Exhibit 10.2


SECURITY AGREEMENT


          THIS
SECURITY AGREEMENT (the “Agreement”) dated as of December 16, 2009, is by and
among UNIVERSAL POWER GROUP, INC. (“Borrower”), MONARCH OUTDOOR ADVENTURES,
LLC, UNIVERSAL BATTERY CORPORATION, and UNIVERSAL MOBILITY, INC., and any
Subsidiary or other entity who may become a party hereto pursuant to the
execution and delivery of a Subsidiary Joinder Agreement (including Borrower,
each a “Debtor” and collectively the “Debtors”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as administrative agent for the Secured Parties as that term is
defined below (“Agent”).


R E C I T A L S:


          Borrower
is entering into that certain Credit Agreement dated of even date herewith with
Monarch Outdoor Adventures, LLC, the lenders party thereto (each individually a
“Bank” and collectively, the “Banks”) and Agent (such agreement, as it may be
amended or otherwise modified from time to time, herein the “Credit
Agreement”). The execution and delivery of this Agreement is a condition to
Agent’s and the Banks’ entering into the Credit Agreement and making the
extensions of credit thereunder.


          NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, and in order to induce Agent and the Banks to extend credit under
the Credit Agreement, the parties hereto hereby agree as follows:


ARTICLE I.


Definitions


          Section
1.1. Definitions. As used in this Agreement, the following terms
have the following meanings:


	
  

 	
  

 
	
  

 	
           “Collateral”
 has the meaning specified in Section 2.1.

 
	
  

 	
  

 
	
  

 	
           “Copyright
 License” means, with respect to a Debtor, any written agreement now or
 hereafter in existence granting to the Debtor any right to use any Copyright
 including the agreements identified for such Debtor on Schedule 3.5.

 
	
  

 	
  

 
	
  

 	
           “Copyrights”
 means, with respect to a Debtor, all of the following: (a) all
 copyrights, works protectable by copyright, copyright registrations and
 copyright applications of the Debtor, including those identified for such
 Debtor on Schedule 3.5; (b) all renewals, extensions and modifications
 thereof; (c) all income, royalties, damages, profits and payments
 relating to or payable under any of the foregoing; (d) the right to sue
 for past, present or future infringements of any of the foregoing; and
 (e) all other rights and benefits relating to any of the foregoing
 throughout the world.

 
	
  

 	
  

 
	
  

 	
           “Copyright
 Security Agreement” means, with respect to a Debtor, a security agreement
 in a form satisfactory to Agent pursuant to which the Debtor grants to Agent,
 for the benefit of the Secured Parties, a first priority security interest in
 the Copyrights 

 



SECURITY AGREEMENT, Page 1









	
  

 	
  

 
	
  

 	
 and the
 Copyright Licenses for purposes of recording such security interest with any
 copyright office of a governmental unit.

 
	
  

 	
  

 
	
  

 	
           “Foreign
 Subsidiary” has the meaning specified in Section 2.1(b)(ii).

 
	
  

 	
  

 
	
  

 	
           “Intellectual
 Property” means the Copyrights, Copyright Licenses, Patents, Patent
 Licenses, Trademarks and Trademark Licenses.

 
	
  

 	
  

 
	
  

 	
           “Obligations”
 means the Deposit Obligations, Hedging Obligations, Loan Obligations, and all
 obligations, indebtedness, and liabilities of each Debtor under the Loan
 Documents, and, without limiting the generality of the foregoing, includes
 all reasonable fees, costs and out–of–pocket expenses (including attorneys’
 fees): (a) of retaking, holding and preparing its Collateral for sale;
 (b) arising in connection with the sale thereof and (c) arising
 from the enforcement of any other right or remedy provided hereunder;
 provided that with respect to each Debtor other than Borrower, the
 obligations, indebtedness and liabilities of such Debtor secured by this
 Agreement shall be limited, with respect to such Debtor only, to an aggregate
 amount equal to the largest amount that would not render such Debtor’s
 obligations hereunder and under the other Loan Documents subject to avoidance
 under Section 544 or 548 of the United States Bankruptcy Code or under
 any applicable state law relating to fraudulent transfers or conveyances.

 
	
  

 	
  

 
	
  

 	
           “Patent
 License” means, with respect to a Debtor, any written agreement now or
 hereafter in existence granting to the Debtor any right to use any invention
 on which a Patent is in existence including the agreements identified for
 such Debtor on Schedule 3.5.

 
	
  

 	
  

 
	
  

 	
           “Patent
 Security Agreement” means, with respect to a Debtor, a security agreement
 in a form satisfactory to Agent pursuant to which the Debtor grants to Agent,
 for the benefit of the Secured Parties, a first priority security interest in
 the Patents and the Patent Licenses for purposes of recording such security
 interest with any patent office of a governmental unit.

 
	
  

 	
  

 
	
  

 	
           “Patents”
 means, with respect to a Debtor, all of the following: (a) all patents,
 patent applications and patentable inventions of the Debtor, including those
 identified for such Debtor on Schedule 3.5, and all of the inventions and
 improvements described and claimed therein; (b) all continuations,
 divisions, renewals, extensions, modifications, substitutions,
 continuations-in-part or reissues of any of the foregoing; (c) all
 income, royalties, profits, damages, awards and payments relating to or
 payable under any of the foregoing; (d) the right to sue for past,
 present and future infringements of any of the foregoing; and (e) all
 other rights and benefits relating to any of the foregoing throughout the
 world.

 
	
  

 	
  

 
	
  

 	
           “Pledged
 Shares” means, with respect to a Debtor, the shares evidencing the
 capital stock, partnership interest, membership interests and other ownership
 interests identified for such Debtor on Schedules 2.1(b) or 2.1(c)
 attached hereto or on Schedule 1 to an amendment to this Agreement in the
 form of Exhibit A.

 
	
  

 	
  

 
	
  

 	
           “Subsidiary
 Joinder Agreement” means a Subsidiary Joinder Agreement in substantially
 the form of Exhibit “B”.

 



SECURITY AGREEMENT, Page 2









	
  

 	
  

 
	
  

 	
           “Trademark
 License” means, with respect to a Debtor, any written agreement now or
 hereafter in existence granting to the Debtor any right to use any Trademark,
 including the agreements identified for such Debtor on Schedule 3.5.

 
	
  

 	
  

 
	
  

 	
           “Trademarks”
 means, with respect to a Debtor, all of the following: (a) all
 trademarks, trade names, corporate names, company names, business names,
 fictitious business names, trade styles, service marks, logos, other business
 identifiers, all registrations and recordings thereof and all applications in
 connection therewith, including registrations, recordings and applications in
 the United States Patent and Trademark Office or in any similar office or
 agency of the United States, any state thereof or any other country or any
 political subdivision thereof, including those identified for such Debtor on
 Schedule 3.5; (b) all reissues, extensions and renewals thereof;
 (c) all income, royalties, damages and payments now or hereafter
 relating to or payable under any of the foregoing, including 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; (e) all rights corresponding to any of the foregoing
 throughout the world; and (f) all goodwill associated with and
 symbolized by any of the foregoing.

 
	
  

 	
  

 
	
  

 	
           “Trademark
 Security Agreement” means, with respect to a Debtor, a security agreement
 in a form satisfactory to Agent which the Debtor grants to Agent, for the
 benefit of the Secured Parties, a first priority security interest in the
 Trademarks and the Trademark Licenses for purposes of recording such security
 interest with the trademark office of any governmental unit.

 
	
  

 	
  

 
	
  

 	
           “UCC”
 means the Uniform Commercial Code as in effect in the State of Texas.

 



          Section
1.2. Other Definitional Provisions. Terms used herein that are
defined in the Credit Agreement and are not otherwise defined herein shall have
the meanings therefor specified in the Credit Agreement. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation”. Any definition of or reference to any agreement or other
documentation herein shall be construed as referring to such agreement or
documentation as from time to time the same may be amended or otherwise
modified. References to “Sections,” “subsections,” “Exhibits” and “Schedules”
shall be to Sections, subsections, Exhibits and Schedules, respectively, of
this Agreement unless otherwise specifically provided. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. All references to statutes and regulations shall
include any amendments of the same and any successor statutes and regulations.
Terms used herein, which are defined in the UCC, unless otherwise defined
herein or in the Credit Agreement, shall have the meanings determined in
accordance with the UCC.


ARTICLE II.



Security Interest


          Section
2.1. Security Interest. As security for the prompt payment and
performance in full when due of its Obligations (whether at stated maturity, by
acceleration or otherwise), each Debtor hereby pledges and assigns to Agent
(for the benefit of the Secured Parties), and grants to Agent (for the benefit
of the Secured Parties) a continuing security interest in, all of such Debtor’s
right, title and interest in and to the following, whether now owned or
hereafter arising or acquired and wherever located (collectively with respect
to any Debtor or all Debtors, as the context requires, the “Collateral”):


                    (a)
all accounts, money, cash, documents, chattel paper (including the chattel
paper described on Schedule 2.1), instruments (including or in addition,
the promissory notes described on


SECURITY AGREEMENT, Page 3





 Schedule 2.1), the commercial tort
claims described on Schedule 2.1(a), deposit accounts (including the
deposit accounts identified on Schedule 3.2), general intangibles
(including all supporting obligations and all Intellectual Property), all
letters of credit (including the letters of credit described on Schedule 2.1);
all other letter of credit rights and all products and proceeds of any of the
foregoing; 


                    (b)
all investment property, including, or in addition to such investment property,
the following:


                              (i)
all the capital stock, partnership interests, membership interests and other
ownership interests issued by, and all other ownership interest in, the Persons
described on Schedule 2.1(b) and all Subsidiaries (other than Foreign
Subsidiaries) hereafter created or acquired and owned by such Debtor, including
the capital stock or other ownership interests described on
Schedule 2.1(b);


                              (ii)
all the capital stock, partnership interests, membership interests or other
ownership interests specifically described on Schedule 2.1(c) (the issuers
of such stock or other interests and any other Subsidiary organized under the
laws of a jurisdiction outside of the United States of America shall be
referred to herein as the “Foreign Subsidiaries”) and so much of such Debtor’s
right, title and interest in any other capital stock or other ownership
interests in the Foreign Subsidiaries (other than any Subsidiary of a Foreign
Subsidiary), whether now owned or hereafter acquired, as is necessary so that
not more than and not less than sixty–five percent (65%) of the voting power of
all classes of capital stock or other ownership interest in each such Foreign
Subsidiary is subject to the security interest granted hereby in total
hereunder (it being agreed that, with respect to capital stock or other
ownership interests in any particular Foreign Subsidiary which are owned by
more than one Debtor, the applicable percentage of such stock or other
ownership interests excluded from the security interest granted hereby pursuant
to this clause (ii) shall be allocated equally between or among all Debtors
which own such capital stock or other ownership interests);


                              (iii)
the commodity and security accounts described in Schedule 3.2; and


                              (iv)
all products and proceeds of the foregoing; and


                    (c)
all equipment, fixtures, inventory and other goods and all accessions thereto
and all products and proceeds thereof; and


                    (d)
all books and records (including correspondence, files, tapes, computer
programs and records, print-outs and customer lists) and all products and
proceeds of the foregoing.


          Section
2.2. Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein: (a) each Debtor shall remain liable under the
documentation 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 Agent of any of
its rights or remedies hereunder shall not release any Debtor from any of its
duties or obligations under such documentation; (c) Agent shall not have
any obligation under any of such documentation included in the Collateral by
reason of this Agreement; and (d) Agent shall not be obligated to perform
any of the obligations of any Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.


SECURITY AGREEMENT, Page 4






ARTICLE III.


Representations and Warranties


          To
induce Agent and the Banks to enter into this Agreement and the Credit
Agreement, each Debtor represents and warrants to Agent and the Secured Parties
that: 


          Section
3.1. Location of Equipment, Fixtures and Inventory; Third Parties in
Possession. As of the date hereof, all of its equipment, fixtures and
inventory are located at the places specified in Schedule 3.1 for such Debtor.
Schedule 3.1 correctly identifies the landlords or mortgagees, if any, of each
of its locations identified in Schedule 3.1. Except for the Persons identified
on Schedules 3.1 and 3.2 who hold Collateral in the capacity designated thereon
and any other Person hereafter identified pursuant to Section 4.3, no Person other
than such Debtor or Agent has possession or control of any of its Collateral.
None of its Collateral other than property acquired by such Debtor within the
last four months has been located in any location within the past four
completed calendar months prior to the date hereof other than as set forth on
Schedule 3.1 for such Debtor. It does not have any aircraft, any railcars or
any vessels documented under Chapter 121, Title 46, United States Code (the
Ship Mortgage Act) or for which an application for documentation is pending. 


          Section
3.2. Deposit, Commodity and Securities Accounts; Other Investment Property.
As of the date hereof, Schedule 3.2 correctly identifies all deposit, commodity
and securities accounts maintained by such Debtor and the institutions holding
such accounts and all lockbox agreements it has entered into with the
institutions reflected thereon. No Person other than such Debtor and Agent has
control over any investment property or any deposit accounts. None of the
Collateral consisting of interests in a partnership or limited liability
company are evidenced by a certificate, except as set forth on Schedule 2.1(b),
nor has any such interest been designated a “security” governed by the
provisions of Article 8 of the UCC. 


          Section
3.3. Office Locations; Fictitious Names; Predecessor Companies; Tax and
Organizational Identification Numbers. As of the date hereof, its chief
executive office and jurisdiction of organization are located at the place or
places identified for it on Schedule 3.1 or pursuant to Section 4.4. Within the
last four completed calendar months prior to the date hereof it has not had any
other chief executive office or jurisdiction of organization except as
disclosed on Schedule 3.1. Schedule 3.1 also sets forth as of the date hereof
all other places where it keeps its books and records and all other locations
where it has a place of business. It does not do business and has not done
business during the past five completed calendar years prior to the date hereof
under any name, trade-name or fictitious business name except as disclosed on
Schedule 3.3. Schedule 3.3 sets forth an accurate list of all names of all of
its predecessor companies including the names of any entities it acquired (by
stock purchase, asset purchase, merger or otherwise) and the chief executive
office and jurisdiction of organization of each such predecessor company and
each jurisdiction in which any Collateral purchased from such companies was
located at the time of purchase. For purposes of the foregoing, a “predecessor
company” shall mean, with respect to any Debtor, any entity whose assets or
equity interests are acquired by such Debtor or who was merged with or into
such Debtor within the last four months prior to the date hereof. As of the
date hereof, it is a registered organization and its United States Federal
Income Tax identification number and organizational identification number are
each identified on Schedule 3.3. 


          Section
3.4. Delivery of Collateral. Except as provided by Section 4.2, it has
delivered to Agent all Collateral the possession of which is necessary to
perfect the security interest of Agent therein. 


          Section
3.5. Intellectual Property. All of its Intellectual Property that is
registered with or for which an application for registration has been filed
with any Governmental Authority as of the date hereof is identified on Schedule
3.5, and such information is true, correct and complete. 


SECURITY
AGREEMENT, Page 5





          Section
3.6. Chattel Paper and Letters of Credit. As of the date hereof, all of
its chattel paper and letters of credit are described on Schedule 2.1. No
Person has possession or control of any of its chattel paper, letters of credit
or letter of credit rights except as disclosed pursuant to Section 3.1. 


          Section
3.7. Disclosure on Other Schedules. As of the date hereof: (i) Schedule
2.1 correctly and completely identifies all promissory notes and other
instruments (other than checks received in the ordinary course of business)
owned by it; (ii) Schedule 2.1(a) correctly and completely identifies all of
its commercial tort claims, (iii) Schedules 2.1(b) and 2.1(c) correctly and
completely identify all of its Subsidiaries and the ownership interests issued
by each such Subsidiary and owned by such Debtor. 


ARTICLE IV.


Covenants


          Each
Debtor covenants and agrees with Agent that until all Loan Obligations and
Hedging Obligations have been Fully Satisfied: 


          Section
4.1. Accounts; Modifications. It shall, in accordance with its customary
business practices, endeavor to collect or cause to be collected, as and when
due, any and all amounts owing under its accounts and payment intangibles.
Without the prior written consent of Agent, it shall not, except in the
ordinary course of business when no Event of Default exists: (a) grant any
extension of time for any payment with respect to any of its accounts or
payment intangibles beyond 120 days after such payment’s due date; (b)
compromise, compound, or settle any of its accounts or payment intangibles for
less than the full amount thereof; (c) release, in whole or in part, any Person
liable for payment of any of its accounts or payment intangibles; (d) allow any
credit or discount for payment with respect to any of its accounts or payment
intangibles other than trade or other customary discounts granted in the
ordinary course of business; or (e) release any Lien, guaranty or other
supporting obligation securing any of its accounts or payment intangibles unless
the amounts secured thereby have been paid. Except as permitted by the Credit
Agreement, it shall not, except in the ordinary course of business when no
Default exists, amend or otherwise modify the contractual terms governing any
Collateral. 


          Section
4.2. Further Assurances; Exceptions to Perfection; Post Closing Obligation.
At any time and from time to time, upon the reasonable request of Agent and at
such Debtor’s sole expense, it shall promptly execute and deliver all such
further documentation and take such further action as Agent may reasonably deem
necessary or appropriate to preserve, perfect and protect its security interest
in the Collateral and carry out the provisions and purposes of this Agreement
and to enable Agent to exercise and enforce its rights and remedies hereunder
with respect to any of the Collateral. In furtherance of the foregoing, each
Debtor hereby authorizes Agent to file, in the offices of the appropriate
governmental unit or units, financing statements naming it as debtor and Agent
as secured party, and, where appropriate, with such changes thereto necessary
to file such financing statement as a fixture filing in the applicable real
property records, in each case as Agent may deem reasonably appropriate. 


                    (a)
Specific Required Actions. 


          Without
limiting the generality of the foregoing provisions of this Section 4.2 but
subject to Section 4.2(b), it shall: 


                              (i)
take such action as Agent may request to permit Agent to have control over any
investment property, any deposit account, letter of credit rights or chattel
paper; 


                              (ii)
deliver to Agent all chattel paper, instruments, negotiable documents and
letters of credit and any other Collateral the possession of which is necessary
to perfect the security


SECURITY AGREEMENT, Page 6





interest therein, duly endorsed and/or accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to Agent; 


                              (iii)
deliver any and all certificates of title, applications for title or similar
evidence of ownership of equipment and cause Agent to be named as lienholder
thereon; 


                              (iv)
execute and deliver to Agent a Copyright Security Agreement, a Patent Security
Agreement and/or Trademark Security Agreement, as applicable; 


                              (v)
obtain and deliver to Agent any waivers, subordinations or acknowledgments from
any third party who has possession or control of any Collateral, including any
agent, landlord or bailee; and 


                              (vi)
execute and deliver to Agent such other documentation as Agent may reasonably
require to perfect, protect and maintain the validity, effectiveness and
priority of the Liens intended to be created by this Agreement. 


                    (b)
Exceptions to Perfection. Notwithstanding the foregoing however, if (but
only if) no Default exists and except as may be otherwise required by the
Credit Agreement or any other Loan Document: 


                              (i)
a Debtor may retain for collection in the ordinary course of business checks
representing proceeds of accounts received in the ordinary course of business; 


                              (ii)
a Debtor may retain any letters of credit and money received or held in the
ordinary course of business; 


                              (iii)
a Debtor may retain and utilize in the ordinary course of business all
dividends and interest paid in respect to any of the Pledged Shares or any
other investment property; 


                              (iv)
a Debtor may retain any documents received and further negotiated in the
ordinary course of business; and 


                              (v)
a Debtor shall not be required to: 


                                        (A)
deliver, or cause Agent’s security interest to be noted thereon, any
certificate of title evidencing any equipment which is (1) subject to an
operating or capital lease or other purchase money financing permitted by the
Credit Agreement, or (2) has a book value of $50,000 or less as long as the
total amount of equipment excluded under this clause (2) does not exceed an
aggregate amount equal to $500,000; 


                                        (B)
grant Agent control over any chattel paper or letter of credit right; 


                                        (C)
take any action under the laws of any jurisdiction other than the United States
of America or any jurisdiction located therein to create, perfect or protect
the security interest of Agent in the equity interest of the Foreign
Subsidiaries pledged pursuant hereto or in any Intellectual Property registered
outside the Untied States of America; 


                                        (D)
obtain and deliver to Agent, for the purpose of any fixture filings to be made
by Agent, real property descriptions for any of such Debtor’s locations or
places of business other than those locations or places of business owned by
such Debtor; 


SECURITY
AGREEMENT, Page 7





                                        (E)
grant Agent control over any deposit account prior to the date that is sixty
(60) days after the date hereof; or 


                                        (F)
take any action to grant a Lien in favor of Agent on any real property
including delivery of a fully executed deed of trust or mortgage, title
insurance policies, landlord consent, estoppel and nondisturbance agreements,
first lien holder consents, surveys, appraisals, environmental reports and the
other documentation reasonably requested by the Agent or otherwise required by
applicable law with respect to any such owned real property. 


          If
a Default exists and Agent so requests, then the Debtors shall take such action
as Agent may reasonably request to perfect and protect the security interests
of Agent in all of the Collateral including any of the Collateral described in
clauses (A) through (F) above, including the following actions: (i) the
delivery to Agent of all Collateral the possession of which is necessary to
perfect the security interest of Agent therein; (ii) the actions described in
clauses (A) through (F) above, and (iii) instructing all account debtors to
make payment on accounts any other Collateral to a post office box or boxes or
to a deposit account under the control and in the name of Agent. Each Debtor
agrees that if any proceeds of any Collateral (including payments made in
respect of accounts or payment intangible) shall be received by it while a
Default exists and Agent so requests, it shall promptly deliver such proceeds
to Agent with any necessary endorsements and, until such proceeds are delivered
to Agent, such proceeds shall be held in trust by it for the benefit of Agent
and shall not be commingled with any other funds or property of it. 


          Section
4.3. Third Parties in Possession of Collateral. Except as otherwise
permitted by Section 4.2, each Debtor shall not permit any third Person to have
or obtain possession of or control over any Collateral, unless such Debtor
shall: (a) notify such third Person of the security interests created hereby;
(b) instruct such Person to hold all such Collateral for Agent’s account
subject to Agent’s instructions (which instructions may only be provided by
Agent during the existence of a Default and otherwise in accordance with this
Agreement and the other Loan Documents); and (c) subject to Section 4.2, take
all other actions Agent reasonably deems necessary to perfect and protect its
and such Debtor’s interests in such Collateral pursuant to the requirements of
the UCC of the applicable jurisdiction where the warehouseman, bailee,
consignee, agent, processor or other third Person is located (including the
filing of a financing statement in the proper jurisdiction naming the
applicable third Person as debtor and it as secured party and notifying the
third Person’s secured lenders of its interest in such Collateral before the
third Person receives possession of the Collateral in question). 


          Section
4.4. Corporate Changes. It shall not change its name, jurisdiction of
organization, or corporate structure in any manner that could reasonably be
expected to make any financing statement filed in connection with this
Agreement seriously misleading or its United States Federal Tax identification
number or organizational identification number unless it shall have given Agent
thirty (30) days prior written notice thereof and shall have taken all action
reasonably deemed necessary or desirable by Agent to protect its security
interest in the Collateral with the priority required by the Credit Agreement
and/or this Agreement. 


          Section
4.5. Equipment, Fixtures and Inventory. It shall keep its equipment,
fixtures and inventory at (or in transit to) any of its locations specified on
Schedule 3.1 hereto or, upon fifteen (15) days prior written notice to Agent,
at such other places within the United States of America where all action
required to perfect and protect Agent’s security interest in such Collateral
with the priority required by the Credit Agreement and/or this Agreement shall
have been taken. It shall notify Agent if it acquires after the date hereof any
equipment for which a certificate of title has been issued, any vessel subject
to the Ship Mortgage Act of 1920 or any aircraft and shall take all action
reasonably deemed necessary or desirable by Agent to create, perfect and
protect its interest in such Collateral with the priority required by the
Credit Agreement and/or this Agreement. 


SECURITY
AGREEMENT, Page 8





          Section
4.6. Warehouse Receipts Non-Negotiable. It agrees that if any warehouse
receipt or receipt in the nature of a warehouse receipt is issued in respect of
any portion of the Collateral, such warehouse receipt or receipt in the nature
thereof shall not be negotiable unless such warehouse receipt or receipt in the
nature thereof is delivered to Agent. 


          Section
4.7. Voting Rights; Distributions, etc.
So long as no Default has occurred, it shall be entitled to (a) receive all
cash dividends and other distributions paid in respect of the Pledged Shares or
other investment property and (b) exercise any and all voting and other
consensual rights (including the right to give consents, waivers and
notifications) pertaining to any of the Pledged Shares or any other investment
property; provided, however, that no vote shall be cast or consent, waiver or
ratification given or action taken without the prior written consent of Agent
which would be inconsistent with or violate any provision of this Agreement or
any other Loan Document. 


          Section
4.8. Additional Investment Property and Instruments. It agrees that it
will: (a) not permit any issuer of any of the Pledged Shares to issue any
shares of stock, or any other equity, partnership, membership or other
ownership interest, any notes or other securities or instruments in addition to
or in substitution for any of the Collateral unless specifically permitted by
the Credit Agreement; (b) pledge hereunder, immediately upon its acquisition
thereof, any and all such shares of stock or other equity, partnership,
membership and other ownership interests, notes or other securities or
instruments (including any of the same received from a Subsidiary created or
acquired after the date hereof; provided that a Debtor shall not be required to
pledge (i) more than 65% of the voting power of all classes of capital stock
issued by any Foreign Subsidiary or (ii) any shares of capital stock of a
Subsidiary of a Foreign Subsidiary), and (c) promptly (and in any event within
five (5) Business Days) deliver to Agent an amendment hereto, duly executed by
it, in substantially the form of Exhibit “A” (an “Amendment”), in respect of
such shares of stock, other ownership interests, notes or other securities or
instruments, together with all certificates, notes or other instruments
representing or evidencing the same. It hereby (A) authorizes Agent to attach
each Amendment to this Agreement, and (B) agrees that all such shares of stock
and other ownership interests, notes or other securities or instruments listed
on any Amendment delivered to Agent shall for all purposes hereunder constitute
Collateral. If any of the Collateral consists of interests in a partnership or
limited liability company, it shall not permit such interest to be evidenced by
a certificate (except for those interests evidenced by a certificate as of the
date hereof as described on Schedule 2.1(b)) or to become a “security” governed
by the provisions of Article 8 of the UCC. 


          Section
4.9. Intellectual Property Covenants. If it acquires or creates any new
Intellectual Property that is registered with or for which an application for
registration has been filed with any Governmental Authority, it shall give to
Agent prompt written notice thereof, and shall execute and deliver, in form and
substance reasonably satisfactory to Agent, a Copyright Security Agreement,
Patent Security Agreement or Trademark Security Agreement, as applicable,
describing any such new Intellectual Property. It shall: (a) prosecute
diligently any Copyright, Patent, or Trademark application at any time pending
which is necessary for the conduct of its business; (b) make application on all
new Copyrights, Patents and Trademarks as it may reasonably deem appropriate;
(c) preserve and maintain all rights in the Intellectual Property that is
necessary for the conduct of its business; and (d) obtain any consents, waivers
or agreements requested by Agent which are reasonably necessary to enable Agent
to exercise its remedies with respect to the Intellectual Property. It shall
not abandon any pending Copyright, Patent or Trademark application, or
registration or issuance for any Copyright, Patent, Trademark or any other
Intellectual Property which is necessary for the conduct of its business
without the prior written consent of Agent. It shall not amend or otherwise
modify any Trademark License, Copyright License or Patent License except as
such amendment or modification would not reasonably be expected to have a
Material Adverse Effect. 


SECURITY
AGREEMENT, Page 9






          Section
4.10. Deposit, Commodity and Security Accounts. It shall not open any
new deposit, commodity or security account or otherwise utilize any such
account other than the accounts identified on Schedule 3.2 unless it shall have
given Agent thirty (30) days prior written notice thereof and shall have taken
all action deemed necessary or desirable by Agent to cause its security
interest therein to be perfected with priority required by the Credit Agreement
and/or this Agreement. When no Default exists, it may make purchases and sales
of investment property in any commodity or security account in accordance with
the restrictions on investment set out in the Credit Agreement and may make
withdrawals from its deposit, commodity and security accounts. When a Default
exists, it shall not be authorized to make purchases and sales of the
investment property in any commodity or security account and shall not be
authorized to make any withdrawals from any deposit account. It will not give
any party control over any investment property or deposit account. 


          Section
4.11. Chattel Paper and Letters of Credit. It will not give any party
control over any letter of credit right or electronic chattel paper. It will
not create any chattel paper without placing a legend on the chattel paper
acceptable to Agent indicating that Agent has a security interest in the
chattel paper. 


          Section
4.12. Commercial Tort Claims. It will amend Schedule 2.1(a) hereto and
otherwise grant to Agent a security interest in any pending commercial tort
claim that arises after the date hereof. 


          Section
4.13. Transfers; Liens. It shall not sell, lease, transfer or otherwise
dispose of any of its Collateral or any right, title or interest therein and
shall not permit any of its Collateral to become subject to any Lien, except in
each case as permitted by the Credit Agreement. 


ARTICLE V.


Rights of Agent


          Section
5.1. POWER OF ATTORNEY. EACH DEBTOR HEREBY IRREVOCABLY CONSTITUTES AND
APPOINTS AGENT 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 NAME OF SUCH DEBTOR OR IN ITS OWN NAME, TO TAKE, ANY
AND ALL ACTIONS AND TO EXECUTE ANY AND ALL DOCUMENTATION WHICH AGENT AT ANY
TIME WHEN A DEFAULT EXISTS AND FROM TIME TO TIME DURING THE OCCURRENCE AND
CONTINUANCE OF A DEFAULT REASONABLY DEEMS NECESSARY OR DESIRABLE TO ACCOMPLISH
THE PURPOSES OF THIS AGREEMENT AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, IT HEREBY GIVES AGENT THE POWER AND RIGHT ON ITS BEHALF AND IN
AGENT’S OWN NAME TO DO ANY OF THE FOLLOWING WHEN A DEFAULT HAS OCCURRED, WITH
NOTICE TO BORROWER BUT WITHOUT THE CONSENT OF ANY DEBTOR: 


                    (a)
to demand, sue for, collect or receive, in the applicable Debtor’s name or in
Agent’s own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, documents
or any other instruments for the payment of money under the Collateral or any
policy of insurance; 


                    (b)
to pay or discharge taxes, Liens or other encumbrances levied or placed on or
threatened against the Collateral; 


SECURITY AGREEMENT, Page 10





                    (c)
to notify post office authorities to change the address for delivery of mail of
the Debtor to an address designated by Agent and to receive, open, and dispose
of mail addressed to the Debtor; 


                    (d)
(i) to direct account debtors and any other parties obligated on the Collateral
to make payment of any and all monies due and to become due thereunder directly
to, or otherwise render performance to or for the benefit of, Agent or as Agent
shall direct; (ii) to receive payment of and receipt for any and all monies,
claims and other amounts due and to become due at any time in respect of or
arising out of any Collateral; (iii) to sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, proxies, stock powers, verifications and notices
in connection with the Collateral; (iv) to commence and prosecute any suit,
action or proceeding at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral (including any Liens or any supporting obligation
securing or supporting the payment thereof); (v) to defend any suit, action or
proceeding brought against it with respect to any Collateral; (vi) to settle,
compromise or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or releases as Agent may deem
appropriate; (vii) to exchange any of the Collateral for other property upon
any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms as Agent may determine; (viii) to add
or release any guarantor, endorser, surety or other party to any of the
Collateral; (ix) to renew, extend or otherwise change the terms and conditions
of any of the Collateral; (x) to grant or issue any exclusive or nonexclusive
license under or with respect to any of the Intellectual Property (subject to
the rights of third parties under pre-existing licenses); (xi) to endorse its
name on all applications and other documentation necessary or desirable in
order for Agent to use any of the Intellectual Property included in the
Collateral; (xii) to make, settle, compromise or adjust any claims under or
pertaining to any of the Collateral (including claims under any policy of
insurance); and (xiii) to sell, transfer, pledge, convey, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Agent were the absolute owner thereof for all purposes,
and to do, at Agent’s option and the Debtors’ expense, at any time, or from
time to time, all acts and things which Agent deems necessary to protect,
preserve, maintain, or realize upon the Collateral and Agent’s security
interest therein. 


          THIS
POWER OF ATTORNEY IS A POWER COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 7.10. Agent
shall be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to Agent
in this Agreement, and shall not be liable for any failure to do so or any
delay in doing so. Neither Agent nor any Person designated by Agent shall be
liable for any act or omission or for any error of judgment or any mistake of
fact or law, except any of the same resulting from its or their gross
negligence or willful misconduct. This power of attorney is conferred on Agent
solely to protect, preserve, maintain and realize upon its security interest in
the Collateral. Agent shall not be responsible for any decline in the value of
the Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve or maintain any Lien or
supporting obligation given to secure the Collateral. 


          Section
5.2. Possession; Reasonable Care. Agent may, from time to time, in its
sole discretion, appoint one or more agents to hold physical custody, for the
account of Agent, of any or all of the Collateral that Agent has a right to
possess. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which Agent accords its own
property; it being understood that Agent shall not have any responsibility for:
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not Agent has or is


SECURITY
AGREEMENT, Page 11





deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Collateral. 


ARTICLE VI.


Default


          Section
6.1. Rights and Remedies. If an Event of Default has occurred, Agent
shall have the following rights and remedies: 


                    (a)
In addition to all other rights and remedies granted to Agent in this Agreement
(including those set forth in Article 5 hereof) or in any other Loan Document
or by applicable law, Agent shall have all of the rights and remedies of a
secured party under the UCC (whether or not the UCC applies to the affected
Collateral). Without limiting the generality of the foregoing, Agent may: (i)
without demand or notice to any Debtor, collect, receive or take possession of
the Collateral or any part thereof and for that purpose Agent may enter upon
any premises on which the Collateral is located and remove the Collateral
therefrom or render it inoperable and, in the event Agent seeks to take possession
of any or all of the Collateral by judicial process, each Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action;
(ii) apply the balance of Debtor’s deposit account held by Agent to Debtor’s
Obligations; (iii) instruct any bank holding any Debtor’s deposit accounts to
pay the balance of such deposit account to or for the benefit of Agent; and/or
(iv) sell, lease or otherwise dispose of the Collateral, or any part thereof,
in one or more parcels at public or private sale or sales, at Agent’s offices
or elsewhere, for cash, on credit or for future delivery, on an “as is” and
“with all faults” basis, with a disclaimer of all warranties (including
warranties of title, possession, quiet enjoyment and the like and all
warranties of merchantability and fitness) and upon such other terms as Agent
may deem commercially reasonable or otherwise as may be permitted by law.
Neither Agent nor any Bank shall have any obligation to clean–up or otherwise
prepare the Collateral for sale if Agent determines that it is not beneficial
to do so or if its costs to do so outweigh the benefits expected to be received
thereby. Agent shall have the right at any public sale or sales, and, to the
extent permitted by applicable law, at any private sale or sales, to bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
and become a purchaser of the Collateral or any part thereof. Upon the request
of Agent after an Event of Default, each Debtor shall within ten (10) days (or
within such longer number of days as Agent may approve): (i) assemble its
Collateral and (ii) make it available to Agent at any place or places
designated by Agent that are reasonably convenient to it and Agent. Each Debtor
agrees that Agent shall not be obligated to give more than ten (10) days prior
written notice of the time and place of any public sale or of the time after
which any private sale may take place and that such notice shall constitute
reasonable notice of such matters; provided that no such notice shall be
required with respect to any Collateral that is perishable, that threatens to
decline speedily in value or is a type customarily sold on the recognized
market. Agent shall not be obligated to make any sale of Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given. Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which the same
was so adjourned. Each Debtor shall be liable for all reasonable expenses of
retaking, holding, preparing for sale or the like, and all reasonable
attorneys’ fees, legal expenses and other costs and expenses incurred by Agent in
connection with the collection of its Obligations and the enforcement of
Agent’s rights under this Agreement and arising as a result hereof. Each Debtor
shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral applied to its Obligations are insufficient to
pay its Obligations in full. Agent may apply the Collateral against the
Obligations as provided in the Credit Agreement and, when applying the
Collateral against the 


SECURITY
AGREEMENT, Page 12





Obligations,
unless otherwise provided in the Credit Agreement, any Obligations which are
purchase money obligations or represent proceeds of loans utilized to acquire
the Collateral shall be deemed to be paid last. Each Debtor waives all rights
of marshalling, valuation and appraisal in respect of the Collateral. Any
proceeds received or held by Agent in respect of any sale of, collection from
or other realization upon all or any part of the Collateral may, in the
discretion of Agent, be held by Agent as collateral for, and then or at any
time thereafter applied in whole or in part by Agent against, the Obligations
in the order permitted by the Credit Agreement. Any surplus of such proceeds
and interest accrued thereon, if any, held by Agent and remaining after the
Loan Obligations and Hedging Obligations have been Fully Satisfied and payment
in full of all the Deposit Obligations then due and payable and the termination
of all Commitments and Letters of Credit under the Credit Agreement shall be
promptly paid over to the Debtor entitled thereto or to whomsoever may be
lawfully entitled to receive such surplus. Agent shall have no obligation to
invest or otherwise pay interest on any amounts held by it in connection with
or pursuant to this Agreement. 


                              (i)
Agent may cause any or all of the Collateral held by it to be transferred into
the name of Agent or the name or names of Agent’s nominee or nominees. 


                              (ii)
Agent may exercise any and all of the rights and remedies of any Debtor under
or in respect of the Collateral, including any and all rights to demand or
otherwise require payment of any amount under, or performance of any provision
of, any of the Collateral and, subject to Section 4.7, any and all voting
rights and corporate powers in respect of the Collateral. Each Debtor shall
execute and deliver (or cause to be executed and delivered) to Agent all such
proxies and other documentation as Agent may reasonably request for the purpose
of enabling Agent to exercise the voting and other rights which it is entitled
to exercise pursuant to this clause (iii) and to receive the dividends,
interest and other amounts which it is entitled to receive hereunder. 


                              (iii)
Agent may collect or receive all money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but shall be
under no obligation to do so. 


                              (iv)
On any sale of the Collateral, Agent is hereby authorized to comply with any
limitation or restriction with which compliance is necessary, in the view of
Agent’s counsel, in order to avoid any violation of applicable law or in order
to obtain any required approval of the purchaser or purchasers by any applicable
governmental unit. Such compliance will not be considered to adversely affect
the commercial reasonableness of any sale of any Collateral. 


                              (v)
For purposes of enabling Agent to exercise its rights and remedies under this Section
6.1 and enabling Agent and its successors and assigns to enjoy the full
benefits of the Collateral in each case as Agent shall be entitled to exercise
its rights and remedies under this Section 6.1, each Debtor hereby grants to
Agent a nonexclusive license, effective upon and irrevocable during the
continuance of a Default (exercisable without payment of royalty or other
compensation to it but subject to the rights of third parties under
pre-existing licenses) to use, assign, license or sublicense any of its
Intellectual Property, including in such license reasonable access to all media
in which any of the licensed items may be recorded or stored and all computer
programs used for the completion or printout thereof; and further including in
such license such rights of quality control and inspection as are reasonably
necessary to prevent any Trademark included in such license from claims of
invalidation, unenforceability or abandonment. This license shall also inure to
the benefit of all successors, assigns and transferees of Agent. 


                              (vi)
If Agent sells any of the Collateral of a Debtor on credit, such Debtor will be
credited only with payments actually made by the purchaser, received by Agent
and applied to the


SECURITY AGREEMENT,
Page 13





indebtedness
of the purchaser. In the event the purchaser fails to pay for the Collateral,
Agent may resell the Collateral and the applicable Debtor shall be credited
with the proceeds of the sale. 


          Section
6.2. Private Sales. Each Debtor recognizes that Agent may be unable to
effect a public sale of any or all of the Collateral by reason of certain
prohibitions contained in the laws of any jurisdiction outside the United
States or in the Securities Act of 1933, as amended from time to time (the
“Securities Act”) and applicable state securities laws, but may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such Collateral for
their own account for investment and not with a view to the distribution or
resale thereof. Each Debtor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable to the seller than if such
sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall, to the extent permitted by law, be deemed to have
been made in a commercially reasonable manner. Neither Agent nor any Bank shall
be under any obligation to delay a sale of any of the Collateral for the period
of time necessary to permit the issuer of such securities to register such
securities under the laws of any jurisdiction outside the United States, under
the Securities Act or under any applicable state securities laws, even if such
issuer would agree to do so. Each Debtor further agrees to do or cause to be
done, to the extent that it may do so under applicable law, all such other
reasonable acts and things as may be necessary to make such sales or resales of
any portion or all of the Collateral valid and binding and in compliance with
any and all applicable laws, regulations, orders, writs, injunctions, decrees
or awards of any and all courts, arbitrators or governmental units, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Debtors’
expense, other than filing and keeping effective a registration statement with
respect to any Pledged Shares. 


          Section
6.3. Standards for Exercising Remedies. To the extent that applicable
law imposes duties on Agent to exercise remedies in a commercially reasonable
manner, each Debtor acknowledges and agrees that it is not commercially
unreasonable for Agent: (a) to fail to incur expenses reasonably deemed
significant by Agent to prepare any Collateral for disposition or otherwise to
complete raw material for work-in-process into finished goods or other finished
products for disposition; (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of the Collateral to be collected or disposed of; (c) to fail to
exercise collection remedies against account debtors or other persons obligated
on Collateral or to remove liens on or any adverse claims against the
Collateral; (d) to exercise collection remedies against account debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (e) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature; (f) to contact other persons,
whether or not in the same business as Debtor, for expressions of interest in
acquiring all or any portion of the Collateral; (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature; (h) to dispose of Collateral by utilizing
Internet sites that provide for the auction of assets of the types included in
the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets; (i) to dispose of assets in wholesale
rather than retail markets; (j) to disclaim disposition warranties; (k) to
purchase insurance or credit enhancements to insure Agent against risks of
loss, collection or disposition of Collateral or to provide Agent a guaranteed
return from the collection or disposition of Collateral; (l) to the extent
deemed appropriate by Agent, to obtain the services of brokers, investment
bankers, consultants and other professionals (including Agent and its
affiliates) to assist Agent in the collection or disposition of any of the
Collateral; or (m) to comply with any applicable state or federal law
requirement in connection with the disposition or collection of the Collateral.
Each Debtor acknowledges that this Section is intended to provide
non-exhaustive indications of what actions or omissions by Agent would not be
commercially unreasonable in Agent’s exercise of remedies against the
Collateral and that other actions or omissions by Agent shall not be deemed


SECURITY
AGREEMENT, Page 14





commercially
unreasonable solely by not being included in this Section. Without limitation
upon the foregoing, nothing contained in this Section shall be construed to
grant any rights to any Debtor or to impose any duties upon Agent that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section. 


ARTICLE VII.


Miscellaneous


          Section
7.1. No Waiver; Cumulative Remedies. No failure on the part of Agent to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and
remedies provided for in this Agreement are cumulative and not exclusive of any
rights and remedies provided by law. 


          Section
7.2. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of each Debtor, Agent, the Secured Parties and respective
successors and assigns, except that no Debtor may assign any of its rights or
obligations under this Agreement without the prior written consent of the Banks
and Agent may not appoint a successor Agent except in accordance with the
Credit Agreement. 


          Section
7.3. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES HERETO. Except as contemplated by the execution and delivery of a
Subsidiary Joinder Agreement or an Amendment (which only needs to be signed by
the party thereto), the provisions of this Agreement may be amended or waived
only by an instrument in writing signed by all of the parties hereto and the
number of Banks required by the Credit Agreement. 


          Section
7.4. Notices. All notices and other communications provided for in this
Agreement shall be given or made in accordance with the Credit Agreement and,
if to any Debtor, at the address for notices of Borrower set forth therein. 


          Section
7.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas (without regard to the conflicts
of law provisions thereof) and the applicable laws of the United States of
America. 


          Section
7.6. Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement. 


          Section
7.7. Survival of Representations and Warranties. All representations,
warranties and certifications made in this Agreement or in any documentation
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Agent shall affect the representations,
warranties and certifications or the right of Agent or any Secured Party to
rely upon them. 


SECURITY
AGREEMENT, Page 15





          Section
7.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. 


          Section
7.9. Severability. Any provision of this Agreement which is determined
by a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. 


          Section
7.10. Termination; Release. When all Loan Obligations and Hedging
Obligations have been Fully Satisfied and Agent is not exercising remedies
under the Loan Documents, the Collateral shall be released from the Liens
created hereby and this Agreement and all obligations (other than those
expressly stated in the Loan Documents to survive termination) of each Debtor
under this Agreement shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral granted
to Agent under this Agreement shall revert to the Debtors. Agent shall, upon
the written request, execute and deliver to Debtors proper documentation
acknowledging the release and termination of the security interests created by
this Agreement, and shall duly assign and deliver to each Debtor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of Agent and has not previously been sold or otherwise
applied pursuant to this Agreement. Prior to termination, Liens on any
Collateral may be released in accordance with Section 11.8 of the Credit
Agreement. 


          Section
7.11. Obligations Absolute. All rights and remedies of Agent hereunder,
and all obligations of each Debtor hereunder, shall be absolute and
unconditional irrespective of: (a) any lack of validity or enforceability of
any of the Loan Documents; (b) any change in the time, manner, or place of
payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from any of the
Loan Documents; (c) any exchange, release, or nonperfection of any Collateral,
or any release or amendment or waiver of or consent to any departure from any
guarantee or other supporting obligation, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense available
to, or a discharge of, a third party pledgor or surety 


SECURITY
AGREEMENT, Page 16





          IN WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first written above. 


	
  

 	
  

 	
  

 
	
  

 	
 DEBTORS:

 
	
  

 	
  

 	
  

 
	
  

 	
 UNIVERSAL
 POWER GROUP, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

 


 
	
  

 	
 Name:

 	
 Ian Edmonds

 
	
  

 	
 Title:

 	
 President

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 MONARCH
 OUTDOOR ADVENTURES, LLC

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

 


 
	
  

 	
 Name:

 	
 Ian Edmonds

 
	
  

 	
 Title:

 	
 Manager

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 UNIVERSAL
 BATTERY CORPORATION

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

 


 
	
  

 	
 Name:

 	
 Ian Edmonds

 
	
  

 	
 Title:

 	
 President

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 UNIVERSAL
 MOBILITY, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

 


 
	
  

 	
 Name:

 	
 Ian Edmonds

 
	
  

 	
 Title:

 	
 President

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 AGENT:

 
	
  

 	
  

 	
  

 
	
  

 	
 WELLS FARGO
 BANK, NATIONAL ASSOCIATION

 
	
  

 	
 as Agent for
 the Secured Parties

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	

 


 
	
  

 	
  

 	
 Clint
 Bryant, Senior Vice President

 



SECURITY
AGREEMENT, Page 17