assignor:

4. Assignee:

5. Date of Assignment and Assumption Agreement:

6. Assignee's Share:



                                                (A)                     (B)
                                                                    Outstanding
                                             Commitment              Principal
                                               Amount                 of Loans
(a) Assignor's Amount                     $_____________         $______________
(b) Assignee's Commitment Percentage           _____%                  ____%
(c) Assignee's Share                      $_____________         $______________
(d) Assignor's Commitment Percentage           _____%                  ____%

7. Notice Instructions:

   Assignee:
   Attention:
   Telephone:
   Telecopier:
   Reference:

   Assignor:
   Attention:
   Telephone:
   Telecopier:
   Reference:

8. Payment Instructions:

   Assignee:
   Assignor:


<PAGE>

  Agent:

Accepted and Agreed:

______________________________,            _______________________________,
as Assignee                                as Assignor

By:____________________________            By:_____________________________

   Name:                                      Name:
   Title:                                     Title:



                                       2