“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims, Copyrights,Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, General Intangibles, Goods,Instruments, Inventory, Investment Property, letters of credit, Letter-of-Credit Rights, Licenses,Patents, Pledged Deposits, Supporting Obligations, Trademarks and Other Collateral, whereverlocated, in which any Grantor now has or hereafter acquires any right or interest, and the proceeds(including Stock Rights), insurance proceeds and products thereof, together with all books andrecords, customer lists, credit files, computer files, programs, printouts and other computermaterials and records related thereto; provided, however, that in no event shall Collateralinclude any Excluded Property.     “Commercial Tort Claims” means those certain currently existing commercial tortclaims, as defined in the UCC of any Grantor, including each commercial tort claim specificallydescribed in Exhibit “F”.     “Control” shall have the meaning set forth in Article 8 or, if applicable, in Section9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.     “Copyrights” means, with respect to any Person, all of such Person’s right, title, andinterest in and to the following: (a) all copyrights, rights and interests in copyrights, worksprotectable by copyright, copyright registrations, and copyright applications; (b) all extensionsof any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter dueand/or payable under any of the foregoing, including, without limitation, damages or payments forpast or future infringements for any of the foregoing; (d) the right to sue for past, present, andfuture infringements of any of the foregoing; and (e) all rights corresponding to any of theforegoing throughout the world.     “Default” has the meaning ascribed thereto in the Credit Agreement.     “Deposit Account Control Agreement” means an agreement, in form and substancereasonably satisfactory to the Administrative Agent, among any Loan Party, a banking institutionholding such Loan Party’s funds, and the Administrative Agent with respect to collection andControl of all deposits and balances held in a deposit account maintained by any Loan Party withsuch banking institution.     “Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC; provided,however, that Deposit Accounts shall not include (a) any trust, fiduciary or similar accountsmaintained by any Grantor or (b) any Restricted Cash Account or (c) any amounts or other propertycredited to any such account or Restricted Cash Account.     “Documents” shall have the meaning set forth in Article 9 of the UCC.     “Excluded Property” shall mean:     (a) any permit or license issued by a Governmental Authority to any Grantor orany agreement to which any Grantor is a party, in each case, only to the extent andfor so long as the terms of such permit, license or agreement or any Requirement ofLaw applicable thereto, prohibit the creation by such Grantor of a security interestin such permit, license or agreement in favor of the Collateral Agent (after givingeffect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or anysuccessor provision or provisions) or any other applicable law (including theBankruptcy Code) or principles of equity),     (b) Equipment owned by any Grantor on the date hereof or hereafter acquiredthat is subject to a Lien securing a Purchase Money Obligation or Capital Lease
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Obligation permitted to be incurred pursuant to the provisions of the CreditAgreement if the contract or other agreement in which such Lien is granted (or thedocumentation providing for such Purchase Money Obligation or Capital LeaseObligation) prohibits the creation of any other Lien on such Equipment; and     (c) Excluded Intercompany Notes and any other property (including anyInstrument, Securities, Investment Property, General Intangibles, Account, note,payment intangible or general tangible relating to any amount due from a ForeignSubsidiary), the security interest in which, would result in an investment ofearnings in United States property under Section 956 (or a successor provision) ofthe Code, which investment would or could reasonably be expected to trigger anincrease in the net income of a Grantor pursuant to Section 951 (or a successorprovision) of the Code (assuming that the person obligated with respect to suchProperty has positive income and earnings and profits at all applicable times);provided, however, that Excluded Property shall not include any Proceeds,substitutions or replacements of any Excluded Property referred to in clause (a) or (b) (unlesssuch Proceeds, substitutions or replacements would constitute Excluded Property referred to inclause (a) or (b)).     “Equipment” shall have the meaning set forth in Article 9 of the UCC.     “Exhibit” refers to a specific exhibit to this Security Agreement, unless anotherdocument is specifically referenced.     “Farm Products” shall have the meaning set forth in Article 9 of the UCC.     “Fixtures” shall have the meaning set forth in Article 9 of the UCC.     “General Intangibles” shall have the meaning set forth in Article 9 of the UCC and, inany event, includes payment intangibles, contract rights, rights to payment, rights arising undercommon law, statutes, or regulations, choses or things in action, goodwill (including the goodwillassociated with any Trademark), Patents, Trademarks, Copyrights, URLs and domain names, otherindustrial or Intellectual Property or rights therein or applications therefor, whether underlicense or otherwise, programs, programming materials, blueprints, drawings, purchase orders,customer lists, monies due or recoverable from pension funds, route lists, rights to payment andother rights under any royalty or licensing agreements, including Intellectual Property Licenses,infringement claims, computer programs, information contained on computer disks or tapes, software,literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premiumrebates, tax refunds, and tax refund claims, interests in a partnership or limited liabilitycompany which do not constitute a security under Article 8 of the Code, and any other personalproperty other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts,Goods, Investment Property, negotiable Collateral, and oil, gas, or other minerals beforeextraction.     “Goods” shall have the meaning set forth in Article 9 of the UCC.     “Instruments” shall have the meaning set forth in Article 9 of the UCC.     “Intellectual Property” means all Patents, Trademarks, Copyrights and any otherintellectual property.     “Inventory” shall have the meaning set forth in Article 9 of the UCC.
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     “Investment Property” shall have the meaning set forth in Article 9 of the UCC.     “Letter of Credit Rights” shall have the meaning set forth in Article 9 of the UCC.     “Licenses” means, with respect to any Person, all of such Person’s right, title, andinterest in and to (a) any and all licensing agreements or similar arrangements in and to itsPatents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now orhereafter due or payable under and with respect thereto, including, without limitation, damages andpayments for past and future breaches thereof, and (c) all rights to sue for past, present, andfuture breaches thereof.     “Other Collateral” means any property of the Grantors, not included within the definedterms Accounts, Chattel Paper, Commercial Tort Claims, Copyrights, Deposit Accounts, Documents,Equipment, Fixtures, Farm Products, General Intangibles, Goods, Instruments, Inventory, InvestmentProperty, Letter-of-Credit Rights, Licenses, Patents, Pledged Deposits, Supporting Obligations andTrademarks, including, without limitation, all cash on hand, letters of credit, Stock Rights or anyother deposits (general or special, time or demand, provisional or final) with any bank or otherfinancial institution, it being intended that the Collateral include all real and personal propertyof the Grantors.     “Patents” means, with respect to any Person, all of such Person’s right, title, andinterest in and to: (a) any and all patents and patent applications; (b) all inventions andimprovements described and claimed therein; (c) all reissues, divisions, continuations, renewals,extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, andpayments now or hereafter due or payable under and with respect thereto, including, withoutlimitation, damages and payments for past and future infringements thereof; (e) all rights to suefor past, present, and future infringements thereof; and (f) all rights corresponding to any of theforegoing throughout the world.     “Pledged Collateral” means all Instruments, Securities and other Investment Propertyof the Grantors, whether or not physically delivered to the Administrative Agent pursuant to thisSecurity Agreement.     “Pledged Deposits” means all time deposits of money (other than Deposit Accounts andInstruments), whether or not evidenced by certificates, which a Grantor may from time to timedesignate as pledged to the Administrative Agent or to any Secured Party as security for anySecured Obligations, and all rights to receive interest on said deposits.     “Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,Instruments or Pledged Deposits, and any other rights or claims to receive money which are GeneralIntangibles or which are otherwise included as Collateral.     “Restricted Cash Accounts” shall mean any deposit account maintained by a Grantor inaccordance with the terms of an agreement with a customer entered into in the ordinary course andin good faith (other than an agreement with a customer that is an Affiliate of such Grantor), whichagreement requires certain of the customer’s funds paid or advanced under such agreement to be usedsolely for the payment of costs and expenses associated with, arising out of or related to suchagreement.     “Section” means a numbered section of this Security Agreement, unless another documentis specifically referenced.     “Security” shall have the meaning set forth in Article 8 of the UCC.     “Securities Account” has the meaning set forth in Article 8 of the UCC.
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     “Stock Rights” means any securities, dividends, instruments or other distributions andany other right or property which any Grantor shall receive or shall become entitled to receive forany reason whatsoever with respect to, in substitution for or in exchange for any securities orother ownership interests in a corporation, partnership, joint venture or limited liability companyconstituting Collateral and any securities, any right to receive securities and any right toreceive earnings, in which any Grantor now has or hereafter acquires any right, issued by an issuerof such securities.     “Supporting Obligation” shall have the meaning set forth in Article 9 of the UCC.     “Trademarks” means, with respect to any Person, all of such Person’s right, title, andinterest in and to the following: (a) all trademarks (including service marks), trade names, tradedress, and trade styles and the registrations and applications for registration thereof and thegoodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether aslicensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, andpayments now or hereafter due or payable with respect thereto, including, without limitation,damages, claims, and payments for past and future infringements thereof; (e) all rights to sue forpast, present, and future infringements of the foregoing, including the right to settle suitsinvolving claims and demands for royalties owing; and (f) all rights corresponding to any of theforegoing throughout the world.     The foregoing definitions shall be equally applicable to both the singular and plural forms ofthe defined terms.ARTICLE IIGRANT OF SECURITY INTEREST     Each of the Grantors hereby pledges, assigns and grants to the Administrative Agent, on behalfof and for the benefit of the Secured Parties, a security interest in all of such Grantor’s right,title and interest, whether now owned or hereafter acquired, in and to the Collateral to secure theprompt and complete payment and performance of the Secured Obligations. For the avoidance ofdoubt, the grant of a security interest herein shall not be deemed to be an assignment ofintellectual property rights owned by the Grantors.ARTICLE IIIREPRESENTATIONS AND WARRANTIES     Each of the Initial Grantors represents and warrants to the Administrative Agent and theSecured Parties, and each Grantor that becomes a party to this Security Agreement pursuant to theexecution of a Security Agreement Supplement in substantially the form of Annex Irepresents and warrants (after giving effect to supplements to each of the Exhibits hereto withrespect to such subsequent Grantor as attached to such Security Agreement Supplement), that:     3.1. Title, Authorization, Validity and Enforceability. Such Grantor has good andvalid rights in or the power to transfer the Collateral owned by it and title to the Collateralwith respect to which it has purported to grant a security interest hereunder, free and clear ofall Liens except for Liens permitted under Section 4.1.6 hereof, and has full corporate,limited liability company or partnership, as applicable, power and authority to grant to theAdministrative Agent the security interest in such Collateral pursuant hereto. The execution anddelivery by such Grantor of this Security Agreement are within such Grantor’s powers and have beenduly authorized by all necessary action on the part of such Grantor. This Security Agreement hasbeen duly executed and delivered by such Grantor and constitutes a legal, valid and
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binding obligation of such Grantor, enforceable in accordance with its terms, subject toapplicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’rights generally and subject to general principles of equity, regardless of whether considered in aproceeding in equity or at law. When financing statements have been filed in the appropriateoffices against such Grantor in the locations listed in Exhibit “E”, the AdministrativeAgent will have a fully perfected first priority security interest in the Collateral owned by suchGrantor in which a security interest may be perfected by filing of a financing statement under theUCC, subject only to Liens permitted under Section 4.1.6 hereof.     3.2. Conflicting Laws and Contracts. Except as set forth on Schedule 3.03 to theCredit Agreement, the execution and delivery by such Grantor of this Security Agreement, thecreation and perfection of the security interest in the Collateral granted hereunder, or compliancewith the terms and provisions hereof (a) do not require any consent or approval of, registration orfiling with, or any other action by, any Governmental Authority, except (i) such as have beenobtained or made and are in full force and effect, (ii) filings necessary to perfect Liens createdby this Security Agreement and the other Loan Documents and (iii) consents, approvals,registrations, filings, permits or actions the failure to obtain or perform which could notreasonably be expected to result in a Material Adverse Effect, (b) will not violate theOrganizational Documents of such Grantor, (c) will not violate any Requirement of Law, except forviolations that could not reasonably be expected to result in a Material Adverse Effect, (d) willnot violate or result in a default or require any consent or approval under any indenture,agreement or other instrument binding upon such Grantor or its property, or give rise to a rightthereunder to require any payment to be made by such Grantor, except for violations, defaults orthe creation of such rights that could not reasonably be expected to result in a Material AdverseEffect and (e) will not result in the creation or imposition of any Lien on any property of suchGrantor, except Liens created by this Security Agreement, the other Loan Documents and PermittedLiens.     3.3. Principal Location. Such Grantor’s mailing address and the location of itsprincipal place of business (if it has only one) or its chief executive office (if it has more thanone place of business), are disclosed in Exhibit “A”.     3.4. Property Locations. The Inventory, Equipment and Fixtures of each Grantor arelocated solely at the locations of such Grantor described in Exhibit “A”. All of saidlocations are owned by such Grantor except for locations (i) which are leased by such Grantor aslessee and designated in Part B of Exhibit “A” and (ii) at which Inventory is held in apublic warehouse or is otherwise held by a bailee or on consignment by such Grantor as designatedin Part C of Exhibit “A”.     3.5. No Other Names; Etc.. Within the five-year period ending as of the date suchPerson becomes a Grantor hereunder, such Grantor has not conducted business under any name, changedits jurisdiction of formation, merged with or into or consolidated with any other Person, except asdisclosed in Exhibit “A”. The name in which such Grantor has executed this SecurityAgreement is the exact name as it appears in such Grantor’s organizational documents, as amended,as filed with such Grantor’s jurisdiction of organization as of the date such Person becomes aGrantor hereunder.     3.6. No Default. No Default or Event of Default exists.     3.7. Accounts and Chattel Paper. The names of the obligors, amounts owing, due datesand other information with respect to the Accounts and Chattel Paper owned by such Grantor are andwill be correctly stated in all records of such Grantor relating thereto and in all invoices. Asof the time when each Account or each item of Chattel Paper arises, such Grantor shall be deemed tohave represented and warranted that such Account or Chattel Paper, as the case may be, and allrecords relating thereto, are genuine and in all respects what they purport to be.
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     3.8. Filing Requirements. None of the Equipment (constituting Collateral) owned bysuch Grantor is covered by any certificate of title, except for motor vehicles. None of theCollateral owned by such Grantor is of a type for which security interests or liens may beperfected by the Administrative Agent by filing under any federal statute except for (i) motorvehicles and (ii) Patents, Trademarks and Copyrights held by such Grantor and described in Part Cof Exhibit “B”. The county and street address of the property on which any Fixtures ownedby such Grantor are located is set forth in Exhibit “C”.     3.9. No Financing Statements, Security Agreements. No financing statement or securityagreement describing all or any portion of the Collateral which has not lapsed or been terminatednaming such Grantor as debtor has been filed or is of record in any jurisdiction except financingstatements (i) naming the Administrative Agent on behalf of the Secured Parties as the securedparty and (ii) in respect of Liens permitted by Section 6.02 of the Credit Agreement;provided, that nothing herein shall be deemed to constitute an agreement to subordinate anyof the Liens of the Administrative Agent under the Loan Documents to any Liens otherwise permittedunder Section 6.02 of the Credit Agreement.     3.10. Federal Employer Identification Number; State Organization Number; Jurisdiction ofOrganization. Such Grantor’s federal employer identification number is, and if such Grantor isa registered organization, such Grantor’s State of organization, type of organization and State oforganization identification number (if any) are, listed in Exhibit “G”.     3.11. Pledged Securities and Other Investment Property. Exhibit “D” setsforth a complete and accurate list of the Instruments, Securities and other Investment Propertyconstituting Collateral and delivered to the Administrative Agent. Each Grantor is the direct andbeneficial owner of each Instrument, Security and other type of Investment Property listed inExhibit “D” as being owned by it, free and clear of any Liens, except for the securityinterest granted to the Administrative Agent for the benefit of the Secured Parties hereunder or aspermitted by Section 6.02 of the Credit Agreement. Each Grantor further represents and warrantsthat (i) all such Instruments, Securities or other types of Investment Property which are shares ofstock in a corporation or ownership interests in a partnership or limited liability company havebeen (to the extent such concepts are relevant with respect to such Instrument, Security or othertype of Investment Property) duly and validly issued, are fully paid and non-assessable andconstitute the percentage of the issued and outstanding shares of stock (or other equity interests)of the respective issuers thereof indicated in Exhibit “D” hereto, (ii) with respect to anycertificates delivered to the Administrative Agent representing an ownership interest in apartnership or limited liability company, either such certificates are Securities as defined inArticle 8 of the UCC of the applicable jurisdiction as a result of actions by the issuer orotherwise, or, if such certificates are not Securities, such Grantor has so informed theAdministrative Agent so that the Administrative Agent may take steps to perfect its securityinterest therein as a General Intangible and (iii) to the extent requested by the AdministrativeAgent prior to the Effective Date, all such Pledged Collateral held by a securities intermediary iscovered by a control agreement among such Grantor, the securities intermediary and theAdministrative Agent pursuant to which the Administrative Agent has Control.     3.12. Intellectual Property. Exhibit “B” contains a complete and accuratelisting as of the Effective Date of all Patents, Trademarks and Copyrights for which registrationis pending or registered under United States federal law or foreign federal law of each of theGrantors, including, but not limited to the following: (i) U.S. and foreign trademark registrationsand applications for trademark registration, (ii) U.S. and foreign patents and patentsapplications, together with all reissuances, continuations, continuations in part, revisions,extensions, and reexaminations thereof, (iii) U.S. and foreign copyright registrations andapplications for registration, (iv) foreign industrial design registrations and industrial designapplications, all forms of Intellectual Property described in clauses (i)-(iii) above that areowned by a third party and licensed to the Grantors other than license agreements and other useragreements entered into by the Grantor in the ordinary course of business. Exhibit B sets forththe names of any
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Person who has been granted rights in respect thereof pursuant to a license outside of theordinary course of business. All of the U.S. registrations, applications for registration orapplications for issuance of the Intellectual Property are valid and subsisting, in good standingand are recorded or is in the process of being recorded in the name of the applicable Grantor.     3.13. Deposit Accounts and Securities Accounts. All of such Grantor’s DepositAccounts and Securities Accounts are listed on Exhibit “H”.ARTICLE IVCOVENANTS     From the date of this Security Agreement and thereafter until this Security Agreement isterminated, each of the Initial Grantors agrees, and from and after the effective date of anySecurity Agreement Supplement applicable to any Grantor (and after giving effect to supplements toeach of the Exhibits hereto with respect to such subsequent Grantor as attached to such SecurityAgreement Supplement) and thereafter until this Security Agreement is terminated each suchsubsequent Grantor agrees:     4.1. General.     4.1.1 Inspection. Each Grantor will permit any representatives designated bythe Administrative Agent or any Lender to visit and inspect the financial records and theproperty of such Grantor (so long as such Lender’s representatives coordinate through theAdministrative Agent and all such representatives of the Administrative Agent and eachLender conduct such visit and inspection at the same time) at reasonable times and onreasonable prior notice (not more often than once per year so long as no Event of Defaulthas occurred and is continuing) and to make extracts from and copies of such financialrecords, and permit any representatives designated by the Administrative Agent or any Lenderto discuss the affairs, finances, accounts and condition of such Grantor with the officersand employees thereof and advisors therefor, including independent accountants (so long assuch Lender’s representatives coordinate through the Administrative Agent and all suchrepresentatives of the Administrative Agent and each Lender conduct such discussion at thesame time).     4.1.2 Taxes. Each Grantor will pay and discharge promptly when due all Taxes,assessments and governmental charges or levies imposed upon it or upon its income or profitsor in respect of its property, before the same shall become delinquent or in default, aswell as all lawful claims for labor, services, materials and supplies or otherwise that, ifunpaid, might give rise to a Lien other than a Permitted Lien upon such properties or anypart thereof; provided that such payment and discharge shall not be required with respect toany such Tax, assessment, charge, levy or claim so long as (x)(i) the validity or amountthereof shall be contested in good faith by appropriate proceedings timely instituted anddiligently conducted and such Grantor shall have set aside on its books adequate reserves orother appropriate provisions with respect thereto in accordance with GAAP, (ii) such contestoperates to suspend collection of the contested obligation, Tax, assessment or charge andenforcement of a Lien other than a Permitted Lien and (iii) in the case of Collateral, suchGrantor shall have otherwise complied with the Contested Collateral Lien Conditions and (y)the failure to pay could not reasonably be expected to result in a Material Adverse Effect.     4.1.3 Records and Reports; Notification of Default. Each Grantor shall keepproper books of record and account in which full, true and correct entries in conformitywith GAAP and
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all Requirements of Law are made of all dealings and transactions in relation to itsbusiness and activities.     4.1.4 Financing Statements and Other Actions; Defense of Title. Each Grantorhereby authorizes the Administrative Agent to file, and if requested will execute anddeliver to the Administrative Agent, all financing statements describing the Collateralowned by such Grantor. Such financing statements may describe the Collateral in the samemanner as described herein or may contain an indication or description of collateral thatdescribes such property in any other manner as the Administrative Agent may determine, inits sole discretion, is necessary, advisable or prudent to ensure that the perfection of thesecurity interest in the Collateral granted to the Administrative Agent herein, including,without limitation, describing such property as “all assets of the Debtor whether now ownedor hereafter acquired and wheresoever located, including all accessions thereto and proceedsthereof.” Each Grantor will take any and all actions necessary to defend title to theCollateral owned by such Grantor against all persons and to defend the security interest ofthe Administrative Agent in such Collateral and the priority thereof against any Lien notexpressly permitted hereunder.     4.1.5 Disposition of Collateral. No Grantor will sell, lease or otherwisedispose of the Collateral owned by such Grantor except (i) dispositions specificallypermitted pursuant to the Credit Agreement, (ii) sales or leases of Inventory in theordinary course of business, and (iii) proceeds of Inventory and Accounts collected in theordinary course of business.     4.1.6 Liens. No Grantor will create, incur, or suffer to exist any Lien onthe Collateral owned by such Grantor except Liens permitted pursuant to Section 6.02 of theCredit Agreement, provided, that nothing herein shall be deemed to constitute anagreement to subordinate any of the Liens of the Administrative Agent under the LoanDocuments to any Liens otherwise permitted under Section 6.02 of the Credit Agreement.     4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization,Location, Name. Each Grantor will comply with Section 5.13 of the Credit Agreement asif it were a party thereto.     4.1.8 Other Financing Statements. Except as otherwise permitted orcontemplated by the Credit Agreement, no Grantor will suffer to exist or authorize thefiling of any financing statement naming it as debtor covering all or any portion of theCollateral owned by such Grantor, except any financing statement authorized underSection 4.1.4 hereof. Each Grantor acknowledges that it is not authorized to fileany financing statement or amendment or termination statement with respect to any financingstatement filed in connection herewith without the prior written consent of theAdministrative Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.     4.2. Receivables.     4.2.1 Certain Agreements on Receivables. Prior to the occurrence andcontinuation of a Default, such Grantor may reduce the amount of Accounts arising from thesale of Inventory or the rendering of services in accordance with its present policies andin the ordinary course of business and as otherwise permitted under the Credit Agreement.     4.2.2 Collection of Receivables. Except as otherwise provided in thisSecurity Agreement, each Grantor will collect and enforce, at such Grantor’s sole expense,all amounts due or hereafter due to such Grantor under the Receivables owned by suchGrantor, in each case,
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in the ordinary course of business and consistent with past practice; provided,however, that any Grantor may (i) allow refunds or credits relating to faulty, damaged ordefective goods or services, (ii) allow such extensions of time and modifications of termsin respect of any Receivables as Grantor shall determine are commercially reasonable and(iii) abandoned any Receivable where the estimated time, cost or expense relating to thecollection of such Receivable is material in relation to the value of such Receivable and/orthe expected amount to be collected thereon.     4.2.3 Delivery of Invoices. Each Grantor will deliver to the AdministrativeAgent promptly upon its request after the occurrence of an Event of Default duplicateinvoices with respect to each Account owned by such Grantor.     4.2.4 Disclosure of Counterclaims on Receivables. If (i) any discount, creditor agreement to make a rebate or to otherwise reduce the amount owing on a Receivable ownedby such Grantor exists or (ii) if, to the knowledge of such Grantor, any dispute, setoff,claim, counterclaim or defense exists or has been asserted or threatened with respect to aReceivable, such Grantor will accurately reflect such fact in the records of such Grantorrelating to such Receivable.     4.3. [Intentionally Omitted].     4.4. Instruments, Securities, Chattel Paper, Documents and Pledged Deposits. EachGrantor will (i) deliver to the Administrative Agent immediately upon execution of this SecurityAgreement the originals of all Chattel Paper, Securities (to the extent certificated) andInstruments, in each case to the extent constituting Collateral (if any then exist), (ii) hold intrust for the Administrative Agent upon receipt and immediately thereafter deliver to theAdministrative Agent any Chattel Paper, Securities and Instruments, in each case to the extentconstituting Collateral, (iii) upon the designation of any Pledged Deposits (as set forth in thedefinition thereof), deliver to the Administrative Agent such Pledged Deposits which are evidencedby certificates included in the Collateral endorsed in blank, marked with such legends and assignedas the Administrative Agent shall specify, and (iv) upon the Administrative Agent’s request, afterthe occurrence and during the continuance of a Default, deliver to the Administrative Agent (andthereafter hold in trust for the Administrative Agent upon receipt and immediately deliver to theAdministrative Agent) any Document evidencing or constituting Collateral.     4.5. Uncertificated Securities and Certain Other Investment Property. Each Grantorwill permit the Administrative Agent from time to time to cause the appropriate issuers (and, ifheld with a securities intermediary, such securities intermediary) of uncertificated securities orother types of Investment Property (which constitutes Collateral) not represented by certificateswhich are Collateral owned by such Grantor to mark their books and records with the numbers andface amounts of all such uncertificated securities or other types of Investment Property notrepresented by certificates and all rollovers and replacements therefor to reflect the Lien of theAdministrative Agent granted pursuant to this Security Agreement. To the extent requested by theAdministrative Agent, each Grantor will use all commercially reasonable efforts, with respect toInvestment Property constituting Collateral owned by such Grantor held with a financialintermediary, to cause such financial intermediary to enter into a control agreement with theAdministrative Agent in form and substance reasonably satisfactory to the Administrative Agent.     4.6. Stock and Other Ownership Interests.     4.6.1 Changes in Capital Structure of Issuers. Except as permitted in theCredit Agreement, no Grantor will vote any of the Instruments, Securities or otherInvestment Property
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owned by such Grantor in favor of any of the dissolution or liquidation of any Person,the retirement of any Equity Interest owned by such Grantor in such Person or the merger orconsolidation of such Person.4.6.2 Issuance of Additional Securities. Except as otherwise permitted by theCredit Agreement, no Grantor will vote any Equity Interests to permit or suffer the issuerof privately held corporate securities or other ownership interests in a corporation,partnership, joint venture or limited liability company constituting Collateral to issue anysuch securities or other ownership interests, any right to receive the same or any right toreceive earnings, except to such Grantor.4.6.3 Registration of Pledged Securities and other Investment Property. EachGrantor will permit any registrable Collateral owned by such Grantor to be registered in thename of the Administrative Agent or its nominee at any time at the option of the RequiredLenders following the occurrence and during the continuance of an Event of Default andwithout any further consent of such Grantor.4.6.4 Exercise of Rights in Pledged Securities and other Investment Property.Each Grantor will permit the Administrative Agent or its nominee at any time after thecontinuance of an Event of Default, without notice, to exercise or refrain from exercisingany and all voting and other consensual rights pertaining to the Collateral owned by suchGrantor or any part thereof, and to receive all dividends and interest in respect of suchCollateral.     4.7. Deposit Accounts. Each Grantor will (i) upon the Administrative Agent’s request,use commercially reasonable efforts to cause each bank or other financial institution (other thanthe Administrative Agent) in which it maintains (a) a Deposit Account to enter into a controlagreement with the Administrative Agent, in form and substance satisfactory to the AdministrativeAgent in order to give the Administrative Agent Control of the Deposit Account or (b) otherdeposits (general or special, time or demand, provisional or final) to be notified of the securityinterest granted to the Administrative Agent hereunder and cause each such bank or other financialinstitution to acknowledge such notification in writing and (ii) upon the Administrative Agent’srequest after the occurrence and during the continuance of an Event of Default, deliver to eachsuch bank or other financial institution a letter, in form and substance acceptable to theAdministrative Agent, transferring ownership of the Deposit Account to the Administrative Agent ortransferring dominion and control over each such other deposit to the Administrative Agent untilsuch time as no Default exists. In the case of deposits maintained with Lenders, the terms of suchletter shall be subject to the provisions of the Credit Agreement regarding setoffs.     4.8. Letter-of-Credit Rights. Each Grantor will, upon the Administrative Agent’srequest, cause each issuer of a letter of credit for the benefit of any Grantor, to consent to theassignment of proceeds of the letter of credit in order to give the Administrative Agent Control ofthe letter-of-credit rights to such letter of credit.     4.9. Federal, State or Municipal Claims. Each Grantor will notify the AdministrativeAgent of any Collateral owned by such Grantor which constitutes a claim against the United Statesgovernment or any state or local government or any instrumentality or agency thereof, theassignment of which claim is restricted by federal, state or municipal law, in each case, to theextent that the fair market value of such Collateral individually, or in the aggregate with respectto any Person against whom such a claim may be made, exceeds $1,000,000.     4.10. Intellectual Property.
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     4.10.1 If, after the date hereof, any Grantor obtains rights to any registered Patent,Copyright or Trademark or any Patent, Copyright or Trademark for which registration ispending, including, but not limited to filing and acceptance of a statement of use or anamendment to allege use with the United States Patent and Trademark Office, or applies foror seeks registration of, any new patentable invention, Trademark or Copyright in additionto the Patents, Trademarks and Copyrights described in Part C of Exhibit “B”, whichare all of such Grantor’s Patents, Trademarks and Copyrights as of the Effective Date, thensuch Grantor shall give the Administrative Agent notice thereof, as part of the compliancecertificate provided to the Administrative Agent in connection with the financial statementsdelivered pursuant to Section 5.01 of the Credit Agreement. Each Grantor agrees promptlyupon request by the Administrative Agent to execute and deliver to the Administrative Agentany supplement to this Security Agreement or any other document reasonably requested by theAdministrative Agent to evidence such security interest in a form appropriate for recordingin the applicable federal office. Each Grantor also hereby authorizes the AdministrativeAgent to modify this Security Agreement unilaterally (i) by amending Part C of Exhibit“B” to include any future Patents, Trademarks and/or Copyrights of which theAdministrative Agent receives notification from such Grantor pursuant hereto and (ii) byrecording, in addition to and not in substitution for this Security Agreement, a duplicateoriginal of this Security Agreement containing in Part C of Exhibit “B” adescription of such future Patents, Trademarks and/or Copyrights.     4.10.2 This Agreement is effective to create a valid and continuing Lien on theCopyrights, Patents and Trademarks for which registration is pending, or registered, withthe United States Patent and Trademark Office or the United States Copyright Office, asapplicable, and, upon filing of the Confirmatory Grant of Security Interest in Copyrightswith the United States Copyright Office and filing of the Confirmatory Grant of SecurityInterest in Patents with the United States Patent and Trademark Office, and the filing ofappropriate financing statements in the jurisdictions listed in Exhibit “E” hereto, allaction necessary or desirable to protect and perfect the security interest in, to and onsuch Patents, Trademarks or Copyrights has been taken and such perfected security interestis enforceable as such as against any and all creditors of and purchasers from any Grantor.     4.11. Commercial Tort Claims. If, after the date hereof, any Grantor identifies theexistence of a Commercial Tort Claim belonging to such Grantor that has arisen in the course ofsuch Grantor’s business in addition to the Commercial Tort Claims described in Exhibit “F”, whichare all of such Grantor’s Commercial Tort Claims as of the Effective Date, then such Grantor shallgive the Administrative Agent notice thereof, at the time of delivery of its compliance certificatedelivered with the financial statements required by Section 5.01(a) of the Credit Agreement. EachGrantor agrees promptly upon request by the Administrative Agent to execute and deliver to theAdministrative Agent any supplement to this Security Agreement or any other document reasonablyrequested by the Administrative Agent to evidence the grant of a security interest therein in favorof the Administrative Agent.     4.12. Updating of Exhibits to Security Agreement. The Borrower will provide to theAdministrative Agent, concurrently with the delivery of the certificate of a Financial Officer ofthe Borrower as required by Section 5.01(c) of the Credit Agreement with respect to financialstatements delivered under Section 5.01(a) of the Credit Agreement, updated versions of theExhibits to this Security Agreement (provided that if there have been no changes to any suchExhibits since the previous updating thereof required hereby, the Borrower shall indicate thatthere has been “no change” to the applicable Exhibit(s)).
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ARTICLE VDEFAULT AND REMEDIES     5.1. Acceleration and Remedies. Upon the acceleration of the Obligations under theCredit Agreement pursuant to Article VII thereof:     5.1.1 The Obligations under the Credit Agreement and, to the extent provided for underthe Swap Agreements and the Banking Services Agreements evidencing the same, the SwapObligations and the Banking Services Obligations, shall immediately become due and payablewithout presentment, demand, protest or notice of any kind, all of which are herebyexpressly waived, and the Administrative Agent may, with the concurrence or at the directionof the Required Lenders, exercise any or all of the following rights and remedies: (i) Those rights and remedies provided in this Security Agreement, the CreditAgreement, or any other Loan Document, provided that this clause (i)shall not be understood to limit any rights or remedies available to the AdministrativeAgent and the Secured Parties prior to a Default.  (ii) Those rights and remedies available to a secured party under the UCC (whetheror not the UCC applies to the affected Collateral) or under any other applicable law(including, without limitation, any law governing the exercise of a bank’s right ofsetoff or bankers’ lien) when a debtor is in default under a security agreement.  (iii) Give notice of sole control or any other instruction under any Deposit AccountControl Agreement or other control agreement with any securities intermediary and takeany action therein with respect to such Collateral.  (iv) Without notice except as specifically provided in Section 8.1 hereof orelsewhere herein, sell, lease, assign, grant an option or options to purchase orotherwise dispose of, deliver, or realize upon, the Collateral or any part thereof inone or more parcels at public or private sale or sales (which sales may be adjourned orcontinued from time to time with or without notice and may take place at any Grantor’spremises of elsewhere), for cash, on credit or for future delivery without assumptionof any credit risk, and upon such other terms as the Administrative Agent may deemcommercially reasonable.  (v) Concurrently with written notice to the applicable Grantor, transfer andregister in its name or in the name of its nominee the whole or any part of the PledgedCollateral, to exchange certificates or instruments representing or evidencing PledgedCollateral for certificates or instruments of smaller or larger denominations, toexercise the voting and all other rights as a holder with respect thereto, to collectand receive all cash dividends, interest, principal and other distributions madethereon and to otherwise act with respect to the Pledged Collateral as though theAdministrative Agent was the outright owner thereof.     5.1.2 The Administrative Agent, on behalf of the Secured Parties, may comply with anyapplicable state or federal law requirements in connection with a disposition of theCollateral, and such compliance will not be considered to adversely affect the commercialreasonableness of any sale of the Collateral.
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     5.1.3 The Administrative Agent shall have the right upon any such public sale or salesand, to the extent permitted by law, upon any such private sale or sales, to purchase forthe benefit of the Administrative Agent and the other Secured Parties, the whole or any partof the Collateral so sold, free of any right of equity redemption, which equity redemptionthe Grantor hereby expressly releases.     5.1.4 Until the Administrative Agent is able to effect a sale, lease, or otherdisposition of Collateral, the Administrative Agent shall have the right to hold or useCollateral, or any part thereof, to the extent that it deems appropriate for the purpose ofpreserving Collateral or its value or for any other purpose deemed appropriate by theAdministrative Agent. The Administrative Agent may, if it so elects, seek the appointmentof a receiver or keeper to take possession of Collateral and to enforce any of theAdministrative Agent’s remedies (for the benefit of the Administrative Agent and otherSecured Parties), with respect to such appointment without prior notice or hearing as tosuch appointment.     5.1.5 If, after the Credit Agreement has terminated by its terms and all of theSecured Obligations have been paid in full, there remain outstanding Swap Obligations orBanking Services Obligations, the Required Lenders may exercise the remedies provided inthis Section 5.1 upon the occurrence of any event which would allow or require thetermination or acceleration of any Swap Obligations or Banking Services Obligations but onlyto the extent that the Administrative Agent has a Lien on any Collateral.     5.1.6 Notwithstanding the foregoing, neither the Administrative Agent nor any otherSecured Party shall be required to (i) make any demand upon, or pursue or exhaust any oftheir rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or anyother Person with respect to the payment of the Secured Obligations or to pursue or exhaustany of their rights or remedies with respect to any Collateral therefor or any direct orindirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the SecuredObligations or to resort to the Collateral or any such guarantee in any particular order, or(iii) effect a public sale of any Collateral.     5.1.7 Each Grantor recognizes that the Administrative Agent may be unable to effect apublic sale of any or all the Pledged Collateral and may be compelled to resort to one ormore private sales thereof in accordance with Section 5.1.1 above. Each Grantoralso acknowledges that any private sale may result in prices and other terms less favorableto the seller than if such sale were a public sale and, notwithstanding such circumstances,agrees that any such private sale shall not be deemed to have been made in a commerciallyunreasonable manner solely by virtue of such sale being private. The Administrative Agentshall be under no obligation to delay a sale of any of the Pledged Collateral for the periodof time necessary to permit any Grantor or the issuer of the Pledged Collateral to registersuch securities for public sale under the Securities Act of 1933, as amended, or underapplicable state securities laws, even if the applicable Grantor and the issuer would agreeto do so.     5.2. Grantors’ Obligations Upon Default. Upon the request of the Administrative Agentafter the occurrence of an Event of Default, each Grantor will:     5.2.1 Assembly of Collateral. Assemble and make available to theAdministrative Agent the Collateral and all records relating thereto at any place or placesspecified by the Administrative Agent.     5.2.2 Secured Party Access. Permit the Administrative Agent, by theAdministrative Agent’s representatives and agents, to enter, occupy and use any premiseswhere all or any part of
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the Collateral, or the books and records relating thereto, or both, are located, totake possession of all or any part of the Collateral, or the books and records relatingthereto, or both, to remove all or any part of the Collateral, or the books and recordsrelating thereto, or both, and to conduct sales of the Collateral, without any obligation topay the Grantor for such use and occupancy.     5.3. License. The Administrative Agent is hereby granted a license or other right touse, following the occurrence and during the continuance of an Event of Default, without charge,each Grantor’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names,trademarks, service marks, customer lists and advertising matter, or any property of a similarnature, as it pertains to the Collateral, in completing production of, advertising for sale, andselling any Collateral, and, following the occurrence and during the continuance of an Event ofDefault, such Grantor’s rights under all licenses and all franchise agreements shall inure to theAdministrative Agent’s benefit. In addition, each Grantor hereby irrevocably agrees that theAdministrative Agent may, following the occurrence and during the continuance of an Event ofDefault, sell any of such Grantor’s Inventory directly to any person, including without limitationpersons who have previously purchased such Grantor’s Inventory from such Grantor and in connectionwith any such sale or other enforcement of the Administrative Agent’s rights under this SecurityAgreement, may sell Inventory which bears any trademark owned by or licensed to such Grantor andany Inventory that is covered by any copyright owned by or licensed to such Grantor and theAdministrative Agent may finish any work in process and affix any trademark owned by or licensed tosuch Grantor and sell such Inventory as provided herein.ARTICLE VIWAIVERS, AMENDMENTS AND REMEDIES     No delay or omission of the Administrative Agent or any Secured Party to exercise any right orremedy granted under this Security Agreement shall impair such right or remedy or be construed tobe a waiver of any Default or an acquiescence therein, and any single or partial exercise of anysuch right or remedy shall not preclude any other or further exercise thereof or the exercise ofany other right or remedy. No waiver, amendment or other variation of the terms, conditions orprovisions of this Security Agreement whatsoever shall be valid unless in writing signed by theAdministrative Agent and each Grantor, and then only to the extent specifically set forth in suchwriting, provided that the addition of any Subsidiary as a Grantor hereunder by execution of aSecurity Agreement Supplement in the form of Annex I (with such modifications as shall beacceptable to the Administrative Agent) shall not require receipt of any consent from or executionof any documentation by any other Grantor party hereto. All rights and remedies contained in thisSecurity Agreement or by law afforded shall be cumulative and all shall be available to theAdministrative Agent and the Secured Parties until the Secured Obligations have been paid in full.ARTICLE VIIPROCEEDS; COLLECTION OF RECEIVABLES     7.1. Lockboxes. Upon request of the Administrative Agent after the occurrence andduring the continuance of an Event of Default, each Grantor shall execute and deliver to theAdministrative Agent irrevocable lockbox agreements in the form provided by or otherwise acceptableto the Administrative Agent, which agreements shall be accompanied by an acknowledgment by the bankwhere the lockbox is located of the Lien of the Administrative Agent granted hereunder and ofirrevocable instructions to wire all amounts collected therein to a special collateral account atthe Administrative Agent.
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     7.2. Collection of Receivables. The Administrative Agent may at any time after theoccurrence and during the continuance of an Event of Default, by giving each Grantor writtennotice, elect to require that the Receivables be paid directly to the Administrative Agent for thebenefit of the Secured Parties. In such event, each Grantor shall, and shall permit theAdministrative Agent to, promptly notify the account debtors or obligors under the Receivablesowned by such Grantor of the Administrative Agent’s interest therein and direct such accountdebtors or obligors to make payment of all amounts then or thereafter due under such Receivablesdirectly to the Administrative Agent. Upon receipt of any such notice from the AdministrativeAgent, each Grantor shall thereafter for so long as an Event of Default is continuing hold in trustfor the Administrative Agent, on behalf of the Secured Parties, all amounts and proceeds receivedby it with respect to the Receivables and Other Collateral and immediately and at all timesthereafter deliver to the Administrative Agent all such amounts and proceeds in the same form as soreceived, whether by cash, check, draft or otherwise, with any necessary endorsements. TheAdministrative Agent shall hold and apply funds so received as provided by the terms ofSections 7.3 and 7.4 hereof.     7.3. Special Collateral Account. After the occurrence, and during the continuance ofan Event of Default, the Administrative Agent may require all cash proceeds of the Collateral to bedeposited in a special non-interest bearing cash collateral account with the Administrative Agentand held there as security for the Secured Obligations. No Grantor shall have any controlwhatsoever over said cash collateral account. If any Event of Default has occurred and iscontinuing, the Administrative Agent may (and shall, at the direction of the Required Lenders),from time to time, apply the collected balances in said cash collateral account to the payment ofthe Secured Obligations whether or not the Secured Obligations shall then be due.     7.4. Application of Proceeds. The proceeds of the Collateral shall be applied by theAdministrative Agent to payment of the Secured Obligations as provided under Section 2.18 of theCredit Agreement.ARTICLE VIIIGENERAL PROVISIONS     8.1. Notice of Disposition of Collateral; Condition of Collateral. To the extentnotice of the time and place of any public sale or the time after which any private sale or otherdisposition of all or any part of the Collateral may be made is required under applicable law, suchnotice shall be deemed reasonable if sent to the Borrower, addressed as set forth in Article IX, atleast ten (10) days prior to (i) the date of any such public sale or (ii) the time after which anysuch private sale or other disposition may be made. The Administrative Agent shall have noobligation to clean-up or otherwise prepare the Collateral for sale. To the maximum extentpermitted by applicable law, each Grantor waives all claims, damages, and demands against theAdministrative Agent or any other Secured Party arising out of the repossession, retention or saleof the Collateral, except such as arise solely out of the gross negligence or willful misconduct ofthe Administrative Agent or such other Secured Party as finally determined by a court of competentjurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waivesand relinquishes the benefit and advantage of, and covenants not to assert against theAdministrative Agent or any other Secured Party, any valuation, stay, appraisal, extension,moratorium, redemption or similar laws and any and all rights or defenses it may have as a suretynow or hereafter existing which, but for this provision, might be applicable to the sale of anyCollateral made under the judgment, order or decree of any court, or privately under the power ofsale conferred by this Security Agreement, or otherwise. Except as otherwise specifically providedherein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximumextent permitted by applicable law) of any kind in connection with this Security Agreement or anyCollateral.
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     8.2. Limitation on Administrative Agent’s and other Secured Parties’ Duty with Respect tothe Collateral. The Administrative Agent shall have no obligation to clean-up or otherwiseprepare the Collateral for sale. The Administrative Agent and each other Secured Party shall usereasonable care with respect to the Collateral in its possession or under its control. Neither theAdministrative Agent nor any other Secured Party shall have any other duty as to any Collateral inits possession or control or in the possession or control of any agent or nominee of theAdministrative Agent or such other Secured Party, or any income thereon or as to the preservationof rights against prior parties or any other rights pertaining thereto. To the extent thatapplicable law imposes duties on the Administrative Agent to exercise remedies in a commerciallyreasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for theAdministrative Agent (i) to fail to incur expenses deemed significant by the Administrative Agentto prepare Collateral for disposition or otherwise to transform raw material or work in processinto finished goods or other finished products for disposition, (ii) to fail to obtain third partyconsents for access to Collateral to be disposed of, or to obtain or, if not required by other law,to fail to obtain governmental or third party consents for the collection or disposition ofCollateral to be collected or disposed of, (iii) to fail to exercise collection remedies againstaccount debtors or other Persons obligated on Collateral or to remove Liens on or any adverseclaims against Collateral, (iv) to exercise collection remedies against account debtors and otherPersons obligated on Collateral directly or through the use of collection agencies and othercollection specialists, (v) to advertise dispositions of Collateral through publications or mediaof general circulation, whether or not the Collateral is of a specialized nature, (vi) to contactother Persons, whether or not in the same business as such Grantor, for expressions of interest inacquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneersto assist in the disposition of Collateral, whether or not the Collateral is of a specializednature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction ofassets of the types included in the Collateral or that have the reasonable capacity of doing so, orthat match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retailmarkets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi)to purchase insurance or credit enhancements to insure the Administrative Agent against risks ofloss, collection or disposition of Collateral or to provide to the Administrative Agent aguaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemedappropriate by the Administrative Agent, to obtain the services of other brokers, investmentbankers, consultants and other professionals to assist the Administrative Agent in the collectionor disposition of any of the Collateral. Each Grantor acknowledges that the purpose of thisSection 8.2 is to provide non-exhaustive indications of what actions or omissions by theAdministrative Agent would be commercially reasonable in the Administrative Agent’s exercise ofremedies against the Collateral and that other actions or omissions by the Administrative Agentshall not be deemed commercially unreasonable solely on account of not being indicated in thisSection 8.2. Without limitation upon the foregoing, nothing contained in this Section8.2 shall be construed to grant any rights to any Grantor or to impose any duties on theAdministrative Agent that would not have been granted or imposed by this Security Agreement or byapplicable law in the absence of this Section 8.2.     8.3. Compromises and Collection of Collateral. Each Grantor and the AdministrativeAgent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligorswith respect to certain of the Receivables, that certain of the Receivables may be or becomeuncollectible in whole or in part and that the expense and probability of success in litigating adisputed Receivable may exceed the amount that reasonably may be expected to be recovered withrespect to a Receivable. In view of the foregoing, each Grantor agrees that the AdministrativeAgent may at any time and from time to time, if an Event of Default has occurred and is continuing,compromise with the obligor on any Receivable, accept in full payment of any Receivable such amountas the Administrative Agent in its sole discretion shall determine or abandon any Receivable, andany such action by the Administrative Agent shall be commercially reasonable so long as theAdministrative Agent acts in good faith based on information known to it at the time it takes anysuch action.
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     8.4. Secured Party Performance of Grantor’s Obligations. Without having anyobligation to do so, the Administrative Agent may perform or pay any obligation which any Grantorhas agreed to perform or pay in this Security Agreement and such Grantor shall reimburse theAdministrative Agent for any reasonable amounts paid by the Administrative Agent pursuant to thisSection 8.4. Each Grantor’s obligation to reimburse the Administrative Agent pursuant tothe preceding sentence shall be a Secured Obligation payable on demand.     8.5. Authorization for Secured Party to Take Certain Action. Each Grantor irrevocablyauthorizes the Administrative Agent at any time and from time to time in the sole discretion of theAdministrative Agent (for clauses (ii), (iv), (v), (vi) and (vii), only upon the occurrence andcontinuation of an Event of Default) and appoints the Administrative Agent as its attorney in fact(i) to execute on behalf of such Grantor as debtor and to file financing statements necessary ordesirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfectionand priority of the Administrative Agent’s security interest in the Collateral, (ii) to indorse andcollect any cash proceeds of the Collateral, (iii) to file a carbon, photographic or otherreproduction of this Security Agreement or any financing statement with respect to the Collateralas a financing statement and to file any other financing statement or amendment of a financingstatement (which does not add new collateral or add a debtor) in such offices as the AdministrativeAgent in its sole discretion deems necessary or desirable to perfect and to maintain the perfectionand priority of the Administrative Agent’s security interest in the Collateral, (iv) to contact andenter into one or more agreements with the issuers of uncertificated securities which areCollateral owned by such Grantor and which are Securities or with financial intermediaries holdingother Investment Property as may be necessary or advisable to give the Administrative Agent Controlover such Securities or other Investment Property, (v) subject to the terms of Section4.1.5 hereof, to enforce payment of the Instruments, Accounts and Receivables in the name ofthe Administrative Agent or such Grantor, (vi) to apply the proceeds of any Collateral received bythe Administrative Agent to the Secured Obligations as provided in Article VII and (vii) todischarge past due taxes, assessments, charges, fees or Liens on the Collateral (except for suchLiens as are specifically permitted hereunder or under any other Loan Document), and each Grantoragrees to reimburse the Administrative Agent on demand for any reasonable payment made or anyreasonable expense incurred by the Administrative Agent in connection therewith, provided that thisauthorization shall not relieve any Grantor of any of its obligations under this Security Agreementor under the Credit Agreement.     8.6. Specific Performance of Certain Covenants. Each Grantor acknowledges and agreesthat a breach of any of the covenants contained in Section 5.3 hereof will causeirreparable injury to the Administrative Agent and the Secured Parties, that the AdministrativeAgent and Secured Parties have no adequate remedy at law in respect of such breaches and thereforeagrees, without limiting the right of the Administrative Agent or the Secured Parties to seek andobtain specific performance of other obligations of the Grantors contained in this SecurityAgreement, that the covenants of the Grantors contained in the Sections referred to in thisSection 8.6 shall be specifically enforceable against the Grantors.     8.7. Use and Possession of Certain Premises. Upon the occurrence of a Default, theAdministrative Agent shall be entitled to occupy and use any premises owned or leased by theGrantors where any of the Collateral or any records relating to the Collateral are located untilthe Secured Obligations are paid or the Collateral is removed therefrom, whichever first occurs,without any obligation to pay any Grantor for such use and occupancy.     8.8. [Intentionally Omitted].     8.9. Reinstatement. This Security Agreement shall remain in full force and effect andcontinue to be effective should any petition be filed by or against any Grantor for liquidation orreorganization, should any Grantor become insolvent or make an assignment for the benefit of any
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creditor or creditors or should a receiver or trustee be appointed for all or any significantpart of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case maybe, if at any time payment and performance of the Secured Obligations, or any part thereof, is,pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored orreturned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulentconveyance,” or otherwise, all as though such payment or performance had not been made. In theevent that any payment, or any part thereof, is rescinded, reduced, restored or returned, theSecured Obligations shall be reinstated and deemed reduced only by such amount paid and not sorescinded, reduced, restored or returned.     8.10. Benefit of Agreement. The terms and provisions of this Security Agreement shallbe binding upon and inure to the benefit of the Grantors, the Administrative Agent and the SecuredParties and their respective successors and assigns (including all persons who become bound as adebtor to this Security Agreement), except that the Grantors shall not have the right to assigntheir rights or delegate their obligations under this Security Agreement or any interest herein,without the prior written consent of the Administrative Agent. No sales of participations,assignments, transfers, or other dispositions of any agreement governing the Secured Obligations orany portion thereof or interest therein shall in any manner impair the Lien granted to theAdministrative Agent, for the benefit of the Administrative Agent and the other Secured Parties,hereunder.     8.11. Survival of Representations. All representations and warranties of the Grantorscontained in this Security Agreement shall survive the execution and delivery of this SecurityAgreement.     8.12. Taxes and Expenses. To the extent required by Section 2.17 of the CreditAgreement, any Other Taxes payable or ruled payable by a Federal or State authority in respect ofthis Security Agreement shall be paid by the Grantors, together, to the extent required by Section2.17 of the Credit Agreement, with interest and penalties, if any. The Grantors shall pay allout-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank, any Lender or anyother Secured Party, including the fees, charges and disbursements of any counsel for theAdministrative Agent, the Issuing Bank, any Lender or any other Secured Party, in connection withthe enforcement or protection of its rights in connection with thisSecurity Agreement and any other LoanDocument, including its rights under this Section; provided, however, that in no eventshall the Grantors be required to reimburse the Lenders or any other Secured Party for more thanone counsel to the Administrative Agent (and up to one local counsel to the Administrative Agent ineach applicable jurisdiction and regulatory counsel) and one counsel for all of the other Lendersand Secured Parties (and up to one local counsel in each applicable jurisdiction and regulatorycounsel), unless a Lender or its counsel or any other Secured Party or its counsel determines thatit is impractical or inappropriate (or would create actual or potential conflicts of interest) tonot have individual counsel, in which case such Lender or such Secured Party may have its owncounsel which shall be reimbursed in accordance with the foregoing. Any and all costs and expensesincurred by the Grantors in the performance of actions required pursuant to the terms hereof shallbe borne solely by the Grantors.     8.13. Headings. The title of and section headings in this Security Agreement are forconvenience of reference only, and shall not govern the interpretation of any of the terms andprovisions of this Security Agreement.     8.14. Termination. This Security Agreement shall continue in effect (notwithstandingthe fact that from time to time there may be no Secured Obligations outstanding) until (i) any andall commitments to extend credit under the Loan Documents have terminated, and the Credit Agreementhas terminated pursuant to its express terms and (ii) all of the Secured Obligations (other thanUnliquidated Obligations) have been indefeasibly paid in cash and performed in full (or withrespect to any outstanding Letters of Credit, a cash deposit or backup Letter of Credit has beendelivered to the Administrative Agent
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as required by the Credit Agreement) and no commitments of the Administrative Agent or theSecured Parties which would give rise to any Obligations are outstanding.     8.15. Entire Agreement. This Security Agreement embodies the entire agreement andunderstanding between the Grantors and the Administrative Agent relating to the Collateral andsupersedes all prior agreements and understandings among the Grantors and the Administrative Agentrelating to the Collateral.     8.16. Governing Law; Jurisdiction; Waiver of Jury Trial.     8.16.1 **THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BYTHE LAW OF THE STATE OF NEW YORK.**     8.16.2 Each of the Administrative Agent and each Grantor hereby irrevocably andunconditionally submits, for itself and its property, to the nonexclusive jurisdiction ofthe Supreme Court of the State of New York sitting in New York County and of the UnitedStates District Court of the Southern District of New York, and any appellate court from anythereof, in any action or proceeding arising out of or relating to this Security Agreementor any other Loan Document, or for recognition or enforcement of any judgment, and each ofthe Administrative Agent and each Grantor hereby irrevocably and unconditionally agrees thatall claims in respect of any such action or proceeding may be heard and determined in suchNew York State or, to the extent permitted by law, in such Federal court. Each of theAdministrative Agent and each Grantor agrees that a final judgment in any such action orproceeding shall be conclusive and may be enforced in other jurisdictions by suit on thejudgment or in any other manner provided by law. Nothing in this Security Agreement or anyother Loan Document shall affect any right that the Administrative Agent, the Issuing Bankor any Lender may otherwise have to bring any action or proceeding relating to this SecurityAgreement or any other Loan Document against any Grantor or its properties in the courts ofany jurisdiction.     8.16.3 Each of the Administrative Agent and each Grantor hereby irrevocably andunconditionally waives, to the fullest extent it may legally and effectively do so, anyobjection which it may now or hereafter have to the laying of venue of any suit, action orproceeding arising out of or relating to this Security Agreement or any other Loan Documentin any court referred to in Section 8.16.2. Each of the Administrative Agent andeach Grantor hereby irrevocably waives, to the fullest extent permitted by law, the defenseof an inconvenient forum to the maintenance of such action or proceeding in any such court.     8.16.4 Each party to this Security Agreement irrevocably consents to service ofprocess in the manner provided for notices in Article IX of this Security Agreement, andeach of the Grantors hereby appoints the Borrower as its agent for service of process.Nothing in this Security Agreement or any other Loan Document will affect the right of anyparty to this Security Agreement to serve process in any other manner permitted by law.     8.16.5 **WAIVER OF JURY TRIAL****. EACH OF THE ADMINISTRATIVE AGENT AND EACHGRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAYHAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF ORRELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT (WHETHER BASED ON CONTRACT,TORT OR ANY OTHER THEORY). EACH PARTY HEREIN (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR**
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**ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHERPARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HEREIN HAVE BEEN INDUCED TO ENTER INTO THISSECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERSAND CERTIFICATIONS IN THIS SECTION.**     8.17. Indemnity. Each Grantor hereby agrees, jointly with the other Grantors andseverally, to indemnify the Administrative Agent and the Secured Parties, and their respectivesuccessors, assigns, agents and employees, from and against any and all liabilities, damages,penalties, suits, costs, and expenses of any kind and nature (including, without limitation, allexpenses of litigation or preparation therefor whether or not the Administrative Agent or anySecured Party is a party thereto) imposed on, incurred by or asserted against the AdministrativeAgent or the Secured Parties, or their respective successors, assigns, agents and employees, in anyway relating to or arising out of this Security Agreement or any other Loan Document, or themanufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use,operation, condition, sale, return or other disposition of any Collateral (including, withoutlimitation, latent and other defects, whether or not discoverable by the Administrative Agent orthe Secured Parties or any Grantor, and any claim for patent, trademark or copyright infringement);provided that such indemnity shall not, as to any Person indemnified hereunder, beavailable to the extent that such liabilities, damages, penalties, situs, costs and expenses aredetermined by a court of competent jurisdiction by final and nonappealable judgment to haveresulted from the material breach by any such Person of its express obligations under the LoanDocuments or the gross negligence or willful misconduct of such Person.     8.18. Subordination of Intercompany Indebtedness. Each Grantor agrees that any andall claims of such Grantor against any other Grantor (each an “Obligor”) with respect toany “Intercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any otherguarantor of all or any part of the Secured Obligations, or against any of its properties shall besubordinate and subject in right of payment to the prior payment, in full and in cash, of allSecured Obligations, provided that, and not in contravention of the foregoing, so long as noDefault or Event of Default has occurred and is continuing, such Grantor may make loans to andreceive payments with respect to such Intercompany Indebtedness from each such Obligor to theextent not prohibited by the terms of this Security Agreement and the other Loan Documents.Notwithstanding any right of any Grantor to ask, demand, sue for, take or receive any payment fromany Obligor, all rights, liens and security interests of such Grantor, whether now or hereafterarising and howsoever existing, in any assets of any other Obligor shall be and are subordinated tothe rights of the Secured Parties and the Administrative Agent in those assets. No Grantor shallhave any right to possession of any such asset or to foreclose upon any such asset, whether byjudicial action or otherwise, unless and until this Security Agreement has terminated in accordancewith Section 8.14. If all or any part of the assets of any Obligor, or the proceedsthereof, are subject to any distribution, division or application to the creditors of such Obligor,whether partial or complete, voluntary or involuntary, and whether by reason of liquidation,bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other actionor proceeding, or if the business of any such Obligor is dissolved or if substantially all of theassets of any such Obligor are sold, then, and in any such event (such events being herein referredto as an “Insolvency Event”), any payment or distribution of any kind or character, eitherin cash, securities or other property, which shall be payable or deliverable upon or with respectto any indebtedness of any Obligor to any Grantor (“Intercompany Indebtedness”) shall bepaid or delivered directly to the Administrative Agent for application on any of the SecuredObligations, due or to become due, until such Secured Obligations (other than UnliquidatedObligations) shall have first been fully paid and satisfied (in cash). Should any payment,distribution, security or instrument or proceeds thereof be received by the applicable Grantor uponor with respect to the Intercompany Indebtedness after any
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Insolvency Event and prior to the termination of this Security Agreement in accordance withSection 8.14, such Grantor shall receive and hold the same in trust, as trustee, for thebenefit of the Secured Parties and shall forthwith deliver the same to the Administrative Agent,for the benefit of the Secured Parties, in precisely the form received (except for the endorsementor assignment of the Grantor where necessary), for application to any of the Secured Obligations,due or not due, and, until so delivered, the same shall be held in trust by the Grantor as theproperty of the Secured Parties. If any such Grantor fails to make any such endorsement orassignment to the Administrative Agent, the Administrative Agent or any of its officers oremployees is irrevocably authorized to make the same. Each Grantor agrees that until thetermination of this Security Agreement in accordance with Section 8.14, no Grantor willassign or transfer to any Person (other than the Administrative Agent or the Borrower or anotherGrantor) any claim any such Grantor has or may have against any Obligor.     8.19. Severability. Any provision in this Security Agreement that is held to beinoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, beinoperative, unenforceable, or invalid without affecting the remaining provisions in thatjurisdiction or the operation, enforceability, or validity of that provision in any otherjurisdiction, and to this end the provisions of this Security Agreement are declared to beseverable.     8.20. Counterparts. This Security Agreement may be executed in counterparts (and bydifferent parties hereto in different counterparts), each of which shall constitute an original,but all of which when taken together shall constitute a single contract. Delivery of an executedcounterpart of a signature page of this Security Agreement by telecopy shall be effective asdelivery of a manually executed counterpart of this Security Agreement.ARTICLE IXNOTICES     9.1. Sending Notices. Any notice required or permitted to be given under thisSecurity Agreement shall be sent (and deemed received) in the manner and to the addresses set forthin Section 9.01 of the Credit Agreement. Any notice delivered to the Borrower shall be deemed tohave been delivered to all of the Grantors.     9.2. Change in Address for Notices. Each of the Grantors, the Administrative Agentand the Lenders may change the address for service of notice upon it by a notice in writing to theother parties.ARTICLE XTHE ADMINISTRATIVE AGENT     JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the Secured Partieshereunder pursuant to Article VIII of the Credit Agreement. It is expressly understood and agreedby the parties to this Security Agreement that any authority conferred upon the AdministrativeAgent hereunder is subject to the terms of the delegation of authority made by the Secured Partiesto the Administrative Agent pursuant to the Credit Agreement, and that the Administrative Agent hasagreed to act (and any successor Administrative Agent shall act) as such hereunder only on theexpress conditions contained in such Article VIII. Any successor Administrative Agentappointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights,interests and benefits of the Administrative Agent hereunder.[Signature Pages Follow]
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     IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent have executed thisSecurity Agreement as of the date first above written.           KENDLE INTERNATIONAL INC., as a Grantor