EXHIBIT
      10.4

     

    COLLATERAL
      AGREEMENT, dated as of December 21, 2007, by and among AFTERSOFT GROUP, INC.,
      a
      Delaware corporation (the “Borrower”),
      AFTERSOFT NETWORK N.A., INC., a Delaware corporation, MAM SOFTWARE LTD., a
      limited liability company formed under the laws of England and Wales, AFTERSOFT
      GROUP (UK) LTD., a limited liability company formed under the laws of England
      and Wales, AFS WAREHOUSE DISTRIBUTION MANAGEMENT, INC., a Delaware corporation,
      AFS TIRE MANAGEMENT, INC., a Delaware corporation, AFS AUTOSERVICE INC., a
      Delaware corporation, and any and all Additional Grantors who may become party
      to this Agreement (the Borrower, such other named entities, and such Additional
      Grantors are hereinafter referred to each as a “Grantor”
and
      collectively as the “Grantors”),
      and
      COMVEST
      CAPITAL,
      LLC
      (the
“Secured
      Party”)
      as
      Lender under the Revolving Credit and Term Loan Agreement of even date herewith
      (as same may be amended, modified, supplemented and/or restated from time to
      time, the “Loan
      Agreement”)
      by and
      between the Borrower and the Secured Party.

     

    STATEMENT
      OF PURPOSE

     

    Pursuant
      to the Loan Agreement, the Secured Party is making and may hereafter from time
      to time make Loans to the Borrower in the aggregate principal amount of up
      to
      $6,000,000 at any time outstanding, upon the terms and subject to the conditions
      set forth therein.

     

    Pursuant
      to the terms of a Guaranty Agreement of even date herewith, the Grantors (other
      than the Borrower), which are Subsidiaries of the Borrower, have guaranteed
      the
      payment and performance of the Obligations of the Borrower.

     

    It
      is a
      condition precedent to the obligation of the Secured Party to make the Loans
      to
      the Borrower under the Loan Agreement that the Grantors shall have executed
      and
      delivered this Agreement to the Secured Party.

     

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged by the parties hereto, and to induce the Secured
      Party to enter into the Loan Agreement and make the Loans to the Borrower
      thereunder, each Grantor hereby agrees with the Secured Party, as
      follows:

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I

     

    DEFINED
      TERMS

     

    Section
      1.1. Terms
      Defined in the Uniform Commercial Code.
      

     

    (a) The
      following terms when used in this Agreement shall have the meanings assigned
      to
      them in the UCC (as defined in Section
      1.2
      below)
      as in effect from time to time: “Account”,
      “Account
      Debtor”,
      “Authenticate”,
      “Certificated
      Security”,
      “Chattel
      Paper”;
      “Commercial
      Tort Claim”,
      “Deposit
      Account”,
      “Documents”,
      “Electronic
      Chattel Paper”,
      “Equipment”,
      “Farm
      Products”
      “Fixture”,
      “General
      Intangible”,
      “Instrument”,
      “Inventory”,
      “Investment
      Company Security”,
      “Investment
      Property”,
      “Issuer”,
      “Letter
      of
      Credit Rights”,
      “Proceeds”,
      “Record”,
      “Registered
      Organization”,
      “Security”,
      “Securities
      Entitlement”,
      “Securities
      Intermediary”,
      “Securities
      Account”,
      “Supporting
      Obligation”,
      “Tangible
      Chattel Paper”,
      and
“Uncertificated
      Security”.

     

    (b) Terms
      defined in the UCC and not otherwise defined herein or in the Loan Agreement
      shall have the meaning assigned in the UCC as in effect from time to
      time.

     

    Section
      1.2. Definitions.
      The
      following terms when used in this Agreement shall have the meanings assigned
      to
      them below:

     

    “Additional
      Grantor”
means
      each Subsidiary of the Borrower which hereafter becomes a Grantor pursuant
      to
Section
      7.15
      hereof
      and Section
      5.11
      of the
      Loan Agreement.

     

    “Agreement”
means
      this Collateral Agreement, as amended, modified, supplemented and/or restated
      from time to time.

     

    “Applicable
      Insolvency Laws”
means
      all Applicable Laws governing bankruptcy, reorganization, arrangement,
      adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent
      transfers or conveyances or other similar laws (including, without limitation,
      11 U.S.C. Sections 547, 548 and 550 and other “avoidance” provisions of
      Title 11 of the United States Code, as amended or supplemented).

     

    “Assignment
      of Claims Act”
means
      the Assignment of Claims Act of 1940 (41 U.S.C. Section 15, 31 U.S.C. Section
      3737, and 31 U.S.C. Section 3727), including all amendments thereto and
      regulations promulgated thereunder.

     

    “Collateral”
has
      the
      meaning assigned thereto in Section
      2.1.

     

    “Collateral
      Account”
means
      any collateral account established by the Secured Party as provided in
Section
      5.2.

     

    “Control”
means
      the manner in which “control” is achieved under the UCC with respect to any
      Collateral for which the UCC specifies a method of achieving
“control”.

     

    “Controlled
      Intermediary”
has
      the
      meaning assigned thereto in Section
      4.6(a).

     

    “Copyrights”
means
      collectively, all of the following of any Grantor: (a) all copyrights,
      rights and interests in copyrights, works protectable by copyright, copyright
      registrations and copyright applications, (b) all reissues, extensions,
      continuations (in whole or in part) and renewals of any of the foregoing,
      (c) all income, royalties, damages and payments now or hereafter due and/or
      payable under any of the foregoing or with respect to any of the foregoing,
      including, without limitation, damages or payments for past or future
      infringements of any of the foregoing, (d) the right to sue for past,
      present and future infringements of any of the foregoing, and (e) all
      rights corresponding to any of the foregoing.

     

    
      
        
        

      

      
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    “Copyright
      Licenses”
means
      any written agreement naming any Grantor as licensor or licensee, granting
      any
      right under any Copyright, including, without limitation, the grant of rights
      to
      manufacture, distribute, exploit and sell materials derived from any
      Copyright.

     

    “Effective
      Endorsement and Assignment”
means,
      with respect to any specific type of Collateral, all such endorsements,
      assignments and other instruments of transfer reasonably requested by the
      Secured Party with respect to the Security Interest granted in such Collateral,
      and in each case, in form and substance satisfactory to the Secured
      Party.

     

    “Excess
      Collateral”
has
      the
      meaning assigned thereto in Section 4.6(c).

     

    “Government
      Contract”
means
      a
      contract between any Grantor and an agency, department or instrumentality of
      the
      United States or any state, municipal or local Governmental Authority located
      in
      the United States or all obligations of any such Governmental Authority arising
      under any Account now or hereafter owing by any such Governmental Authority,
      as
      account debtor, to any Grantor.

     

    “Grantors”
has
      the
      meaning set forth in the preamble of this Agreement.

     

    “Guarantors”
has
      the
      meaning assigned thereto in the Guaranty Agreement.

     

    “Guaranty
      Agreement”
has
      the
      meaning assigned thereto in the Loan Agreement.

     

    “Intellectual
      Property”
means
      collectively, all of the following of any Grantor: (a)  all systems
      software, applications software and internet rights, including, without
      limitation, screen displays and formats, internet domain names, web sites
      (including web links), program structures, sequence and organization, all
      documentation for such software, including, without limitation, user manuals,
      flowcharts, programmer’s notes, functional specifications, and operations
      manuals, all formulas, processes, ideas and know-how embodied in any of the
      foregoing, and all program materials, flowcharts, notes and outlines created
      in
      connection with any of the foregoing, whether or not patentable or
      copyrightable, (b) concepts, discoveries, improvements and ideas,
      (c) any useful information relating to the items described in clause (a) or
      (b), including know-how, technology, engineering drawings, reports, design
      information, trade secrets, practices, laboratory notebooks, specifications,
      test procedures, maintenance manuals, research, development, manufacturing,
      marketing, merchandising, selling, purchasing and accounting, (d) Patents
      and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and Trademark
      Licenses, and (e) other licenses to use any of the items described in the
      foregoing clauses (a), (b), (c) and (d) or any other similar items of such
      Grantor necessary for the conduct of its business.

     

    “Issuer”
means
      any issuer of any Investment Property or Partnership/LLC Interests (including,
      without limitation, any Issuer as defined in the UCC).

     

    “Loan
      Agreement”
has
      the
      meaning assigned thereto in the preamble of this Agreement.

     

    “Obligations”
means,
      with respect to the Borrower, the meaning assigned to such term in the Loan
      Agreement, and with respect to each Guarantor, the obligations of such Guarantor
      under the Guaranty Agreement, and with respect to all Grantors, all liabilities
      and obligations of the Grantors hereunder.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Partnership/LLC
      Interests”
means,
      with respect to any Grantor, the entire partnership, membership interest or
      limited liability company interest, as applicable, of such Grantor in each
      partnership, limited partnership or limited liability company owned thereby,
      including, without limitation, such Grantor’s capital account, its interest as a
      partner or member, as applicable, in the net cash flow, net profit and net
      loss,
      and items of income, gain, loss, deduction and credit of any such partnership,
      limited partnership or limited liability company, as applicable, such Grantor’s
      interest in all distributions made or to be made by any such partnership,
      limited partnership or limited liability company, as applicable, to such Grantor
      and all of the other economic rights, titles and interests of such Grantor
      as a
      partner or member, as applicable, of any such partnership, limited partnership
      or limited liability company, as applicable, whether set forth in the
      partnership agreement or membership agreement, as applicable, of such
      partnership, limited partnership or limited liability company, as applicable,
      by
      separate agreement or otherwise.

     

    “Patents”
means
      collectively, all of the following of any Grantor: (a) all patents, rights
      and interests in patents, patentable inventions and patent applications,
      (b) all reissues, extensions, continuations (in whole or in part) and
      renewals of any of the foregoing, (c) all income, royalties, damages or
      payments now or hereafter due and/or payable under any of the foregoing or
      with
      respect to any of the foregoing, including, without limitation, damages or
      payments for past or future infringements of any of the foregoing, (d) the
      right to sue for past, present and future infringements of any of the foregoing,
      and (e) all rights corresponding to any of the foregoing.

     

    “Patent
      License”
means
      all agreements now or hereafter in existence, whether written or oral, providing
      for the grant by or to any Grantor of any right to manufacture, use or sell
      any
      invention covered in whole or in part by a Patent.

     

    “Perfection
      Certificate”
means
      the perfection certificate dated as of the date hereof, substantially in the
      form of Exhibit
      A
      attached
      hereto, and otherwise in form and substance satisfactory to the Secured Party,
      and duly certified by an officer, partner or member, as applicable, of each
      Grantor.

     

    “Restricted
      Securities Collateral”
has
      the
      meaning assigned thereto in Section 5.3(a) below.

     

    “Secured
      Party”
has
      the
      meaning assigned thereto in the preamble of this Agreement. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, including all amendments thereto and regulations
      promulgated thereunder.

     

    “Security
      Interests”
means
      the liens and security interests granted pursuant to Article
      II.

     

    “Subsidiary
      Issuer”
means
      any Issuer of Investment Property or any Partnership/LLC Interests, which is
      a
      direct or indirect Subsidiary of any Grantor.

     

    
      
        
        

      

      
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    “Trademarks”
means
      collectively, all of the following of any Grantor: (a) all trademarks,
      rights and interests in trademarks, trade names, corporate names, company names,
      business names, fictitious business names, trade styles, service marks, logos,
      other business identifiers, prints and labels on which any of the foregoing
      have
      appeared or appear, all registrations and recordings thereof, and all
      applications in connection therewith, (b) all reissues, extensions,
      continuations (in whole or in part) and renewals of any of the foregoing,
      (c) all income, royalties, damages and payments now or hereafter due and/or
      payable under any of the foregoing or with respect to any of the foregoing,
      including, without limitation, damages or payments for past or future
      infringements of any of the foregoing, (d) the right to sue for past,
      present and future infringements of any of the foregoing, and (e) all
      rights corresponding to any of the foregoing.

     

    “Trademark
      License”
means
      any agreement now or hereafter in existence, whether written or oral, providing
      for the grant by or to any Grantor of any right to use any
      Trademark.

     

    “UCC”
means
      the Uniform Commercial Code as in effect in the State of New York, as amended
      or
      modified from time to time.

     

    “Vehicles”
means
      all cars, trucks, trailers, and other vehicles covered by a certificate of
      title
      under the laws of any state, all tires and all other appurtenances to any of
      the
      foregoing.

     

    Section
      1.3. Other
      Definitional Provisions.
      Terms
      defined in the Loan Agreement and not otherwise defined herein shall have the
      meanings assigned thereto in the Loan Agreement. The words “hereof,” “herein”,
“hereto” and “hereunder” and words of similar import when used in this Agreement
      shall refer to this Agreement as a whole and not to any particular provision
      of
      this Agreement, and Section and Schedule references are to this Agreement unless
      otherwise specified. The meanings given to terms defined herein shall be equally
      applicable to both the singular and plural forms of such terms. Where the
      context requires, terms relating to the Collateral or any part thereof, when
      used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
      relevant part thereof. The word “including” and words of similar import when
      used in this Agreement shall mean “including, without limitation,” unless
      otherwise specified.

     

    ARTICLE
      II


     

    SECURITY
      INTEREST

     

    Section
      2.1. Grant
      of Security Interest.

     

    (a) Each
      Grantor hereby grants, pledges and collaterally assigns to the Secured Party
      a
      security interest in all of such Grantor’s right, title and interest in the
      following property now owned or at any time hereafter acquired by such Grantor
      or in which such Grantor now has or at any time in the future may acquire any
      right, title or interest, and wherever located or deemed located (collectively,
      the “Collateral”),
      as
      collateral security for the prompt and complete payment and performance when
      due
      (whether at the stated maturity, by acceleration or otherwise) of the
      Obligations:

     

    (i) all
      Accounts;

     

    (ii) all
      cash
      and currency;

     

    
      
        
        

      

      
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    (iii) all
      Chattel Paper;

     

    (iv) all
      Commercial Tort Claims;

     

    (v) all
      Deposit Accounts;

     

    (vi) all
      Documents;

     

    (vii) all
      Equipment;

     

    (viii) all
      Fixtures;

     

    (ix) all
      General Intangibles;

     

    (x) all
      Instruments;

     

    (xi) all
      Intellectual Property;

     

    (xii) all
      Inventory;

     

    (xiii) all
      Investment Property;

     

    (xiv) all
      Letter of Credit Rights;

     

    (xv) all
      Vehicles;

     

    (xvi) all
      other
      personal property not otherwise described above;

     

    (xvii) all
      books
      and records pertaining to the Collateral; and

     

    (xviii) to
      the
      extent not otherwise included, all Proceeds and products of any and all of
      the
      foregoing and all collateral security and Supporting Obligations (as now or
      hereafter defined in the UCC) given by any Person with respect to any of the
      foregoing.

     

    (b) Notwithstanding
      clause (a) of this Section
      2.1,
      to the
      extent that, at any time, the grant of a security interest in any contract
      rights would, notwithstanding Sections 9-407 and 9-408 of the UCC or other
      applicable law, cause a breach of the subject Contract permitting the
      conterparty thereto to terminate such Contract under applicable law, such
      contract rights shall not at such time be part of the Collateral (but the
      proceeds thereof and any supporting obligations therefor shall be part of the
      Collateral). Each Grantor shall use all commercially reasonable efforts to
      obtain any necessary consents or waivers required in order for such Grantor
      to
      grant the Security Interests in any affected Contract.

     

    Section
      2.2. Grantors
      Remain Liable. Anything
      herein to the contrary notwithstanding:
      (a)
      each Grantor shall remain liable under the contracts and agreements included
      in
      the Collateral to the extent set forth therein to perform all of its duties
      and
      obligations thereunder to the same extent as if this Agreement had not been
      executed, (b) the exercise by Secured Party of any of the rights hereunder
      shall
      not release any Grantor from any of its duties or obligations under the
      contracts and agreements included in the Collateral, (c) the Secured Party
      shall
      have no obligation or liability under the contracts and agreements included
      in
      the Collateral by reason of this Agreement, nor shall the Secured Party be
      obligated to perform any of the obligations or duties of any Grantor thereunder
      or to take any action to collect or enforce any claim for payment assigned
      hereunder, and (d) the Secured Party shall have no liability in contract or
      tort
      for any Grantor's acts or omissions.

     

    
      
        
        

      

      
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    ARTICLE
      III


     

    REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      the Secured Party to enter into the Loan Agreement and to make the Loans to
      the
      Borrower thereunder, each Grantor hereby represents and warrants to the Secured
      Party that:

     

    Section
      3.1. Existence.
      Each
      Grantor is duly organized, validly existing and in good standing under the
      laws
      of the jurisdiction of its incorporation or formation, has the requisite power
      and authority to own, lease and operate its properties and to carry on its
      business as now being and hereafter proposed to be conducted and is duly
      qualified and authorized to do business in each jurisdiction in which the
      character of its properties or the nature of its business requires such
      qualification and authorization other than in any such jurisdiction where
      failure to so qualify would not reasonably be expected to have a Material
      Adverse Effect.

     

    Section
      3.2. Authorization
      of Agreement; No Conflict.
      Each
      Grantor has the right, power and authority and has taken all necessary corporate
      or other organizational action to authorize the execution, delivery and
      performance of, this Agreement. This Agreement has been duly executed and
      delivered by the duly authorized officers of each Grantor, and this Agreement
      constitutes the legal, valid and binding obligation of the Grantors, enforceable
      against the Grantors in accordance with its terms, except as such enforcement
      may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
      state or federal debtor relief laws from time to time in effect which affect
      the
      enforcement of creditors’ rights in general, and general limitations on the
      availability of equitable remedies. The execution, delivery and performance
      by
      the Grantors of this Agreement will not, by the passage of time, the giving
      of
      notice or otherwise, violate any material provision of any Applicable Law or
      any
      Contract material to the business of any Grantor and will not result in the
      creation or imposition of any Lien, other than the Security Interests, upon
      or
      with respect to any property or revenues of any Grantor.

     

    Section
      3.3. Consents.
      No
      approval, consent, exemption, authorization or other action by, or notice to,
      or
      filing with, any Governmental Authority or any other Person is necessary or
      required in connection with the execution, delivery or performance by, or
      enforcement against any Grantor or any Subsidiary Issuer of this Agreement,
      except (i) as may be required by laws affecting the offering and sale of
      securities generally, (ii) filings with the United States Copyright Office
      and/or the United States Patent and Trademark Office, and (iii) filings under
      the UCC and/or the Assignment of Claims Act.

     

    Section
      3.4. Perfected
      First Priority Liens.
      The
      Security Interests granted pursuant to this Agreement (a) constitute valid
      security interests in all of the Collateral in favor of the Secured Party,
      as
      collateral security for the Obligations, enforceable in accordance with the
      terms hereof against all creditors of such Grantor and any Persons purporting
      to
      purchase any Collateral from such Grantor, and (b) are prior to all other
      Liens on the Collateral in existence on the date hereof except to the extent
      of
      any priority accorded under Applicable Law to any Permitted Liens. Upon the
      filing and acceptance of financing statements in the jurisdiction of formation
      of the respective Grantors reflected in the Perfection Certificate, and the
      filing of appropriate collateral assignments with the United States Copyright
      Office and the United States Patent and Trademark Office, the Security Interests
      will be perfected first priority security interests in all Collateral in which
      a
      security interest can be perfected by means of filing; and upon delivery to
      the
      Secured Party of the certificates representing the Collateral consisting of
      Certificated Securities, the Security Interests will be perfected first priority
      security interests in such Collateral. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Section
      3.5. Title;
      No Other Liens.
      Except
      for the Security Interests, each Grantor owns each item of the Collateral free
      and clear of any and all Liens or claims other than Permitted Liens. No
      financing statement under the UCC of any state which names a Grantor as debtor
      or other public notice with respect to all or any part of the Collateral is
      on
      file or of record in any public office, except such as have been filed in favor
      of the Secured Party pursuant to this Agreement or in connection with Permitted
      Liens. No Collateral is in the possession or Control of any Person asserting
      any
      claim thereto or security interest therein, except that (a) the Secured Party
      or
      its designee may have possession or Control of Collateral as contemplated
      hereby, (b) a depositary bank may have Control of a Deposit Account owned by
      a
      Grantor at such depositary bank and a Securities Intermediary may have Control
      over a Securities Account owned by a Grantor at such Securities Intermediary,
      in
      each case subject to the terms of any Deposit Account control agreement or
      Securities Account control agreement, as applicable and to the extent required
      by Section
      4,
      in
      favor of the Secured Party, and (c) a bailee, consignee or other Person may
      have
      possession of Collateral as contemplated by, and so long as, the applicable
      Grantors have complied to the satisfaction of the Secured Party with the
      applicable provisions of Section 4.

     

    Section
      3.6. State
      of Organization; Location of Inventory, Equipment and Fixtures; Other
      Information. 

     

    (a) The
      exact
      legal name of each Grantor is as set forth in the Perfection Certificate.


     

    (b) Each
      Grantor is a Registered Organization organized under the laws of the
      jurisdiction identified for such Grantor in the Perfection Certificate. The
      taxpayer identification number and Registered Organization number (if any)
      of
      each Grantor is as set forth for such Grantor in the Perfection Certificate.
      

     

    (c) All
      Collateral consisting of Inventory, Equipment and Fixtures (whether now owned
      or
      hereafter acquired) is (or will be) located at the locations specified in the
      Perfection Certificate.

     

    (d) The
      mailing address, chief place of business, chief executive office and office
      where each Grantor keeps its books and records relating to the Accounts,
      Documents, General Intangibles, Instruments and Investment Property in which
      it
      has any interest is located at the locations specified for
      such
      Grantor in the Perfection Certificate. No
      Grantor has any other places of business. No Grantor does business or has done
      business during the past five years under any trade name or fictitious business
      name except as disclosed for
      such
      Grantor in the Perfection Certificate. Except
      as
      disclosed in the Perfection Certificate, no Grantor has acquired assets from
      any
      Person, other than assets acquired in the ordinary course of such Grantor's
      business, during the past five years.

     

    
      
        
        

      

      
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    Section
      3.7. Accounts.
      Each
      existing Account constitutes, and each hereafter arising Account will
      constitute, the legally valid and binding obligation of the applicable Account
      Debtor. The amount represented by each Grantor to the Secured Party as owing
      by
      each Account Debtor is, or will be, the correct amount actually and
      unconditionally owing, except for normal cash discounts and allowances in the
      ordinary course of business where applicable. No Account Debtor has any defense,
      set-off, claim or counterclaim against any Grantor that can be asserted against
      the Secured Party, whether in any proceeding to enforce Secured Party’s rights
      in the Collateral or otherwise, except defenses, set-offs, claims or
      counterclaims that are not, in the aggregate, material to the value of the
      Accounts. None of the Accounts is, nor will any hereafter arising Account be,
      evidenced by a promissory note or other Instrument, other than a check, that
      has
      not been pledged and delivered to the Secured Party in accordance with the
      terms
      hereof.

     

    Section
      3.8. Chattel
      Paper.
      As of
      the date hereof, to the Grantors’ Knowledge, no Grantor holds any Chattel
      Paper.

     

    Section
      3.9. Commercial
      Tort Claims.
      As of
      the date hereof, no Grantor holds any Commercial Tort Claims except as described
      in the Perfection Certificate; and, upon becoming aware at any time and from
      time to time of any further Commercial Tort Claims, the Grantors shall notify
      the Secured Party thereof in accordance with Section
      4.4.

     

    Section
      3.10. Deposit
      Accounts.
      As of
      the date hereof, all Deposit Accounts (including, without limitation, lockboxes
      and cash management accounts that are Deposit Accounts) owned by any Grantor
      are
      listed in the Perfection Certificate.

     

    Section
      3.11. Intellectual
      Property.
      None of
      the Intellectual Property owned by any Grantor is the subject of any written
      licensing or franchise agreement pursuant to which such Grantor is the licensor
      or franchisor, except as would not reasonably be expected to have a Material
      Adverse Effect.

     

    Section
      3.12. Inventory.
      Collateral consisting of Inventory
      is of good and merchantable quality, free from any material defects, and has
      been manufactured in accordance with the requirements of the Fair Labor
      Standards Act and all other Applicable Law. To the Knowledge of each Grantor,
      none of such Inventory is subject to any licensing, Patent, Trademark, trade
      name or Copyright with any Person that materially restricts any Grantor’s
      ability to manufacture and/or sell such Inventory. The completion of the
      manufacturing process of such Inventory by a Person other than the applicable
      Grantor would be permitted under any contract to which such Grantor is a party
      or to which the Inventory is subject.

     

    
      
        
        

      

      
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    Section
      3.13. Investment
      Property; Partnership/LLC Interests.
      

     

    (a) As
      of the
      date hereof, all Investment Property (including, without limitation, Securities
      Accounts and cash management accounts that are Investment Property) and all
      Partnership/LLC Interests owned by any Grantor is listed in the Perfection
      Certificate.

     

    (b) All
      Investment Property and all Partnership/LLC Interests issued by any Subsidiary
      Issuer to any Grantor (i) have been duly and validly issued and, if applicable,
      are fully paid and nonassessable, (ii) are beneficially owned as of record
      by
      such Grantor, and (iii) constitute all the issued and outstanding shares of
      all
      classes of the capital stock or equity interest of such Subsidiary Issuer issued
      to such Grantor.

     

    (c) None
      of
      the Partnership/LLC Interests (i) are traded on a securities exchange or in
      securities markets, (ii) by their terms expressly provide that they are
      Securities governed by Article 8 of the UCC, or (iii) are Investment Company
      Securities.

     

    Section
      3.14. Instruments.
      As of
      the date hereof, no Grantor holds any Instruments or is named a payee of any
      promissory note or other evidence of indebtedness.

     

    ARTICLE
      IV


     

    COVENANTS

     

    Until
      the
      Obligations shall have been indefeasibly paid in full and the Revolving Credit
      Commitment has been terminated, unless express written consent has been obtained
      from the Lender, the Grantors covenant and agree that:

     

    Section
      4.1. Maintenance
      of Perfected Security Interest; Further Information.
      

     

    (a) Each
      Grantor shall maintain the Security Interest created by this Agreement as a
      perfected Security Interests having at least the priority described in
Section 3.4
      and
      shall defend such Security Interest against the claims and demands of all
      Persons whomsoever.

     

    (b) Each
      Grantor will furnish to the Secured Party from time to time statements and
      schedules further identifying and describing the assets and property of such
      Grantor and such other reports in connection therewith as the Secured Party
      may
      reasonably request, all in reasonable detail.

     

    Section
      4.2. Maintenance
      of Insurance.
      

     

    (a) Each
      Grantor will maintain, with financially sound and reputable companies, insurance
      policies (i) insuring the Collateral against loss by fire, explosion,
      theft, fraud and such other casualties, including business interruption, as
      may
      be reasonably satisfactory to the Secured Party in amounts and with deductibles
      at least as favorable as those generally maintained by businesses of similar
      size engaged in similar activities, and (ii) insuring such Grantor and the
      Secured Party against liability for hazards, risks and liability to persons
      and
      property relating to the Collateral (including, without limitation, products
      liability coverage), in amounts and with deductibles at least as favorable
      as
      those generally maintained by businesses of similar size engaged in similar
      activities, such policies to be in such form and having such coverage as may
      be
      reasonably satisfactory to the Lender.

     

    
      
        
        

      

      
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    (b) All
      such
      insurance (other than workers’ compensation) shall (i) name the Secured
      Party as loss payee (to the extent covering risk of loss or damage to tangible
      property) and as an additional insured as its interests may appear (to the
      extent covering any other risk), (ii) provide that no cancellation shall be
      effective until at least thirty (30) days after receipt by the Secured Party
      of
      written notice thereof, and (iii) be reasonably satisfactory in all other
      respects to the Secured Party.

     

    (c) Upon
      the
      request of the Secured Party, each Grantor shall deliver to the Secured Party
      periodic information from a reputable insurance broker with respect to the
      insurance referred to in this Section
      4.2.

     

    Section
      4.3. Changes
      in Locations; Changes in Name or Structure.
      No
      Grantor will, except upon fifteen (15) days’ prior written notice to the Secured
      Party and delivery to the Secured Party of (a) all additional financing
      statements (executed if necessary for any particular filing jurisdiction) and
      other instruments and documents reasonably requested by the Secured Party to
      maintain the validity, perfection and priority of the Security Interests, and
      (b) if applicable, a written supplement to the Perfection
      Certificate:

     

    (i) permit
      any Deposit Account to be held by or at a depositary bank other than the
      depositary bank that held such Deposit Account as of the date hereof as set
      forth in the Perfection Certificate;

     

    (ii) permit
      any of the Inventory, Equipment or Fixtures to be kept at a location other
      than
      those listed in the Perfection Certificate, except as otherwise permitted
      hereunder;

     

    (iii) permit
      any Investment Property (other than Certificated Securities delivered to the
      Secured Party pursuant to Section
      4.5)
      to be
      held by a Securities Intermediary;

     

    (iv) change
      its organizational form or structure, jurisdiction of organization or the
      location of its chief executive office from that identified in the Perfection
      Certificate; or

     

    (v) change
      its name or identity to such an extent that any financing statement filed by
      the
      Secured Party in connection with this Agreement would become
      misleading.

     

    Section
      4.4. Required
      Notifications.
      Each
      Grantor shall promptly notify the Secured Party, in writing, of: (a) any Lien
      (other than the Security Interests or Permitted Liens) on any of the Collateral,
      (b) the occurrence of any other event which could reasonably be expected to
      have
      a material adverse effect on the aggregate value of the Collateral or on the
      Security Interests, (c) any
      Collateral which, to the Knowledge of such Grantor, constitutes or arises out
      of
      a Government Contract, and
      (d) the acquisition or ownership by such Grantor of any (i) Commercial Tort
      Claim, (ii) Deposit Account, or (iii) Investment Property after
      the
      date hereof.

     

    
      
        
        

      

      
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    Section
      4.5. Delivery
      Covenants.
      Each
      Grantor will deliver and pledge to the Secured Party all Certificated
      Securities, Partnership/LLC Interests evidenced by a certificate, negotiable
      Documents, Instruments, and Tangible Chattel Paper owned or held by such
      Grantor, in each case, together with an Effective Endorsement and Assignment
      and
      all Supporting Obligations, as applicable, unless such delivery and pledge
      has
      been waived in writing by the Secured Party.

     

    Section
      4.6. Control
      Covenants.
      

     

    (a) Each
      Grantor shall instruct (and otherwise use its reasonable efforts) to cause
      (i)
      each depositary bank holding a Deposit Account owned by such Grantor, and (ii)
      each Securities Intermediary holding any Investment Property owned by such
      Grantor, to execute and deliver a control agreement, sufficient to provide
      the
      Secured Party with Control of such Deposit Account or Investment Property,
      and
      otherwise in form and substance satisfactory to the Secured Party (any such
      depositary bank executing and delivering any such control agreement, a
“Controlled
      Depositary”,
      and
      any such Securities Intermediary executing and delivering any such control
      agreement, a “Controlled
      Intermediary”).
      In
      the event any such depositary bank or Securities Intermediary refuses to execute
      and deliver such control agreement, the Secured Party, in its sole discretion,
      may require the applicable Deposit Account and Investment Property to be
      transferred to the Secured Party or a Controlled Depositary or Controlled
      Intermediary, as applicable.

     

    (b) Each
      Grantor will, promptly upon request of the Secured Party, take such actions
      and
      deliver all such agreements as are requested by the Secured Party to provide
      the
      Secured Party with Control of all Letter of Credit Rights and Electronic Chattel
      Paper owned or held by such Grantor, including, without limitation, with respect
      to any such Electronic Chattel Paper, by having the Secured Party identified
      as
      the assignee of the Record(s) pertaining to the single authoritative copy
      thereof.

     

    (c) If
      any
      Collateral (other than Collateral specifically subject to the provisions of
      Section
      4.6(a)
      and
Section
      4.6(b))
      exceeding in value $200,000 in the aggregate (such Collateral exceeding such
      amount, the “Excess
      Collateral”)
      is at
      any time in the possession or control of any single consignee, warehouseman,
      bailee (other than a carrier transporting Inventory to a purchaser in the
      ordinary course of business), processor, or any other third party, such Grantor
      shall notify in writing such Person of the Security Interests created hereby,
      shall use its reasonable efforts to obtain such Person’s written agreement in
      writing to hold all such Collateral for the Secured Party’s account subject to
      the Secured Party’s instructions, and shall, promptly upon request of the
      Secured Party, cause such Person to issue and deliver to the Secured Party
      warehouse receipts, bills of lading or any similar documents relating to such
      Collateral to the Secured Party together with an Effective Endorsement and
      Assignment; provided
      that if
      such Grantor is not able to obtain such agreement and cause the delivery of
      such
      items, the Secured Party, in its sole discretion, may require such Excess
      Collateral to be moved to another location reasonably approved by the Secured
      Party. Further, each Grantor shall perfect and protect such Grantor’s ownership
      interests in all Inventory exceeding $200,000 in the aggregate stored with
      a
      consignee against creditors of the consignee by filing and maintaining financing
      statements against the consignee reflecting the consignment arrangement filed
      in
      all appropriate filing offices, providing any written notices required to notify
      any prior creditors of the consignee of the consignment arrangement, and taking
      such other actions as may be appropriate to perfect and protect such Grantor’s
      interests in such Inventory under Section 2-326, Section 9-103, Section 9-324
      and Section 9-505 of the UCC or otherwise. All such financing statements filed
      pursuant to this Section
      4.6(c)
      shall be
      assigned, on the face thereof, to the Secured Party.

     

    
      
        
        

      

      
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    Section
      4.7. Filing
      Covenants.
      Pursuant to Section 9-509 of the UCC and any other Applicable Law, each Grantor
      authorizes the Secured Party to file or record financing statements and other
      filing or recording documents or instruments with respect to the Collateral
      without the signature of such Grantor in such form and in such offices as the
      Secured Party determines appropriate to perfect the Security Interests of the
      Secured Party under this Agreement. Such financing statements may describe
      the
      Collateral in the same manner as described herein or may contain an indication
      or description of Collateral that describes such property in any other manner
      as
      the Secured Party may determine, in its sole discretion, is necessary, advisable
      or prudent to ensure the perfection of the Security Interest in the Collateral
      granted herein, including, without limitation, describing such property as
“all
      assets” or “all personal property.” Further, a photographic or other
      reproduction of this Agreement shall be sufficient as a financing statement
      or
      other filing or recording document or instrument for filing or recording in
      any
      jurisdiction. Each Grantor hereby authorizes, ratifies and confirms all
      financing statements and other filing or recording documents or instruments
      filed by Secured Party prior to the date of this Agreement.

     

    Section
      4.8. Accounts.
      

     

    (a) Other
      than in the ordinary course of business consistent with its past practice,
      no
      Grantor will (i) grant any extension of the time of payment of any Account,
      (ii) compromise or settle any Account for less than the full amount
      thereof, (iii) release, wholly or partially, any Account Debtor,
      (iv) allow any credit or discount whatsoever on any Account, or
      (v) amend, supplement or modify any Account in any manner that could
      adversely affect the value thereof.

     

    (b) Each
      Grantor will deliver to the Secured Party a copy of each material demand, notice
      or document received by such Grantor that questions or calls into doubt the
      validity or enforceability of any material Account.

     

    (c) The
      Secured Party shall have the right, upon prior notice to the Borrower (provided
      that no such notice shall be required during the continuance of any Default
      or
      Event of Default), to make test verifications of the Accounts in any manner
      and
      through any medium that it reasonably considers advisable, and each Grantor
      shall furnish all such assistance and information as the Secured Party may
      reasonably require in connection with such test verifications. At any time
      and
      from time to time, upon the Secured Party’s reasonable request and at the
      expense of the relevant Grantor, such Grantor shall cause independent
      accountants or other Persons reasonably satisfactory to the Secured Party to
      furnish to the Secured Party reports showing reconciliations, aging and test
      verifications of, and trial balances for, the Accounts.

     

    (d) Upon
      request of the Secured Party for good reason at any time after five (5) days’
notice to the Borrower (provided that no such notice or reason shall be required
      during the continuance of any Default or Event of Default), each Grantor shall
      direct is Account Debtors to remit all payments on Accounts owing to such
      Grantor from time to time to a lockbox maintained in the name or under the
      Control of the Secured Party and swept on a regular basis into a Deposit Account
      at a Controlled Depositary or the Collateral Account. 

     

    
      
        
        

      

      
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    Section
      4.9. Intellectual
      Property.
      

     

    (a) Within
      thirty (30) days after the close of the second and fourth quarters of each
      Fiscal Year (or more frequently if reasonably requested by the Secured Party),
      each Grantor shall give written notice to the Secured Party of the existence
      of
      any new registered Intellectual Property owned or claimed to be owned by such
      Grantor, which notice shall set forth the particulars thereof (including the
      name or title of the subject Intellectual Property, the filing office in which
      any filings may have been made in respect thereof, and the filing date and
      registration number of each such filing); and each such Grantor shall execute
      and deliver to the Secured Party, for filing, any and all such collateral
      assignments as the Secured Party may reasonably request in order to confirm
      and/or perfect the Security Interests in such Intellectual Property.


     

    (b) Each
      Grantor (either itself or through licensees) (i) will continue to use each
      registered Trademark (owned by such Grantor) and Trademark for which an
      application (owned by such Grantor) is pending, to the extent reasonably
      necessary to maintain such Trademark in full force free from any claim of
      abandonment for non-use, (ii) will maintain products and services offered
      under such Trademark at a level substantially consistent with the quality of
      such products and services as of the date hereof, (iii) will not (and will
      not permit any licensee or sublicensee thereof to) do any act or knowingly
      omit
      to do any act whereby such Trademark could reasonably be expected to become
      invalidated or impaired in any way, (iv) will not do any act, or knowingly
      omit
      to do any act, whereby any issued Patent owned by such Grantor would reasonably
      be expected to become forfeited, abandoned or dedicated to the public, (v)
      will
      not (and will not permit any licensee or sublicensee thereof to) do any act
      or
      knowingly omit to do any act whereby any registered Copyright owned by such
      Grantor or Copyright for which an application is pending (owned by such Grantor)
      could reasonably be expected to become invalidated or otherwise impaired, and
      (vi) will not (either itself or through licensees) do any act whereby any
      material portion of the Copyrights may fall into the public domain; provided,
      however,
      that
      unless an Event of Default shall have occurred and be continuing, each Grantor
      may maintain and manage its Intellectual Property consistent with reasonable
      business judgment, and may abandon or dispose (for fair value) of Intellectual
      Property which is no longer used or useful in the Business
      Operations.

     

    (c) Each
      Grantor will notify the Secured Party promptly if such Grantor knows that any
      application or registration relating to any material Intellectual Property
      owned
      by such Grantor may become forfeited, abandoned or dedicated to the public,
      or
      of any adverse determination or development (including, without limitation,
      the
      institution of, or any such determination or development in, any proceeding
      in
      the United States Patent and Trademark Office, the United States Copyright
      Office or any court or tribunal in any country) regarding such Grantor’s
      ownership of, or the validity of, any material Intellectual Property owned
      by
      such Grantor or such Grantor’s right to register the same or to own and maintain
      the same.

     

    (d) Whenever
      such Grantor, either by itself or through any agent, employee, licensee or
      designee, shall file an application for the registration of any Intellectual
      Property with the United States Patent and Trademark Office, the United States
      Copyright Office or any similar office or agency in any other country or any
      political subdivision thereof, such Grantor shall report such filing to the
      Secured Party within thirty (30) days after the last day of the fiscal quarter
      in which such filing occurs. Upon request of the Secured Party, such Grantor
      shall execute and deliver, and have recorded, any and all agreements,
      instruments, documents, and papers as the Secured Party may reasonably request
      to evidence the Secured Party’s security interest in any material Copyright,
      Patent or Trademark and the goodwill and General Intangibles of such Grantor
      relating thereto or represented thereby.

     

    
      
        
        

      

      
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    (e) Each
      Grantor shall take all commercially reasonable and necessary steps, at such
      Grantor’s sole cost and expense, including, without limitation, in any
      proceeding before the United States Patent and Trademark Office, the United
      States Copyright Office or any similar office or agency in any other country
      or
      any political subdivision thereof, to maintain and pursue each application
      (and
      to obtain the relevant registration) and to maintain each registration of the
      material Intellectual Property, including, without limitation, filing of
      applications for renewal, affidavits of use and affidavits of
      incontestability.

     

    (f) In
      the
      event that any material Intellectual Property owned by a Grantor is infringed,
      misappropriated or diluted by a third party, the applicable Grantor shall
      (i) at such Grantor’s sole cost and expense, take such actions as such
      Grantor shall reasonably deem appropriate under the circumstances to protect
      such Intellectual Property, and (ii) if such Intellectual Property is of
      material economic value, promptly notify the Secured Party after it learns
      of
      such infringement, misappropriation or dilution.

     

    Section
      4.10. Investment
      Property; Partnership/LLC Interests.
      

     

    (a) Without
      the prior written consent of the Lender, no Grantor will (i) vote to
      enable, or take any other action to permit, any Subsidiary Issuer to issue
      any
      Investment Property or Partnership/LLC Interests, except for those additional
      Investment Property or Partnership/LLC Interests that will be subject to the
      Security Interest granted herein in favor of the Secured Party, or
      (ii) enter into any agreement or undertaking restricting the right or
      ability of such Grantor or the Secured Party to sell, assign or transfer any
      Investment Property or Partnership/LLC Interests or Proceeds thereof. The
      Grantors will defend the right, title and interest of the Secured Party in
      and
      to any Investment Property and Partnership/LLC Interests against the claims
      and
      demands of all Persons whomsoever. 

     

    (b) If
      any
      Grantor shall become entitled to receive or shall receive (i) any Certificated
      Securities (including, without limitation, any certificate representing a stock
      dividend or a distribution in connection with any reclassification, increase
      or
      reduction of capital or any certificate issued in connection with any
      reorganization), option or rights in respect of the ownership interests of
      any
      Issuer, whether in addition to, in substitution of, as a conversion of, or
      in
      exchange for, any Investment Property, or otherwise in respect thereof, or
      (ii)
      any sums paid upon or in respect of any Investment Property upon the liquidation
      or dissolution of any Issuer, such Grantor shall accept the same as the agent
      of
      the Secured Party, hold the same in trust for the Secured Party, segregated
      from
      other funds of such Grantor, and promptly deliver the same to the Secured Party
      in accordance with the terms hereof.

     

    Section
      4.11. Equipment.
      Each
      Grantor will maintain each material item of Equipment in good working order
      and
      condition (reasonable wear and tear and obsolescence excepted), and in
      accordance with any manufacturer’s manual and/or recommendations, and will as
      quickly as practicable provide all maintenance, service and repairs necessary
      for such purpose and will promptly furnish to the Secured Party a statement
      respecting any material loss or damage to any material item of the Equipment;
      provided,
      however,
      that
      unless an Event of Default shall have occurred and be continuing, each Grantor
      may dispose of items of surplus, worn-out or obsolete Equipment in the ordinary
      course of business.

     

    
      
        
        

      

      
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    Section
      4.12. Vehicles.
      Upon
      the request of the Secured Party at any time and from time to time, any and
      all
      applications for certificates of title or ownership indicating the Secured
      Party’s first priority Lien on the Vehicle covered by such certificate, and any
      other necessary documentation, shall be filed in each office in each
      jurisdiction which the Secured Party shall deem reasonably advisable to perfect
      its Liens on the Vehicles. Prior thereto, each certificate of title or ownership
      relating to each Vehicle shall be maintained by the applicable Grantor in
      accordance with Applicable Law to reflect the ownership interest of such
      Grantor.

     

    Section
      4.13. Further
      Assurances.
      Upon
      the request of the Secured Party and at the sole expense of the Grantors, each
      Grantor will promptly and duly execute and deliver, and have recorded, such
      further instruments and documents and take such further actions as the Secured
      Party may reasonably request for the purpose of obtaining or preserving the
      full
      benefits of this Agreement and of the rights and powers herein granted,
      including, without limitation, (a) the collateral assignment of any
      Contract, (b) with respect to Government Contracts, collateral assignment
      agreements and notices of collateral assignment, in form and substance
      satisfactory to the Secured Party, duly executed by the subject Grantor in
      compliance with the Assignment of Claims Act (or analogous state Applicable
      Law), and (c) all applications, certificates, instruments, registration
      statements, and all other documents and papers the Secured Party may reasonably
      request and as may be required by law in connection with the obtaining of any
      consent, approval, registration, qualification, or authorization of any Person
      deemed necessary or appropriate for the effective exercise of any rights under
      this Agreement.

     

    ARTICLE
      V


     

    REMEDIAL
      PROVISIONS

     

    Section
      5.1. General
      Remedies.
      If an
      Event of Default shall occur and be continuing, the Secured Party may exercise,
      in addition to all other rights and remedies granted to it in this Agreement
      and
      in any other instrument or agreement securing, evidencing or relating to the
      Obligations, all rights and remedies of a secured party under the UCC or any
      other Applicable Law. Without limiting the generality of the foregoing, the
      Secured Party, without demand of performance or other demand, presentment,
      protest, advertisement or notice of any kind (except any notice required
      hereunder or by law referred to below) to or upon any Grantor or any other
      Person (all and each of which demands, presentments, protests, advertisements
      and notices are hereby waived), may in such circumstances forthwith collect,
      receive, appropriate and realize upon the Collateral, or any part thereof,
      and/or may forthwith sell, lease, assign, give option or options to purchase,
      or
      otherwise dispose of and deliver the Collateral or any part thereof (or contract
      to do any of the foregoing), in one or more parcels at public or private sale
      or
      sales, at any exchange, broker’s board or office of the Secured Party or
      elsewhere upon such terms and conditions as it may deem advisable and at such
      prices as it may deem best, for cash or on credit or for future delivery without
      assumption of any credit risk. The Secured Party may disclaim any warranties
      of
      title, possession and quiet enjoyment. The Secured Party shall have the right
      upon any such public sale or sales, and, to the extent permitted by law, upon
      any such private sale or sales, to purchase the whole or any part of the
      Collateral so sold, free of any right or equity of redemption in any Grantor,
      which right or equity is hereby waived and released. Each Grantor further
      agrees, at the Secured Party’s request, to assemble the Collateral and make it
      available to the Secured Party at places which the Secured Party shall
      reasonably select, whether at such Grantor’s premises or elsewhere. To the
      extent permitted by Applicable Law, each Grantor waives all claims, damages
      and
      demands it may acquire against the Secured Party arising out of the exercise
      by
      it of any rights hereunder except to the extent any such claims, damages, or
      demands result solely from the gross negligence or willful misconduct of the
      Secured Party. If any notice of a proposed sale or other disposition of
      Collateral shall be required by law, such notice shall be deemed reasonable
      and
      proper if given at least ten (10) days before such sale or other
      disposition.

     

    
      
        
        

      

      
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    Section
      5.2. Specific
      Remedies.
      

     

    (a) The
      Secured Party hereby authorizes each Grantor to collect its Accounts, under
      the
      Secured Party’s direction and control; provided
      that,
      the Secured Party may curtail or terminate such authority at any time after
      the
      occurrence and during the continuance of an Event of Default.

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default:

     

    (i) the
      Secured Party may communicate with Account Debtors of any Account subject to
      a
      Security Interest and upon the request of the Secured Party, each Grantor shall
      notify (such notice to be in form and substance satisfactory to the Secured
      Party) its Account Debtors and parties to the Contracts subject to a Security
      Interest that such Accounts and the Contracts have been assigned to the Secured
      Party;

     

    (ii) each
      Grantor shall forward to the Secured Party, on the last Business Day of each
      week (or more frequently if requested by the Secured Party), deposit slips
      related to all cash, money, checks or any other similar items of payment
      received by the Grantor during such week, and, if requested by the Secured
      Party, copies of such checks or any other similar items of payment, together
      with a statement showing the application of all payments on the Collateral
      during such week and a collection report with regard thereto, in form and
      substance satisfactory to the Secured Party.

     

    (iii) whenever
      any Grantor shall receive any cash, money, checks or any other similar items
      of
      payment relating to any Collateral (including any Proceeds of any Collateral),
      such Grantor agrees that it will, within one (1) Business Day of such receipt,
      deposit all such items of payment into the Collateral Account or in a Deposit
      Account at a Controlled Depositary; and until such Grantor shall deposit such
      cash, money, checks or any other similar items of payment in the Collateral
      Account or in a Deposit Account at a Controlled Depositary, such Grantor shall
      hold such cash, money, checks or any other similar items of payment in trust
      for
      the Secured Party and as property of the Secured Party, separate from the other
      funds of such Grantor, and the Secured Party shall have the right to transfer
      or
      direct the transfer of the balance of each Deposit Account to the Collateral
      Account. All such Collateral and Proceeds of Collateral received by the Secured
      Party hereunder shall be held by the Secured Party in the Collateral Account
      as
      collateral security for all the Obligations and shall not constitute payment
      thereof until applied as provided in Section 5.4.

     

    
      
        
        

      

      
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    (iv) the
      Secured Party shall have the right to receive any and all cash dividends,
      payments or distributions made in respect of any Investment Property or
      Partnership/LLC Interests or other Proceeds paid in respect of any Investment
      Property or Partnership/LLC Interests, and any or all of any Investment Property
      or Partnership/LLC Interests shall be registered in the name of the Secured
      Party or its nominee, and the Secured Party or its nominee may thereafter
      exercise (A) all voting, corporate and other rights pertaining to such
      Investment Property or Partnership/LLC Interests, at any meeting of
      shareholders, partners or members of the relevant Issuers, and (B) any and
      all rights of conversion, exchange and subscription and any other rights,
      privileges or options pertaining to such Investment Property or Partnership/LLC
      Interests as if it were the absolute owner thereof (including, without
      limitation, the right to exchange at its discretion any and all of the
      Investment Property or Partnership/LLC Interests upon the merger, consolidation,
      reorganization, recapitalization or other fundamental change in the corporate,
      partnership or company structure of any Issuer or upon the exercise by any
      Grantor or the Secured Party of any right, privilege or option pertaining to
      such Investment Property or Partnership/LLC Interests, and in connection
      therewith, the right to deposit and deliver any and all of the Investment
      Property or Partnership/LLC Interests with any committee, depositary, transfer
      agent, registrar or other designated agency upon such terms and conditions
      as
      the Secured Party may determine), all without liability except to account for
      property actually received by it; but the Secured Party shall have no duty
      to
      any Grantor to exercise any such right, privilege or option and the Secured
      Party shall not be responsible for any failure to do so or delay in so doing.
      In
      furtherance thereof, each Grantor hereby authorizes and instructs each Issuer
      with respect to any Collateral consisting of Investment Property and
      Partnership/LLC Interests to (i) comply with any instruction received by it
      from the Secured Party in writing that (A) states that an Event of Default
      has
      occurred and is continuing, and (B) is otherwise in accordance with the terms
      of
      this Agreement, without any other or further instructions from such Grantor,
      and
      each Grantor agrees that each Issuer shall be fully protected in so complying,
      and (ii) except as otherwise expressly permitted hereby, pay any dividends,
      distributions or other payments with respect to any Investment Property or
      Partnership/LLC Interests directly to the Secured Party; and

     

    (v) the
      Secured Party shall be entitled to (but shall not be required to): (A) proceed
      to perform any and all obligations of the applicable Grantor under any Contract
      and exercise all rights of such Grantor thereunder as fully as such Grantor
      itself could, (B) do all other acts which the Secured Party may deem necessary
      or proper to protect its Security Interest granted hereunder, provided such
      acts
      are not inconsistent with or in violation of the terms of the Loan Agreement
      or
      Applicable Law, and (C) sell, assign or otherwise transfer any Contract
      constituting Collateral, subject, however, to the prior approval of each other
      party to such Contract, to the extent required under the Contract.

     

    
      
        
        

      

      
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    (c) Unless
      an
      Event of Default shall have occurred and be continuing and the Secured Party
      shall have given notice to the relevant Grantor of the Secured Party’s intent to
      exercise its corresponding rights pursuant to Section 5.2(b),
      each
      Grantor shall be permitted to receive all cash dividends, payments or other
      distributions made in respect of any Investment Property and Partnership/LLC
      Interests, in each case paid in the normal course of business of the relevant
      Issuer and consistent with past practice, to the extent permitted in the Loan
      Agreement, and to exercise all voting and other corporate, company or
      partnership rights with respect to any Investment Property and Partnership/LLC
      Interests; provided
      that no
      vote shall be cast or other corporate, company or partnership right exercised
      or
      other action taken which, in the Secured Party’s reasonable judgment, would
      impair the Collateral or which would result in a Default or Event of Default
      under any provision of the Loan Agreement, this Agreement or any other Loan
      Document.

     

    Section
      5.3. Private
      Sale.
      

     

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

     

    (b) Each
      Grantor agrees to use its best efforts to do or cause to be done all such other
      acts as may be necessary to make such sale or sales of all or any portion of
      the
      Restricted Securities Collateral valid and binding and in compliance with any
      and all other Applicable Laws.

     

    Section
      5.4. Application
      of Proceeds.
      At such
      intervals as may be agreed upon by the Borrower and the Secured Party, or,
      if an
      Event of Default shall have occurred and be continuing, at any time at the
      Lender’s election, the Secured Party may apply all or any part of the Collateral
      or any Proceeds of the Collateral in payment in whole or in part of the
      Obligations (after deducting all reasonable costs and expenses of every kind
      incurred in connection therewith or incidental to the care or safekeeping of
      any
      of the Collateral or in any way relating to the Collateral or the rights of
      the
      Secured Party hereunder, including, without limitation, reasonable attorneys’
fees and disbursements) in accordance with Section
      2.07
      of the
      Loan Agreement. Any balance of such Proceeds remaining after payment in full
      of
      the Obligations shall be paid over to the Grantors, or to whomever else may
      be
      lawfully entitled to receive the same. Only after (a) the payment by the Secured
      Party of any other amount required by any provision of law, including, without
      limitation, Section 9-610 and Section 9-615 of the UCC, and (b) the payment
      in
      full of the Obligations, shall the Secured Party account for the surplus, if
      any, to any Grantor, or to whomever else may be lawfully entitled to receive
      the
      same.

     

    
      
        
        

      

      
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    Section
      5.5. Waiver,
      Deficiency.
      Each
      Grantor hereby waives, to the extent permitted by Applicable Law, all rights
      of
      redemption, appraisement, valuation, stay, extension or moratorium now or
      hereafter in force under any Applicable Law in order to prevent or delay the
      enforcement of this Agreement or the absolute sale of the Collateral or any
      portion thereof. Each Grantor shall remain liable for any deficiency if the
      proceeds of any sale or other disposition of the Collateral are insufficient
      to
      pay its Obligations and the fees and disbursements of any attorneys employed
      by
      the Secured Party to collect such deficiency.

     

    ARTICLE
      VI

     

    THE
      SECURED PARTY

     

    Section
      6.1. Secured
      Party’s Appointment as Attorney-In-Fact.
      

     

    (a) Each
      Grantor hereby irrevocably constitutes and appoints the Secured Party and any
      officer or agent thereof, with full power of substitution, as its true and
      lawful attorney-in-fact with full irrevocable power and authority in the place
      and stead of such Grantor and in the name of such Grantor or in its own name,
      for the purpose of carrying out the terms of this 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 Agreement,
      and,
      without limiting the generality of the foregoing, each Grantor hereby gives
      the
      Secured Party the power and right, on behalf of such Grantor, without notice
      to
      or assent by such Grantor, to do any or all of the following upon the occurrence
      and during the continuance of an Event of Default:

     

    (i) in
      the
      name of such Grantor or its own name, or otherwise, take possession of and
      indorse and collect any checks, drafts, notes, acceptances or other instruments
      for the payment of moneys due under any Account or Contract subject to a
      Security Interest or with respect to any other Collateral and file any claim
      or
      take any other action or proceeding in any court of law or equity or otherwise
      deemed appropriate by the Secured Party for the purpose of collecting any and
      all such moneys due under any Account or Contract subject to a Security Interest
      or with respect to any other Collateral whenever payable;

     

    (ii) in
      the
      case of any Intellectual Property, execute and deliver, and have recorded,
      any
      and all agreements, instruments, documents and papers as the Secured Party
      may
      request to evidence the Secured Party’s security interest in such Intellectual
      Property and the goodwill and General Intangibles of such Grantor relating
      thereto or represented thereby;

     

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

     

    
      
        
        

      

      
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    (iv) execute,
      in connection with any sale provided for in this Agreement, any endorsements,
      assignments or other instruments of conveyance or transfer with respect to
      the
      Collateral; and

     

    (v) (A) direct
      any party liable for any payment under any of the Collateral to make payment
      of
      any and all moneys due or to become due thereunder directly to the Secured
      Party
      or as the Secured Party shall direct; (B) ask or demand for, collect, and
      receive payment of and receipt for, any and all moneys, claims and other amounts
      due or to become due at any time in respect of or arising out of any Collateral;
      (C) sign and indorse any invoices, freight or express bills, bills of
      lading, storage or warehouse receipts, drafts against debtors, assignments,
      verifications, notices and other documents in connection with any of the
      Collateral; (D) 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 portion thereof and to enforce any other right in respect
      of
      any Collateral; (E) defend any suit, action or proceeding brought against
      such Grantor with respect to any Collateral; (F) settle, compromise or
      adjust any such suit, action or proceeding and, in connection therewith, give
      such discharges or releases as the Secured Party may deem appropriate;
      (G) assign any Copyright, Patent or Trademark (along with the goodwill of
      the business to which any such Copyright, Patent or Trademark pertains), for
      such term or terms, on such conditions, and in such manner, as the Secured
      Party
      shall in its sole discretion determine; and (H) generally, sell, transfer,
      pledge and make any agreement with respect to or otherwise deal with any of
      the
      Collateral as fully and completely as though the Secured Party were the absolute
      owner thereof for all purposes, and do, at the Secured Party’s option and such
      Grantor’s expense, at any time, or from time to time, all acts and things which
      the Secured Party deems necessary to protect, preserve or realize upon the
      Collateral and the Secured Party’s Security Interests therein and to effect the
      intent of this Agreement, all as fully and effectively as such Grantor might
      do.

     

    (b) If
      any
      Grantor fails to perform or comply with any of its agreements contained herein,
      the Secured Party, at its option, but without any obligation so to do, may
      perform or comply, or otherwise cause performance or compliance, with such
      agreement in accordance with the provisions of Section
      6.1(a).

     

    (c) The
      costs
      and expenses (including, without limitation, reasonable attorneys’ fees)
      incurred by the Secured Party in connection with actions taken pursuant to
      the
      terms of this Agreement shall be deemed to be Advances under the Loan Agreement
      and shall, together with interest thereon at the rate(s) in effect from time
      to
      time pursuant to the Revolving Credit Note, from the date of payment by the
      Secured Party to the date reimbursed by the Grantors, be payable by the Grantors
      to the Secured Party on demand.

     

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

     

    
      
        
        

      

      
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    Section
      6.2. Duty
      of Secured Party.
      The
      Secured Party’s sole duty with respect to the custody, safekeeping and physical
      preservation of the Collateral in its possession, under Section 9-207 of the
      UCC
      or otherwise, shall be to deal with it in the same manner as the Secured Party
      deals with similar property for its own account. Neither the Secured Party
      nor
      any of its officers, directors, employees or agents shall be liable for failure
      to demand, collect or realize upon any of the Collateral or for any delay in
      doing so or shall be under any obligation to sell or otherwise dispose of any
      Collateral upon the request of any Grantor or any other Person or to take any
      other action whatsoever with regard to the Collateral or any part thereof.
      The
      powers conferred on the Secured Party hereunder are solely to protect the
      Secured Party’s interests in the Collateral and shall not impose any duty upon
      the Secured Party to exercise any such powers. The Secured Party shall be
      accountable only for amounts that it actually receives as a result of the
      exercise of such powers, and neither it nor any of its officers, directors,
      employees or agents shall be responsible to any Grantor for any act or failure
      to act hereunder, except for their own gross negligence or willful
      misconduct.

     

    ARTICLE
      VII


     

    MISCELLANEOUS

     

    Section
      7.1. Amendments
      in Writing.
      None of
      the terms or provisions of this Agreement may be waived, amended, supplemented
      or otherwise modified except in accordance with Section
      9.04
      of the
      Loan Agreement.

     

    Section
      7.2. Notices.
      All
      notices, requests and demands to or upon the Secured Party or any Grantor
      hereunder shall be effected in the manner provided for in Section
      9.06
      of the
      Loan Agreement.

     

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

     

    Section
      7.4. Enforcement
      Expenses, Indemnification.
      

     

    (a) Each
      Grantor agrees to pay or reimburse the Secured Party on demand for all of its
      reasonable costs and expenses incurred in connection with enforcing or
      preserving any rights under this Agreement and the other Loan Documents
      (including, without limitation, in connection with any workout, restructuring,
      bankruptcy or other similar proceeding), including, without limitation, the
      reasonable fees and disbursements of counsel to the Secured Party.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (b) Each
      Grantor agrees to pay, and to save the Secured Party harmless from, any and
      all
      liabilities with respect to, or resulting from any delay in paying, any and
      all
      stamp, excise, sales or other taxes which may be payable or determined to be
      payable with respect to any of the Collateral or in connection with any of
      the
      transactions contemplated by this Agreement (but not including franchise taxes
      or taxes based on net income of the Secured Party).

     

    (c) Each
      Grantor agrees to pay, and to save the Secured Party harmless from any and
      all
      liabilities, obligations, losses, damages, penalties, costs and expenses in
      connection with actions, judgments, suits, costs, expenses or disbursements
      of
      any kind or nature whatsoever with respect to the execution, delivery,
      enforcement, performance and administration of this Agreement to the extent
      any
      Grantor would be required to do so pursuant to Section
      9.02
      of the
      Loan Agreement.

     

    (d) The
      agreements in this Section
      7.4
      shall
      survive repayment of the Obligations and the termination of this Agreement
      and/or any other Loan Documents.

     

    Section
      7.5. Waiver
      of Jury Trial; Preservation of Remedies.
      

     

    (a) EACH
      GRANTOR HEREBY IRREVOCABLY WAIVES ITS RIGHTS TO A JURY TRIAL WITH RESPECT TO
      ANY
      ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION
      WITH
      THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF
      SUCH
      RIGHTS AND OBLIGATIONS.

     

    (b) The
      parties hereto preserve, without diminution, certain remedies that such Persons
      may employ or exercise freely, either alone, in conjunction with or during
      a
      dispute. Each such Person shall have and hereby reserves the right to proceed
      in
      any court of proper jurisdiction or by self-help to exercise or prosecute the
      following remedies, as applicable: (i) all rights to foreclose against any
      real
      or personal property or other security by exercising a power of sale granted
      in
      the Loan Documents or under Applicable Law or by judicial foreclosure and sale,
      including a proceeding to confirm the sale, (ii) all rights of self-help
      including peaceful occupation of property and collection of rents, set-off,
      and
      peaceful possession of property, (iii) obtaining provisional or ancillary
      remedies including injunctive relief, sequestration, garnishment, attachment,
      appointment of receiver and in filing an involuntary bankruptcy proceeding,
      and
      (iv) when applicable, a judgment by confession of judgment. Preservation of
      these remedies does not limit the power of an arbitrator to grant similar
      remedies that may be requested by a party in a dispute.

     

    Section
      7.6. Successors
      and Assigns.
      This
      Agreement shall be binding upon the successors and assigns of each Grantor
      and
      shall inure to the benefit of each Grantor (and shall bind all Persons who
      become bound as a Grantor to this Agreement), the Secured Party and their
      successors and permitted assigns; provided,
      that no
      Grantor may assign, transfer or delegate any of its rights or obligations under
      this Agreement without the prior written consent of all holders of
      Obligations.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Section
      7.7. Set-Off.
      Each
      Grantor hereby irrevocably authorizes the Secured Party at any time and from
      time to time, without notice to such Grantor, any such notice being expressly
      waived by each Grantor, to set off and appropriate and apply any and all
      deposits (general or special, time or demand, provisional or final), in any
      currency, and any other credits, indebtedness or claims, in any currency, in
      each case whether direct or indirect, absolute or contingent, matured or
      unmatured, at any time held or owing by the Secured Party (or any agent of
      the
      Secured Party) to or for the credit or the account of such Grantor, or any
      part
      thereof in such amounts as the Secured Party may elect, against and on account
      of the obligations and liabilities of such Grantor to the Secured Party
      hereunder and claims of every nature and description of the Secured Party
      against such Grantor, in any currency, whether arising hereunder, under the
      Loan
      Agreement, any other Loan Document or otherwise, as the Secured Party may elect,
      whether or not the Secured Party has made any demand for payment and although
      such obligations, liabilities and claims may be contingent or unmatured. The
      Secured Party shall notify such Grantor promptly of any such set-off and the
      application made by the Secured Party of the proceeds thereof; provided,
      that
      the failure to give such notice shall not affect the validity of such setoff
      and
      application. The rights of the Secured Party under this Section
      7.7
      are in
      addition to other rights and remedies (including, without limitation, other
      rights of set-off) which the Secured Party may have.

     

    Section
      7.8. Counterparts.
      This
      Agreement may be executed by one or more of the parties to this Agreement on
      any
      number of separate counterparts (including by telecopy), and all of said
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

     

    Section
      7.9. Severability.
      Any
      provision of this Agreement 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 remainder
      of
      such provision or the remaining provisions hereof or thereof or affecting the
      validity or enforceability of such provision in any other
      jurisdiction.

     

    Section
      7.10. Section
      Headings.
      The
      Section headings used in this Agreement are for convenience of reference only
      and are not to affect the construction hereof or be taken into consideration
      in
      the interpretation hereof.

     

    Section
      7.11. Integration.
      This
      Agreement and the other agreements, instruments and documents referred to herein
      represent the agreement of the Grantors and the Secured Party with respect
      to
      the subject matter hereof and thereof, and there are no promises, undertakings,
      representations or warranties by the Secured Party relative to subject matter
      hereof and thereof not expressly set forth or referred to herein or in the
      other
      agreements, instruments and documents referred to herein.

     

    Section
      7.12. Governing
      Law.
      This
      Agreement shall be governed by, construed, interpreted and enforced in
      accordance with, the laws of the State of New York, without giving effect to
      principles of conflicts of laws; provided,
      however,
      that to
      the extent that the laws of any other jurisdiction govern the perfection of
      the
      Security Interests in any Collateral located in such jurisdiction or owned
      by a
      Grantor located in such jurisdiction, then the laws of that jurisdiction shall
      govern as respects such perfection, and the Grantors shall comply therewith
      to
      the same extent as herein provided with respect to the UCC and other New York
      law.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    Section
      7.13. Consent
      to Jurisdiction.
      Each
      Grantor hereby irrevocably consents to the personal jurisdiction of all state
      and federal courts located in New York, New York, in any action, claim or other
      proceeding arising out of any dispute in connection with this Agreement, the
      Loan Agreement, the Notes and the other Loan Documents, any rights or
      obligations hereunder or thereunder, or the performance of such rights and
      obligations. Each Grantor hereby irrevocably consents to the service of a
      summons and complaint and other process in any action, claim or proceeding
      brought by the Secured Party in connection with this Agreement, the Loan
      Agreement, the Notes or the other Loan Documents, any rights or obligations
      hereunder or thereunder, or the performance of such rights and obligations,
      on
      behalf of itself or its property, by registered or certified mail, return
      receipt requested, in the manner specified in Section
      9.06
      of the
      Loan Agreement. Nothing in this Section
      7.13
      shall
      affect the right of the Secured Party to serve legal process in any other manner
      permitted by Applicable Law or affect the right of the Secured Party to bring
      any action or proceeding against any Grantor or its properties in the courts
      of
      any other jurisdiction in which any Grantor maintains an office or in which
      any
      Collateral is located.

     

    Section
      7.14. Acknowledgements.
      

     

    (a) Each
      Grantor hereby acknowledges that (i) it has been advised by counsel in the
      negotiation, execution and delivery of this Agreement, (ii) the Secured Party
      has no fiduciary relationship with or duty to any Grantor arising out of or
      in
      connection with the Loan Agreement, this Agreement or any of the other Loan
      Documents, and the relationship between the Grantors (on the one hand) and
      the
      Secured Party (on the other hand) in connection herewith or therewith is solely
      that of debtor and creditor, and (iii) no joint venture is created hereby or
      otherwise exists by virtue of the transactions contemplated hereby.

     

    (b) Each
      Issuer party to this Agreement acknowledges receipt of a copy of this Agreement
      and agrees to be bound thereby and to comply with the terms thereof insofar
      as
      such terms are applicable to it. Each Issuer agrees to provide such notices
      to
      the Secured Party as may be necessary to give full effect to the provisions
      of
      this Agreement.

     

    Section
      7.15. Additional
      Grantors.
      Each
      Subsidiary of the Borrower that is required to become a party to this Agreement
      pursuant to Section
      5.11
      of the
      Loan Agreement shall become a Grantor for all purposes of this Agreement upon
      execution and delivery by such Subsidiary of a joinder agreement (with a
      Perfection Certificate and/or other appropriate disclosure schedules respecting
      such Additional Grantor) in form and substance satisfactory to the Secured
      Party.

     

    Section
      7.16. Releases.
      

     

    (a) At
      such
      time as the Obligations shall have been indefeasibly paid in full and the
      Revolving Credit Commitment has been terminated, the Collateral shall be
      released from the Liens created hereby, and this Agreement and all obligations
      (other than those expressly stated to survive such termination) of the Secured
      Party and each Grantor hereunder shall terminate, all without delivery of any
      instrument or performance of any act by any party, and all rights to the
      Collateral shall revert to the Grantors. At the request and sole expense of
      any
      Grantor following any such termination, the Secured Party shall deliver to
      such
      Grantor any Collateral held by the Secured Party hereunder, and execute and
      deliver to such Grantor such documents as such Grantor shall reasonably request
      to evidence such termination.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (b) If
      any of
      the Collateral shall be sold, transferred or otherwise disposed of by any
      Grantor in a transaction permitted by the Loan Agreement, then the Secured
      Party, at the request and sole expense of such Grantor, shall execute and
      deliver to such Grantor all releases or other documents reasonably necessary
      or
      desirable for the release of the Liens created hereby on such
      Collateral.

     

    [Signature
      Page to Follow]

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    



    IN
      WITNESS WHEREOF, the parties hereto have caused this Collateral Agreement to
      be
      executed by their duly authorized officers, all as of the day and year first
      written above.

     

    
      	 	 	 
	 	AFTERSOFT
              GROUP,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Simon
              Chadwick
	 	
              

              Name:
                Simon Chadwick

              Title:
                Chief Operating Officer

            
	 	 


    

    
      
        	 	 	 
	 	AFTERSOFT
                NETWORK
                N.A., INC.
	 
 	 
 	 
 
	 	By:  	/s/ Simon
                Chadwick
	 	
                

                Name:
                  Simon Chadwick

                Title:
                  Director

              
	 	 


      

      
        
          	 	 	 
	 	MAM
                  SOFTWARE
                  LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Simon
                  Chadwick
	 	
                  

                  Name:
                    Simon Chadwick

                  Title:
                    Director

                
	 	 


        

        
          
            	 	 	 
	 	AFTERSOFT
                    GROUP
                    (UK) LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Simon
                    Chadwick
	 	
                    

                    Name:
                      Simon Chadwick

                    Title:
                      Director

                  
	 	 


          

          
            
              
                	 	 	 
	 	AFS
                        WAREHOUSE
                        DISTRIBUTION MANAGEMENT, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Ian
                        Warwick
	 	
                        

                        Name:
                          Ian Warwick

                        Title:
                          President, Director

                      
	 	 


              

              
                
                  
                    	 	 	 
	 	AFS
                            TIRE
                            MANAGEMENT, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Ian
                            Warwick
	 	
                            

                            Name:
                              Ian Warwick

                            Title:
                              President, Director

                          
	 	 


                  

                  
                    
                       

                      
                        
                          
                          

                        

                        
                          
                          

                          
                            

                          

                        

                        
                          
                          

                        

                      

                       

                      
                        	 	 	 
	 	AFS
                                AUTOSERVICE
                                INC.
	 
 	 
 	 
 
	 	By:  	/s/ Ian
                                Warwick
	 	
                                

                                Name:
                                  Ian Warwick

                                Title:
                                  President, Director

                              
	 	 


                      

                      
                        
                          
                            	 	 	 
	 	COMVEST
                                    CAPITAL,
                                    LLC 
	 
 	 
 	 
 
	 	By:  	/s/ Gary
                                    E.
                                    Jaggard
	 	
                                    

                                    Name:
                                      Gary E. Jaggard

                                    Title:
                                      Managing Director

                                  
	 	 


                          

                           

                          
                            
                              
                              

                            

                            
                              
                              

                              
                                

                              

                            

                            
                              
                              

                            

                            

                              EXHIBIT
                                A

                              to

                              Collateral
                                Agreement

                               

                              Form
                                of Perfection Certificate

                               

                              Dated
                                as
                                of December __, 2007

                               

                              This
                                Perfection Certificate is being rendered to the Secured
                                Party by the Grantors,
                                pursuant to that certain Collateral Agreement dated
                                as of December __, 2007 by
                                and among Aftersoft Group, Inc., its Subsidiaries
                                and ComVest Capital, LLC (as
                                amended, modified, supplemented and/or restated from
                                time to time, the
“Collateral Agreement”). Capitalized terms used herein and not otherwise
                                defined
                                shall have the meanings assigned to them in the Collateral
                                Agreement.

                               

                              Each
                                Grantor hereby certifies to the Secured Party that
                                as of the Closing
                                Date:

                               

                              SECTION
                                1. Identification
                                Information.

                               

                              (a) The
                                jurisdiction of incorporation, organization or formation
                                of each Grantor and the
                                date of such incorporation, organization or formation
                                is as
                                follows:

                               

                              (b) The
                                location of the chief executive office of each Grantor
                                is as
                                follows:

                               

                              (c) The
                                exact
                                legal name of each Grantor as it appears in its Certificate
                                of Incorporation or
                                other Organic Document is as follows:

                               

                              (d) Except
                                as
                                set forth herein, (i) no Grantor has changed its
                                identity or organizational
                                structure in any way within the past five years,
                                and (ii) no Person has merged
                                or consolidated with or into any Grantor and no Person
                                has liquidated into or
                                transferred all or substantially all of its assets
                                to any Grantor in any way
                                within the past year.

                               

                              (e) The
                                following is a list of all other names (including
                                trade names or similar
                                appellations) used by any Grantor at any time during
                                the past five
                                years:

                               

                              (f) The
                                taxpayer identification number of each Grantor is
                                as follows:

                               

                              (g) The
                                registered organization identification number of
                                each Grantor is as
                                follows:

                               

                              SECTION
                                2. Current
                                Locations.

                               

                              (a) The
                                following are the only locations at which any Grantor
                                maintains any books or
                                records relating to any Accounts:

                               

                              
                                	
                                        Grantor

                                      	
                                        Mailing
                                          Address

                                      	
                                        County
                                          and State

                                      


                              

                               

                              
                                
                                  
                                  

                                

                                
                                  
                                  

                                  
                                    

                                  

                                

                                
                                  
                                  

                                

                              

                               

                              (b) The
                                following are all the locations not identified above
                                where the Grantors maintain
                                any Inventory or Equipment:

                               

                              
                                
                                  	
                                          Grantor

                                        	
                                          Mailing
                                            Address

                                        	
                                          County
                                            and State

                                        


                                

                                 

                              

                              SECTION
                                3. Deposit
                                Accounts and Securities Accounts.
                                The
                                Grantors maintain the following Deposit Accounts:

                              


                              
                                	
                                        Grantor

                                      	
                                        Financial
                                          Institution

                                      	
                                        Account
                                          Number

                                      	
                                        Address
                                          of Financial Institution

                                      	
                                        Account
                                          Purpose

                                      
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 


                              

                              


                              SECTION
                                4. Securities
                                and Investment Property.
                                The
                                Grantors hold the following securities and Investment
                                Property (including
                                without limitation, capital stock of subsidiaries):


                               

                              
                                	
                                        Issuer

                                      	
                                        Grantor
                                          Owner

                                      	
                                        Number
                                          and Type of Securities

                                      	
                                        Percentage
                                          Ownership of Issuer

                                      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


                              

                              


                              SECTION
                                5. Patents.
                                The
                                Grantors are the registered owners of the following
                                Patents:

                               

                              
                                	
                                        Grantor

                                      	
                                        Description

                                      	
                                        Registration/Application
                                          No.

                                      	
                                        Date

                                      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


                              

                              


                               

                              SECTION
                                6. Trademarks.
                                The
                                Grantors are the registered owners of the following
                                Trademarks:

                               

                              
                                	
                                        Grantor

                                      	
                                        Description

                                      	
                                        Registration/Application
                                          No.

                                      	
                                        Date

                                      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


                              

                              


                              
                                
                                  
                                  

                                

                                
                                  
                                  

                                  
                                    

                                  

                                

                                
                                  
                                  

                                

                              

                               

                              SECTION
                                7. Copyrights.
                                The
                                Grantors are the registered owners of the following
                                Copyrights:

                               

                              
                                	
                                        Grantor

                                      	
                                        Description

                                      	
                                        Registration/Application
                                          No.

                                      	
                                        Date

                                      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


                              

                               

                              SECTION
                                8. Commercial
                                Tort Claims.
                                On the
                                date hereof, the Grantors hold the following Commercial
                                Tort
                                Claims:

                               

                              SECTION
                                9. Unusual
                                Transactions.
                                Other
                                than as set forth below, all Accounts have been originated
                                by the Grantors and
                                all Inventory and Equipment have been acquired by
                                the Grantors in the ordinary
                                course of business from Persons in the business of
                                selling goods of such
                                kind.

                               

                              SECTION
                                10. Reliance.
                                The
                                undersigned acknowledge that the Secured Party is
                                entitled to rely and has, in
                                fact, relied on the information contained herein,
                                and any successor or assign of
                                the Secured Party is entitled to rely on the information
                                contained
                                herein.

                               

                              
                                
                                  
                                  

                                

                                
                                  
                                  

                                  
                                    

                                  

                                

                                
                                  
                                  

                                

                              

                               

                              IN
                                WITNESS WHEREOF, each Grantor has executed this Perfection
                                Certificate as of the
                                date first above written.

                              
                                 

                                
                                  	 	 	 
	 	AFTERSOFT
                                          GROUP,
                                          INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                          

                                          Name: 
                                            

                                          Title:

                                        
	 	 


                                

                                
                                  
                                    	 	 	 
	 	AFTERSOFT
                                            NETWORK
                                            N.A., INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                            

                                            Name:
                                              

                                            Title:
                                              

                                          
	 	 


                                  

                                  
                                    
                                      	 	 	 
	 	MAM
                                              SOFTWARE
                                              LTD.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                              

                                              Name: 
                                                

                                              Title: 
                                                

                                            
	 	 


                                    

                                    
                                      
                                        	 	 	 
	 	AFTERSOFT
                                                GROUP
                                                (UK) LTD.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                                

                                                Name: 
                                                  

                                                Title: 
                                                  

                                              
	 	 


                                      

                                      
                                        
                                          
                                            	 	 	 
	 	AFS
                                                    WAREHOUSE
                                                    DISTRIBUTION MANAGEMENT, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                                    

                                                    Name: 
                                                      

                                                    Title: 
                                                      

                                                  
	 	 


                                          

                                          
                                            
                                              
                                                	 	 	 
	 	AFS
                                                        TIRE
                                                        MANAGEMENT, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                                        

                                                        Name: 
                                                          

                                                        Title: 
                                                          

                                                      
	 	 


                                              

                                              
                                                
                                                   

                                                  
                                                    
                                                      
                                                      

                                                    

                                                    
                                                      
                                                      

                                                      
                                                        

                                                      

                                                    

                                                    
                                                      
                                                      

                                                    

                                                  

                                                   

                                                  
                                                    	 	 	 
	 	AFS
                                                            AUTOSERVICE
                                                            INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                                                            

                                                            Name: 
                                                              

                                                            Title: