<PAGE>

                                                                  EXHIBIT 4.1(c)





                      SUBSIDIARY PLEDGE AND SECURITY AGREEMENT

         This SUBSIDIARY PLEDGE AND SECURITY AGREEMENT (as amended,
supplemented, amended and restated or otherwise modified from time to time, this
"Security Agreement"), dated as of July 17, 2001, is made by ALEXANDER CITY
CASTING COMPANY, INC., a corporation organized and existing under the laws of
the State of Alabama, CAST-MATIC CORPORATION, a corporation organized and
existing under the laws of the State of Michigan, COLUMBUS FOUNDRY, L.P., a
limited partnership organized and existing under the laws of the State of
Delaware, DIVERSIFIED DIEMAKERS, INC, a corporation organized and existing under
the laws of the State of Delaware, GANTON TECHNOLOGIES INC., a corporation
organized and existing under the laws of the State of Illinois, FRISBY P.M.C.,
INCORPORATED, a corporation organized and existing under the laws of the State
of Illinois, INTERMET HOLDING COMPANY, a corporation organized and existing
under the laws of the State of Delaware, INTERMET INTERNATIONAL, INC., a
corporation organized and existing under the laws of the State of Georgia,
IRONTON IRON INC., a corporation organized and existing under the laws of the
State of Ohio, LYNCHBURG FOUNDRY COMPANY, a corporation organized and existing
under the laws of the Commonwealth of Virginia, NORTHERN CASTINGS CORPORATION, a
corporation organized and existing under the laws of the State of Georgia,
SUDBURY, INC., a corporation organized and existing under the laws of the State
of Delaware, SUDM, INC., a corporation organized and existing under the laws of
the State of Michigan, TOOL PRODUCTS, INC., a corporation organized and existing
under the laws of the State of Delaware, WAGNER CASTINGS COMPANY, a corporation
organized and existing under the laws of the State of Delaware and WAGNER
HAVANA, INC., a corporation organized and existing under the laws of the State
of Delaware, and each other Subsidiary of INTERMET CORPORATION, a Georgia
corporation (the "Borrower"), that executes and delivers a supplement to this
Security Agreement from time to time (each individually, a "Grantor" and,
collectively, the "Grantors"), in favor of THE BANK OF NOVA SCOTIA ("Scotia
Capital"), as collateral agent under the Term Loan Agreement and the Revolving
Credit Agreement (together with its successor(s) thereto in such capacities, the
"Collateral Agent") for the benefit of each of the Secured Parties (capitalized
terms used herein have the meanings set forth in or incorporated by reference in
Article I).


                               W I T N E S S E T H


         WHEREAS, pursuant to the First Amended and Restated Term Loan
Agreement, dated as the date hereof (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "Term Loan Agreement"),
among the Borrower, the "Lenders" thereunder, SunTrust Bank, as the
Documentation Agent, Bank One, Michigan, as the Syndication Agent and Scotia
Capital, as administrative and collateral agent, such Lenders and the Borrower
have


                                                   Subsidiary Security Agreement


<PAGE>

agreed to refinance a portion of the outstanding term loans made by such Lenders
to the Borrower;


         WHEREAS, the Grantors have guaranteed the obligations of the Borrower
under the Term Loan Agreement pursuant to a First Amended and Restated Guaranty
Agreement dated as of the date hereof (the "Term Loan Guaranty Agreement");

         WHEREAS, pursuant to the Fourth Amendment dated as of the date hereof
(the "Revolving Credit Amendment") to the Five-Year Credit Agreement dated as of
November 5, 1999, as amended (as amended, supplemented, amended and restated or
otherwise modified from time to time, the "Revolving Credit Agreement"), among
the Borrower, the "Lenders" thereunder, Scotia Capital, as administrative and
collateral agent, and the other agents thereunder, such Lenders and the Borrower
have agreed to refinance the outstanding revolving loans, swingline loans,
letters of credit and available credit thereunder extended by such Lenders to
the Borrower:

         WHEREAS, the Grantors have guaranteed the obligations of the Borrower
under the Revolving Credit Agreement pursuant to a First Amended and Restated
Guaranty Agreement dated as of the date hereof (the "Revolving Credit Guaranty
Agreement"); and

         WHEREAS, as a condition precedent to the effectiveness of the Term Loan
Agreement and the Revolving Credit Amendment, each Grantor is required to
execute and deliver this Security Agreement;

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Secured
Parties to engage in such refinancings, each Grantor agrees, for the benefit of
the Secured Parties as follow:

                                    ARTICLE I
                                   DEFINITIONS

         SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):

         "Borrower" is defined in the preamble.

         "Capital Securities" means with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital, whether now outstanding or
issued after the date hereof.

         "Collateral" is defined in Section 2.1.

         "Collateral Account" is defined in clause (c) of Section 4.3.









                                       2           Subsidiary Security Agreement




<PAGE>



         "Collateral Agent" is defined in the preamble.

         "Computer, Hardware and Software Collateral" means:


                  (a) all computer and other electronic data processing
         hardware, integrated computer systems, central processing units, memory
         units, display terminals, printers, features, computer elements, card
         readers, tape drives, hard and soft disk drives, cables, electrical
         supply hardware, generators, power equalizers, accessories and all
         peripheral devices and other related computer hardware;

                  (b) all software programs (including both source code, object
         code and all related applications and data tiles), whether now owned,
         licensed or leased or hereafter acquired by any Grantor, designed for
         use on the computers and electronic data processing hardware described
         in clause (a) above;

                  (c) all firmware associated therewith,

                  (d) all documentation (including flow charts, logic diagrams,
         manuals, guides and specifications) with respect to such hardware,
         software and firmware described in the preceding clauses (a) through
         (c); and

                  (e) all rights with respect to all of the foregoing,
         including any and all copyrights, licenses, options, warranties,
         service contracts, program services, test rights, maintenance rights,
         support rights, improvement rights, renewal rights and indemnifications
         and any substitutions, replacements, additions or model conversions of
         any of the foregoing.

         "Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered and whether published or
unpublished, now or hereafter in force throughout the world including all of
such Grantor's right, title and interest in and to all copyrights registered in
the United States Copyright Office or anywhere else in the world and also
including the copyrights referred to in Item A of Schedule V hereto, and
registrations and recordings thereof and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, including
each copyright license referred to in Item B of Schedule V hereto, the right to
sue for past, present and future infringements of any of the foregoing, all
rights corresponding thereto, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and proceeds of suit.

         "Credit Document" means any "Credit Document" as defined in either the
Term Loan Agreement or the Revolving Credit Agreement.

         "Credit Part" means any of the Borrower and the Grantors.



                                       3          Subsidiary Security Agreement

<PAGE>

         "Default" means any condition or event which, with notice or lapse of
time or both, would constitute an Event of Default.

         "Distributions" means all non-cash dividends paid on Capital
Securities, liquidating dividends paid on Capital Securities, shares of Capital
Securities resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Capital Securities constituting
Collateral, but excluding Dividends.

         "Dividends" means cash dividends and cash distributions with respect to
any Capital Securities constituting Collateral that are not a liquidating
dividend.

         "Equipment" is defined in clause (c) of Section 2.1.

         "Event of Default" means any Event of Default as defined in either the
Term Loan Agreement or the Revolving Credit Agreement.

         "Foreign Pledge Agreement" means any supplemental pledge agreement
governed by the laws of a jurisdiction other than the United States or a state
thereof executed and delivered by any Consolidated Company pursuant to the terms
of this Agreement, in form and substance satisfactory to the Collateral Agent,
as may be necessary or desirable under the laws of organization or incorporation
of a Subsidiary thereof to further protect or perfect the Lien on and security
interest in any Collateral.

         "Grantor" and "Grantors" are defined in the preamble.

         "Including" means including, without limitation.

         "Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.

         "Intercompany Note" means a promissory note payable to any
Grantor, substantially in the form of Exhibit A hereto (with such modifications
as agreed to by the Collateral Agent), as amended, modified or supplemented from
time to time in accordance with clause (c) of Section 4.6, together with any
notes delivered in extension or renewal thereof or substitution therefor.

         "Inventory" is defined in clause (d) of Section 2.1.

         "Lien" means any mortgage, deed of trust, pledge, security interest,
    lien, charge, hypothecation, assignment, deposit arrangement, title
    retention, preferential property right, trust or other arrangement having
    the practical effect of the foregoing and shall include the interest of




                                       4           Subsidiary Security Agreement

<PAGE>


a vendor or lessor under any conditional sale agreement, capitalized lease or
other title retention agreement.

         "Patent Collateral" means:

                  (a) all letters patent and applications for letters patent
         throughout the world, including all patent applications in preparation
         for filing and each patent and patent application referred to in Item A
         of Schedule III hereto;

                  (b) all reissues, divisions, continuations,
         continuations-in-part, extensions, renewals and reexaminations of any
         of the items described in clause (a);

                  (c) all patent licenses, including each patent license
         referred to in Item B of Schedule III hereto; and

                  (d) all proceeds of, and rights associated with, the foregoing
         (including license royalties and proceeds of infringement suits), the
         right to sue third parties for past, present or future infringements of
         any patent or patent application, and for breach or enforcement of any
         patent license.

         "Receivables" is defined in clause (e) of Section 2.1.

         "Related Contracts" is defined in clause (e) of Section 2.1.

         "Required Lenders" means both the "Required Lenders" as defined in the
Term Loan Agreement and the "Required Lenders" as defined in the Revolving
Credit Agreement.

         "Revolving Credit Agreement" is defined in the third recital.

         "Revolving Credit Amendment" is defined in the third recital.

         "Revolving Credit Guaranty Agreement" is defined in the fourth recital.

         "Secured Obligations" means:

                  (a) all "Guaranteed Obligations" (as defined in the Term Loan
         Guaranty Agreement);

                  (b) all "Guaranteed Obligations" (as defined in the Revolving
         Credit Guaranty Agreement); and

                  (c) all Cash Management Obligations.




                                       5           Subsidiary Security Agreement

<PAGE>


         "Secured Party" means any of the Collateral Agent and each of the
agents, "Lenders" and their respective Affiliates under the Term Loan Agreement
or the Revolving Credit Agreement

         "Securities Act" is defined in clause (a) of Section 6.2.

         "Security Agreement" is defined in the preamble.

         "Securities Control Agreement" means an agreement in form and substance
satisfactory to the Collateral Agent which provides for the Collateral Agent to
have "control" (as defined in Section 8-106 of the UCC, as such term relates to
investment property (other than certificated securities or commodity contracts),
or as used in Section 9-115(1)(e) of the UCC, as such term relates to commodity
contracts).

         "Specified Event" means the occurrence and continuance of a Default
under Section 8.07 of the Term Loan Agreement or the Revolving Credit Agreement
or any other "Event of Default".

         "Term Loan Agreement" is defined in the first recital.

         "Term Loan Guaranty Agreement" is defined in the second recital.

          "Termination Date" means the date on which all Secured Obligations
 have been paid in full and all commitments to make loans, issue letters of
 credit or otherwise extend credit pursuant to Term Loan Agreement and the
 Revolving Credit Agreement have been terminated.

          "Trademark Collateral" means:

                   (a) (i) all trademarks, trade names, corporate names, company
         names, business names, fictitious business names, trade styles, service
         marks, certification marks, collective marks, logos and other source or
         business identifiers, and all goodwill of the business associated
         therewith, now existing or hereafter adopted or acquired including
         those referred to in Item A of Schedule IV hereto, whether currently in
         use or not, all registrations and recordings thereof and all
         applications in connection therewith, whether pending or in preparation
         for filing, including registrations, recordings and applications in the
         United States Patent and Trademark Office or in any office or agency of
         the United States of America or any State thereof or any other country
         or political subdivision thereof or otherwise, and all common-law
         rights relating to the foregoing, and (ii) the right to obtain all
         reissues, extensions or renewals of the foregoing (collectively
         referred to as the "Trademark");

                  (b) all Trademark licenses for the grant by or to any Grantor
         of any right to use any Trademark, including each Trademark license
         referred to in Item B of Schedule IV hereto; and



                                       6           Subsidiary Security Agreement






<PAGE>


                  (c) all proceeds of, and rights associated with, the
         foregoing, including any claim by any Grantor against third parties for
         past, present or future infringement or dilution of any Trademark,
         Trademark registration or Trademark license.

         "Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential, proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of any Grantor (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule VI hereto, and
including the right to sue for and to enjoin and to collect damages for the
actual or threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.

         "UCC" means the Uniform Commercial Code as in effect in the State of
New York, except to the extent that the validity or the perfection of the
security interest hereunder, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the State of
New York, in which case "UCC" means the Uniform Commercial Code as in effect in
such jurisdiction.

         SECTION 1.2. Revolving Credit Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Security
Agreement, including its preamble and recitals, have the meanings provided in
the Revolving Credit Agreement.

         SECTION 1.3. UCC Definitions. Unless otherwise defined herein or in the
Revolving Credit Agreement or the context otherwise requires, terms for which
meanings are provided in the UCC, as the same shall be hereafter amended,
including amendments to such terms as may occur upon enactment and effective
date of Revised Article 9, are used in this Security Agreement, including its
preamble and recitals, with such meanings.

                                   ARTICLE II
                                SECURITY INTEREST

          SECTION 2.1. Grant of Security Interest. Each Grantor hereby assigns,
 pledges, hypothecates, charges, mortgages, delivers, and transfers to the
 Collateral Agent, for its benefit and the ratable benefit of each other Secured
 Party, and hereby grants to the Collateral Agent, for its benefit and the
 ratable benefit of each other Secured Party, a continuing security interest in
 all of the following property, whether now or hereafter existing or acquired by
 such Grantor (the "Collateral"):

                  (a) all Intercompany Notes in which such Grantor has an
         interest (including each Intercompany Note described in Item A of
         Schedule I hereto (including the right to receive payment of the
         principal of and accrued interest on such Intercompany Note, and



                                        7          Subsidiary Security Agreement


<PAGE>


         other rights of such Grantor arising in its capacity as the payee of
         such Intercompany Note));

                  (b) (i) all investment property in which such Grantor has an
         interest (including the Capital Securities of each issuer of such
         Capital Securities described in Item of Schedule I hereto) and (ii) all
         other Capital Securities which are interests in limited liability
         companies or partnerships in which such Grantor has an interest
         (including the Capital Securities of each issuer of such Capital
         Securities described in Item B of Schedule I hereto), in each case
         together with Dividends and Distributions payable in respect of the
         Collateral described in the foregoing clauses (b)(i) and (b)(ii);

                  (c) all equipment of such Grantor, including all parts thereof
         and all accessions, additions, attachments, improvements, substitutions
         and replacements thereto and therefor and all accessories related
         thereto (collectively referred to as the "Equipment");

                  (d) all inventory in all of its forms of such Grantor,
         including (i) all raw materials and work in process therefor, finished
         goods thereof, and materials used or consumed in the manufacture or
         production thereof, (ii) all goods in which such Grantor has an
         interest in mass or a joint or other interest or right of any kind
         (including goods in which such Grantor has an interest or right as
         consignee), and (iii) all goods which are returned to or repossessed by
         such Grantor, and all accessions thereto, products thereof and
         documents therefor (all of the foregoing collectively referred to as
         the "Inventory");

                  (e) all accounts, contracts, chattel paper, documents,
         instruments, and general intangibles (including tax refunds) of such
         Grantor, whether or not arising out of or in connection with the sale
         or lease of goods or the rendering of services, and all rights of such
         Grantor now or hereafter existing in and to all security agreements,
         guaranties, leases and other contracts securing or otherwise relating
         to any such accounts, contracts, chattel paper, documents, instruments,
         and general intangibles (all of the foregoing collectively referred to
         as the "Receivables", and any and all such security agreements,
         guaranties, leases and other contracts collectively referred to as the
         "Related Contracts");

                  (f) all Intellectual Property Collateral of such Grantor;

                  (g) the Collateral Account and each lock box (including all
         deposits and investments therein and all earnings thereon);

                  (h) all deposit accounts of such Grantor;

                  (i) all books, records, writings, data bases, information and
         other property relating to, used or useful in connection with,
         evidencing, embodying, incorporating or referring to, any of the
         foregoing in this Section;


                                        8          Subsidiary Security Agreement


<PAGE>

                  (j) all of such Grantor's other property and rights of every
         kind and description and interests therein; and

                  (k) all products, offspring, rents, issues, profits, returns,
         income and proceeds of and from any and all of the foregoing Collateral
         (including proceeds which constitute property of the types described in
         clauses (a) through (j) above, and, to the extent not otherwise
         included, all payments under insurance (whether or not the Collateral
         Agent is the loss payee thereof), or distributions or, rights arising
         out of, returns of and from, and any and all claims and/or insurance
         payments arising out of the loss, noncomformity, or interference with
         the use of, defects or infringements of rights in, or damage to any of
         the foregoing Collateral).

Notwithstanding the foregoing, "Collateral" shall not include (i) any general
intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would (A)
constitute a violation of a valid and enforceable restriction in favor of a
third party on such grant, unless and until any required consents shall have
been obtained (provided that each Grantor shall use all commercially reasonable
efforts to obtain such consents) or (B) give any other party to such contract,
instrument, license or other document the right to terminate its obligations
thereunder, unless and until any required consents shall have been obtained and
(ii) investment property consisting of Capital Securities of an issuer that is a
Foreign Subsidiary (other than a Foreign Subsidiary that (i) is treated as a
partnership under the Code or (ii) is not treated as an entity that is separate
from (A) any Grantor, (B) any Person that is treated as a partnership under the
Code or (C) any "United States person" (as defined in Section 7701(a)(30) of the
Code)) of such Grantor, in excess of 65% of the total combined voting power of
all Capital Securities of each such Foreign Subsidiary; provided further,
however, that, in the event of any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase in of, any law or
regulation, directive or guideline of any Governmental Authority that could
reasonably be expected to alter the amount of United States federal income tax
that would otherwise be payable by such Grantor in the absence of such pledge,
the Collateral Agent or the Required Lenders may require such Grantor to pledge
such Capital Securities.

          SECTION 2.2. Security for Obligations. This Security Agreement and the
 Collateral in which the Secured Parties are granted a security interest in
 hereunder secures the payment of all Secured Obligations.

          SECTION 2.3. Grantors Remain Liable. Anything herein to the contrary
 notwithstanding

                   (a) each Grantor will remain liable under the contracts and
          agreements included in the Collateral to the extent set forth therein,
          and will perform all of its duties and obligations under such
          contracts and agreements to the same extent as if this Security
          Agreement had not been executed;



                                       9           Subsidiary Security Agreement

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                  (b) the exercise by any Secured Party of any of its rights
         hereunder will not release any Grantor from any of its duties or
         obligations under any such contracts or agreements included in the
         Collateral; and

                  (c) no Secured Party will have any obligation or liability
         under any contracts or agreements included in the Collateral by reason
         of this Security Agreement, nor will any, Secured Party be obligated to
         perform any of the obligations or duties of any Grantor thereunder or
         to take any action to collect or enforce any claim for payment assigned
         hereunder.

         SECTION 2.4. Security Interest Absolute, etc. This Security Agreement
shall in all respects be a continuing, absolute, unconditional and irrevocable
grant of security interest, and shall remain in full force and effect until the
Termination Date has occurred. All rights of the Secured Party and the security
interests granted to the Collateral Agent (for its benefit and the ratable
benefit of each other Secured Party) hereunder, and all obligations of each
Grantor hereunder, shall, in each case, be absolute, unconditional and
irrevocable irrespective of:

                  (a) surrender or non-perfection of any collateral, or any
         amendment to or waiver or release or addition to, or consent to or
         departure from, any other guaranty held by any Secured Party securing
         any of the Secured Obligations;

                  (b) any change in the time, place or manner of payment of,
          or in any other term of, all or any of the Secured Obligations, any
          waiver, indulgence, renewal, extension, amendment or modification of,
          or addition, consent or supplement to, or deletion from, or any other
          action or inaction under or in respect of, the Term Loan Agreement or
          the Revolving Credit Agreement, the other Credit Documents, or any
          other documents, instruments or agreements relating to the Secured
          Obligations or any other instrument or agreement referred to therein
          or any assignment or transfer of any thereof;

                  (c) any lack of validity or enforceability of the Term Loan
         Agreement, the Revolving Credit Agreement, the other Credit Documents,
         or any other document, instrument or agreement referred to therein or
         any assignment or transfer of any thereof;

                  (d) any furnishing to the Secured Parties of any additional
         security for the Secured Obligations, or any sale, exchange, release or
         surrender of, or realization on, any security for the Secured
         Obligations;

                  (e) any settlement or compromise of any of the Secured
         Obligations, any security therefor, or any liability of any other party
         with respect to the Secured Obligations, or any subordination of the
         payment of the Secured Obligations to the payment of any other
         liability of the Borrower;

                  (f) any bankruptcy, insolvency, reorganization, composition,
         adjustment, dissolution, liquidation or other like proceeding relating
         to any Grantor or the Borrower,


                                       10          Subsidiary Security Agreement

<PAGE>


         or any action taken with respect to this Security Agreement by any
         trustee or receiver, or by any court, in any such proceeding;

                  (g) any nonperfection of any security interest or lien on any
         collateral, or any amendment or waiver of, consent to, or departure
         from, any guaranty or security for all or any of the Secured
         Obligations;

                 (h) any application of sums paid by the Borrower or any other
         Person with respect to the Secured Obligations of the Borrower to the
         Secured Parties, regardless of what Secured Obligations of the Borrower
         remain unpaid;

                  (i) any act or failure to act by any Secured Party which may
         adversely affect a Grantor's subrogation rights, if any, against the
         Borrower to recover payments made under this Security Agreement; and

                  (j) any other circumstance which might otherwise constitute a
         defense available to, or a legal or equitable discharge of, any Credit
         Party, any surety or any guarantor (other than the Termination Date).

         SECTION 2.5. Postponement of Subrogation, etc. Each Grantor agrees that
it will not exercise any rights which it may acquire by way of rights of
subrogation under any Credit Document to which it is a party, nor shall any
Grantor seek or be entitled to seek any contribution or reimbursement from any
Credit Party, in respect of any payment made under any Credit Document or
otherwise, until following the Termination Date. Any amount paid to any Grantor
on account of any such subrogation rights prior to the Termination Date shall be
held in trust for the benefit of the Secured Parties and shall immediately be
paid and turned over to the Collateral Agent for its benefit and the ratable
benefit of each other Secured Party in the exact form received by such Grantor
(duly endorsed in favor of the Collateral Agent, if required), to be credited
and applied against the Secured Obligations, whether matured or unmatured, in
accordance with clause (b) of Section 6.1; provided, however, that if any
Grantor has made payment to the Secured Parties of all or any part of the
Secured Obligations and the Termination Date has occurred, then at such
Grantor's request, the Collateral Agent (on behalf of the Secured Parties) will,
at the expense of such Grantor, execute and deliver to such Grantor appropriate
documents (without recourse and without representation or warranty) necessary to
evidence the transfer by subrogation to such Grantor of an interest in the
Secured Obligations resulting from such payment. In furtherance of the
foregoing, at all times prior to the Termination Date, each Grantor shall
refrain from taking any action or commencing any proceeding against any Credit
Party (or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Security Agreement to any Secured Party.

          SECTION 2.6. Reinstatement. If any payment made in respect of any
Secured Obligations is rescinded or must otherwise be restored by Secured Party
and, pursuant to Section



                                       11          Subsidiary Security Agreement

<PAGE>



2.4, the security interest granted herein shall have terminated, this Agreement
and such security interest shall be reinstated and otherwise restored all as
though such payment had not been made.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         In order to induce the Secured Parties to enter into the Term Loan
Agreement and the Revolving Credit Amendment and the other Credit Documents as
applicable, each Grantor represents and warrants to each Secured Party as set
forth below.

         SECTION 3.1. As to Capital Securities of Subsidiaries. With respect to
any Subsidiary of any Grantor that is

                  (a) a corporation, business trust, joint stock company or
          similar Person, all Capital Securities issued by such Subsidiary are
          duly authorized and validly issued, fully paid and non-assessable, and
          represented by a certificate; and

                  (b) a partnership or limited liability company, no Capital
          Securities issued by such Subsidiary (i) are dealt in or traded on
          securities exchanges or in securities markets, (ii) expressly provide
          that such Capital Securities are a security governed by Article 8 of
          the UCC, (iii) are held in a securities account, or (iv) are
          represented by a certificate.

The percentage of the issued and outstanding Capital Securities of each
Subsidiary pledged by each Grantor hereunder are as set forth on Schedule I
hereto. Except as set forth in Schedule I hereto, no Grantor has any
Subsidiaries, the Capital Securities of which are not pledged pursuant to this
Security Agreement.

         SECTION 3.2. Intercompany Notes. All Intercompany Notes have been duly
authorized, executed, endorsed, issued and delivered, and are the legal, valid
and binding obligation of the issuers thereof, and are not in default.

         SECTION 3.3. Location of Collateral, etc. All of the Equipment,
Inventory, lock boxes and deposit accounts of each Grantor are located at the
places specified in Item A, Item B and Item C respectively, of Schedule II
hereto, as each such Item may be supplemented or otherwise modified from time to
time pursuant clause (a) of Section 4.2. None of the Equipment and Inventory
has, within the four months preceding the date of this Security Agreement, been
located at any place other than the places specified in Item A and Item B,
respectively, of Schedule II hereto except as set forth in a footnote thereto.
The true legal name as registered in the jurisdiction in which any Grantor is
organized or incorporated, the state of incorporation or organization, the
place(s) of business and the chief executive office of such Grantor and the
office(s) where such Grantor keeps its records concerning the Receivables, and
all originals of all chattel paper which evidence Receivables, are located at
the addresses set forth in Item D of Schedule II hereto, as each such Item may
be supplemented or otherwise modified from time to time pursuant clause (a) of
Section 4.3. No Grantor has any trade names other than those set forth in Item E
of Schedule II

                                       12         Subsidiary Security@ Agreement

<PAGE>

hereto. During, the four months preceding the date hereof, no Grantor has been
known by any legal name different from the one set forth on the signature page
hereto, nor has any Grantor been the subject of any merger, consolidation,
conversion or other corporate reorganization, except as set forth in Item F of
Schedule II hereto. Each Grantor's federal taxpayer identification number is
(and, during the four months preceding the date hereof, such Grantor has not had
a federal taxpayer identification number different from the one) set forth in
Item of Schedule II hereto. If the Collateral of any Grantor includes any
Inventory located in the State of California, such Grantor is not a "retail
merchant" within the meaning of Section 9102 of the California UCC. All
Receivables evidenced by a promissory note or other instrument, negotiable
document or chattel paper have been duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent and delivered and pledged to the Collateral
Agent pursuant to Section 4.6. No Grantor is a party to any federal, state or
local government contract except as set forth in Item H of Schedule II hereto.

         SECTION 3.4. Ownership, No Liens, etc. Each Grantor owns its Collateral
free and clear of any Lien, except for Liens (a) created by this Security
Agreement, and, in the case of Collateral other than any investment property
(including Capital Securities of any Subsidiary of such Grantor) in  which such
Grantor has an interest, (b) permitted by Section 7.02 of the Term Loan
Agreement and the Revolving Credit Agreement. No effective financing statement
or other filing similar in effect covering any Collateral is on file in any
recording office, except those filed in favor of the Collateral Agent relating
to this Security Agreement or those tiled in connection with Liens permitted by
Section 7.02 of the Term Loan Agreement and the Revolving Credit Agreement.

         SECTION 3.5. Possession of Inventory, etc. Each Grantor agrees that it
will maintain exclusive possession of its goods, instruments and Inventory,
other than Inventory in transit in the ordinary course of business and Inventory
which is in the possession or control of a warehouseman, bailee agent or other
Person (other than a Person controlled by or under common control with such
Grantor) that has been notified of the security interest created in favor of the
Secured Parties pursuant to this Security Agreement, and has agreed to hold such
Inventory subject to the Secured Parties' Lien and waive any Lien held by it
against such Inventory.

         SECTION 3.6. Negotiable Documents. Instruments and Chattel Paper. Each
Grantor has delivered to the Collateral Agent possession of all originals of all
negotiable documents, instruments and chattel paper owned or held by such
Grantor on the date hereof and agrees that it will, promptly following receipt,
deliver to the Collateral Agent possession of all originals of negotiable
documents, instruments and chattel paper that it acquires following the date
hereof.

         SECTION 3.7. Intellectual Property Collateral. With respect to any
material Intellectual Property Collateral:

                  (a) such Intellectual Property Collateral is subsisting and
         has not been adjudged invalid or unenforceable, in whole or in part;

                  (b) such Intellectual Property Collateral is valid and
         enforceable;


                                       13          Subsidiary Security Agreement

<PAGE>


                  (c) each Grantor has made all necessary filings and
         recordations to protect its interest in such Intellectual Property
         Collateral, including recordations of all of its interests in the
         Patent Collateral and Trademark Collateral in the United States Patent
         and Trademark Office and in corresponding offices throughout the world,
         and its claims to the Copyright Collateral in the United States
         Copyright Office and in corresponding offices throughout the world;

                  (d) each Grantor is the exclusive owner of the entire and
         unencumbered right, title and interest in and to such Intellectual
         Property Collateral and no claim has been made that the use of such
         Intellectual Property Collateral does or may violate the asserted
         rights of any third party; and

                  (e) each Grantor has performed and will continue to perform
         all acts and has paid and will continue to pay all required fees and
         taxes to maintain each and every such item of Intellectual Property
         Collateral in full force and effect throughout the world, as
         applicable.

Each Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of such Grantor's
business.

         SECTION 3.8. Validity, etc. This Security Agreement creates a valid
security interest in the Collateral securing the payment of the Secured
Obligations. Each Grantor has executed and delivered to the Collateral Agent
originals of all financing statements suitable for filing in the appropriate
offices and (a) in the case of Collateral comprised of certificated securities
or instruments, has delivered such Collateral to the Collateral Agent, duly
endorsed in blank and (b) in the case of Collateral comprised of uncertificated
securities and other investment property (other than certificated securities),
has taken such actions causing the Collateral Agent to have "control" (as
defined in Section 8-106 of the UCC, as such term relates to investment property
(other than certificated securities or commodity contracts), or as used in
Section 9-106(b) of the UCC, as such term ,relates to commodity contracts) of
such Collateral.

         SECTION 3.9. Authorization. Approval, etc. Except as have been obtained
or made and are in full force and effect, no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required either

                  (a) for the grant by each Grantor of the security interest
         granted hereby, the pledge by each Grantor of any Collateral pursuant
         hereto or for the execution, delivery and performance of this Security
         Agreement by each Grantor;

                  (b) for the perfection of or the exercise by any Secured Party
         of its rights and remedies hereunder (except for whatever action is
         necessary for filing in the appropriate offices); or


                                       14          Subsidiary Security Agreement

<PAGE>


                  (c) for the exercise by the Collateral Agent of the voting or
         other rights provided for in this Security Agreement, or, except with
         respect to any securities issued by a Subsidiary of any Grantor, as may
         be required in connection with a disposition of such securities by laws
         affecting the offering and sale of securities generally, the remedies
         in respect of the Collateral pursuant to this Security Agreement.

         SECTION 3.10. Compliance with Laws. Each Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules and regulations, the non-compliance with any of the
Term Loan Agreement and the Revolving Credit Amendment which could reasonably be
expected to materially and adversely affect the value of the Collateral.

         SECTION 3.11. Best Interests. It is in the best interests of each
Grantor to execute this Security Agreement inasmuch as such Grantor will, as a
result of being a Subsidiary of the Borrower, derive substantial direct and
indirect benefits from the Term Loan Agreement and the Revolving Credit
Amendment, and each Grantor agrees that the Secured Parties are relying on this
representation in agreeing to the Term Loan Agreement and the Revolving Credit
Amendment.

         SECTION 3.12. Representations and Warranties. Each Grantor represents
and warrants as to itself that all representations and warranties relating to it
contained in Sections 5.01 through 5.06 of the Term Loan Agreement and the
Revolving Credit Agreement are true and correct.

                                   ARTICLE IV
                                    COVENANTS

         Each Grantor covenants and agrees that, until the Termination Date has
occurred, such Grantor will perform, comply with and be bound by the obligations
set forth below.

         SECTION 4.1. As to Investment Property and Intercompany Notes; Etc.

         SECTION 4.1.1. Capital Securities of Subsidiaries. Each Grantor will
cause each of its Subsidiaries that is

                  (a) a corporation, business trust, joint stock company or
         similar Person, to provide in its Organic Documents that all
         securities issued by such Subsidiary will be represented by a
         certificate; and

                  (b) a partnership or limited liability company, to provide in
         its Organic Documents that no Capital Securities issued by such
         Subsidiary will (i) be dealt in or traded on securities exchanges or in
         securities markets, (ii) expressly provide that such Capital Securities
         are securities governed by Article 8 of the UCC, (iii) be held in a
         securities account, or (iv) be represented by a certificate.



                                       15          Subsidiary Security Agreement

<PAGE>



         SECTION 4.1.2 Investment Property (other than Certificated Securities).
With respect to any investment property (other than certificated securities)
owned by any Grantor, such Grantor will cause a Securities Control Agreement
relating to such investment property to be executed and delivered by such
Grantor and the applicable broker or securities or commodity intermediary in
favor of the Collateral Agent.

         SECTION 4.1.3 Stock Powers, etc. Each Grantor agrees that all
certificated securities delivered by such Grantor pursuant to this Security
Agreement will be accompanied by duly executed undated blank stock powers, or
other equivalent instruments of transfer acceptable to the Collateral Agent.

         SECTION 4.1.4 Continuous Pledge. Each Grantor will deliver to the
Collateral Agent and at all times keep pledged to the Collateral Agent pursuant
hereto, on a first-priority, perfected basis all investment property
constituting Collateral, all Dividends and Distributions with respect thereto,
all Intercompany Notes (duly endorsed by such Grantor to the order of the
Collateral Agent), and all interest and principal with respect to the
Intercompany Notes, and all proceeds and rights from time to time received by or
distributable to such Grantor in respect of any of the foregoing Collateral.

         SECTION 4.1.5 Voting Rights; Dividends, etc. Each Grantor agrees:

                  (a) promptly upon receipt of notice of the occurrence and
         continuance of a Specified Event from the Collateral Agent and without
         any request therefor by the Collateral Agent, so long as such Specified
         Event shall continue, to deliver (properly endorsed where required
         hereby or requested by the Collateral Agent) to the Collateral Agent
         all Dividends and Distributions with respect to investment property,
         all interest, principal and other cash payments on Intercompany Notes,
         and all proceeds of the Collateral, in each case thereafter received by
         such Grantor, all of which shall be held by the Collateral Agent as
         additional Collateral; and

                  (b) immediately upon the occurrence and continuance of a
          Specified Event and so long as the Collateral Agent has notified such
          Grantor of the Collateral Agent's intention to exercise its voting
          power under this clause, such Grantor agrees

                            (i) that the Collateral Agent may exercise (to the
                   exclusion of such Grantor) the voting power and all other
                   incidental rights of ownership with respect to any investment
                   property constituting Collateral and such Grantor hereby
                   grants the Collateral Agent an irrevocable proxy, exercisable
                   under such circumstances, to vote such investment property;
                   and

                            (ii) to promptly deliver to the Collateral Agent
                    such additional proxies and other documents as may be
                    necessary to allow the Collateral Agent to exercise such
                    voting power.



                                       16          Subsidiary Security Agreement


<PAGE>

All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by any Grantor but which
such Grantor is then obligated to deliver to the Collateral Agent, shall, until
delivery to the Collateral Agent, be held by such Grantor separate and apart
from its other property in trust for the Secured Parties. The Collateral Agent
agrees that unless a Specified Event shall have occurred and be continuing and
the Collateral Agent shall have given the notice referred to in clause (b), each
Grantor will have the exclusive voting power with respect to any investment
property constituting Collateral and the Collateral Agent will, upon the written
request of such Grantor, promptly deliver such proxies and other documents,
if any, as shall be reasonably requested by such Grantor which are necessary to
allow such Grantor to exercise that voting power; provided, however, that no
vote shall be cast, or consent, waiver, or ratification given, or action taken
by such Grantor that would impair any such Collateral or be inconsistent with or
violate any provision of any Credit Document.

         SECTION 4.1.6 Organic Documents. No Grantor will amend, supplement or
otherwise modify or permit, consent to or suffer to occur any amendment,
supplement or modification of, any terms or provisions contained in, or
applicable to, any Organic Document of any Subsidiary that has issued Capital
Securities included in the Collateral if the effect thereof is to impair, or is
in any manner adverse to, the rights or interests of any Secured Party unless
consented to by the Collateral Agent.

         SECTION 4.2. As to Equipment and Inventory. Each Grantor hereby agrees
that it will

                  (a) keep ah the Equipment and Inventory (other than Equipment
         and Inventory sold in accordance with Section 7.04 of the Term Loan
         Agreement and the Revolving Credit Agreement, motor vehicles and
         Inventory in transit) at the places therefor specified in Section 3.3
         or, upon 30 days' prior written notice to the Collateral Agent, at such
         other places in a jurisdiction where all representations and warranties
         set forth in Article III shall be true and correct, and all action
         required pursuant to Section 4.6 shall have been taken with respect to
         the Equipment and Inventory;

                  (b) cause the Equipment to be maintained and preserved in good
         repair and working order, ordinary wear and tear excepted, and in
         accordance with any manufacturer's manual; and forthwith, or in the
         case of any material loss or damage to any of the Equipment, as quickly
         as practicable after the occurrence thereof, make or cause to be made
         all repairs, replacements, and other improvements in connection
         therewith which are necessary or desirable to such end; and promptly
         furnish to the Collateral Agent a statement respecting any material
         loss or damage to any of the Equipment; and

                  (c) pay promptly when due all property and other taxes,
         assessments and governmental charges or levies imposed upon, and all
         claims (including claims for labor, materials and supplies) against,
         the Equipment and Inventory, except to the extent the validity thereof
         is being contested in good faith by appropriate proceedings and for
         which adequate reserves in accordance with GAAP have been set aside.



                                       17          Subsidiary Security Agreement

<PAGE>

         SECTION. 4.3. As to Receivables. (a) Each Grantor will keep its chief
executive office, its jurisdiction of formation, the office(s) where it keeps
its records concerning the Receivables and all originals of all chattel paper
which evidences Receivables located at the addresses set forth in Item of
Schedule II hereto, or, upon 30 days' prior written notice to the Collateral
Agent, at such other locations in a jurisdiction where all actions required by
Section 4.6 shall have been taken with respect to the Receivables and other
Collateral. No Grantor will change its name or federal taxpayer identification
number or jurisdiction of formation except upon 30 days' prior written notice to
the Collateral Agent. In addition, each Grantor shall supplement the information
contained in Schedule II hereto on the Compliance Certificate on each date a
Compliance Certificate is required to be delivered to the administrative agent
under the Revolving Credit Agreement or the Term Loan Agreement, including any
changes to the information set forth in Section 3.3.

                  (b) Each Grantor shall have the right to collect all
         Receivables so long as no Specified Event shall have occurred and be
         continuing.

                  (c) Upon (i) the occurrence and continuance of a Specified
         Event or any other Event of Default and (ii) the delivery of written
         notice by the Collateral Agent to each Grantor, all proceeds of
         Collateral received by such Grantor shall be delivered in kind to the
         Collateral Agent for deposit to a deposit account (the "Collateral
         Account") of such Grantor maintained with the Collateral Agent, and
         such Grantor shall not commingle any such proceeds, and shall hold
         separate and apart from all other property, all such proceeds in
         express trust for the benefit of the Secured Parties until delivery
         thereof is made to the Collateral Agent.

                  (d) Following the delivery of notice pursuant to clause
         (c)(ii) of this Section, the Collateral Agent shall have the right to
         apply any amount in the Collateral Account to the payment of any
         Secured Obligations which are due and payable.

                  (e) With respect to the Collateral Account, it is hereby
         confirmed and agreed that (i) deposits in each Collateral Account are
         subject to a security interest as contemplated hereby, (ii) each such
         Collateral Account shall be under the sole dominion and control of the
         Collateral Agent and (iii) the Collateral Agent shall have the sole
         right of withdrawal over such Collateral Account.

         SECTION 4.4. As to Collateral.

                  (a) Subject to clause (b) of this Section, each Grantor (i)
         may in the ordinary course of its business, at its own expense, sell,
         lease or furnish under the contracts of service any of the, Inventory
         normally held by such Grantor for such purpose, and use and consume, in
         the ordinary course of its business, any raw materials, work in process
         or materials normally held by such Grantor for such purpose, (ii) will,
         at its own expense, endeavor to collect, as and when due, all amounts
         due with respect to any of the Collateral, including the taking of such
         action with respect to such collection as the Collateral Agent may
         reasonably request following the occurrence of a Specified Event or, in
         the absence of such request, as


                                       18          Subsidiary Security Agreement

<PAGE>


         such Grantor may deem advisable, and (iii) may grant, in the ordinary
         course of business, to any party obligated on any of the Collateral,
         any rebate, refund or allowance to which such party may be lawfully
         entitled, and may accept, in connection therewith, the return of goods,
         the sale or lease of which shall have given rise to such Collateral.

                  (b) At any time following the occurrence and during the
         continuance of a Specified Event, whether before or after the maturity
         of any of the Secured Obligations, the Collateral Agent may (i) revoke
         any or all of the rights of any Grantor set forth in clause (a), (ii)
         notify any parties obligated on any of the Collateral to make payment
         to the Collateral Agent of any amounts due or to become due thereunder
         and (iii) enforce collection of any of the Collateral by suit or
         otherwise and surrender, release, or exchange all or any part thereof,
         or compromise or extend or renew for any period (whether or not longer
         than the original period) any indebtedness, thereunder or evidenced
         thereby.

                  (c) Upon request of the Collateral Agent following the
         occurrence and during the continuance of a Specified Event, each
         Grantor will, at its own expense, notify any parties obligated on any
         of the Collateral to make payment to the Collateral Agent of any
         amounts due or to become due thereunder.

                  (d) Each Grantor hereby authorizes the Collateral Agent to
         endorse, in the name of such Grantor, any item, howsoever received by
         the Collateral Agent, representing any payment on or other proceeds of
         any of the Collateral.

         SECTION 4.5. As to Intellectual Property Collateral. Except, in the
case of clauses (a)(i), (b) and (d) below, for any items marked with an asterisk
in Schedule III, IV or V hereto, which the Grantors do not currently use and do
not intend to use at any time in the future, each Grantor covenants and agrees
to comply with the following provisions as such provisions relate to any
Intellectual Property Collateral of such Grantor:

                  (a) such Grantor will not (i) do or fail to perform any act
         whereby any of the, Patent Collateral may lapse or become abandoned or
         dedicated to the public or unenforceable, (ii) permit any of its
         licensees to (A) fail to continue to use any of the Trademark
         Collateral in order to maintain all of the Trademark Collateral in full
         force free from any claim of abandonment for non-use, (B) fail to
         maintain as in the past the quality of products and services offered
         under all of the Trademark Collateral, (C) fail to employ all of the
         Trademark Collateral registered with any federal or state or foreign
         authority with an appropriate notice of such registration, (D) adopt or
         use any other Trademark which is confusingly similar or a colorable
         imitation of any of the Trademark Collateral, (E) use any of the
         Trademark Collateral registered with any federal, state or foreign
         authority except for the uses for which registration or application for
         registration of all of the Trademark Collateral has been made or (F) do
         or permit any act or knowingly omit to do any act whereby any of the
         Trademark Collateral may lapse or become invalid or unenforceable, or
         (G) do or permit any act or knowingly omit to do any act whereby any of
         the Copyright Collateral or any of the Trade Secrets Collateral may
         lapse or become invalid or


                                       19          Subsidiary Security Agreement


<PAGE>

unenforceable or placed in the public domain except upon expiration of the end
of an unrenewable term of a registration thereof, unless, in the case of any of
the foregoing requirements in clauses (i) or (ii), such Grantor shall either (x)
reasonably and in good faith determine that any of such Intellectual Property
Collateral is of negligible economic value to such Grantor, or (y) have a valid
business purpose to do otherwise;

         (b) such Grantor shall promptly notify the Collateral Agent if it
 knows, or has reason to know, that any application or registration relating to
 any material item of the Intellectual Property Collateral may become abandoned
 or dedicated to the public or placed in the public domain or invalid or
 unenforceable, or of any adverse determination or development (including the
 institution of, or any such determination or development in, any proceeding in
 the United States, Patent and Trademark Office, the United States Copyright
 Office or any foreign counterpart thereof or any court) regarding such
 Grantor's ownership of any of the Intellectual Property Collateral, its right
 to register the same or to keep and maintain and enforce the same;

          (c) in no event will such Grantor or any of its agents, employees,
 designees or licensees file an application for the registration of any
 Intellectual Property Collateral with the United States Patent and Trademark
 Office, the United States Copyright Office or any similar office or agency in
 any other country or any political subdivision thereof, unless it promptly
 informs the Collateral Agent, and upon request of the Collateral Agent,
 executes and delivers all agreements, instruments and documents as the
 Collateral Agent may reasonably request to evidence the Collateral Agent's
 security interest in such Intellectual Property Collateral;

         (d) such Grantor will take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment of fees
and taxes (except to the extent that dedication, abandonment or invalidation is
permitted under the foregoing clause (a) or (b); and

         (e) such Grantor will promptly (but no less than quarterly) execute and
deliver to the Collateral Agent (as applicable) a Patent Security Agreement,
Trademark Security Agreement and/or Copyright Security Agreement, as the case
may be, in the forms of Exhibit B, Exhibit C and Exhibit D hereto following its
obtaining an interest in any such Intellectual Property, and shall execute and
deliver to the Collateral Agent any other document required to acknowledge or
register or perfect the Secured Parties' interest in any part of such item of
Intellectual Property Collateral.




                                       20          Subsidiary Security Agreement

<PAGE>


         SECTION 4.6. Further Assurances, etc. Each Grantor will warrant and
defend the security interest herein granted unto the Secured Parties by such
Grantor in and to the Collateral (and all right, title and interest represented
by such Collateral) against the claims and demands of all Persons whomsoever.
Each Grantor agrees that, from time to time at its own expense, it will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or that the Collateral Agent may reasonably
request, in order to perfect, preserve and protect any security interest granted
or purported to be granted hereby or to enable any Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor:

                  (a) will from time to time upon the request of the Collateral
         Agent, promptly deliver to the Collateral Agent such stock powers,
         instruments and similar documents, satisfactory in form and substance
         to the Collateral Agent, with respect to such Collateral as the
         Collateral Agent may reasonably request and will, from time to time
         upon the request of the Collateral Agent after the occurrence and
         during the continuance of any Specified Event promptly transfer any
         Capital Securities constituting Collateral into the name of any nominee
         designated by the Collateral Agent for the ratable benefit of the
         Secured Parties; if any Receivable shall be evidenced by an instrument,
         negotiable document or chattel paper, deliver and pledge to the
         Collateral Agent hereunder such instrument, negotiable document or
         chattel paper duly endorsed and accompanied by duly executed
         instruments of transfer or assignment, all in form and substance
         satisfactory to the Collateral Agent;

                  (b) will execute and file (or caused to be filed) such
         financing statements or continuation statements, or amendments thereto,
         and such other instruments or notices (including any assignment of
         claim form under or pursuant to the federal assignment of claims
         statute, 31 U.S.C. ss. 3726, any successor or amended version thereof
         or any regulation promulgated under or pursuant to any version
         thereof), as may be necessary or that the Collateral Agent may
         reasonably request in order to perfect and preserve the security
         interests and other rights granted or purported to be granted to the
         Collateral Agent or the other Secured Parties hereby;

                  (c) hereby authorizes the Collateral Agent to file such
         financing statements and other documents without its signature (to the
         extent allowed by applicable law);

                  (d) shall not enter into any agreement amending, supplementing
         or waiving any provision of any Intercompany Note (including any
         underlying instrument pursuant to which such Intercompany Note is
         issued), that compromises, releases or extends the time for payment of
         any obligation of the maker thereof;

                  (e) shall not take or omit to take any action the taking or
         the omission of which would result in any impairment or alteration of
         any obligation of the maker of any Intercompany Note or other
         instrument constituting Collateral;




                                       21          Subsidiary Security Agreement

<PAGE>


                  (f) will furnish to the Collateral Agent, from time to time as
         the Collateral Agent may reasonably request, statements and schedules
         further identifying and describing the Collateral and such other
         reports in connection with the Collateral as the Collateral Agent may
         reasonably request, all in reasonable detail;

                  (g) will maintain or cause to be maintained with financially
         sound and reputable insurers, insurance with respect to its properties
         and business, and the properties and business of its Subsidiaries,
         against loss or damage of the kinds customarily insured against by
         reputable companies in the same or similar businesses, such insurance
         to be of such types and in such amounts as are customary for such
         companies under similar circumstances; and

                  (h) shall not change its state of organization or
         incorporation or its name, identity or corporate structure such that
         any financing statement filed to perfect the Collateral Agent's
         interests under this Security Agreement would be come seriously
         misleading, unless such Grantor shall have given the Collateral Agent
         not less than 30 days' prior notice of such change (provided that this
         Section 4.6(h) shall not be deemed authorize any change or transaction
         prohibited under the Term Loan Agreement or the Revolving Credit
         Agreement).

With respect to the foregoing and the grant of the security interest hereunder,
each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. Each Grantor agrees that a carbon, photographic or other reproduction of
this Security Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
law.

          SECTION 4.7. Deposit Accounts. From and after the date hereof, no
Grantor shall maintain any Deposit Account or deposit any items or amounts in
any Deposit Account, except: (i) Deposit Accounts maintained with the Collateral
Agent or any "Lender" under either the Term Loan Agreement or the Revolving
Credit Agreement, or (ii) Deposit Accounts as to which each respective Grantor,
the Collateral Agent and the depositary bank have entered into a Control
Agreement that the depositary bank will comply with instructions originated by
the Collateral Agent directing disposition of the funds in the account without
further consent by such Grantor.

          SECTION 4.8. Transfers and Other Liens. No Grantor shall:

                  (a) sell, assign (by operation of law or otherwise) or
         otherwise dispose of any of the Collateral, except as permitted by the
         Term Loan Agreement and the Revolving Credit Agreement; or

                  (b) create or suffer to exist any Lien upon or with respect to
         any of the Collateral to secure Indebtedness of any Person, except for
         the security interest created by this Security Agreement and except as
         permitted by the Term Loan Agreement and the Revolving Credit
         Agreement.



                                       22          Subsidiary Security Agreement

<PAGE>

                                    ARTICLE V
                               THE COLLATERAL AGENT

         SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Collateral Agent's discretion, following
the occurrence and during the continuance of a Specified Event, to take any
action and to execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Security Agreement,
including:

                  (a) to ask, demand, collect, sue for, recover, compromise,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Collateral;

                  (b) to receive, endorse, and collect any drafts or other
         instruments, documents and chattel paper, in connection with clause (a)
         above;

                  (c) to file any claims or take any action or institute any
         proceedings which the Collateral Agent may deem necessary or desirable
         for the collection of any of the Collateral or otherwise to enforce the
         rights of the Collateral Agent with respect to any of the Collateral;
         and

                  (d) to perform the affirmative obligations of such Grantor
         hereunder (including all obligations of such Grantor pursuant to
         Section 4.6).

Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

         SECTION 5.2. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Collateral Agent incurred in connection therewith shall be payable by such
Grantor pursuant to Section 6.4.

         SECTION 5.3. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or responsibility for

                  (a) ascertaining or taking action with respect to calls,
         conversions, exchanges, maturities, tenders or other matters relative
         to any investment property, whether or not the Collateral Agent has or
         is deemed to have knowledge of such matters, or




                                       23          Subsidiary Security Agreement

<PAGE>



                  (b) taking any necessary steps to preserve rights against
         prior parties or any other rights pertaining to any Collateral.

         SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, that the Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
any of the Collateral, if it takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care, provided, further that the Collateral
Agent shall have no liability to any Grantor or any Secured Party except to the
extent caused by its gross negligence or willful misconduct.

                                   ARTICLE VI
                                    REMEDIES

         SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:

                  (a) The Collateral Agent may exercise in respect of the
         Collateral, in addition to other rights and remedies provided for
         herein or otherwise available to it, all the rights and remedies of a
         secured party on default under the UCC (whether or not the UCC applies
         to the affected Collateral) and also may

                           (i) require each Grantor to, and such Grantor hereby
                  agrees that it will, at its expense and upon request of the
                  Collateral Agent forthwith, assemble all or part of the
                  Collateral as directed by the Collateral Agent and make it
                  available to the Collateral Agent at a place to be designated
                  by the Collateral Agent which is reasonably convenient to both
                  parties, and

                           (ii) without notice except as specified below, sell
                   the Collateral or any part thereof in one or more parcels at
                   public or private sale, at any of the Collateral Agent's
                   offices or elsewhere, for cash, on credit or for future
                   delivery, and upon such other terms as the Collateral Agent
                   may deem commercially reasonable. Each Grantor agrees that,
                   to the extent notice of sale shall be required by law, at
                   least ten days prior notice to such Grantor of the time and
                   place of any public sale or the time after which any private
                   sale is to be made shall constitute reasonable notification.
                   The Collateral Agent shall not be obligated to make any sale
                   of Collateral regardless of notice of sale having been given.
                   The Collateral Agent may adjourn any public or private sale
                   from time to time by announcement at the time and place fixed
                   therefor, and such sale may, without further notice, be made
                   at the time and place to which it was so adjourned.

                   (b) The Collateral Agent may


                                        24         Subsidiary Security Agreement

<PAGE>

                           (i) transfer all or any part of the Collateral into
                  the name of the Collateral Agent or its nominee, with or
                  without disclosing that such Collateral is subject to the Lien
                  hereunder,

                           (ii) notify the parties obligated on any of the
                  Collateral to make payment to the Collateral Agent of any
                  amount due or to become due thereunder,

                          (iii) enforce collection of any of the Collateral by
                 suit or otherwise, and surrender, release or exchange all or
                 any part thereof, or compromise or extend or renew for any
                 period (whether or not longer than the original period) any
                 obligations of any nature of any party with respect thereto,

                           (iv) endorse any checks, drafts, or other writings in
                  any Grantor's name to allow collection of the Collateral,

                           (v) take control of any proceeds of the Collateral,
                  and

                           (vi) execute (in the name, place and stead of any
                  Grantor) endorsements, assignments, stock powers and other
                  instruments of conveyance or transfer with respect to all or
                  any of the Collateral.

         SECTION 6.2. Securities Laws. If the Collateral Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, each Grantor agrees that, upon request of the Collateral Agent, such
Grantor will, at its own expense:

                  (a) execute and deliver, and cause (or, with respect to any
         issuer which is not a Subsidiary of such Grantor, use its best efforts
         to cause) each issuer of the Collateral contemplated to be sold and the
         directors, officers, managers and trustees thereof to execute and
         deliver, all such instruments and documents, and do or cause to be done
         all such other acts and things, as may be necessary or, in the opinion
         of the Collateral Agent, advisable to register such Collateral under
         the provisions of the Securities Act of 1933, as from time to time
         amended (the "Securities Act"), and cause the registration statement
         relating thereto to become effective and to remain effective for such
         period as prospectuses are required by law to be furnished, and to make
         all amendments and supplements thereto and to the related prospectus
         which, in the reasonable opinion of the Collateral Agent, are necessary
         or advisable, all in conformity with the requirements of the Securities
         Act and the rules and regulations of the SEC applicable thereto;

                  (b) use its best efforts to qualify the Collateral under the
         state securities or "Blue Sky" laws and to obtain all necessary
         governmental approvals for the sale of the Collateral, as requested by
         the Collateral Agent;




                                        25         Subsidiary Security Agreement

<PAGE>

                  (c) cause (or, with respect to any issuer which is not a
         Subsidiary of such Grantor, use its best efforts to cause) each such
         issuer to make available to its security holders, as soon as
         practicable, an earnings statement that will satisfy the provisions of
         Section 11(a) of the Securities Act; and

                  (d) do or cause to be done all such other acts and things as
         may be necessary to make such sale of the Collateral or any part
         thereof valid and binding and in compliance with applicable law.

Each Grantor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by any of the Secured Parties by reason of the
failure of such Grantor to perform any of the covenants contained in this
Section and, consequently, agrees that, if such Grantor shall fail to perform
any of such covenants, it shall pay, as liquidated damages and not as a penalty,
an amount equal to the value (as determined by an independent appraiser) of the
Collateral on the date the Collateral Agent shall demand compliance with this
Section.

         SECTION 6.3. Compliance with Restrictions. Each Grantor agrees that

                  (a) in any sale of any of the Collateral whenever an Event of
         Default shall have occurred and be continuing, the Collateral Agent is
         hereby authorized to comply with any limitation or restriction in
         connection with such sale as it may be advised by counsel is necessary
         in order to

                           (i) avoid any violation of applicable law (including
                  compliance with such procedures as may restrict the number of
                  prospective bidders and purchasers, require that such
                  prospective bidders and purchasers have certain
                  qualifications, and restrict such prospective bidders and
                  purchasers to Persons who will represent and agree that they
                  are purchasing for their own account for investment and not
                  with a view to the distribution or resale of such Collateral),
                  or

                           (ii) obtain any required approval of the sale or of
                  the purchaser by any Governmental Authority or official, and

                  (b) such compliance shall not result in such sale being
         considered or deemed not to have been made in a commercially reasonable
         manner, nor shall the Collateral Agent be liable nor accountable to
         such Grantor for any discount allowed by the reason of the fact that
         such Collateral is sold in compliance with any such limitation or
         restriction; provided that the Collateral Agent acted in compliance
         with Article 9 of the UCC.

         SECTION 6.4. Indemnity and Expenses.

                  (a) Each Grantor jointly and severally agrees to indemnify the
         Collateral Agent from and against any and all claims, losses and
         liabilities arising out of or resulting from this Security Agreement
         (including enforcement of this Security Agreement), except claims,


                                       26          Subsidiary Security Agreement

<PAGE>
         losses or liabilities resulting from the Collateral Agent's gross
         negligence or wilful misconduct.

                  (b) Each Grantor will, upon demand, pay to the Collateral
         Agent the amount of any and all reasonable expenses, including the
         reasonable fees and disbursements of its counsel and of any experts and
         agents, which the Collateral Agent may incur in connection with

                           (i)   the administration of each Credit Document,

                           (ii)  the custody, preservation, use or operation of,
                  or the sale of, collection from, or other realization upon,
                  any of the Collateral,

                           (iii) the exercise or enforcement of any of the
                  rights of the Collateral Agent or the Secured Parties
                  hereunder, and

                           (iv)  the failure by any Grantor to perform or
                  observe any of the provisions hereof.


                  (c) All of the foregoing fees, costs and expenses shall be
         part of the Secured Obligations and shall be secured by the Collateral.
         This Section 6.4 shall survive the termination of this Security
         Agreement.

         SECTION 6.5. Protection of Collateral. The Collateral Agent may from
time to time, at its option, perform any act which any Grantor fails to perform
after being requested in writing so to perform by the Collateral Agent (it being
understood that no such request need be given after the occurrence and during
the continuance of an Event of Default) and the Collateral Agent may from time
to time take any other action which the Collateral Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.

         SECTION 6.6. Application of Proceeds. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the proceeds of the Collateral shall be
applied by the Collateral Agent to payment of the Secured Obligations in the
following order unless a court of competent jurisdiction shall otherwise direct:

                  (a) FIRST, to payment of all reasonable costs and expenses of
         the Collateral Agent incurred in connection with the collection and
         enforcement of the Secured Obligations or of the security interest
         granted to the Collateral Agent pursuant to this Security Agreement;

                  (b) SECOND, to payment of that portion of the Secured
         Obligations constituting accrued and unpaid interest and fees, pro rata
         among the Secured Parties in accordance with the amount of such accrued
         and unpaid interest and fees owing to each of them;



                                       27          Subsidiary Security Agreement


<PAGE>

                  (c) THIRD, to payment of the principal of the Secured
         Obligations, pro rata among the Secured Parties in accordance with the
         amount of such principal owing to each of them;

                  (d) FOURTH, to payment of any other Secured Obligations (other
         than those listed above) pro rata among the Secured Parties in
         accordance with the amounts owing to each of them; and

                  (e) FIFTH, the balance, if any, after all of the Secured
         Obligations have been satisfied, to the applicable Grantor or to
         whosoever may be lawfully entitled to receive them; provided, that
         prior to the Termination Date, such balance may, in the discretion of
         the Collateral Agent, be used by the Collateral Agent as additional
         collateral to be applied at any time thereafter pursuant to this
         Section 6.6.


                                   ARTICLE VII
                            MISCELLANEOUS PROVISIONS

         SECTION 7.1. Credit Document. This Security Agreement is a "Credit
Document" executed pursuant to the Term Loan Agreement and the Revolving Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof,
including Articles X thereof.

         SECTION 7.2. Binding on Successors, Transferees and Assigns;
Assignment. This Security Agreement shall remain in full force and effect until
the Termination Date has occurred, shall be binding upon each Grantor and its
successors, transferees and assigns and shall inure to the benefit of and be
enforceable by each Secured Party and its successors, transferees and assigns;
provided, however, that no Grantor may assign any of its obligations hereunder
without the prior written consent of the Collateral Agent. Without limiting the
foregoing, any Secured Party may assign or otherwise transfer all or any portion
of the Secured Obligations held by it to any other Person, and such other Person
shall thereupon become vested with all the rights and benefits in respect
thereof granted to such Secured Party under this Security Agreement or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the applicable provisions of the Term Loan Agreement or the
Revolving Credit Agreement.

         SECTION 7.3. Amendments, etc. No amendment to or waiver of any
provision of this Security Agreement, nor consent to any departure by any
Grantor from its obligations under this Security Agreement, shall in any event
be effective unless the same shall be in writing and signed by the Collateral
Agent (on behalf of the Lenders or the Required Lenders or Super-Majority
Lenders, as the case may be, pursuant to Section 10.2 of the Term Loan Agreement
and the Revolving Credit Agreement) and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.




                                       28          Subsidiary Security Agreement

<PAGE>



          SECTION 7.4. Notices. All notices and other communications provided
for hereunder shall be given in the manner provided in Section 10.01 of the
Revolving Credit Agreement to the appropriate party at the address or facsimile
number of such party (in the case of any Grantor, in care of the Borrower)
pursuant to the Revolving Credit Agreement and shall be deemed given as provided
in the Revolving Credit Agreement.

          SECTION 7.5. Foreign Pledge Agreements. Without limiting any of the
rights, remedies, privileges or benefits provided hereunder to the Collateral
Agent for its benefit and the ratable benefit of each other Secured Party, each
Grantor and the Collateral Agent hereby agree that the terms and provisions of
this Security Agreement in respect of any Collateral subject to the pledge or
other lien of a Foreign Pledge Agreement are, and shall be deemed to be,
supplemental and in addition to the rights, remedies, privileges and benefits
provided to the Secured Parties under such Foreign Pledge Agreement and under
applicable law to the extent consistent with applicable law; provided, that, in
the event that the terms of this Security Agreement conflict or are inconsistent
with the applicable Foreign Pledge Agreement or applicable law governing such
Foreign Pledge Agreement, the terms of such Foreign Pledge Agreement or such
applicable law shall be controlling.

            SECTION 7.6. Release of Liens. Upon (a) a Permitted Asset Sale of
Collateral, (b) the consummation of a Permitted Receivables Purchase Facility,
but only with respect to such Collateral being sold thereunder (excluding any
interest being retained by a Grantor), or (c) the occurrence of the Termination
Date, the security interests granted herein shall automatically terminate with
respect to (i) such Collateral (in the case of clause (a) or (b)) or (ii) all
Collateral (in the case of clause (c)). Upon such termination, the Collateral
Agent will, at the applicable Grantor's sole expense, deliver to such Grantor,
without any representations, warranties or recourse of any kind whatsoever, all
terminated Collateral held by the Collateral Agent hereunder, and execute and
deliver to such Grantor such documents as such Grantor shall reasonably request
to evidence such termination.

           SECTION 7.7. Additional Grantors. Upon the execution and delivery by
any other Person of a supplement in the form of Annex I hereto, such Person
shall become a "Grantor" hereunder with the same force and effect as if it were
originally a party to this Security Agreement and named as a "Grantor"
hereunder. The execution and delivery of such supplement shall not require the
consent of any other Grantor hereunder, and the rights and obligations of each
Grantor hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor as a party to this Security Agreement.

           SECTION 7.8. No Waiver; Remedies. No failure on the part of any
Secured Party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

           SECTION 7.9. Section Cautions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.



                                       29          Subsidiary Security Agreement

<PAGE>
         SECTION 7.10. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.

         SECTION 7.11. Governing Law. Appointment Of Agent For Service Of
Process; Submission To Jurisdiction; Waiver of Jury Trial.

         (a) THIS SECURITY AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH
PURPOSE SECTION 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK).

         (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SECURITY
AGREEMENT OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH GRANTOR
HEREBY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THE AFORESAID COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE
RIGHTS OF THE COLLATERAL AGENT AND THE SECURED PARTIES WITH RESPECT TO THIS
SECURITY AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH GRANTOR HEREBY
IRREVOCABLY DESIGNATES UNITED STATES CORPORATION COMPANY AS THE DESIGNEE,
APPOINTEE AND AGENT OF SUCH GRANTOR TO RECEIVE, FOR AND ON BEHALF OF SUCH
GRANTOR, SERVICE OR PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY DOCUMENT RELATED
HERETO AND SUCH SERVICE SHALL BE DEEMED COMPLETED THIRTY DAYS AFTER MAILING
THEREOF TO SAID AGENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON
SUCH AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE SERVER OF
PROCESS BY MAIL TO THE RESPECTIVE GRANTOR AT ITS ADDRESS SET FORTH HEREIN, BUT
THE FAILURE OF SUCH GRANTOR TO RECEIVE SUCH COPY SHALL NOT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. EACH
GRANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS SECURITY
AGREEMENT OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GRANTOR IN ANY
OTHER JURISDICTION. TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION


                                       30          Subsidiary Security Agreement

<PAGE>



OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, SUCH GRANTOR HEREBY IRREVOCABLY WAIVES TO
THE FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A
PARTY.

          (c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY
OTHER CREDIT DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR
THEREUNDER. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR SUCH GRANTOR ENTERING INTO THE CREDIT DOCUMENTS.

           SECTION 7.12. Counterparts. This Security Agreement may be executed
by the parties hereto in several counterparts, each of which shall be deemed to
be an original and all of which shall constitute together but one and the same
agreement.

           SECTION 7.13. Fraudulent Conveyance Limitation. Anything else in this
Security Agreement notwithstanding, the grant by the Borrower hereunder of a
security interest in the Collateral shall secure the Secured Obligations only
for the maximum amount that can be incurred without rendering this Security
Agreement void or voidable under applicable law relating to fraudulent
obligations, fraudulent conveyance or fraudulent transfer, and not any greater
amount.





















                                       31          Subsidiary Security Agreement

<PAGE>



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


                                    ALEXANDER CITY CASTING
                                    COMPANY, INC.


                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary




                                    CAST-MATIC CORPORATION



                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary





                                    COLUMBUS FOUNDRY, L.P.




                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary




                                    DIVERSIFIED DIEMAKERS, INC.



                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary


                                    FRISBY P.M.C., INCORPORATED


                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary






                                                   Subsidiary Security Agreement



<PAGE>

                                    GANTON TECHNOLOGIES INC.




                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary







                                    INTERMET HOLDING COMPANY




                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary






                                    INTERMET INTERNATIONAL, INC.




                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary





                                    IRONTON IRON INC.



                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary




                                    LYNCHBURG FOUNDRY COMPANY



                                    By /s/  Alan J. Miller
                                      ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary






                                                   Subsidiary Security Agreement


<PAGE>

                                   NORTHERN CASTINGS CORPORATION


                                   By /s/  Alan J. Miller
                                     ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary





                                   SUDBURY, INC.



                                   By /s/  Alan J. Miller
                                     ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary





                                   SUDM, INC.



                                   By /s/  Alan J. Miller
                                     ----------------------------------------
                                       Name Printed: Alan J. Miller
                                       Title:  Secretary





                                   TOOL PRODUCTS, INC.



                                   By /s/  Alan J. Miller
                                     ----------------------------------------
                                      Name Printed: Alan J. Miller
                                      Title:  Secretary















                                                   Subsidiary Security Agreement


<PAGE>



                                      WAGNER CASTINGS COMPANY


                                      By /s/  Alan J. Miller
                                        ---------------------------------------
                                         Name Printed: Alan J. Miller
                                         Title:  Secretary




                                      WAGNER HAVANA, INC.


                                      By /s/  Alan J. Miller
                                        ----------------------------------------
                                         Name Printed: Alan J. Miller
                                         Title:  Secretary

































                                                   Subsidiary Security Agreement


<PAGE>





                                       THE BANK OF NOVA SCOTIA,
                                         as Collateral Agent




                                       By /s/  F.C.H. Ashby
                                          -------------------------------------
                                          Name Printed:  F.C.H. Ashby
                                          Title:  Senior Manager Loan Operations





























                                       36       Subsidiary Security Agreement