EXECUTION COPY 

AMENDED AND
RESTATED 
PLEDGE AND SECURITY AGREEMENT 

     THIS AMENDED
AND RESTATED PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) is entered into
as of April 23, 2012 by and among MERITOR, INC., an Indiana corporation
(formerly known as ArvinMeritor, Inc.) (the “Company”), the Subsidiaries of the
Company identified on the signature pages hereto (the “Initial Subsidiary Grantors”), and any additional Subsidiaries of the Company, whether now existing
or hereafter formed which become parties to this Security Agreement by executing
a Security Agreement Supplement hereto in substantially the form of
Annex I
(such additional Subsidiaries, together with the Company and the Initial
Subsidiary Grantors, the “Grantors”), in favor of JPMORGAN CHASE
BANK, N.A., as Administrative Agent (the “Administrative Agent”), for the
benefit of the Holders of Secured Obligations (as defined in the Credit
Agreement referred to below). 

PRELIMINARY STATEMENT 

     WHEREAS,
pursuant to that certain Amendment and Restatement Agreement of even date herewith, the Company, ArvinMeritor Finance Ireland
(the “Subsidiary Borrower” and, collectively with the Company, the “Borrowers”), the financial
institutions party thereto and the Administrative Agent have agreed to enter into that certain Amended and Restated Credit Agreement
dated of even date herewith among the Borrowers, the financial institutions party thereto (the “Lenders”) and
the Administrative Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), which Credit Agreement, among other things, (i) amends and restates in its entirety the Existing Credit
Agreement (as defined in the Credit Agreement); (ii) re-evidences outstanding obligations of the Borrowers party to the Existing
Credit Agreement and (iii) provides, subject to the terms and conditions thereof, for future extensions from time to time of credit
and other financial accommodations to be made by the Lenders to or for the benefit of the Borrowers and their respective Subsidiaries;


    
WHEREAS, in connection with the Existing Credit Agreement, each of the
Grantors (including as successors by merger or otherwise) (collectively, the
“Existing Grantors”) and the Administrative Agent have entered into that certain Pledge and
Security Agreement, dated as of June 23, 2006 (as amended, restated,
supplemented or otherwise modified prior to the date hereof, the
“Existing Security Agreement”), and pursuant to which each Existing Grantor granted a
security interest in all or substantially all of its personal property and
pledged and, to the extent applicable, reaffirmed its prior pledge of, its
capital stock, membership interests or partnership interests in certain of its
Subsidiaries to the Agent; 

    
WHEREAS, the parties hereto wish to amend and restate the Existing
Security Agreement in its entirety; 

    
WHEREAS, each Grantor has agreed to grant, and in the case of any Initial
Subsidiary Grantor, reaffirm its prior grant of, a security interest in all or
substantially all of its personal property and to pledge, and in the case of any
Initial Subsidiary Grantor, reaffirm its prior pledge of, its capital stock,
membership interests or partnership interests in certain of its Subsidiaries to the Administrative Agent for the
benefit of the Holders of Secured Obligations, as security for the Secured
Obligations as set forth herein; 







     WHEREAS, it is
the intention of the parties hereto that this Security Agreement be merely an
amendment and restatement of the Existing Security Agreement and not constitute
a novation of the grants of security or the obligations thereunder; and


    
WHEREAS, the Administrative Agent and the Lenders have required, as a
condition, among others, to the effectiveness of the Credit Agreement and the
other Loan Documents, that each Grantor execute and deliver this Security
Agreement. 

    
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

ARTICLE I 

DEFINITIONS 

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

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

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

    
“1998 Restricted
Subsidiary” means, as of any date of
determination, each Person constituting a “Restricted Subsidiary” under (and as
defined in) either the 1998 Senior Note Indenture or the 2006 Senior Note
Indenture as of such date. 

    
“1998 Restricted
Grantor” means, as of any date of
determination, the Company and each Grantor constituting a 1998 Restricted
Subsidiary. 

    
“1998 Restricted
Collateral” means, as of any date
determination, (i) any real property (including buildings and other
improvements) of any 1998 Restricted Grantor constituting a “Principal Property”
under (and as defined in) the 1998 Senior Note Indenture as of such date, (ii)
the Capital Stock of any 1998 Restricted Subsidiary held by any 1998 Restricted
Grantor and (iii) any indebtedness of any 1998 Restricted Subsidiary held by any
1998 Restricted Grantor. 

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


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

2







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

    
“Collateral” means all Accounts, Chattel Paper, Commercial Tort Claims, Copyrights,
Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, letters of credit, Letter-of-Credit
Rights, Licenses, Patents, Pledged Deposits, Supporting Obligations, Trademarks,
Pledged Equity and Other Collateral, wherever located, 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
and records, customer lists, credit files, computer files, programs, printouts
and other computer materials and records related thereto. Notwithstanding
anything to the contrary contained in this definition, Collateral shall not
include (i) contractual rights to the extent and for so long as the grant of a
security interest herein would violate the terms of the agreement under which
such contractual rights arise or exist to the extent such prohibition is
enforceable under applicable law, (ii) rights under governmental licenses and
authorizations to the extent and for so long as the grant of a security interest
therein is prohibited by law and (iii) any intent-to-use trademark or service
mark application prior to the filing of a statement of use or amendment to
allege use, or any other intellectual property, to the extent that applicable
law or regulation prohibits the creation of a security interest or would
otherwise result in the loss of rights from the creation of such security
interest or from the assignment of such rights upon the occurrence and
continuance of a Default. 

    
“Commercial Tort Claims” means the commercial tort claims, as defined in the New York
UCC, of any Grantor, including each commercial tort claim specifically described
in Exhibit E. 

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


    
“Copyrights” means, with respect to any Person, all of such Person’s right, title,
and interest in and to the following: (a) all copyrights, rights and interests
in copyrights, works protectable by copyright, copyright registrations, and
copyright applications; (b) all renewals of any of the foregoing; (c) all
income, royalties, damages, and payments now or hereafter due and/or payable
under any of the foregoing, including, without limitation, damages or payments
for past or future infringements for any of the foregoing; (d) the right to sue
for past, present, and future infringements of any of the foregoing; and (e) all
rights corresponding to any of the foregoing throughout the world. 

    
“Default” means an event described in Section
5.1 hereof. 

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

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


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


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

3







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


    
“General Intangibles” shall have the meaning set forth in Article 9 of the New
York UCC and, in any event, includes payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or intellectual property or rights therein or
applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Licenses, infringement
claims, computer programs, information contained on computer disks or tapes,
software, literature, reports, catalogs, pension plan refunds, pension plan
refund claims, insurance premium rebates, tax refunds, and tax refund claims,
interests in a partnership or limited liability company which do not constitute
a security under Article 8 of the Code, and any other personal property other
than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts,
Goods, Investment Property, negotiable Collateral, and oil, gas, or other
minerals before extraction. 

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


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


    
“Intellectual Property” means (i) United States of America and foreign trademark
registrations, and applications for trademark registration, (ii) United States
of America and foreign patents and patents applications, together with all
reissuances, continuations, continuations in part, revisions, extensions, and
reexaminations thereof and (iii) United States of America and foreign copyright
registrations and applications for registration. 

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


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

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

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

    
“New York UCC” means the New York Uniform Commercial Code as in effect from
time to time. 

4







    
“Other Collateral” means any property of the Grantors, not included within the
defined terms Accounts, Chattel Paper, Commercial Tort Claims, Copyrights,
Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Licenses,
Patents, Pledged Deposits, Supporting Obligations, Trademarks and Pledged
Equity, including, without limitation, all cash on hand, letters of credit,
Stock Rights or any other deposits (general or special, time or demand,
provisional or final) with any bank or other financial institution, it being
intended that the Collateral include all personal property of the Grantors,
subject to the limitations contained in Article II of this Security Agreement.


     “Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all licenses of the foregoing whether as licensee or licensor; (e)
all income, royalties, damages, claims, and payments now or hereafter due or
payable under and with respect thereto, including, without limitation, damages
and payments for past and future infringements thereof; (f) all rights to sue
for past, present, and future infringements thereof; and (g) all rights
corresponding to any of the foregoing throughout the world. 

    
“Pledged Deposits” means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which a
Grantor may from time to time designate as pledged to the Administrative Agent
or to any Holder of Secured Obligations as security for any Guaranteed
Obligation, and all rights to receive interest on said deposits. 

    
“Pledged Equity” means, with respect to any Grantor, the shares of Capital
Stock of each issuer identified in Exhibit
C under the name of such Grantor and all
other shares of Capital Stock of whatever class of each such issuer, now or
hereafter owned by such Grantor, and all certificates or Instruments evidencing
the same, and shall include, without limitation, the Applicable Pledge
Percentage of the Capital Stock of each Pledge Subsidiary of such
Grantor.

    
“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments or Pledged Deposits, and any other rights or claims to receive money
which are General Intangibles or which are otherwise included as Collateral.


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

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

    
“Stock Rights” means any securities, dividends, Instruments or other
distributions and any other right or property which any Grantor shall receive or
shall become entitled to receive for any reason whatsoever with respect to, in
substitution for or in exchange for any securities or other ownership interests
in a corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities. 

    
“Supporting Obligation” shall have the meaning set forth in Article 9 of the New
York UCC. 

5







     “Trademarks” means, with respect to any Person, all of such Person’s right, title,
and interest in and to the following: (a) all trademarks (including service
marks), trade names, trade dress, and trade styles and the registrations and
applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments 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 for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world. 

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

ARTICLE II 

GRANT OF SECURITY INTEREST 

    
2.1. Grantor Pledge; Reaffirmation of Pledge. Each of the Grantors hereby pledges, assigns and grants to the
Administrative Agent, for the ratable benefit of the Holders of Secured
Obligations, 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 the prompt and complete payment and performance of the Secured
Obligations. Without limiting the foregoing, each Initial Subsidiary Grantor
reaffirms the assignments, pledges and grants of any and all security interests
made under the Existing Security Agreement and agrees that such assignments,
pledges and security interests (including, without limitation, any filings made
in connection therewith) remain in full force and effect and are hereby
ratified, reaffirmed and confirmed in order to secure the prompt and complete
payment and performance of the Secured Obligations, with the same force, effect
and priority in effect both immediately prior to and after entering into this
Agreement. Each Grantor acknowledges and agrees with the Administrative Agent
that the Existing Security Agreement is hereby amended and restated in its
entirety pursuant to the terms hereof; provided, that this Security Agreement
is in no way intended to constitute a novation of any obligations owed by the
Grantors to the Administrative Agent or any other Holders of Secured Obligations
under the Existing Security Agreement, all of which are hereby reaffirmed,
ratified and confirmed. 

    
2.2. Limitations. 

    
2.2.1 Applicable Pledge
Percentage. Notwithstanding anything to the
contrary in this Article II, the Collateral shall not include the Capital Stock of any
Subsidiary exceeding the Applicable Pledge Percentage with respect
thereto.

    
2.2.2 Joint Ventures. Notwithstanding anything to the contrary in this
Article II,
the Collateral shall not include the Capital Stock of any Joint Venture to the
extent the organizational documents of such Joint Venture do not permit the
applicable Grantor to pledge the Capital Stock of such Joint Venture as security
for the Secured Obligations (or require the consent of another Venturer
therefor). 

6







     2.2.3 1998 Senior Note
Indenture.

         
(i) Notwithstanding anything to the contrary in this Article II, the aggregate
principal amount of the Secured Obligations secured by Liens on 1998 Restricted
Collateral granted pursuant to this Security Agreement and the other Loan
Documents shall not exceed 15% of Consolidated Net Tangible Assets under (and as
defined in) the 1998 Senior Note Indenture at any time or, if greater, the
maximum principal amount of Secured Obligations that may be secured by Liens on
1998 Restricted Collateral under the terms of all Senior Note Indentures then in
effect (it being understood that the principal amount of the Secured Obligations
secured by Liens on Collateral other than the 1998 Restricted Collateral granted
pursuant to this Security Agreement and the other Loan Documents shall not be
limited by this Section 2.2.3).

         
(ii) It is further understood and agreed that the limitation on the amount of
the Secured Obligations secured by Liens on 1998 Restricted Collateral set forth
in the foregoing paragraph (i) applies to all Liens granted pursuant to this Security
Agreement and each of the other Loan Documents in such a manner that at no time
shall the Administrative Agent be entitled to realize proceeds of such Liens in
excess of such amount, but that the Administrative Agent shall be entitled to
enforce such security interests pursuant to this Security Agreement and the
other Loan Documents on any an all “Collateral” (as defined in the Credit
Agreement) in any manner or order of its choosing. 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES


    
Each Grantor represents and warrants, and each Grantor that becomes a
party to this Security Agreement pursuant to the execution of a Security
Agreement Supplement in substantially the form of Annex I represents and warrants (after
giving effect to supplements to each of the Exhibits hereto with respect to such
subsequent Grantor as attached to such Security Agreement Supplement), that:


    
3.1. Title, Authorization, Validity and Enforceability. Each such Grantor has good and valid rights in or the power
to transfer (and with respect to intellectual property rights, grant a security
interest in) the Collateral owned by it and title to the Collateral with respect
to which it has purported to grant a security interest hereunder, free and clear
of all Liens except for 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 the Administrative Agent the security interest in such
Collateral pursuant hereto. The execution and delivery by each such Grantor of
this Security Agreement has been duly authorized by proper corporate, limited
liability company or partnership, as applicable, proceedings, and this Security
Agreement constitutes a legal, valid and binding obligation of each such Grantor
and creates a security interest which is enforceable against each such Grantor
in all Collateral it now owns or hereafter acquires, except as enforceability
may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws relating to or affecting the enforcement of
creditors’ rights generally, (ii) general equitable principles (whether
considered in a proceeding in equity or at law), and (iii) requirements of
reasonableness, good faith and fair dealing. When financing statements have been filed in the
appropriate offices against each Grantor in the locations listed on
Exhibit D,
and filing made in the appropriate filing offices for intellectual property, the
Administrative Agent will have a fully perfected first priority security
interest in the Collateral owned by such Grantor in which a security interest
may be perfected by filing, subject only to Liens permitted under
Section 4.1.6 hereof.

7







     3.2. Conflicting Laws and Contracts.
Neither the execution and delivery by each Grantor of this Security Agreement,
the creation and perfection of the security interest in the Collateral granted
hereunder, nor compliance with the terms and provisions hereof will violate (i)
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on such Grantor, or (ii) such Grantor’s charter, by-laws or other
organizational or constitutional documents, or (iii) the provisions of any
indenture, instrument or agreement to which such Grantor is a party or is
subject, or by which it, or its property may be bound or affected, or conflict
with or constitute a default thereunder, or result in or require the creation or
imposition of any Lien in, of or on the property of such Grantor pursuant to the
terms of any such indenture, instrument or agreement (other than any Lien
permitted under Section 7.3(F) of the Credit Agreement), except for any such
violation as would not reasonably be expected to have a Material Adverse Effect.


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

    
3.4. Property Locations. The Inventory,
Equipment and Fixtures of each Grantor are located solely at the locations of
such Grantor described in Exhibit
A or are in transit to or from such locations
(except Inventory having an aggregate value for all Grantors not exceeding
$15,000,000), which locations are owned by such Grantor except for locations (i)
which are leased by such Grantor as lessee and designated in Part B of
Exhibit A
or (ii) at which Inventory is held in a public warehouse or is otherwise held by
a bailee or on consignment by such Grantor as designated in Part C of
Exhibit A.

    
3.5. No Other Names. Within the five-year
period ending as of the date such Person becomes a Grantor hereunder, such
Grantor has not conducted business under any name, changed its jurisdiction of
formation, merged with or into or consolidated with any other Person, except as
disclosed in Exhibit “A”; provided that with respect to any Grantor party to this
Security Agreement as of the Restatement Effective Date, such period shall be a
five-year period ending on the Restatement Effective Date. The name in which
such Grantor has executed this Security Agreement is the exact name as it
appears in such Grantor’s organizational documents, as amended, as filed with
such Grantor’s jurisdiction of organization as of the date such Person becomes a
Grantor hereunder. 

    
3.6. Accounts and Chattel Paper. The names
of the obligors, amounts owing, due dates and other information with respect to
the Accounts and Chattel Paper owned by each Grantor are and will be correctly
stated in all material respects in all records of such Grantor relating thereto
and in all invoices and reports with respect thereto furnished to the
Administrative Agent by such Grantor from time to time. As of the time when each
Account or each item of Chattel Paper arises, such
Grantor shall be deemed to have represented and warranted that, to the best of
such Grantor’s knowledge, such Account or Chattel Paper, as the case may be, and
all records relating thereto, are genuine and in all respects what they purport
to be. 

8







     3.7. Filing Requirements. None of the
Equipment owned by such Grantor is covered by any certificate of title required
to be delivered pursuant to Section
4.3.3, except for the vehicles described in
Part A of Exhibit B. None of the Collateral owned by such Grantor is of a type for which
security interests or liens may be perfected by filing under any federal statute
except (i) aircraft and any aircraft/engines, ships, railcars and other vehicles
governed by federal statute described in Part B of Exhibit B and (ii) the patents,
trademarks and copyrights held by such Grantor and described in Part C of
Exhibit B.


    
3.8. No Financing Statements, Security Agreements. No financing statement or security agreement describing all or any
portion of the Collateral which has not lapsed or been terminated naming any
Grantor as debtor has been filed in any jurisdiction except financing statements
(i) naming the Administrative Agent on behalf of the Holders of Secured
Obligations as the secured party, and (ii) in respect of Liens permitted by
Section 7.3(F) of the Credit Agreement; provided, that nothing herein shall be
deemed to constitute an agreement to subordinate any of the Liens of the
Administrative Agent under the Loan Documents to any Liens otherwise permitted
under Section 7.3(F) of the Credit Agreement. 

    
3.9. Federal Employer Identification Number; Jurisdiction of Organization Number; Jurisdiction of Organization. Each
Grantor’s federal employer identification number is, and if such Grantor is a
registered organization, such Grantor’s jurisdiction of organization, type of
organization and jurisdiction of organization identification number is listed on
Exhibit A.

    
3.10. Pledged Securities and Other Investment Property. Exhibit C sets forth a complete and accurate list of the Pledged
Equity, and to the extent the same has a value in excess of $5,000,000 in the
aggregate, Instruments, Securities and other Investment Property (to the extent
the same do not constitute Cash Equivalent Investments) delivered to the
Administrative Agent. Each Grantor is the direct and beneficial owner of each
Instrument, Security and other type of Investment Property listed on
Exhibit C
as being owned by it, free and clear of any Liens, except for the security
interest granted to the Administrative Agent for the benefit of the Holders of
Secured Obligations hereunder or as permitted by Section 7.3(F) of the Credit
Agreement. Each Grantor further represents and warrants that (i) all Pledged
Equity which are shares of stock in a corporation or ownership interests in a
partnership or limited liability company have been (to the extent such concepts
are relevant with respect to such Pledged Equity) duly and validly issued, are
fully paid and non-assessable and constitute the percentage of the issued and
outstanding shares of stock (or other equity interests) of the respective
issuers thereof indicated on Exhibit
C hereto and (ii) with respect to any
certificates delivered to the Administrative Agent representing an Equity
Interest, either such certificates are Securities as defined in Article 8 of the
UCC of the applicable jurisdiction as a result of actions by the issuer or
otherwise, or, if such certificates are not Securities, such Grantor has so
informed the Administrative Agent so that the Administrative Agent may take
steps to perfect its security interest therein as a General Intangible.


9







     3.11. Commercial Tort Claims.
Exhibit E
sets forth a complete and accurate list of all Commercial Torts Claims of the
Grantors. 

    
3.12. Intellectual Property. 

     3.12.1 Exhibit B contains a complete and
accurate listing as of the Restatement Effective Date of the following: (i)
Intellectual Property, (ii) foreign industrial design registrations and
industrial design applications, and (iii) the names of any Person who has been
granted rights in respect thereof outside of the ordinary course of
business. 

     3.12.2 Such intellectual property is
valid, subsisting, unexpired (where registered) and enforceable and has not been
abandoned or adjudged invalid or unenforceable, in whole or in part, except as
could not be reasonably expected to result in a Material Adverse
Effect. 

     3.12.3 Except as set forth on
Exhibit B,
no Person other than the respective Grantor has any right or interest of any
kind or nature in or to the Intellectual Property, including any right to sell,
license, lease, transfer, distribute, use or otherwise exploit the Intellectual
Property or any portion thereof outside of the ordinary course of the respective
Grantor’s business. Except as set forth on Exhibit B, each Grantor has good,
marketable and exclusive title to, and the valid and enforceable power and right
to sell, license, transfer, distribute, use and otherwise exploit, its
Intellectual Property. 

     3.12.4 Each Grantor has taken or caused
to be taken steps so that none of its intellectual property, the value of which
to the Grantors are contingent upon maintenance of the confidentiality thereof,
have been disclosed by such Grantor to any Person other than employees,
contractors, customers, representatives and agents of the Grantors who are
parties to customary confidentiality and nondisclosure agreements with the
Grantors. 

     3.12.5 To each Grantor’s knowledge, no
Person has violated, infringed upon or breached, or is currently violating,
infringing upon or breaching, any of the rights of the Grantors to the
intellectual property or has breached or is breaching any duty or obligation
owed to the Grantors in respect of the intellectual property except where those
breaches, individually or in the aggregate, could not be reasonably expected to
result in a Material Adverse Effect. 

     3.12.6 No settlement or consents,
covenants not to sue, nonassertion assurances, or releases have been entered
into by any Grantor or to which any Grantor is bound that adversely affects its
rights to own or use any intellectual property except as could not be reasonably
expected to result in a Material Adverse Effect, in each case individually or in
the aggregate. 

     3.12.7 No Grantor has received any
written notice that remains outstanding challenging the validity,
enforceability, or ownership of any intellectual property except where those
challenges could not reasonably be expected to result in a Material Adverse
Effect, and to such Grantor’s knowledge at the date hereof there are no facts
upon which such a challenge could be made. 

10







     3.12.8 To each Grantor’s knowledge, such Grantor owns directly
or is entitled to use, by license or otherwise, all intellectual property
necessary for the conduct of such Grantor’s business. 

     3.12.9 Each Grantor uses adequate
standards of quality in the manufacture, distribution, and sale of all products
sold and in the provision of all services rendered under or in connection with
all trademarks and has taken all commercially reasonable action necessary to
insure that all licensees of the trademarks owned or licensed by such Grantor
use such adequate standards of quality, except where the failure to use adequate
standards of quality could not reasonably be expected to result in a Material
Adverse Effect. 

    
3.13. The consummation of the transactions contemplated by the Loan Documents
will not result in the termination or material impairment of any of the
Intellectual Property. 

ARTICLE IV 

COVENANTS 

    
From the date of this Security Agreement and thereafter until this
Security Agreement is terminated pursuant to the terms hereof, each Grantor
party hereto as of the date hereof agrees, and from and after the effective date
of any Security Agreement Supplement in substantially the form of
Annex I
applicable to any Grantor (and after giving effect to supplements to each of the
Exhibits hereto with respect to such subsequent Grantor as attached to such
Security Agreement Supplement) and thereafter until this Security Agreement is
terminated pursuant to the terms hereof, each such subsequent Grantor agrees
that: 

    
4.1. General. 

     4.1.1 Inspection. Each Grantor will permit
the Administrative Agent or any Lender, by its representatives and agents, upon
reasonable prior notice (i) to inspect its respective Collateral, (ii) to
examine and make copies of the records of such Grantor relating to its
respective Collateral and (iii) to discuss such Grantor’s respective Collateral
and the related records of such Grantor with, and to be advised as to the same
by, such Grantor’s officers and employees (and, in the case of any Receivable,
after the occurrence and during the continuance of a Default, with any person or
entity which is or may be obligated thereon), all at such reasonable times and
intervals as the Administrative Agent or such Lender may determine;
provided,
that the Grantors shall pay all reasonable costs and expenses of one such
inspection per year by the Administrative Agent and its representatives and
agents (and any representatives and agents of the Lenders participating in such
inspection); provided, further, that if a Default has occurred and is continuing, the
Grantors shall pay all reasonable costs and expenses of all such
inspections.

     4.1.2 Taxes. Each Grantor will pay when due
all taxes, assessments and governmental charges and levies upon the Collateral
owned by such Grantor, as applicable, except (i) those which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves have been set aside in accordance with GAAP and with respect to which
no Lien exists, and (ii) those as to which the failure to pay when due could not
reasonably be expected to have a Material Adverse Effect. 

11







     4.1.3
Records and Reports;
Notification. Each Grantor shall keep and
maintain materially complete, accurate and proper books and records with respect
to the Collateral owned by such Grantor and furnish to the Administrative Agent,
with sufficient copies for each of the Lenders, such reports relating to its
respective Collateral as the Administrative Agent shall from time to time
reasonably request. Each Grantor will give prompt notice in writing to the
Administrative Agent and the Lenders of any development, financial or otherwise,
which might materially and adversely affect a material portion of its respective
Collateral.

    
4.1.4 Financing Statements and Other
Actions; Defense of Title. Each Grantor
hereby authorizes the Administrative Agent to file, and if requested by the
Administrative Agent will execute and deliver to the Administrative Agent, all
financing statements describing the Collateral owned by such Grantor and other
documents and take such other actions as may from time to time reasonably be
requested by the Administrative Agent in order to maintain a first priority
perfected security interest in and, if applicable, Control of, the Collateral
owned by such Grantor, subject to Liens permitted under Section 7.3(F) of the
Credit Agreement; provided that nothing herein shall be deemed to constitute an
agreement to subordinate any of the Liens of the Administrative Agent under the
Loan Documents to any Liens otherwise permitted under Section 7.3(F) of the Credit
Agreement. Such financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as the
Administrative Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure that the perfection of the security interest in
the Collateral granted to the Administrative Agent herein, including, without
limitation, describing, with respect to any Grantor’s financing statement, such
property as “all assets” or “all assets of the Debtor, whether now owned or
hereafter acquired or arising, wheresoever located, together with all proceeds
thereof.” Each Grantor will take any and all actions reasonably necessary to
defend title to the Collateral owned by such Grantor against all Persons and to
defend the security interest of the Administrative Agent in such Collateral and
the priority thereof against any Lien not expressly permitted hereunder or by
the Credit Agreement. 

    
4.1.5 Disposition of
Collateral. No Grantor will sell, lease or
otherwise dispose of the Collateral owned by such Grantor except dispositions
specifically permitted pursuant to Section
7.3(C) of the Credit Agreement. 

    
4.1.6 Liens. No Grantor will create, incur, or suffer to exist any Lien on the
Collateral owned by such Grantor except Liens permitted pursuant to
Section 7.3(F) of the Credit Agreement; provided, that nothing herein shall be
deemed to constitute an agreement to subordinate any of the Liens of the
Administrative Agent under the Loan Documents to any Liens otherwise permitted
under Section 7.3(F) of the Credit Agreement. 

12







     4.1.7 Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name. Each Grantor will: 

	     	(i)	     	
      except as otherwise permitted by Section
      7.3(B) of the Credit Agreement, preserve its existence and corporate
      structure as in effect on the Restatement Effective Date, or, with respect
      to Grantors that become subject hereto pursuant to an Annex I hereto, the
      date of such Annex I hereto;

	 			
		(ii)		not change its
      jurisdiction of organization;
	 	
		(iii)		
      not maintain its place of
      business (if it has only one) or its chief executive office (if it has
      more than one place of business) at a location other than a location
      specified on Exhibit A; and

	 	
		(iv)		
      not (i) have any Inventory,
      Equipment or Fixtures or proceeds or products thereof having an aggregate
      value for all Grantors in excess of $15,000,000 (unless in transit) at a
      location other than a location specified in Exhibit A, (ii) change its name
      or taxpayer identification number or (iii) change its mailing
      address,



unless, in
each such case, such Grantor shall have given the Administrative Agent not less
than fifteen (15) days’ prior written notice of such event or occurrence and the
Administrative Agent shall have either (x) determined that such event or
occurrence will not adversely affect the validity, perfection or priority of the
Administrative Agent’s security interest in the Collateral, or (y) taken such
steps (with the cooperation of such Grantor to the extent necessary or
advisable) as are reasonably necessary or advisable to properly maintain the
validity, perfection and priority of the Administrative Agent’s security
interest in the Collateral owned by such Grantor (including compliance with
Section 4.3.2). 

     4.1.8 Other Financing Statements. No Grantor
will suffer to exist or authorize the filing of any financing statement naming
it as debtor covering all or any portion of the Collateral owned by such
Grantor, except any financing statement authorized under Section 4.1.4 hereof or
filed to perfect a Lien permitted under Section 7.3(F) of the Credit Agreement.
Each Grantor acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement filed in connection herewith without the prior written consent of the
Administrative Agent, subject to such Grantor’s rights under Section 9-509(d)(2)
of the New York UCC. 

4.2. Receivables. 

     4.2.1 Collection of Receivables. Except as
otherwise provided in this Security 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 such Grantor in accordance with its
present policies and in the ordinary course of business and as otherwise
permitted under the Credit Agreement. 

     4.2.2 Delivery of Invoices. Each Grantor
will deliver to the Administrative Agent immediately upon its request after the
occurrence and during the continuance of a Default duplicate invoices with
respect to each Account owned by such Grantor bearing such language of
assignment as the Administrative Agent shall specify. 

13







     4.2.3 Disclosure of
Receivables. Upon the reasonable request of
the Administrative Agent, each Grantor shall
deliver to the Administrative Agent copies of any periodic reports prepared with
respect to Receivables in connection with any Permitted Receivables Financing.


    
4.3. Inventory and Equipment. 

     4.3.1 Maintenance of Goods. Each Grantor
will do all things reasonably necessary to maintain, preserve, protect and keep
the Inventory and the Equipment owned by such Grantor in good repair, working
order and saleable condition (ordinary wear and tear excepted) and make all
reasonably necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. 

     4.3.2 Bailment Agreements. With respect to
any location of Inventory (other than locations holding Inventory having an
aggregate value for all Grantors of less than $15,000,000) that is leased by
such Grantor or at which Inventory is held in a public warehouse or is otherwise
held by a bailee or on consignment, such Grantor, at the Administrative Agent’s
reasonable request, shall deliver landlord waivers, bailment agreements,
warehouse receipts, financing statements or other documents reasonably
satisfactory to the Administrative Agent to protect the Administrative Agent’s
and the Holders of Secured Obligations’ security interest in such Inventory and
provide the Administrative Agent with access to such Collateral upon the
occurrence of a Default. 

     4.3.3 Titled Vehicles. Each Grantor will
give the Administrative Agent notice of its ownership or acquisition of any
vehicle covered by a certificate of title the book value of which, when taken
together with all other vehicles covered by a certificate of title owned by any
Grantor, exceeds $2,500,000 in the aggregate, and deliver to the Administrative
Agent, upon reasonable request, the original of any vehicle title certificate
and do all things necessary to have the security interest of the Administrative
Agent noted on any such certificate to eliminate such excess. 

     4.4. Instruments, Securities, Chattel
Paper, Documents and Pledged Deposits. Each
Grantor will (i) deliver to the Administrative Agent immediately upon execution
of this Security Agreement the originals of all Pledged Equity, and, to the
extent the same has a value in excess of $5,000,000 in the aggregate, originals
of all Chattel Paper, Securities and Instruments constituting Collateral (if any
then exist and other than those constituting Cash Equivalent Investments), (ii)
hold in trust for the Administrative Agent upon receipt and immediately
thereafter deliver to the Administrative Agent any Pledged Equity, and, to the
extent the same has a value in excess of $5,000,000 in the aggregate, originals
of Chattel Paper, Securities and Instruments constituting Collateral (other than
those constituting Cash Equivalent Investments), (iii) upon the designation of
any Pledged Deposits (as set forth in the definition thereof) in excess of
$5,000,000 in the aggregate, deliver to the Administrative Agent such Pledged
Deposits which are evidenced by certificates included
in the Collateral endorsed in blank, marked with such legends and assigned as
the Administrative Agent shall specify, and (iv) upon the Administrative Agent’s
request, after the occurrence and during the continuance of a Default, deliver
to the Administrative Agent (and thereafter hold in trust for the Administrative
Agent upon receipt and immediately deliver to the Administrative Agent) any
Document evidencing or constituting Collateral.

14







     4.5. Uncertificated Securities and Certain Other Investment
Property. Each Grantor will permit the
Administrative Agent from time to time, after the occurrence and during the
continuance of a Default, to cause the appropriate issuers (and, if held with a
securities intermediary, such securities intermediary) of uncertificated
securities or other types of Investment Property not represented by certificates
which are Collateral owned by such Grantor to mark their books and records with
the numbers and face amounts of all such uncertificated securities or other
types of Investment Property not represented by certificates and all rollovers
and replacements therefor to reflect the Lien of the Administrative Agent
granted pursuant to this Security Agreement. Each Grantor will use all
commercially reasonable efforts, upon the request of the Administrative Agent
upon the occurrence and during the continuance of a Default, with respect to
Investment Property constituting Collateral owned by such Grantor held with a
financial intermediary, to cause such financial intermediary to enter into a
control agreement with the Administrative Agent in form and substance
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 the Credit Agreement, no Grantor will (i) permit
or suffer any issuer of Pledged Equity owned by such Grantor to dissolve,
liquidate, retire any of its Capital Stock, reduce its capital or merge or
consolidate with any other entity, or (ii) vote any of the Pledged Equity in
favor of any of the foregoing, except to the extent permitted under the Credit
Agreement. 

     4.6.2 Issuance of Additional Securities. No
Grantor will permit or suffer (i) any issuer of Pledged Equity that is a
Wholly-Owned Subsidiary of such Grantor to issue any such securities or other
ownership interests, any right to receive the same or any right to receive
earnings, except to such Grantor or (ii) any issuer of Pledged Equity that is
not a Wholly-Owned Subsidiary of such Grantor to issue any such securities or
other ownership interests, any right to receive the same or any right to receive
earnings unless such issuance is made or offered to each holder of such
securities based on their proportionate holdings thereof. 

     4.6.3 Registration of Pledged Securities and other Investment
Property. Each Grantor will permit any
registerable Collateral owned by such Grantor to be registered in the name of
the Administrative Agent or its nominee at any time at the option of the
Required Lenders following the occurrence and during the continuance of a
Default and without any further consent of such Grantor. 

15








     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 the occurrence and
continuance of a Default, without notice, to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to the Collateral
owned by such Grantor or any part thereof, and to receive all dividends and
interest in respect of such Collateral. Unless and until a Default shall have
occurred and be continuing, (i) each Grantor shall be entitled to exercise all
voting and other consensual rights pertaining to the Collateral for any purpose
that does not violate the terms of this Agreement, the Credit Agreement and the
other Loan Documents; provided, however, that no Grantor will be entitled to exercise any such right
if the result thereof could materially and adversely affect the rights and
remedies of the Administrative Agent or Holders of Secured Obligations under
this Agreement or the Credit Agreement or any other Loan Document or the ability
to exercise the same, and (ii) each Grantor shall be entitled to receive and
retain all dividends or interest in respect of such Collateral to the extent and
only to the extent that such dividends or interest are not prohibited by the
terms and conditions of the Credit Agreement, the other Loan Documents and
applicable laws, other than any dividends or interest resulting from a
subdivision, combination or reclassification or received in exchange for
Collateral, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets.

     4.6.5 Interests in Limited
Liability Companies and Limited Partnerships.
Each Grantor agrees that no ownership interests in a limited liability company
or a limited partnership which are included within the Collateral owned by such
Grantor shall at any time constitute a Security under Article 8 of the UCC of
the applicable jurisdiction. 

    
4.7. Deposit Accounts. Each Grantor will,
after the occurrence and during the continuance of a Default and upon the
Administrative Agent’s request, cause each bank or other financial institution
in which it maintains (a) a Deposit Account to enter into a control agreement
with the Administrative Agent, in form and substance reasonably satisfactory to
the Administrative Agent in order to give the Administrative Agent Control of
the Deposit Account to the extent it does not already possess such Control or to
further evidence such Control, or (b) other deposits (general or special, time
or demand, provisional or final) to be notified of the security interest granted
to the Administrative Agent hereunder and cause each such bank or other
financial institution to acknowledge such notification in writing. 

    
4.8. Letter-of-Credit Rights. Each Grantor
will, upon the Administrative Agent’s request, cause each issuer of a letter of
credit to such Grantor that constitutes Collateral having a face value in excess
of $5,000,000, to consent to the assignment of proceeds of the letter of credit
in order to give the Administrative Agent Control of the letter-of-credit rights
to such letter of credit. 

    
4.9. Intellectual Property. If, after the
date hereof, any Grantor obtains rights to, or applies for or seeks registration
of, any new patent, trademark or copyright in addition to the patents,
trademarks and copyrights described in Part C of Exhibit B, which are all of such
Grantor’s patents, trademarks and copyrights as of the Restatement Effective
Date, then such Grantor shall give the Administrative Agent notice of such newly
acquired or registered patent, trademark or copyright, as part of each
compliance certificate provided to the Administrative Agent pursuant to the
Credit Agreement. Each Grantor agrees promptly upon request by the
Administrative Agent to execute and deliver to the Administrative Agent any
supplement to this Security Agreement or any other
document reasonably requested by the Administrative Agent to evidence a security
interest in such intellectual property in a form appropriate for recording in
the applicable federal office. Each Grantor also hereby authorizes the
Administrative Agent 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 the Administrative Agent receives notification from such Grantor
pursuant hereto and (ii) by recording, in addition to and not in substitution
for this Security Agreement, a duplicate original of this Security Agreement
containing in Part C of Exhibit
B a description of such future patents,
trademarks and/or copyrights.. 

16







     4.10. Commercial Tort Claims. If, after the
date hereof, any Grantor identifies the existence of a commercial tort claim
belonging to such Grantor having, individually or together with all other such
Commercial Tort Claims, in such Grantor’s reasonable business judgment, a value
in excess of $10,000,000, that has arisen in the course of such Grantor’s
business in addition to the Commercial Tort Claims described in Exhibit E, which are all of
such Grantor’s Commercial Tort Claims as of the Restatement Effective Date, then
such Grantor shall give the Administrative Agent notice thereof not less
frequently than quarterly. Each Grantor agrees promptly upon written request by
the Administrative Agent to execute and deliver to the Administrative Agent any
supplement to this Security Agreement or any other document reasonably requested
by the Administrative Agent to evidence the grant of a security interest therein
in favor of the Administrative Agent. 

    
4.11. Federal, State or Municipal Claims.
After the occurrence and during the continuance of a Default, upon the
Administrative Agent’s request, each Grantor will notify the Administrative
Agent of any Collateral owned by such Grantor which constitutes a claim against
the United States government or any state or local government or any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal, state or municipal law. Furthermore, each Grantor will execute and
deliver to the Administrative Agent such documents, agreements and instruments,
and will take such further actions (including, without limitation, the taking of
necessary actions under the Federal Assignment of Claims Act of 1940, as amended
(31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.)), which the Administrative
Agent may, from time to time, reasonably request, to ensure perfection and
priority of the Liens hereunder in respect of Accounts and General Intangibles
owing by any government or instrumentality or agency thereof, all at the expense
of the Borrower. 

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

    
4.13. Insurance. In the event any Collateral
is located in any area that has been designated by the Federal Emergency
Management Agency as a “Special Flood Hazard Area”, each Grantor shall purchase
and maintain flood insurance on such Collateral (including any personal property
which is located on any real property leased by such Grantor within a “Special
Flood Hazard Area”). The amount of flood insurance required by this Section
shall at a minimum comply with applicable law, including the Flood Disaster
Protection Act of 1973, as amended. 

17







ARTICLE V 

DEFAULT 

     5.1. Default. The occurrence of any
“Default” under the Credit Agreement shall constitute a Default hereunder.


    
5.2. Acceleration and Remedies. Upon the
occurrence and during the continuance of a Default, the Administrative Agent
may, with the concurrence or at the direction of the Required Lenders (or, if
required pursuant to the terms of the Credit Agreement, with the concurrence or
at the direction of each of the Lenders), exercise any or all of the following
rights and remedies: 

     5.2.1 Those rights and remedies provided
in this Security Agreement, the Credit Agreement, or any other Loan Document;
provided
that this Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Administrative Agent and the Holders of Secured Obligations
prior to a Default. 

     5.2.2 Those rights and remedies available
to a secured party under the New York UCC or under any other applicable law
(including, without limitation, any law governing the exercise of a bank’s right
of setoff or bankers’ lien) when a debtor is in default under a security
agreement. 

     5.2.3 Give notice of sole control or any
other instruction under any deposit account control agreement or other control
agreement with any securities intermediary (if any) and take any action therein
with respect to such Collateral. 

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

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

     5.2.6 The Administrative Agent shall have
the right upon any such public sale or sales and, to the extent permitted by
law, upon any such private sale or sales, to purchase for the benefit of the
Administrative Agent and the other Secured Parties, the whole or any part of the
Collateral so sold, free of any right of equity redemption, which equity
redemption the Grantor hereby expressly releases.  

18







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


    
5.2.8 Each Grantor recognizes that the Administrative Agent may be unable
to effect a public sale of any or all the Pledged Equity and may be compelled to
resort to one or more private sales thereof in accordance with Section 5.2.1 above. Each
Grantor also acknowledges that any private sale may result in prices and other
terms less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Equity for the period of time
necessary to permit any Grantor or the issuer of the Pledged Equity to register
such securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if the applicable Grantor and the
issuer would agree to do so. 

The Administrative Agent, on behalf of
the Holders of Secured Obligations, may comply with any applicable state or
federal law requirements in connection with a disposition of the Collateral, and
such compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral. Notwithstanding the foregoing,
neither the Administrative Agent nor the Holders of Secured Obligations shall be
required to (i) make any demand upon, or pursue or exhaust any of their rights
or remedies against, any Grantor, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the Secured Obligations or to pursue
or exhaust any of their rights or remedies with respect to any Collateral
therefor or any direct or indirect guarantee thereof, (ii) marshal the
Collateral or any guarantee of the Secured Obligations or to resort to the
Collateral or any such guarantee in any particular order or (iii) effect a
public sale of any of the Collateral. 

    
5.3. Grantors’ Obligations Upon Default.
Upon the request of the Administrative Agent after the occurrence and during the
continuance of a Default, each Grantor will: 

    
5.3.1 Assembly of
Collateral. Assemble and make available to
the Administrative Agent its respective Collateral and all records relating
thereto at any place or places specified by the Administrative Agent.


19







     5.3.2 Administrative Agent Access. Permit
the Administrative Agent, by the Administrative Agent’s representatives and
agents, to enter, occupy and use any premises where all or any part of its
respective Collateral, or the books and records relating thereto, or both, are
located, to take possession of all or any part of the Collateral and to remove
all or any part of the Collateral, or the books and records relating thereto, or
both, and to conduct sales of the Collateral, without any obligation to pay the
Grantor for such use and occupancy. 

     5.3.3 Take, or cause an issuer of Pledged
Equity to take, any and all actions necessary to register or qualify the Pledged
Equity to enable the Administrative Agent to consummate a public sale or other
disposition of the Pledged Equity. 

    
5.4. License. The Administrative Agent is
hereby granted a license or other right to use, exercisable only following the
occurrence and during the continuance of a 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 similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral, and,
following the occurrence and during the continuance of a Default, such Grantor’s
rights under all licenses and all franchise agreements shall inure to the
Administrative Agent’s benefit. In addition, each Grantor hereby irrevocably
agrees that the Administrative Agent may, following the occurrence and during
the continuance of a Default, sell any of such Grantor’s Inventory directly to
any person, including without limitation persons who have previously purchased
such Grantor’s Inventory from such Grantor and in connection with any such sale
or other enforcement of the Administrative Agent’s rights under this Security
Agreement, may sell Inventory which bears any trademark owned by or licensed to
such Grantor and any Inventory that is covered by any copyright owned by or
licensed to such Grantor and the Administrative Agent may (but shall have no
obligation to) finish any work in process and affix any trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein. 

ARTICLE VI 

WAIVERS, AMENDMENTS AND REMEDIES


     No delay or
omission of the Administrative Agent or any Holder of Secured Obligations to
exercise any right or remedy granted under this Security Agreement shall impair
such right or remedy or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude any other or further exercise thereof or the exercise
of any other right or remedy. No waiver, amendment or other variation of the
terms, conditions or provisions of this Security Agreement whatsoever shall be
valid unless in writing signed by the Administrative Agent with the concurrence
or at the direction of (a) the Required Lenders (or, if required pursuant to the
terms of the Credit Agreement, with the concurrence or at the direction of
Required Revolving Lenders or all of the Lenders) and (b) each Grantor, and then
only to the extent in such writing specifically set forth; provided that the addition
of any Subsidiary of the Company as a Grantor hereunder by execution of a
Security Agreement Supplement in the form of Annex I (with such modifications as
shall be acceptable to the Administrative Agent) shall not require receipt of
any consent from or execution of any documentation by any other Grantor party
hereto. All rights and remedies contained in this Security Agreement or by law
afforded shall be cumulative and all shall be available to the Administrative
Agent and the Holders of Secured Obligations until the Secured Obligations have
been paid in full. 

20







ARTICLE VII 

PROCEEDS; COLLECTION OF RECEIVABLES


     7.1. Lockboxes and Account Control Agreements. Upon request of the Administrative Agent, after the occurrence and
during the continuance of a Default, each Grantor shall execute and deliver to
the Administrative Agent irrevocable lockbox and account control agreements in
the form provided by or otherwise acceptable to the Administrative Agent, which
agreements shall be accompanied by an acknowledgment by the bank where the
lockbox and applicable deposit account is located of the Lien of the
Administrative Agent granted hereunder and of irrevocable instructions to wire
all amounts collected therein to a special collateral account at the
Administrative Agent. 

    
7.2. Collection of Receivables. The
Administrative Agent may at any time after the occurrence and during the
continuance of a Default, by giving each Grantor written notice, elect to
require that the Receivables that constitute Collateral be paid directly to the
Administrative Agent for the benefit of the Holders of Secured Obligations. In
such event, each Grantor shall, and shall permit the Administrative Agent to,
promptly notify the account debtors or obligors under the Receivables owned by
such Grantor of the Administrative Agent’s interest therein and direct such
account debtors or obligors to make payment of all amounts then or thereafter
due under such Receivables directly to the Administrative Agent. Upon receipt of
any such notice from the Administrative Agent, each Grantor shall thereafter
hold in trust for the Administrative Agent, on behalf of the Holders of Secured
Obligations, all amounts and proceeds received by it with respect to the
Receivables and Other Collateral and immediately and at all times thereafter
deliver to the Administrative Agent all such amounts and proceeds in the same
form as so received, whether by cash, check, draft or otherwise, with any
necessary endorsements. The Administrative Agent shall hold and apply funds so
received as provided by the terms of Sections
7.3 and 7.4 hereof. 

    
7.3. Special Collateral Account. The
Administrative Agent may require, after the occurrence and during the
continuance of a Default, all cash proceeds of such Grantor’s Collateral to be
deposited in a special non-interest bearing cash collateral account with the
Administrative Agent and held there as security for the Secured Obligations. No
Grantor shall have any control whatsoever over said cash collateral account. If
no Default has occurred or is continuing, the Administrative Agent shall from
time to time deposit the collected balances in said cash collateral account into
the applicable Grantor’s general operating account with the Administrative
Agent. If any Default has occurred and is continuing, 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 of
the 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 the Administrative Agent to payment of the
Secured Obligations in accordance with Section 12.4 of the Credit Agreement.


21







ARTICLE VIII 

GENERAL PROVISIONS 

    
8.1. Notice of Disposition of Collateral; Condition of
Collateral. Each Grantor hereby waives notice
of the time and place of any public sale or the time after which any private
sale or other disposition of all or any part of the Collateral may be made. To
the extent such notice may not be waived under applicable law, any notice made
shall be deemed reasonable if sent to the Company, as designee for the other
Grantors, addressed as set forth in Article
IX, at least ten (10) days prior to (i) the
date of any such public sale or (ii) the time after which any such private sale
or other disposition may be made. The Administrative Agent shall have no
obligation to clean-up or otherwise prepare the Collateral for sale. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against the Administrative Agent or any other Holder of
Secured Obligations arising out of the repossession, retention or sale of the
Collateral, except such as arise solely out of the gross negligence or willful
misconduct of the Administrative Agent or such other Holder of Secured
Obligations as finally determined by a court of competent jurisdiction. To the
extent it may lawfully do so, each Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Administrative Agent or any other Holder of Secured Obligations, any
valuation, stay, appraisal, extension, moratorium, redemption or similar laws
and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Security Agreement, or otherwise.
Except as otherwise specifically provided herein, each Grantor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement or any
Collateral. 

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

22







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

    
8.4. Administrative Agent Performance of Grantors’ Obligations. Without having any obligation to do so, the Administrative
Agent may perform or pay any obligation which any Grantor has agreed to perform
or pay in this Security Agreement and such Grantor shall reimburse the
Administrative Agent for any reasonable amounts paid by the Administrative Agent
pursuant to this Section 8.3. Each Grantor’s obligation to reimburse the Administrative
Agent pursuant to the preceding sentence shall be a Secured Obligation payable
within ten (10) days after demand. 

23







     8.5. Authorization for Administrative Agent to Take Certain Action;
Proxy. 

     8.5.1 Each Grantor irrevocably authorizes
the Administrative Agent at any time and from time to time in the sole
discretion of the Administrative Agent 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 or desirable in the Administrative Agent’s
sole discretion to perfect and to maintain the perfection and priority of the
Administrative Agent’s security interest in the Collateral, (ii) to endorse and
collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement and to file
any other financing statement or amendment of a financing statement (which does
not add new collateral or add a debtor) in such offices as the Administrative
Agent in its sole discretion deems reasonably necessary or desirable to perfect
and to maintain the perfection and priority of the Administrative Agent’s
security interest in the Collateral, (iv) to contact and enter into one or more
agreements with the issuers of uncertificated securities which are Collateral
owned by such Grantor and which are Securities or, after the occurrence and
during the continuance of a Default, with financial intermediaries holding other
Investment Property as may be necessary or advisable to give the Administrative
Agent Control over such Securities or other Investment Property, (v) to enforce
payment of the Instruments, Accounts and Receivables in the name of the
Administrative Agent or such Grantor, (vi) to apply the proceeds of any
Collateral received by the Administrative Agent to the Secured Obligations as
provided in Article VII and (vii) to discharge past due taxes, assessments, charges,
fees or Liens on the Collateral (except for such Liens as are specifically
permitted hereunder or under any other Loan Document), and each Grantor agrees
to reimburse the Administrative Agent on demand for any reasonable payment made
or any reasonable expense incurred by the Administrative Agent in connection
therewith; provided that this authorization shall not relieve any Grantor of any of its
obligations under this Security Agreement or under the Credit Agreement. The
Administrative Agent agrees not to exercise the powers of attorney granted
pursuant to the foregoing clauses
(iv) and (v) unless a Default has occurred and
is continuing. 

     8.5.2 EACH GRANTOR HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS THE PROXY AND ATTORNEY IN
FACT OF SUCH GRANTOR WITH RESPECT TO THE COLLATERAL OWNED BY SUCH GRANTOR,
INCLUDING THE RIGHT TO VOTE ANY INSTRUMENTS, SECURITIES OR OTHER INVESTMENT
PROPERTY CONSTITUTING COLLATERAL IN ACCORDANCE WITH THE TERMS HEREOF, WITH FULL
POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH
COLLATERAL AFTER A DEFAULT, THE APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY
AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS,
POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH COLLATERAL WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING
SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL
BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING
ANY TRANSFER OF ANY SUCH COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF)
BY ANY PERSON (INCLUDING THE ISSUER OF SUCH COLLATERAL OR ANY OFFICER OR THE
ADMINISTRATIVE AGENT THEREOF), UPON THE OCCURRENCE OF A DEFAULT. THE APPOINTMENT
OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS SECURITY
AGREEMENT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON
WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.12. THE
ADMINISTRATIVE AGENT AGREES NOT TO EXERCISE THE POWER OF ATTORNEY GRANTED
PURSUANT TO THIS SECTION 8.5.2 UNLESS A DEFAULT HAS OCCURRED AND IS CONTINUING.


24







     8.6. Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees that a breach of any of the
covenants contained in Sections
4.1.5, 4.1.6, 4.4 or 5.3 or in Article VII hereof will cause
irreparable injury to the Administrative Agent and the Holders of Secured
Obligations, that the Administrative Agent and Holders of Secured Obligations
have no adequate remedy at law in respect of such breaches and therefore agrees,
without limiting the right of the Administrative Agent or the Holders of Secured
Obligations to seek and obtain specific performance of other obligations of the
Grantors contained in this Security Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 8.6 shall be
specifically enforceable against the Grantors. 

    
8.7. Use and Possession of Certain Premises. Upon the occurrence and during the continuance of a Default, the
Administrative Agent shall be entitled to occupy and use any premises owned or
leased by any Grantor where any of such Grantor’s Collateral or any records
relating to such Grantor’s Collateral are located until the Secured Obligations
are paid or such Grantor’s Collateral is removed therefrom, whichever first
occurs, without any obligation to pay any Grantor for such use and occupancy.


    
8.8. Dispositions Not Authorized. No
Grantor is authorized to sell or otherwise dispose of its respective Collateral
except as set forth in Section
4.1.5 hereof and notwithstanding any course
of dealing between such Grantor and the Administrative Agent or other conduct of
the Administrative Agent, no authorization to sell or otherwise dispose of such
Grantor’s Collateral (except as set forth in Section 4.1.5 hereof) shall be binding
upon the Administrative Agent or the Holders of Secured Obligations unless such
authorization is in writing signed by the Administrative Agent with the consent
or at the direction of the Required Lenders (or, if required pursuant to the
terms of the Credit Agreement, with the consent or at the direction of each of
the Lenders). 

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

25







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

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


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

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

    
8.14. Termination. This Security Agreement
shall continue in effect (notwithstanding the fact that from time to time there
may be no Secured Obligations outstanding) until (i) the Credit Agreement has
terminated pursuant to its express terms and (ii) all of the Secured Obligations
have been indefeasibly paid in cash and performed in full (or with respect to
any outstanding Letters of Credit, collateralized in an amount and manner
satisfactory to the Administrative Agent) (except for contingent indemnity
obligations) and no commitments of the Administrative Agent or the Holders of
Secured Obligations which would give rise to any Obligations are outstanding.


26







     8.15. Entire Agreement. This Security
Agreement embodies the entire agreement and understanding between the Grantors
and the Administrative Agent relating to the Collateral and supersedes all prior
agreements and understandings among the Grantors and the Administrative Agent
relating 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 BY THE LAW OF THE STATE OF NEW YORK.


     8.16.2 Each Grantor hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Security Agreement or any other Loan
Document, or for recognition or enforcement of any judgment, and each Grantor
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each Grantor agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Security Agreement or any other Loan Document
shall affect any right that the Administrative Agent, the Issuing Bank or any
Lender may otherwise have to bring any action or proceeding relating to this
Security Agreement or any other Loan Document against any Grantor or its
properties in the courts of any jurisdiction. 

     8.16.3 Each Grantor hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Security
Agreement or any other Loan Document in any court referred to in Section 8.14.2. Each Grantor hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. 

     8.16.4 Each party to this Security
Agreement irrevocably consents to service of process in the manner provided for
notices in Article IX of this Security Agreement, and each of the Grantors hereby
appoints the Company as its agent for service of process. Nothing in this
Security Agreement or any other Loan Document will affect the right of any party
to this Security Agreement to serve process in any other manner permitted by
law. 

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

27







     8.17. Indemnity. Each Grantor hereby agrees,
jointly with the other Grantors and severally, to indemnify the Administrative
Agent and the Holders of Secured Obligations, and their respective successors,
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, all expenses of litigation or preparation
therefor whether or not the Administrative Agent or any Holder of Secured
Obligations is a party thereto) imposed on, incurred by or asserted against the
Administrative Agent or the Holders of Secured Obligations, or their respective
successors, assigns, agents and employees, in any way relating to or arising out
of this Security Agreement or any other Loan Document, or the manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not
discoverable by the Administrative Agent or the Holders of Secured Obligations
or any Grantor, and any claim for patent, trademark or copyright infringement)
other than to the extent such liabilities, damages, penalties, suits, costs, and
expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of any such indemnified party. 

    
8.18. Severability. Any provision in this
Security Agreement that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Security Agreement are
declared to be severable. 

    
8.19. Counterparts. This Security Agreement
may be executed in counterparts (and by different 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 executed
counterpart of a signature page of this Security Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Security
Agreement. 

ARTICLE IX 

NOTICES 

    
All notices, requests and other communications to any party hereunder
shall be given in the manner prescribed in Section 14.1 of the Credit Agreement
with respect to the Administrative Agent at its notice address therein and, with
respect to any Grantor, in the care of the Company at the address of the
Company set forth in the Credit Agreement, or such other address or telecopy
number as such party may hereafter specify for such purpose in accordance with
the provisions of Section 14.1 of the Credit Agreement. 

28







ARTICLE X 

THE ADMINISTRATIVE AGENT 

     JPMorgan Chase
Bank, N.A. has been appointed Administrative Agent for the Holders of Secured
Obligations hereunder pursuant to Article
XI of
the Credit Agreement. It is expressly understood and agreed by the parties to
this Security Agreement that any authority conferred upon the Administrative
Agent hereunder is subject to the terms of the delegation of authority made by
the Holders of Secured Obligations to the Administrative Agent pursuant to the
Credit Agreement, and that the Administrative Agent has agreed to act (and any
successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article
XI. Any successor Administrative Agent
appointed pursuant to Article
XI of the Credit Agreement shall be entitled
to all the rights, interests and benefits of the Administrative Agent hereunder.


[SIGNATURE PAGES TO FOLLOW] 

29







     IN WITNESS WHEREOF, each Grantor and
the Administrative Agent have executed this Security Agreement as of the date
first above written. 


	MERITOR, INC.
	 
	By:  	/s/ Carl D. Anderson,
    II	 
	Name: Carl D. Anderson, II
	Title:  
  Treasurer






Signature Page to 
Pledge and
Security Agreement 








	ARVIN INNOVATION HOLDINGS, INC.
	ARVIN INNOVATION MANAGEMENT, INC.
	ARVIN INNOVATION MEXICO HOLDINGS II, LLC
	ARVIN INTERNATIONAL HOLDINGS, LLC
	ARVIN REPLACEMENT PRODUCTS FINANCE LLC
	ARVIN TECHNOLOGIES, INC.
	ARVINMERITOR ASSEMBLY, LLC
	ARVINMERITOR BRAKE HOLDINGS, LLC
	ARVINMERITOR FILTERS HOLDING CO., LLC
	ARVINMERITOR FILTERS OPERATING CO., LLC
	ARVINMERITOR HOLDINGS MEXICO, LLC
	ARVINMERITOR HOLDINGS, LLC
	ARVINMERITOR INVESTMENTS, LLC
	ARVINMERITOR OE, LLC
	ARVINMERITOR TECHNOLOGY, LLC
	ARVINMERITOR, INC.
	ARVINYL WEST, INC.
	AVM, INC.
	EUCLID INDUSTRIES, LLC
	GABRIEL EUROPE, INC.
	MAREMONT CORPORATION
	MAREMONT EXHAUST PRODUCTS, INC.
	MERITOR AFTERMARKET USA, LLC
	MERITOR HEAVY VEHICLE BRAKING SYSTEMS (U.S.A.), LLC
	MERITOR HEAVY VEHICLE SYSTEMS (SINGAPORE) PTE., LTD.
	MERITOR HEAVY VEHICLE SYSTEMS (VENEZUELA), INC.
	MERITOR HEAVY VEHICLE SYSTEMS, LLC
	MERITOR, INC., a Nevada Corporation
	MERITOR MANAGEMENT, INC.
	MERITOR TECHNOLOGY, LLC
	MERITOR TRANSMISSION CORPORATION
	ROOF SYSTEMS USA, INC.
	 
	 
	By: 	/s/ Carl D. Anderson, II	
	Name: Carl D.
      Anderson, II
	Title:  
Treasurer






Signature Page to
Pledge and
Security Agreement 







Acknowledged and Agreed to as of the
date first written above: 

	JPMORGAN CHASE
      BANK, N.A.,
	as the
      Administrative Agent
	 
	  
	By:  	/s/ Robert P. Kellas	 
	Name: Robert P. Kellas
	Title:   Executive
  Director




Signature Page to 
Pledge and
Security Agreement 







ANNEX I TO PLEDGE AND SECURITY
AGREEMENT 

     Reference is
hereby made to the Amended and Restated Pledge and Security Agreement (as
amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), dated as of April 23, 2012 by and among Meritor, Inc. (formerly known
as ArvinMeritor, Inc.) (the “Company”), and certain Subsidiaries of
the Company which become parties to the Security Agreement from time to time,
including, without limitation, those that become party thereto by executing a
Security Agreement Supplement in substantially the form hereof (such
Subsidiaries, including the undersigned, together with the Company, the
“Grantors”), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent (the
“Administrative Agent”), for the benefit of the Holders of Secured Obligations
under the Credit Agreement. Each capitalized terms used herein and not defined
herein shall have the meanings given to it in the Security Agreement.

    
By its execution below, the undersigned, [NAME OF NEW
GRANTOR], a [__________________________] [corporation] [partnership] [limited liability company] (the “New Grantor”) agrees to become, and
does hereby become, a Grantor under the Security Agreement and agrees to be
bound by such Security Agreement as if originally a party thereto. The New
Grantor hereby collaterally assigns and pledges to the Administrative Agent for
the benefit of the Holders of Secured Obligations, and grants to the
Administrative Agent for the benefit of the Holder of Secured Obligations, a
security interest in all of the New Grantor’s right, title and interest in and
to the Collateral, whether now owned or hereafter acquired, to secure the prompt
and complete payment and performance of the Secured Obligations, subject to the
limitations set forth in Section 2.2 of the Security Agreement. For the
avoidance of doubt, the grant of a security interest herein shall not be deemed
to be an assignment of intellectual property rights owned by the New Grantor.


    
By its execution below, the New Grantor represents and warrants as to
itself that all of the representations and warranties contained in the Security
Agreement are true and correct in all respects as of the date hereof. The New
Grantor represents and warrants that the supplements to the Exhibits to the
Security Agreement attached hereto are true and correct in all respects and such
supplements set forth all information required to be scheduled under the
Security Agreement. The New Grantor shall take all steps necessary to perfect,
in favor of the Administrative Agent, a first-priority security interest in and
lien against the New Grantor’s Collateral, including, without limitation,
delivering all certificated Pledged Equity to the Administrative Agent (and
other Collateral required to be delivered under the Security Agreement), and
taking all steps necessary to properly perfect the Administrative Agent’s
interest in any uncertificated Pledged Equity.

     IN WITNESS WHEREOF, [NAME OF NEW
GRANTOR], a [__________________] [corporation] [partnership] [limited liability company] has executed and delivered this
Annex I
counterpart to the Security Agreement as of this ___________ day of
____________, ____. 


ANNEX I 








	[NAME
      OF NEW GRANTOR]
	 
	 
	By:	 	 
	Title: