EXECUTION COPY










                               SECURITY AGREEMENT

                             Dated August 12, 1999

                                      From

                THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF

                                  as Grantors

                                       to

                              ROYAL BANK OF CANADA

                              as Collateral Agent








<PAGE>


                     T A B L E   O F   C O N T E N T S


Section                                                                     Page

1.  Grant of Security..........................................................2

2.  Security for Obligations...................................................6

3.  Borrower Remains Liable....................................................6

4.  Delivery and Control of Security Collateral and Account Collateral.........6

5.  Maintaining the Cash Collateral Account and the L/C Cash Collateral
    Account....................................................................7

6.  Maintaining the Pledged Accounts...........................................8

7.  Investing of Amounts in the Cash Collateral Account and the L/C Cash
    Collateral Account.........................................................9

8.  Release of Amounts.........................................................9

9.  Representations and Warranties.............................................9

10.  Further Assurances.......................................................11

11.  As to Equipment and Inventory............................................12

12.  Insurance................................................................13

13.  Place of Perfection; Records; Collection of Receivables..................14

14.  Voting Rights; Dividends; Etc............................................15

15.  As to the Assigned Agreements............................................16

16.  Payments Under the Assigned Agreements...................................17

17.  Transfers and Other Liens [; Additional Shares]..........................17

18.  Collateral Agent Appointed Attorney-in-Fact..............................18

19.  Collateral Agent May Perform.............................................18

20.  The Collateral Agent's Duties............................................18

21.  Remedies.................................................................19



<PAGE>


Section                                                                     Page

22.  Registration Rights......................................................20

23.  Indemnity and Expenses...................................................21

[Section 24.  Security Interest Absolute......................................21

[25].  Amendments; Waivers; Etc...............................................22

[26].  Addresses for Notices..................................................22

[27].  Continuing Security Interest; Assignments under the Credit Agreement...23

[28].  Release and Termination................................................23

[29].  The Mortgages..........................................................24

[30].  Governing Law..........................................................24



Schedule I       -  Pledged Shares [,] [and] Pledged Debt [, Pledged Security
                    Entitlements and Pledged Commodity Contracts]

Schedule II      -  Assigned Agreements

Schedule III     -  Locations of Equipment and Inventory

Schedule IV      -  Intellectual Property

Schedule V       -  Pledged Accounts

Schedule VI      -  Permitted Unpledged Accounts

Exhibit A        -  Form of Security Agreement Supplement

Exhibit B        -  Form of Pledged Account Letter

Exhibit C        -  Form of Consent and Agreement

Exhibit D        -  Form of Intellectual Property Security Agreement

Exhibit E        -  Form of Intellectual Property Security Agreement
                    Supplement


                                       ii
<PAGE>

                                                               Execution Copy

                               SECURITY AGREEMENT


          SECURITY AGREEMENT dated August 12, 1999 made by the Persons listed on
the signature  pages hereof and the  Additional  Grantors (as defined in Section
23(c)) (such Persons so listed and the Additional Grantors being,  collectively,
the "Grantors"), to Royal Bank of Canada, as administrative agent and collateral
agent (the "Collateral Agent") for the Credit Agreement referred to below

          PRELIMINARY STATEMENTS.

          (1) ICG Equipment,  Inc., a Colorado corporation ("ICG Equipment") and
ICG NetAhead,  Inc., a Delaware  corporation  ("ICG NetAhead" and, together with
ICG Equipment, the "Borrowers") have entered into a Credit Agreement dated as of
August 12, 1999 (said Agreement, as it may be hereafter amended, supplemented or
otherwise  modified from time to time, being the Credit  Agreement) with certain
Lender  Parties  thereto,  Royal  Bank of  Canada  as  Administrative  Agent and
Collateral  Agent, and Morgan Stanley Senior Funding,  Inc., as Sole Book-Runner
and Lead Arranger.

          (2) Each Grantor is the owner of the shares (the "Pledged  Shares") of
stock set forth opposite such  Grantor's  name on and as otherwise  described in
Part I of Schedule I hereto and issued by the corporations  named therein and of
the  indebtedness  (the "Pledged Debt")  described in Part II of said Schedule I
and issued by the obligors named therein.

          (3) The Borrowers have opened a non-interest  bearing cash  collateral
account (the "Cash Collateral Account") with  ____________________ at its office
at _______________,  New York, New York _____, Account No. 277188-9, in the name
of the Borrowers but under the sole control and dominion of the Collateral Agent
and subject to the terms of this Agreement.

          (4) The Borrowers have opened a non-interest  bearing cash  collateral
account (the "L/C Cash  Collateral  Account") with  ____________________  at its
office at _______________,  New York, New York _____,  Account No. 277187-1,  in
the name of the  Borrowers  but  under  the sole  control  and  dominion  of the
Collateral Agent and subject to the terms of this Agreement.

          (5) It is a  condition  precedent  to the making of  Advances  and the
issuance of Letters of Credit by the Lender  Parties under the Credit  Agreement
and the entry into Secured Hedge Agreements by the Hedge Banks from time to time
that the Grantors shall have granted the  assignment  and security  interest and
made the pledge and assignment contemplated by this Agreement.

          (6) Each Grantor will derive  substantial  direct and indirect benefit
from the transactions contemplated by the Loan Documents.

          (7) Terms defined in the Credit Agreement and not otherwise defined in
this Agreement are used in this Agreement as defined in the Credit Agreement.

<PAGE>

          (8)  Unless  otherwise  defined  in this  Agreement  or in the  Credit
Agreement,  terms  defined in Article 8 or 9 of the Uniform  Commercial  Code in
effect in the State of New York  ("N.Y.  Uniform  Commercial  Code") are used in
this Agreement as such terms are defined in such Article 8 or 9.


          NOW,  THEREFORE,  in  consideration  of the  premises  and in order to
induce the Lender Parties to make Advances and issue Letters of Credit under the
Credit  Agreement  and to induce  the Hedge  Banks to enter into  Secured  Hedge
Agreements  from time to time,  each Grantor  hereby agrees with the  Collateral
Agent for its benefit and the ratable benefit of the Secured Parties as follows:

          Section 1. Grant of Security.  Each Grantor hereby assigns and pledges
to the Collateral  Agent for its benefit and the ratable  benefit of the Secured
Parties,  and hereby  grants to the  Collateral  Agent for its  benefit  and the
ratable  benefit of the Secured  Parties a security  interest in, the  following
(collectively, the "Collateral"):

          (a) all of such Grantor's right, title and interest, whether now owned
     or  hereafter  acquired,  in  and  to all  equipment  in all of its  forms,
     wherever  located,  now or hereafter  existing,  all fixtures and all parts
     thereof  and  all  accessions  thereto  (including,  but  not  limited  to,
     telecommunications equipment) (any and all such equipment,  fixtures, parts
     and accessions being the "Equipment");

          (b) all of such Grantor's right, title and interest, whether now owned
     or hereafter acquired, in and to all inventory (including,  but not limited
     to, all telecommunications  equipment and goods and all ancillary equipment
     and goods) in all of its forms, wherever located, now or hereafter existing
     (including,  but not limited to, (i) all raw  materials and work in process
     therefor,  finished  goods  thereof and  materials  used or consumed in the
     manufacture,  production,  preparation or shipping  thereof,  (ii) goods in
     which such Grantor has an interest in mass or a joint or other  interest or
     right of any  kind  (including,  without  limitation,  goods in which  such
     Grantor  has an interest  or right as  consignee)  and (iii) goods that are
     returned to or repossessed or stopped in transit by such Grantor),  and all
     accessions thereto and products thereof and documents therefor (any and all
     such inventory, accessions, products and documents being the "Inventory");

          (c) all of such Grantor's right, title and interest, whether now owned
     or hereafter  acquired,  in and to all accounts,  contract rights,  chattel
     paper,  instruments,   deposit  accounts,  general  intangibles  and  other
     obligations of any kind, now or hereafter existing,  whether or not arising
     out of or in connection with the sale or lease of goods or the rendering of
     services  and whether or not earned by  performance,  and all rights now or
     hereafter  existing  in and to all  security  agreements,  leases and other
     contracts,  agreements and guarantees securing or otherwise relating to any
     such  accounts,  contract  rights,  chattel  paper,  instruments,   deposit
     accounts,  general  intangibles or obligations  (any and all such accounts,
     contract rights,  chattel paper,  instruments,  deposit  accounts,  general
     intangibles and  obligations,  to the extent not referred to in clause (d),
     (e),  (f) or (g)  below,  being  the  "Receivables",  and any and all  such
     leases, security agreements and other contracts,  agreements and guarantees
     being the "Related Contracts");

               (d) all of the following (the "Security Collateral"):

                                       2
<PAGE>

                    (i) the Pledged Shares and the certificates representing the
               Pledged Shares,  and all dividends,  cash,  instruments and other
               property  from time to time  received,  receivable  or  otherwise
               distributed  in respect of or in  exchange  for any or all of the
               Pledged Shares;

                    (ii) the Pledged  Debt and the  instruments  evidencing  the
               Pledged  Debt,  and all  interest,  cash,  instruments  and other
               property  from time to time  received,  receivable  or  otherwise
               distributed  in respect of or in  exchange  for any or all of the
               Pledged Debt;

                    (iii)  all  additional  shares  of stock  from  time to time
               acquired  by such  Grantor in any  manner,  and the  certificates
               representing  such additional  shares,  and all dividends,  cash,
               instruments  and  other  property  from  time to  time  received,
               receivable or otherwise  distributed in respect of or in exchange
               for any or all of such shares;

                    (iv) all additional  indebtedness  from time to time owed to
               such Grantor and the instruments  evidencing  such  indebtedness,
               and all interest,  cash, instruments and other property from time
               to time received,  receivable or otherwise distributed in respect
               of or in exchange for any or all of such indebtedness; and

                    (v)  all  other  investment  property  (including,   without
               limitation,   all  (A)   securities,   whether   certificated  or
               uncertificated,  (B) security entitlements, as defined in Section
               8-102(a)(17) of the N.Y. Uniform  Commercial Code or, in the case
               of any U.S.  Treasury  book-entry  securities,  as  defined in 31
               C.F.R.  Section 357.2, or, in the case of any U.S. federal agency
               book-entry  securities,  as  defined  in the  corresponding  U.S.
               federal  regulations  governing such book-entry  securities,  (C)
               securities  accounts,  (D) commodity  contracts and (E) commodity
               accounts) in which such Grantor has or acquires from time to time
               any right,  title or interest in any manner, and the certificates
               or   instruments,   if  any,   representing  or  evidencing  such
               investment property, and all dividends, interest,  distributions,
               value,  cash,  instruments  and other  property from time to time
               received, receivable or otherwise distributed in respect of or in
               exchange for any or all of such investment property;

          (e) all of such Grantor's right, title and interest in and to (i) each
     of the  agreements  listed on  Schedule  II  hereto,  (ii) each  additional
     agreement  to lease  goods of any type to any Person  entered  into by such
     Grantor as lessor  thereunder,  (iii) all other  contracts,  agreements and
     guarantees  securing or otherwise  relating to the agreements  described in
     clauses  (i) and (ii)  above and (iv) each  Hedge  Agreement  to which such
     Grantor  is now or may  hereafter  become  a  party,  in each  case as such
     agreements may be amended,  supplemented or otherwise modified from time to
     time  (collectively,   the  "Assigned  Agreements"),   including,   without
     limitation,  (A) all rights of such  Grantor  to receive  moneys due and to
     become due under or pursuant to the Assigned Agreements,  (B) all rights of
     such Grantor to receive proceeds of any insurance,  indemnity,  warranty or
     guaranty  with  respect  to the  Assigned  Agreements,  (C)  claims of such
     Grantor  for damages  arising out of or for breach of or default  under the
     Assigned  Agreements  and (D) the right of such  Grantor to  terminate  the
     Assigned  Agreements,  to perform  thereunder and to compel performance and
     otherwise  exercise all remedies  thereunder (all such Collateral being the
     "Agreement Collateral");

                                       3
<PAGE>

          (f) all of the following (collectively, the "Account Collateral"):

               (i) the Cash Collateral  Account,  all funds held therein and all
          certificates and instruments,  if any, from time to time  representing
          or evidencing the Cash Collateral Account;

               (ii) the L/C Cash Collateral Account,  all funds held therein and
          all  certificates   and  instruments,   if  any,  from  time  to  time
          representing or evidencing the L/C Cash Collateral Account;

               (iii) all Pledged  Accounts (as hereinafter  defined),  all funds
          held therein and all certificates  and instruments,  if any, from time
          to time representing or evidencing the Pledged Accounts;

               (iv) all other deposit  accounts of such Grantor,  all funds held
          therein and all  certificates  and  instruments,  if any, from time to
          time representing or evidencing such deposit accounts;

               (v) all Collateral Investments (as hereinafter defined) from time
          to time and all  certificates  and  instruments,  if any, from time to
          time representing or evidencing the Collateral Investments;

               (vi) all notes, certificates of deposit, deposit accounts, checks
          and other  instruments  from time to time  hereafter  delivered  to or
          otherwise  possessed by the Collateral  Agent for or on behalf of such
          Grantor in  substitution  for or in addition to any or all of the then
          existing Account Collateral;

               (vii)  all  interest,  dividends,  cash,  instruments  and  other
          property  from  time  to  time   received,   receivable  or  otherwise
          distributed  in respect of or in  exchange  for any or all of the then
          existing Account Collateral;

          (g) all of such Grantor's right, title and interest, whether now owned
     or  hereafter  acquired,  in  and  to  the  following  (collectively,   the
     "Intellectual Property Collateral"):

               (i) all United States,  international and foreign patents, patent
          applications and statutory invention registrations, including, without
          limitation,  the patents and patent applications set forth in Schedule
          IV hereto (as such Schedule IV may be  supplemented  from time to time
          by  supplements  to this  Agreement,  each  such  supplement  being in
          substantially the form of Exhibit E hereto (an "IP Security  Agreement
          Supplement"), executed and delivered by such Grantor to the Collateral
          Agent  from  time to time),  together  with all  reissues,  divisions,
          continuations,  continuations-in-part,  extensions and  reexaminations
          thereof,  all  inventions  therein,  all rights  therein  provided  by
          international  treaties or conventions and all  improvements  thereto,
          and all other rights of any kind  whatsoever of such Grantor  accruing
          thereunder or pertaining thereto (the "Patents");

                                       4
<PAGE>

               (ii)  all  trademarks  (including,  without  limitation,  service
          marks),  certification  marks,  collective marks, trade dress,  logos,
          domain names,  product  configurations,  trade names,  business names,
          corporate  names  and  other  source   identifiers,   whether  or  not
          registered,  whether  currently  in use  or  not,  including,  without
          limitation,  all common law rights and  registrations and applications
          for registration thereof, including, without limitation, the trademark
          registrations  and  trademark  applications  set forth in  Schedule IV
          hereto (as such Schedule IV may be  supplemented  from time to time by
          IP Security  Agreement  Supplements  executed  and  delivered  by such
          Grantor  to the  Collateral  Agent  from time to time),  and all other
          marks  registered in the U.S.  Patent and  Trademark  Office or in any
          office or agency of any State or Territory of the United States or any
          foreign  country  (but  excluding  any  United  States   intent-to-use
          trademark  application  prior  to  the  filing  and  acceptance  of  a
          Statement of Use or an Amendment to allege use in connection therewith
          to the extent that a valid security  interest may not be taken in such
          an intent-to-use  trademark application under applicable law), and all
          rights therein provided by international treaties or conventions,  all
          reissues, extensions and renewals of any of the foregoing, together in
          each case with the goodwill of the business  connected  therewith  and
          symbolized thereby,  and all rights  corresponding  thereto throughout
          the world and all other rights of any kind  whatsoever of such Grantor
          accruing thereunder or pertaining thereto (the "Trademarks");

               (iii)   all   copyrights,   copyright   applications,   copyright
          registrations and like protections in each work of authorship, whether
          statutory  or  common  law,  whether  published  or  unpublished,  any
          renewals or  extensions  thereof,  all  copyrights  of works based on,
          incorporated  in,  derived  from, or relating to works covered by such
          copyrights, including, without limitation, the copyright registrations
          and copyright  applications set forth in Schedule IV hereto including,
          without   limitation,   the  trademark   registrations  and  trademark
          applications  set forth in Schedule IV hereto (as such Schedule IV may
          be supplemented from time to time by IP Security Agreement Supplements
          executed and  delivered by such Grantor to the  Collateral  Agent from
          time  to  time),   together  with  all  rights  corresponding  thereto
          throughout  the world and all other rights of any kind  whatsoever  of
          such  Grantor   accruing   thereunder  or   pertaining   thereto  (the
          "Copyrights");

               (iv) all  confidential  and proprietary  information,  including,
          without  limitation,   know-how,  trade  secrets,   manufacturing  and
          production   processes  and  techniques,   inventions,   research  and
          development  information,  technical  data,  financial,  marketing and
          business data,  pricing and cost  information,  business and marketing
          plans and  customer  and supplier  lists and  information  (the "Trade
          Secrets");

               (v) all  computer  software  programs and  databases  (including,
          without   limitation,   source  code,  object  code  and  all  related
          applications  and  data  files),   firmware,   and  documentation  and
          materials  relating  thereto,  and  all  rights  with  respect  to the
          foregoing,  together  with any and all  options,  warranties,  service
          contracts,   program  services,   test  rights,   maintenance  rights,
          improvement  rights,  renewal  rights  and  indemnifications  and  any
          substitutions,  replacements, additions or model conversions of any of
          the foregoing (the "Computer Software");

                                       5
<PAGE>

               (vi)  all  license   agreements,   permits,   authorizations  and
          franchises,   whether  with   respect  to  the  Patents,   Trademarks,
          Copyrights, Trade Secrets or Computer Software, or with respect to the
          patents,  trademarks,  copyrights, trade secrets, computer software or
          other  proprietary  right  of any  other  Person,  including,  without
          limitation, the license agreements set forth in Schedule IV hereto (as
          such Schedule IV may be supplemented  from time to time by IP Security
          Agreement  Supplements  executed and  delivered by such Grantor to the
          Collateral  Agent from time to time),  and all income,  royalties  and
          other  payments  now or  hereafter  due and/or  payable  with  respect
          thereto,  subject,  in  each  case,  to  the  terms  of  such  license
          agreements, permits, authorizations and franchises, including, without
          limitation,  terms requiring consent to a grant of a security interest
          (the "Licenses"); and

               (vii) any and all claims for damages for past, present and future
          infringement,  misappropriation or breach with respect to the Patents,
          Trademarks,  Copyrights, Trade Secrets, Computer Software or Licenses,
          with the right,  but not the  obligation,  to sue for and collect,  or
          otherwise recover, such damages; and

          (h)  all  proceeds  of  any  and  all  of  the  foregoing   Collateral
     (including,  without  limitation,  proceeds that constitute property of the
     types  described  in clauses  (a)  through  (g) of this  Section 1 and this
     clause (h) and,  to the extent not  otherwise  included,  all (i)  payments
     under  insurance  (whether  or not the  Collateral  Agent is the loss payee
     thereof), or any indemnity, warranty or guaranty, payable by reason of loss
     or damage to or otherwise  with respect to any of the foregoing  Collateral
     and (ii) cash.

          Section 2. Security for Obligations.  This Agreement  secures,  in the
case of each  Grantor,  the payment of all  Obligations  of such  Grantor now or
hereafter  existing  under  the Loan  Documents,  whether  direct  or  indirect,
absolute or  contingent,  and including,  without  limitation,  any  extensions,
modifications,  substitutions,  amendments  and  renewals  thereof,  whether for
principal,  reimbursement  obligations,  interest,  premiums,  penalties,  fees,
indemnifications,  contract causes of action,  costs, expenses or otherwise (all
such  Obligations  being  the  "Secured  Obligations").   Without  limiting  the
generality of the foregoing,  this Agreement  secures the payment of all amounts
that  constitute  part of the  Secured  Obligations  and  would  be owed by such
Grantor to any Secured Party under the Loan Documents but for the fact that they
are  unenforceable  or  not  allowable  due to the  existence  of a  bankruptcy,
reorganization or similar proceeding involving any Grantor.

          Section 3. Grantors  Remain  Liable.  Anything  herein to the contrary
notwithstanding,  (a) each Grantor  shall remain  liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its  duties  and  obligations  thereunder  to the same  extent as if this
Agreement had not been executed, (b) the exercise by the Collateral Agent of any
of the rights  hereunder  shall not release any of the Grantors  from any of its
duties or  obligations  under  the  contracts  and  agreements  included  in the
Collateral and (c) neither the Collateral Agent nor any Secured Party shall have
any obligation or liability  under the contracts and agreements  included in the
Collateral by reason of this Agreement or any other Loan Document, nor shall the
Collateral  Agent  or any  Secured  Party be  obligated  to  perform  any of the
obligations or duties of any of the Grantors thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

                                       6
<PAGE>

          Section 4.  Delivery  and Control of Security  Collateral  and Account
Collateral.  (a) All  certificates  or  instruments  representing  or evidencing
Security  Collateral or Account  Collateral shall be delivered to and held by or
on behalf of the Collateral  Agent pursuant hereto and shall be in suitable form
for transfer by delivery,  or shall be accompanied by duly executed  instruments
of transfer or assignment in blank,  all in form and substance  satisfactory  to
the Collateral  Agent. The Collateral Agent shall have the right, at any time in
its  discretion  and without prior notice to the Grantors,  to transfer to or to
register in the name of the  Collateral  Agent or any of its nominees any or all
of the Security Collateral and Account Collateral, subject only to the revocable
rights specified in Section 13(a). In addition,  the Collateral Agent shall have
the right at any time to exchange  certificates  or instruments  representing or
evidencing  Security  Collateral  or  Account  Collateral  for  certificates  or
instruments of smaller or larger denominations.

          (b)  With  respect  to any  Security  Collateral  that  constitutes  a
security and is not  represented or evidenced by a certificate or an instrument,
the  applicable  Grantor shall cause the issuer thereof to agree in writing with
such  Grantor  and the  Collateral  Agent  that such  issuer  will  comply  with
instructions  with respect to such security  originated by the Collateral  Agent
without  further  consent  of such  Grantor,  such  agreement  to be in form and
substance satisfactory to the Collateral Agent.

          (c)  With  respect  to any  Security  Collateral  that  constitutes  a
security  entitlement,   the  applicable  Grantor  shall  cause  the  securities
intermediary with respect to such security entitlement either (i) to identify in
its records the  Collateral  Agent as having such security  entitlement  against
such  securities  intermediary or (ii) to agree in writing with such Grantor and
the  Collateral  Agent  that  such  securities  intermediary  will  comply  with
entitlement  orders  (that is,  notifications  communicated  to such  securities
intermediary  directing  transfer or redemption of the financial  asset to which
such Grantor has a security  entitlement)  originated  by the  Collateral  Agent
without  further  consent  of such  Grantor,  such  agreement  to be in form and
substance satisfactory to the Collateral Agent.

          (d)  With  respect  to any  Security  Collateral  that  constitutes  a
commodity   contract,   the   applicable   Grantor  shall  cause  the  commodity
intermediary  with respect to such  commodity  contract to agree in writing with
such Grantor and the  Collateral  Agent that such  commodity  intermediary  will
apply any value distributed on account of such commodity contract as directed by
the Collateral Agent without further consent of such Grantor,  such agreement to
be in form and substance satisfactory to the Collateral Agent.

          (e)  With  respect  to any  Security  Collateral  that  constitutes  a
securities account or a commodity  account,  the applicable Grantor will, in the
case of a securities account,  comply with subsection (c) of this Section 4 with
respect to all security  entitlements carried in such securities account and, in
the case of a commodity  account,  comply with  subsection (d) of this Section 4
with respect to all commodity contracts carried in such commodity account.

          Section 5.  Maintaining the Cash  Collateral  Account and the L/C Cash
Collateral  Account.  So long as any Advance shall remain unpaid,  any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment  under
the Credit Agreement:

          (a) The Borrowers  will maintain the Cash  Collateral  Account and the
     L/C Cash Collateral Account with ____________________.

                                       7
<PAGE>

          (b) It shall be a term and  condition  of each of the Cash  Collateral
     Account and the L/C Cash Collateral  Account,  notwithstanding  any term or
     condition  to the  contrary  in any other  agreement  relating  to the Cash
     Collateral Account or the L/C Cash Collateral  Account, as the case may be,
     and except as otherwise  provided by the  provisions of Section 20, that no
     amount  (including  interest on  Collateral  Investments)  shall be paid or
     released to or for the account of, or  withdrawn  by or for the account of,
     the  Grantors or any other Person from the Cash  Collateral  Account or the
     L/C Cash Collateral Account, as the case may be.

The Cash Collateral Account and the L/C Cash Collateral Account shall be subject
to such  applicable  laws,  and  such  applicable  regulations  of the  Board of
Governors of the Federal Reserve System and of any other appropriate  banking or
governmental authority, as may now or hereafter be in effect.

          Section 6.  Maintaining the Pledged  Accounts.  So long as any Advance
shall remain  unpaid,  any Letter of Credit shall be  outstanding  or any Lender
Party shall have any Commitment under the Credit Agreement:

          (a) Each Grantor shall maintain  blocked  deposit  accounts  ("Pledged
     Accounts") only with banks ("Pledged Account Banks") that have entered into
     letter  agreements in substantially the form of Exhibit B with such Grantor
     and the Collateral Agent ("Pledged Letters").

          (b) (i) Upon the  written  direction  of the  Collateral  Agent,  each
     Grantor shall immediately instruct each Affiliate of such Grantor obligated
     at any  time  to make  any  payment  to such  Grantor  for any  reason  (an
     "Obligor")  to make  such  payment  to a  Pledged  Account  or to the  Cash
     Collateral Account and shall pay to the Collateral Agent for deposit in the
     Cash Collateral  Account,  at the end of each Business Day, all proceeds of
     Collateral.

               (ii)  After the  occurrence  and during  the  continuance  of any
          Default and at the written  direction of the  Collateral  Agent,  each
          Grantor shall immediately instruct each Person who is not an Affiliate
          of such  Grantor  obligated  at any time to make any  payment  to such
          Grantor for any reason to make such payment to a Pledged Account or to
          the Cash Collateral  Account and shall pay to the Collateral Agent for
          deposit in the Cash  Collateral  Account,  at the end of each Business
          Day, all proceeds of Collateral.

          (c) Each Grantor shall instruct each Pledged  Account Bank to transfer
     to the Cash Collateral  Account, at the end of each Business Day after such
     written direction, in same day funds, an amount equal to the credit balance
     of the Pledged Account in such Pledged Account Bank.

          (d)  Upon any  termination  of any  Pledged  Account  Letter  or other
     agreement  with  respect  to the  maintenance  of a Pledged  Account by any
     Grantor  or  any  Pledged  Account  Bank,  the  applicable   Grantor  shall
     immediately  notify (i) the  Collateral  Agent,  and (ii) all Obligors that
     were making payments to such Pledged Account to make all future payments to
     another  Pledged Account or to the Cash  Collateral  Account.  Each Grantor
     agrees to terminate  any or all Pledged  Accounts and Pledged  Letters upon
     request by the Collateral Agent.

                                       8
<PAGE>

          Section 7.  Representations and Warranties.  Each of the Grantors
represents and warrants as follows:

          (a) All of the  Equipment  and  Inventory  are  located  at the places
     specified in Schedule III hereto,  as such Schedule III may be amended from
     time to time  pursuant to Section  9(a).  The chief  place of business  and
     chief  executive  office of such  Grantor and the office where such Grantor
     keeps its records  concerning the Receivables,  and any permitted copies of
     each Assigned  Agreement and any permitted copies of all chattel paper that
     evidence Receivables, are located at the address set forth on the signature
     pages hereto  beneath  such  Grantor's  name.  Only one copy of any item of
     chattel paper that evidences  Receivables has been  originally  executed by
     the parties  thereto and such original  executed copy has been delivered to
     the  Collateral  Agent  by such  Grantor.  Any  copy of any  chattel  paper
     evidencing  Receivables  of which the  Collateral  Agent does not have sole
     possession has been conspicuously  marked with a legend indicating (i) that
     such  copy is not the  original  executed  copy,  (ii)  that  the  original
     executed copy is in the possession of the Collateral Agent, (iii) that such
     chattel paper is subject to the security  interest granted hereby and, (iv)
     such other  matters as may be specified in writing from time to time by the
     Collateral  Agent.  None of the  Receivables  or  Agreement  Collateral  is
     evidenced by a promissory note or other instrument.

          (b) Such Grantor is the legal and  beneficial  owner of the Collateral
     of such  Grantor  free and  clear of any  Lien,  claim,  option or right of
     others,  except for the security  interest  created by this  Agreement  and
     other Liens  permitted  by the Credit  Agreement.  No  effective  financing
     statement or other instrument similar in effect covering all or any part of
     the Collateral is on file in any recording office,  except such as may have
     been filed in favor of the  Collateral  Agent  relating to this  Agreement.
     Such Grantor has the trade names listed on Schedule IV.

          (c) Except for possessory interests of landlord and warehousemen, such
     Grantor has exclusive possession and control of the Equipment and Inventory
     (other than Inventory the subject of an Assigned Agreement).

          (d) The Pledged  Shares have been duly  authorized  and validly issued
     and are  fully  paid and  non-assessable.  The  Pledged  Debt has been duly
     authorized,  authenticated or issued and delivered, is the legal, valid and
     binding obligation of the issuers thereof and is not in default.

          (e)  As  of  the  date  hereof,  the  Pledged  Shares  constitute  the
     percentage  of the issued and  outstanding  shares of stock of the  issuers
     thereof indicated on Schedule I. As of the date hereof, the Pledged Debt is
     outstanding in the principal amount indicated on Schedule I.

          (f) All of the  investment  property owned by such Grantor on the date
     hereof is listed on Schedule I hereto.  The  jurisdiction  (for purposes of
     Section  8-110(e) of the N.Y.  Uniform  Commercial  Code) of the securities
     intermediary  that  maintains the securities  account  carrying the Pledged
     Security Entitlement is ___________.

          (g) The Assigned  Agreements have been duly  authorized,  executed and
     delivered  by all  parties  thereto,  have not been  amended  or  otherwise


                                       9
<PAGE>

     modified, are in full force and effect and are binding upon and enforceable
     against all parties thereto in accordance with their terms. There exists no
     default under any Assigned  Agreement by any party  thereto.  Each party to
     the  Assigned  Agreements  (other  than the  applicable  Grantor)  and each
     guarantor of any such party has  executed  and  delivered to such Grantor a
     consent,  in substantially  the form of Exhibit C, to the assignment of the
     Agreement  Collateral to the Collateral  Agent pursuant to this  Agreement.
     Only one copy of each Assigned  Agreement (other than Hedge Agreements) has
     been originally  executed by the parties thereto and such original executed
     copy has been delivered to the Collateral Agent by such Grantor.  Each copy
     of each Assigned Agreement of which the Collateral Agent does not have sole
     possession has been conspicuously  marked with a legend indicating (i) that
     such  copy is not the  original  executed  copy,  (ii)  that  the  original
     executed copy is in the possession of the Collateral Agent, (iii) that such
     Assigned  Agreement is subject to the security interest granted hereby, and
     (iv) such other matters as may be specified in writing from time to time by
     the Collateral Agent.

          (h) Such  Grantor  has no  deposit  accounts  other  than the  Pledged
     Accounts listed on Schedule V and the permitted accounts listed on Schedule
     VI.

          (i) This  Agreement,  the pledge of the Security  Collateral  pursuant
     hereto and the pledge and  assignment  of the Account  Collateral  pursuant
     hereto create a valid and perfected first priority security interest in the
     Collateral,  securing  the  payment  of the  Secured  Obligations,  and all
     filings and other  actions  necessary  or  desirable to perfect and protect
     such security interest have been duly taken.

          (j) No consent of any other Person and no  authorization,  approval or
     other  action  by,  and no  notice  to or  filing  with,  any  governmental
     authority or  regulatory  body or other third party is required  either (i)
     for the grant by such  Grantor  of the  assignment  and  security  interest
     granted  by it  hereby,  for the  pledge by such  Grantor  of the  Security
     Collateral pursuant hereto or for the execution, delivery or performance of
     this  Agreement by such Grantor,  (ii) for the perfection or maintenance of
     the pledge,  assignment and security interest created hereby (including the
     first  priority  nature of such pledge,  assignment or security  interest),
     except for the filing of financing and  continuation  statements  under the
     Uniform  Commercial Code,  which financing  statements have been duly filed
     and are in full  force and  effect,  the  recordation  of the  Intellectual
     Property  Security  Agreements  referred to in Section  12(f) with the U.S.
     Patent and Trademark Office and the U.S. Copyright Office, which Agreements
     have been duly  recorded  and are in full force and effect and the  actions
     described in Section 4 with respect to Security  Collateral,  which actions
     have been taken and are in full force and effect, or (iii) for the exercise
     by the Collateral  Agent of its voting or other rights provided for in this
     Agreement  or the  remedies in respect of the  Collateral  pursuant to this
     Agreement,  except as may be required in connection with the disposition of
     any portion of the Security  Collateral by laws  affecting the offering and
     sale of securities generally.

          (k) The Inventory has been produced by such Grantor in compliance with
     all requirements of the Fair Labor Standards Act.

          (l) As to itself and its Intellectual Property Collateral:

                                       10
<PAGE>

               (i) The rights of such Grantor in or to the Intellectual Property
          Collateral do not conflict with,  misappropriate  or infringe upon the
          intellectual property rights of any third party, and no claim has been
          asserted that the use of such Intellectual Property Collateral does or
          may infringe upon the intellectual property rights of any third party.

               (ii)  Such  Grantor  is the  exclusive  owner of the  entire  and
          unencumbered  right,  title and  interest  in and to the  Intellectual
          Property  Collateral  and is  entitled  to use all  such  Intellectual
          Property  Collateral without  limitation,  subject only to the license
          terms of the Licenses.

               (iii) The Intellectual  Property Collateral set forth on Schedule
          IV hereto includes all of the patents, patent applications,  trademark
          registrations   and   applications,    copyright   registrations   and
          applications and Licenses owned by such Grantor.

               (iv) The Intellectual  Property  Collateral is subsisting and has
          not been adjudged  invalid or  unenforceable  in whole or part, and to
          the best of such Grantor's knowledge,  is valid and enforceable.  Such
          Grantor is not aware of any uses of any item of Intellectual  Property
          Collateral  that  could  be  expected  to lead to such  item  becoming
          invalid or unenforceable.

               (v) Such  Grantor has made or performed  all filings,  recordings
          and other acts and has paid all  required  fees and taxes to  maintain
          and  protect  its  interest  in each and  every  item of  Intellectual
          Property Collateral in full force and effect throughout the world, and
          to protect  and  maintain  its  interest  therein  including,  without
          limitation,  recordations  of any of its  interests in the Patents and
          Trademarks  with  the  U.S.   Patent  and  Trademark   Office  and  in
          corresponding   national  and   international   patent  offices,   and
          recordation  of any of its interests in the  Copyrights  with the U.S.
          Copyright  Office  and in  corresponding  national  and  international
          copyright  offices.  Such Grantor has used proper  statutory notice in
          connection with its use of each patent, trademark and copyright of the
          Intellectual Property Collateral.

               (vi) No action, suit, investigation, litigation or proceeding has
          been  asserted  or  is  pending  or  (to  such  Grantor's   knowledge)
          threatened  against  such  Grantor  (i) based upon or  challenging  or
          seeking  to  deny  or  restrict  the  use of  any of the  Intellectual
          Property  Collateral,  or (ii) alleging that any services provided by,
          processes used by, or products  manufactured  or sold by, such Grantor
          infringe upon or misappropriate  any patent,  trademark,  copyright or
          any other  proprietary  right of any third party.  To the best of such
          Grantor's  knowledge,  no  Person is  engaging  in any  activity  that
          infringes upon or misappropriates the Intellectual Property Collateral
          or upon the  rights of such  Grantor  therein.  Except as set forth on
          Schedule IV hereto, such Grantor has not granted any license, release,
          covenant not to sue,  non-assertion  assurance,  or other right to any
          Person  with  respect  to  any  part  of  the  Intellectual   Property
          Collateral.  The consummation of the transactions  contemplated by the
          Transaction Documents will not result in the termination or impairment
          of any of the Intellectual Property Collateral.

                                       11
<PAGE>

               (vii) With respect to each material License:  (A) such License is
          valid and  binding  and in full force and effect  and  represents  the
          entire  agreement  between the  respective  licensor and licensee with
          respect to the subject  matter of such License;  (B) such License will
          not  cease to be valid and  binding  and in full  force and  effect on
          terms identical to those currently in effect as a result of the rights
          and  interest  granted  herein,  nor will the grant of such rights and
          interest  constitute  a  breach  or  default  under  such  License  or
          otherwise  give the  licensor  or licensee a right to  terminate  such
          License;  (C) such Grantor has not received any notice of  termination
          or cancellation under such License;  (D) such Grantor has not received
          any notice of a breach or default under such License,  which breach or
          default  has not been cured;  (E) such  Grantor has not granted to any
          other  third  party any  rights,  adverse  or  otherwise,  under  such
          License;  and (F)  neither  such  Grantor  nor any other party to such
          License is in breach or default in any material respect,  and no event
          has  occurred  that,  with  notice  or lapse  of time or  both,  would
          constitute   such  a  breach  or   default   or  permit   termination,
          modification  or  acceleration  under  such  License,  except for such
          events  that  could not  reasonably  be  expected  to have a  Material
          Adverse Effect.

               (viii) To the best of such Grantor's acknowledge, (A) none of the
          Trade  Secrets of such Grantor has been used,  divulged,  disclosed or
          appropriated  to the  detriment of such Grantor for the benefit of any
          other Person  other than such  Grantor;  (B) no employee,  independent
          contractor  or agent of such  Grantor  has  misappropriated  any trade
          secrets of any other Person in the course of the performance of his or
          her duties as an  employee,  independent  contractor  or agent of such
          Grantor; and (C) no employee,  independent contractor or agent of such
          Grantor  is in  default  or  breach  of any  term  of  any  employment
          agreement,   non-disclosure   agreement,   assignment   of  inventions
          agreement or similar  agreement or contract relating in any way to the
          protection,  ownership, development, use or transfer of such Grantor's
          Intellectual Property Collateral in any material respect.

          Section 8. Further Assurances.  (a) Each Grantor agrees that from time
to time, at the expense of such Grantor,  such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary  or  desirable,  or that the  Collateral  Agent may  reasonably
request  (including,  without  limitation,  procuring third party consents),  in
order to perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby or to enable the Collateral  Agent to exercise
and enforce its rights and remedies  hereunder  with respect to any  Collateral.
Without  limiting the generality of the  foregoing,  such Grantor will: (i) mark
conspicuously  each  document  included in the  Inventory,  each  chattel  paper
included in the Receivables, each Related Contract, each Assigned Agreement and,
at the request of the Collateral  Agent,  each of its records  pertaining to the
Collateral with a legend,  in form and substance  satisfactory to the Collateral
Agent, indicating that such document, chattel paper, Related Contract,  Assigned
Agreement or Collateral is subject to the security interest granted hereby; (ii)
if any Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument  or chattel  paper duly  indorsed and  accompanied  by duly  executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral  Agent; and (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable,  or as the Collateral Agent may request,  in order to


                                       12
<PAGE>

perfect and preserve the pledge,  assignment  and security  interest  granted or
purported  to be granted by such Grantor  hereunder;  (iv) deliver and pledge to
the  Collateral   Agent  for  benefit  of  the  Secured   Parties   certificates
representing  Pledged  Shares  accompanied  by undated stock powers  executed in
blank;  and (v) deliver to the  Collateral  Agent evidence that all other action
that the Collateral Agent may deem reasonably necessary or desirable in order to
perfect and protect the security  interest  created by such  Grantor  under this
Agreement has been taken.

          (b) Each Grantor hereby authorizes the Collateral Agent to file one or
more financing or continuation statements,  and amendments thereto,  relating to
all or any part of the  Collateral  without the  signature of such Grantor where
permitted by law. A photocopy  or other  reproduction  of this  Agreement or any
financing  statement  covering  the  Collateral  or any  part  thereof  shall be
sufficient as a financing statement where permitted by law.

          (c) Each  Grantor will  furnish to the  Collateral  Agent from time to
time 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.

          (d)  Each  Grantor  shall  execute  only  one  copy of  each  Assigned
Agreement and of any chattel paper and shall  deliver to the  Collateral  Agent,
forthwith upon execution thereof, such original executed copy, together with all
other  documents  ancillary  thereto or  delivered  by the  relevant  parties in
connection  therewith.  Such  Grantor  shall  mark  each  copy  of any  Assigned
Agreement  and any  chattel  paper  which is not in the sole  possession  of the
Collateral Agent with a conspicuous  legend indicating (i) that such copy is not
the  original  executed  copy,  (ii) that the original  executed  copy is in the
possession  of the  Collateral  Agent,  (iii) that such  Assigned  Agreement  or
chattel paper is subject to the security interest granted hereby,  and (iv) such
other matters as may be specified in writing from time to time by the Collateral
Agent.

          Section 9. As to Equipment and Inventory.  (a) Each Grantor shall keep
its Equipment and Inventory (other than Inventory sold in the ordinary course of
business)  at the places  therefor  specified  in Section 7(a) or, upon 30 days'
prior  written  notice  to the  Collateral  Agent,  at such  other  places  in a
jurisdiction  where all action  required by Section 8 shall have been taken with
respect to the Equipment and Inventory  (and,  upon the taking of such action in
such jurisdiction, Schedule III hereto shall be automatically amended to include
such other places).

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

          (c) Each Grantor  shall 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,  its
Equipment and Inventory.  In producing the Inventory,  each Grantor shall comply
with all requirements of the Fair Labor Standards Act.

                                       13
<PAGE>

          Section 10.  Insurance.  (a) Each Grantor  shall,  at its own expense,
maintain  insurance with respect to its Equipment and Inventory in such amounts,
against  such  risks,  in  such  form  and  with  such  insurers,  as  shall  be
satisfactory to the Collateral Agent from time to time. Each policy for property
insurance  shall  provide for all losses to be paid on behalf of the  Collateral
Agent and such  Grantor  as their  interests  may  appear,  and each  policy for
property  damage  insurance  shall provide for all losses  (except for losses of
less than  $5,000,000  per  occurrence)  to be paid  directly to the  Collateral
Agent.  Each  such  policy  shall in  addition  (i) name  such  Grantor  and the
Collateral Agent as insured parties  thereunder  (without any  representation or
warranty by or  obligation  upon the  Collateral  Agent) as their  interests may
appear, (ii) contain the agreement by the insurer that any loss thereunder shall
be payable to the  Collateral  Agent  notwithstanding  any  action,  inaction or
breach of representation  or warranty by such Grantor,  (iii) provide that there
shall be no  recourse  against the  Collateral  Agent for payment of premiums or
other amounts with respect thereto and (iv) provide that at least 10 days' prior
written  notice of  cancellation  or of lapse  shall be given to the  Collateral
Agent by the insurer.  Each  Grantor  shall,  if so requested by the  Collateral
Agent,  deliver to the Collateral  Agent original or duplicate  policies of such
insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable  insurance broker with respect to such insurance.  Further,  each
Grantor shall, at the request of the Collateral Agent, duly exercise and deliver
instruments  of  assignment  of such  insurance  policies  to  comply  with  the
requirements  of Section 8 and cause the insurers to acknowledge  notice of such
assignment.

          (b)  Reimbursement  under any  liability  insurance  maintained by any
Grantor pursuant to this Section 10 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory  when  subsection (c) of this Section 10 is not
applicable,  the applicable Grantor shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory as deemed desirable in
the reasonable opinion of the Grantor,  and any proceeds of insurance maintained
by such  Grantor  pursuant to this  Section 10 shall be paid to such  Grantor as
reimbursement for the costs of such repairs or replacements.

          (c) Upon the occurrence  and during the  continuance of any Default or
the actual or  constructive  total loss (in excess of $5,000,000 per occurrence)
of any  Equipment  or  Inventory,  all  insurance  payments  in  respect of such
Equipment or Inventory  shall be paid to and applied by the Collateral  Agent as
specified in Section 20(b).

          Section 11. Place of Perfection;  Records;  Collection of Receivables.
(a) Each  Grantor  shall keep its chief  place of business  and chief  executive
office and the office where it keeps its records concerning the Collateral,  and
any copies of the  Assigned  Agreements  not  required  to be  delivered  to the
Collateral  Agent  hereunder and any copies of all chattel paper not required to
be delivered to the Collateral Agent hereunder that evidence Receivables, at the
location  therefor  specified  in Section  7(a) or, upon 30 days' prior  written
notice to the Collateral Agent, at such other locations in a jurisdiction  where
all  actions  required  by Section 8 shall  have been taken with  respect to the
Collateral  of such  Grantor.  Each Grantor will hold and preserve such records,
Assigned  Agreements  and chattel paper and will permit  representatives  of the
Collateral Agent at any time during normal business hours upon reasonable notice
to inspect and make abstracts from such records, Assigned Agreements and chattel
paper.  If the  jurisdiction of the securities  intermediary  that maintains the
security account carrying the Pledged  Security  Entitlements  shall change from
that  jurisdiction  specified in Section  7(f),  the  applicable  Grantor  shall
promptly   notify  the  Collateral   Agent  of  such  change  and  of  such  new
jurisdiction.

                                       14
<PAGE>

          (b) Except as otherwise  provided in this subsection (b), each Grantor
shall continue to collect, at its own expense,  all amounts due or to become due
such Grantor under the Receivables in the manner such Grantor currently collects
such amounts. In connection with such collections made in respect of Receivables
owing from a Person being an affiliate  of such  Grantor,  such Grantor may take
(and,  at the  Collateral  Agent's  direction,  shall  take) such action as such
Grantor or the Collateral  Agent may  reasonably  deem necessary or advisable to
enforce or expedite collection of the Receivables;  provided,  however, that the
Collateral  Agent shall have the right at any time,  upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any  Receivables
of the assignment of such Receivables to the Collateral Agent and to direct such
Obligors to make  payment of all  amounts  due or to become due to such  Grantor
thereunder  directly to the  Collateral  Agent or its  designee  and,  upon such
notification  and at the expense of such Grantor,  to enforce  collection of any
such Receivables directly against the relevant Obligor, and to adjust, settle or
compromise  the amount or payment  thereof,  in the same  manner and to the same
extent as such Grantor might have done. In connection with such collections made
in respect of Receivables  owing from a Person not an affiliate of such Grantor,
such Grantor may take (and, at the Collateral  Agent's  direction,  shall take),
after the occurrence and during the  continuance of any Default,  such action as
such Grantor or the Collateral  Agent may reasonably deem necessary or advisable
to enforce or expedite collection of the Receivables;  provided,  however,  that
the  Collateral  Agent shall have the right at any time after the occurrence and
during the  continuance  of any Default,  upon written notice to such Grantor of
its  intention to do so, to notify the  Obligors  under any  Receivables  of the
assignment  of such  Receivables  to the  Collateral  Agent and to  direct  such
Obligors to make  payment of all  amounts  due or to become due to such  Grantor
thereunder  directly to the  Collateral  Agent or its  designee  and,  upon such
notification  and at the expense of such Grantor,  to enforce  collection of any
such Receivables directly against the relevant Obligor, and to adjust, settle or
compromise  the amount or payment  thereof,  in the same  manner and to the same
extent as such  Grantor  might have done.  After  receipt by such Grantor of the
notice from the  Collateral  Agent  referred to in the proviso to the  preceding
sentences, (i) all amounts and proceeds (including instruments) received by such
Grantor in respect of the Receivables shall be received in trust for the benefit
of the Collateral Agent hereunder,  shall be segregated from other funds of such
Grantor and shall be  forthwith  paid over to the  Collateral  Agent in the same
form as so received (with any necessary indorsement) and (ii) such Grantor shall
not  adjust,  settle or  compromise  the amount or  payment  of any  Receivable,
release  wholly or partly any Obligor  thereof,  or allow any credit or discount
thereon.

          (c) No Grantor  will  permit or consent  to the  subordination  of its
right to payment under any of the  Receivables  or the Related  Contracts to any
other indebtedness or obligations of the Obligor thereof.

          SECTION 12.  As to Intellectual Property Collateral.

          (a) With respect to each item of its Intellectual Property Collateral,
each Grantor  agrees to take, at its expense,  all necessary  steps,  including,
without limitation,  in the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other  governmental  authority,  to (i) maintain the validity and
enforceability  of  each  such  item of  Intellectual  Property  Collateral  and
maintain each such item of  Intellectual  Property  Collateral in full force and
effect,  and (ii)  pursue  the  registration  and  maintenance  of each  patent,
trademark,  or copyright registration or application,  now or hereafter included
in the  Intellectual  Property  Collateral of such Grantor,  including,  without
limitation,  the payment of required fees and taxes,  the filing of responses to
office  actions  issued  by the  U.S.  Patent  and  Trademark  Office,  the U.S.


                                       15
<PAGE>

Copyright Office or other governmental  authorities,  the filing of applications
for renewal or extension,  the filing of affidavits  under  Sections 8 and 15 of
the   U.S.   Trademark   Act,   the   filing   of   divisional,    continuation,
continuation-in-part,  reissue  and  renewal  applications  or  extensions,  the
payment   of   maintenance   fees  and  the   participation   in   interference,
reexamination,   opposition,  cancellation,  infringement  and  misappropriation
proceedings.  No Grantor  shall,  without the written  consent of the Collateral
Agent,  discontinue  use  of or  otherwise  abandon  any  Intellectual  Property
Collateral,  or abandon any right to file an  application  for  letters  patent,
trademark,  or copyright,  unless such Grantor shall have previously  determined
that  such use or the  pursuit  or  maintenance  of such  Intellectual  Property
Collateral is no longer desirable in the conduct of such Grantor's  business and
that the loss thereof would not be reasonably  likely to have a Material Adverse
Effect,  in which  case,  such  Grantor  will  give  prompt  notice  of any such
abandonment to the Collateral Agent.

          (b) Each Grantor  agrees  promptly to notify the  Collateral  Agent if
such Grantor learns (i) that any item of the  Intellectual  Property  Collateral
may  have  become   abandoned,   placed  in  the  public   domain,   invalid  or
unenforceable,  or of any adverse  determination  or development  regarding such
Grantor's ownership of any of the Intellectual  Property Collateral or its right
to register the same or to keep and  maintain  and enforce the same,  or (ii) of
any adverse  determination  or the  institution  of any  proceeding  (including,
without  limitation,  the  institution of any proceeding in the U.S.  Patent and
Trademark Office or any court)  regarding any item of the Intellectual  Property
Collateral.

          (c) In the event that any Grantor  becomes  aware that any item of the
Intellectual  Property  Collateral is being  infringed or  misappropriated  by a
third party,  such Grantor shall promptly notify the Collateral  Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate  under the circumstances to protect such Intellectual
Property Collateral,  including,  without limitation,  suing for infringement or
misappropriation   and  for  an   injunction   against  such   infringement   or
misappropriation.

          (d) Each Grantor shall use proper  statutory notice in connection with
its use of each item of its Intellectual  Property Collateral.  No Grantor shall
do or  permit  any  act or  knowingly  omit  to do any  act  whereby  any of its
Intellectual Property Collateral may lapse or become invalid or unenforceable or
placed in the public domain.

          (e) Each Grantor shall take all steps which it or the Collateral Agent
deems reasonable and appropriate under the circumstances to preserve and protect
each  item  of  its  Intellectual   Property  Collateral,   including,   without
limitation,  maintaining the quality of any and all products or services used or
provided in connection with any of the  Trademarks,  consistent with the quality
of the  products  and  services  as of the date  hereof,  and  taking  all steps
necessary to ensure that all licensed  users of any of the  Trademarks  use such
consistent standards of quality.

          (f) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute an agreement, in substantially the form set forth in Exhibit D
hereto (an  "Intellectual  Property  Security  Agreement"),  for  recording  the
security interest granted hereunder to the Collateral Agent in such Intellectual
Property  Collateral  with  the  U.S.  Patent  and  Trademark  Office,  the U.S.
Copyright Office and any other governmental authorities necessary to perfect the
security interest hereunder in such Intellectual Property Collateral.

                                       16
<PAGE>

          (g) Each Grantor agrees that,  should it obtain an ownership  interest
in any item of the  type set  forth  in  Section  1(g)  which is not on the date
hereof  a part of the  Intellectual  Property  Collateral  (the  "After-Acquired
Intellectual  Property"),  (i) the  provisions of Section 1 shall  automatically
apply thereto,  (ii) any such After-Acquired  Intellectual  Property and, in the
case  of  trademarks,  the  goodwill  of the  business  connected  therewith  or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral  subject to the terms and  conditions of this  Agreement with respect
thereto,  (iii) such Grantor  shall give prompt  written  notice  thereof to the
Collateral Agent in accordance  herewith and (iv) such Grantor shall execute and
deliver to the Collateral  Agent an IP Security  Agreement  Supplement  covering
such After-Acquired  Intellectual Property as "Additional Collateral" thereunder
and as defined therein,  and shall record such IP Security Agreement  Supplement
with the U.S. Patent and Trademark  Office,  the U.S.  Copyright  Office and any
other  governmental  authorities  necessary  to perfect  the  security  interest
hereunder in such After-Acquired Intellectual Property.

          Section 13.  Voting Rights; Dividends; Etc.  (a)  So long as no
Event of Default shall have occurred and be continuing:

          (i) Each Grantor  shall be entitled to exercise any and all voting and
     other consensual rights  pertaining to its Security  Collateral or any part
     thereof for any purpose not  inconsistent  with the terms of this Agreement
     or the other Loan Documents; provided, however, that such Grantor shall not
     exercise or refrain from  exercising  any such right if, in the  Collateral
     Agent's  judgment,  such action would have a material adverse effect on the
     value of the Security Collateral or any part thereof.

          (ii) Each Grantor  shall be entitled to receive and retain any and all
     dividends, interest and other distributions paid in respect of its Security
     Collateral; provided, however, that any and all

               (A) dividends,  interest and other  distributions paid or payable
          other than in cash in respect of, and  instruments  and other property
          received,  receivable  or otherwise  distributed  in respect of, or in
          exchange for, such Security Collateral,

               (B) dividends and other  distributions paid or payable in cash in
          respect of such Security  Collateral  in connection  with a partial or
          total  liquidation or dissolution or in connection with a reduction of
          capital, capital surplus or paid-in-surplus and

               (C) cash paid,  payable or  otherwise  distributed  in respect of
          principal  of, or in  redemption  of, or in exchange for, any Security
          Collateral

     shall be, and shall be forthwith  delivered to the Collateral Agent to hold
     as, Security Collateral and shall, if received by such Grantor, be received
     in trust for the benefit of the Collateral  Agent,  be segregated  from the
     other  property or funds of such Grantor and be forthwith  delivered to the
     Collateral  Agent as  Security  Collateral  in the same form as so received
     (with any necessary indorsement).

          (iii) The  Collateral  Agent shall execute and deliver (or cause to be
     executed  and  delivered)  to each  Grantor  all  such  proxies  and  other


                                       17
<PAGE>

     instruments  as such  Grantor  may  reasonably  request  for the purpose of
     enabling  such  Grantor to exercise  the voting and other rights that it is
     entitled to exercise  pursuant  to  paragraph  (i) above and to receive the
     dividends or interest  payments that it is authorized to receive and retain
     pursuant to paragraph (ii) above.

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

          (i) All  rights  of each  Grantor  (x) to  exercise  or  refrain  from
     exercising the voting and other  consensual  rights that it would otherwise
     be entitled to exercise  pursuant to Section 13(a)(i) shall, upon notice to
     such  Grantor  by the  Collateral  Agent,  cease  and  (y) to  receive  the
     dividends,  interest  and other  distributions  that it would  otherwise be
     authorized  to receive  and retain  pursuant  to  Section  13(a)(ii)  shall
     automatically  cease,  and all such rights shall thereupon become vested in
     the Collateral Agent, which shall thereupon have the sole right to exercise
     or refrain from exercising such voting and other  consensual  rights and to
     receive and hold as Security Collateral such dividends,  interest and other
     distributions.

          (ii) All dividends, interest and other distributions that are received
     by each Grantor contrary to the provisions of paragraph (i) of this Section
     13(b) shall be received in trust for the benefit of the  Collateral  Agent,
     shall be segregated from other funds of such Grantor and shall be forthwith
     paid over to the Collateral  Agent as Security  Collateral in the same form
     as so received (with any necessary indorsement).

          Section 14.  As to the Assigned Agreements.  (a)  Each Grantor shall
at its expense:

          (i) perform and observe all the terms and  provisions  of the Assigned
     Agreements  to be  performed  or  observed  by it,  maintain  the  Assigned
     Agreements  in full force and effect,  enforce the Assigned  Agreements  in
     accordance with their terms and take all such reasonable action to such end
     as may be from time to time requested by the Collateral Agent; and

          (ii) furnish to the  Collateral  Agent  promptly upon receipt  thereof
     copies of all  notices,  requests  and  other  documents  received  by such
     Grantor under or pursuant to the Assigned Agreements, and from time to time
     (A) furnish to the Collateral Agent such information and reports  regarding
     the Collateral as the Collateral Agent may reasonably  request and (B) upon
     request of the  Collateral  Agent make to each other party to any  Assigned
     Agreement  such  demands and requests  for  information  and reports or for
     action as such Grantor is entitled to make thereunder.

          (b) Each Grantor agrees that it shall not:

          (i) cancel or terminate any Assigned Agreement or consent to or accept
     any cancellation or termination  thereof,  except in the ordinary course of
     business  and in a manner that would not  reasonably  be expected to have a
     Material Adverse Effect;

          (ii) amend or  otherwise  modify any  Assigned  Agreement  or give any
     consent, waiver or approval thereunder;

                                       18
<PAGE>

          (iii) waive any default under or breach of any Assigned Agreement; or

          (iv) take any other action in connection  with any Assigned  Agreement
     that would  materially  impair the value of the  interest or rights of such
     Grantor  thereunder or that would materially  impair the interest or rights
     of any Secured Party.

          (c) Each  Grantor  hereby  consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured  Parties of each  Assigned  Agreement  to which it is a party by any
other Grantor hereunder.

          Section 15.  Payments  Under the  Assigned  Agreements.  Each  Grantor
agrees,  and has  effectively  so  instructed  each other party to each Assigned
Agreement,  that all payments due or to become due under or in  connection  with
such  Assigned  Agreement  shall be made in  accordance  with  the  terms of the
consents referred to in Section 7(g) above.

          Section 16.  Transfers and Other Liens;  Additional  Shares.  (a) Each
Grantor  agrees  that it shall not (i) other  than in  accordance  with the Loan
Documents,  sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of the Collateral,  except sales of
Inventory in the ordinary course of business,  or (ii) create or suffer to exist
any Lien upon or with  respect to any of the  Collateral  except for the pledge,
assignment and security interest created by this Agreement.

          (b) Each  Grantor  agrees  that it shall (i) cause each  issuer of the
Pledged  Shares not to issue any stock or other  securities in addition to or in
substitution  for the  Pledged  Shares  issued  by such  issuer,  except to such
Grantor, and (ii) pledge hereunder,  immediately upon its acquisition  (directly
or  indirectly)  thereof,  any and all  additional  shares  of  stock  or  other
securities of each issuer of the Pledged Shares.

          Section 17. Collateral Agent Appointed Attorney-in-Fact.  Each Grantor
hereby    irrevocably    appoints   the   Collateral    Agent   such   Grantor's
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,  to take any action and to execute any instrument  that the
Collateral  Agent may deem  necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:

          (a)  to  obtain  and  adjust  insurance  required  to be  paid  to the
     Collateral Agent pursuant to Section 10,

          (b) to ask for, 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,

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

                                       19
<PAGE>

          (d) to file any claims or take any action or institute any proceedings
     that  the  Collateral  Agent  may  deem  necessary  or  desirable  for  the
     collection of any of the Collateral or otherwise to enforce compliance with
     the terms and  conditions  of any  Assigned  Agreement or the rights of the
     Collateral Agent with respect to any of the Collateral.

          Section 18.  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 expenses of the  Collateral
Agent  incurred in connection  therewith  shall be payable by such Grantor under
Section 22(b).

          Section 19. The Collateral Agent's Duties. The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured  Parties'  interest
in the  Collateral  and shall not impose any duty upon it to  exercise  any such
powers.  Except for the safe custody 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,  as to  ascertaining  or taking action
with  respect to calls,  conversions,  exchanges,  maturities,  tenders or other
matters  relative to any Collateral,  whether or not any Secured Party has or is
deemed to have  knowledge of such matters,  or as to the taking of any necessary
steps to preserve  rights against any parties or any other rights  pertaining to
any  Collateral.  The  Collateral  Agent  shall  be  deemed  to  have  exercised
reasonable  care  in the  custody  and  preservation  of any  Collateral  in its
possession if such Collateral is accorded treatment  substantially equal to that
which it accords its own property.

          (b) Anything  contained  herein to the contrary  notwithstanding,  the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary,  appoint one or more subagents (each a "Subagent") for the Collateral
Agent hereunder with respect to all or any part of the Collateral.  In the event
that  the  Collateral  Agent  so  appoints  any  Subagent  with  respect  to any
Collateral,  (i) the assignment  and pledge of such  Collateral and the security
interest  granted in such  Collateral by each Grantor  hereunder shall be deemed
for purposes of this Security  Agreement to have been made to such Subagent,  in
addition  to the  Collateral  Agent,  for the  ratable  benefit  of the  Secured
Parties,  as security for the Secured  Obligations  of such  Grantor,  (ii) such
Subagent shall  automatically  be vested,  in addition to the Collateral  Agent,
with all rights,  powers,  privileges,  interests and remedies of the Collateral
Agent hereunder with respect to such Collateral,  and (iii) the term "Collateral
Agent,"  when  used  herein  in  relation  to any  rights,  powers,  privileges,
interests and remedies of the Collateral  Agent with respect to such Collateral,
shall include such Subagent;  provided,  however, that no such Subagent shall be
authorized  to take any action with  respect to any such  Collateral  unless and
except to the extent expressly authorized in writing by the Collateral Agent.

          Section 20.  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 upon
     default  under the N.Y.  Uniform  Commercial  Code (whether or not the N.Y.
     Uniform  Commercial  Code applies to the affected  Collateral) and also may
     (i) require any of the Grantors to, and each 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 that is reasonably  convenient to both parties and


                                       20
<PAGE>

     (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 are commercially  reasonable;
     (iii) occupy any premises  owned or leased by any of the Grantors where the
     Collateral  or any part  thereof is  assembled  or located for a reasonable
     period in order to  effectuate  its rights and remedies  hereunder or under
     law, without obligation to such Grantor in respect of such occupation;  and
     (iv) exercise any and all rights and remedies of any of the Grantors  under
     or in connection  with the Assigned  Agreements,  the  Receivables  and the
     Related  Contracts or otherwise  in respect of the  Collateral,  including,
     without  limitation,  any and all  rights  of such  Grantor  to  demand  or
     otherwise  require  payment  of any amount  under,  or  performance  of any
     provision  of, the Assigned  Agreements,  the  Receivables  and the Related
     Contracts.  Each Grantor agrees that, to the extent notice of sale shall be
     required by law, at least ten days'  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) 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 Collateral  may, in the discretion of the Collateral  Agent, be held by
     the  Collateral  Agent  as  collateral  for,  and/or  then  or at any  time
     thereafter  applied (after payment of any amounts payable to the Collateral
     Agent pursuant to Section 22) in whole or in part by the  Collateral  Agent
     for the ratable benefit of the Secured Parties against,  all or any part of
     the Secured  Obligations in such order as the Collateral Agent shall elect.
     Any surplus of such cash or cash proceeds held by the Collateral  Agent and
     remaining  after  payment in full of all the Secured  Obligations  shall be
     paid  over to the  applicable  Grantor  or to  whomsoever  may be  lawfully
     entitled to receive such surplus.

          (c) All payments  received by each Grantor under or in connection with
     any Assigned  Agreement or otherwise in respect of the Collateral  shall be
     received  in  trust  for the  benefit  of the  Collateral  Agent,  shall be
     segregated  from other funds of such  Grantor and shall be  forthwith  paid
     over to the  Collateral  Agent in the same  form as so  received  (with any
     necessary indorsement).

          (d) The Collateral  Agent may, without notice to any Grantor except as
     required by law and at any time or from time to time,  charge,  set-off and
     otherwise apply all or any part of the Secured Obligations against the Cash
     Collateral Account or the L/C Cash Collateral Account or any part thereof.

          (e) In the  event  of any  sale  or  other  disposition  of any of the
     Intellectual  Property  Collateral  of any  Grantor,  the  goodwill  of the
     business  connected with and  symbolized by any Trademarks  subject to such
     sale or other disposition shall be included therein, and such Grantor shall
     supply to the Collateral Agent or its designee such Grantor's  know-how and
     expertise,  and documents and things relating to any Intellectual  Property

                                       21
<PAGE>

     Collateral  subject to such sale or other  disposition,  and such Grantor's
     customer   lists  and  other  records  and   documents   relating  to  such
     Intellectual  Property  Collateral  and to the  manufacture,  distribution,
     advertising and sale of products and services of such Grantor.

          Section 21.  Registration  Rights. With respect to Security Collateral
issued by entities (controlled by a Grantor) where the securities are registered
under Section 12(b) or 12(g) of the  Securities  Act of 1934, if the  Collateral
Agent shall  determine  to exercise its right to sell all or any of the Security
Collateral pursuant to Section 20, each Grantor agrees that, upon request of the
Collateral Agent, such Grantor will, at its own expense:

          (a)  execute  and  deliver,  and cause  each  issuer  of the  Security
     Collateral  contemplated to be sold and the directors and officers  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  Security
     Collateral under the provisions of the Securities Act of 1933, as from time
     to time amended (the "Securities Act"), to 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 that, in
     the 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 Securities and Exchange Commission applicable thereto;


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

          (c) 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;

          (d)  provide  the  Collateral  Agent with such other  information  and
     projections as may be necessary or, in the opinion of the Collateral Agent,
     advisable  to  enable  the  Collateral  Agent  to  effect  the sale of such
     Security Collateral; and

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

The Collateral Agent is authorized,  in connection with any sale of the Security
Collateral  pursuant  to Section  19, to deliver or  otherwise  disclose  to any
prospective purchaser of the Security Collateral (i) any registration  statement
or prospectus,  and all supplements and amendments thereto, prepared pursuant to
clause (a) above,  (ii) any information and projections  provided to it pursuant
to clause (d) above and (iii) any other  information in its possession  relating
to the Security Collateral.

                                       22
<PAGE>

          Section  22.  Indemnity  and  Expenses.  (a) Each  Grantor  agrees  to
indemnify the Collateral  Agent from and against any and all claims,  losses and
liabilities growing out of or resulting from this Agreement (including,  without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from the Collateral  Agent's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.

          (b) Each  Grantor  will upon  demand pay to the  Collateral  Agent the
amount of any and all reasonable  expenses,  including the  reasonable  fees and
expenses of its counsel and of any experts and agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement,  (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 or
(iv) the  failure by such  Grantor to perform or observe  any of the  provisions
hereof.

          Section 23.  Amendments;  Waivers;  Etc. (a) No amendment or waiver of
any provision of this Agreement,  and no consent to any departure by any Grantor
herefrom,  shall in any event be  effective  unless the same shall be in writing
and signed by the  Collateral  Agent,  and then such waiver or consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

          (b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising any right, power or privilege hereunder,  shall operate as a
waiver  thereof;  nor shall any single or partial  exercise  of any such  right,
power or  privilege  preclude  any  other or  further  exercise  thereof  or the
exercise of any other right, power or privilege.

          (c) Upon the  execution  and  delivery  by any  Person  of a  security
agreement  supplement  in  substantially  the form of  Exhibit A hereto  (each a
"Security  Agreement  Supplement"),  (i) such Person  shall be referred to as an
"Additional  Grantor" and shall be and become a Grantor,  and each  reference in
this  Agreement  to  "Grantor"  shall  also  mean  and be a  reference  to  such
Additional  Grantor and (ii) the Schedules  attached to each Security  Agreement
Supplement  shall  be  incorporated  into and  become  a part of and  supplement
Schedules  I  through  VI  hereto,  and the  Collateral  Agent may  attach  such
Schedules as supplements to such Schedules, and each reference to such Schedules
shall  mean and be a  reference  to such  Schedules,  as  supplemented  pursuant
hereto.

          Section   24.   Addresses   for   Notices.   All   notices  and  other
communications  provided for hereunder shall be in writing  (including  telecopy
communication) and, mailed (by certified mail), telecopied, or delivered by hand
to the Borrowers or to the  Collateral  Agent,  as the case may be, in each case
addressed to such Person at its address specified in the Credit Agreement or, as
to any other  Grantor at its address set forth below the name of such Grantor on
the signature pages hereto, or to the Security Agreement  Supplement to which it
is a party, as the case may be, or as to any party,  either party, at such other
address as shall be designated  by such party in a written  notice to each other
party complying as to delivery with the terms of this Section.  All such notices
and other communications shall, when mailed (by certified mail), telecopied,  or
delivered shall be effective when received by the party being notified. Delivery
by  telecopier  of an executed  counterpart  of any  amendment  or waiver of any
provision of this Agreement, any Security Agreement Supplement hereto, or of any
Schedule  hereto to be executed and  delivered  hereunder  shall be effective as
delivery of an original executed counterpart hereto.

                                       23
<PAGE>

          Section 25. Continuing Security Interest; Assignments under the Credit
Agreement.  This Agreement  shall create a continuing  security  interest in the
Collateral  and shall (a) remain in full force and effect until the later of (i)
the payment in full in cash of the Secured Obligations and (ii) the later of the
Tranche A  Termination  Date,  the Tranche B Termination  Date,  and the Working
Capital  Termination Date, (b) be binding upon each Grantor,  its successors and
assigns and (c) inure,  together with the rights and remedies of the  Collateral
Agent hereunder, to the benefit of the Collateral Agent, the Secured Parties and
their  respective  successors,  transferees  and assigns.  Without  limiting the
generality of the foregoing clause (c), any Lender Party may assign or otherwise
transfer  all or any  portion  of its rights  and  obligations  under the Credit
Agreement (including,  without limitation, all or any portion of its Commitment,
the Advances  owing to it and the Note or Notes held by it to any other  Person,
and such other Person  shall  thereupon  become  vested with all the benefits in
respect  thereof  granted to such Lender  herein or  otherwise,  in each case as
provided in Section 9.07 of the Credit Agreement.

          Section  26.  Release  and  Termination.  (a)  Upon any  sale,  lease,
transfer or other  disposition of any item of Collateral in accordance  with the
terms of the Loan  Documents  (other  than sales of  Inventory  in the  ordinary
course of business),  the  Collateral  Agent will, at the  applicable  Grantor's
expense,  execute and deliver to such  Grantor  such  documents  as such Grantor
shall reasonably request to evidence the release of such item of Collateral from
the assignment and security interest granted hereby; provided, however, that (i)
at the time of such request and such release no Default  shall have occurred and
be  continuing,  (ii)  the  applicable  Grantor  shall  have  delivered  to  the
Collateral  Agent,  at least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease,  transfer or other  disposition in reasonable  detail,
including the price thereof and any expenses in connection  therewith,  together
with a form of release for execution by the Collateral Agent and a certification
by such Grantor to the effect that the  transaction  is in  compliance  with the
Loan Documents and as to such other matters as the Collateral  Agent may request
and (iii) the proceeds of any such sale,  lease,  transfer or other  disposition
required to be applied in accordance  with Section 2.05 of the Credit  Agreement
shall be paid to, or in  accordance  with the  instructions  of, the  Collateral
Agent at the closing.

          (b) Upon the later of (i) the  payment in full in cash of the  Secured
Obligations, and (ii) the later of the Tranche A Termination Date, the Tranche B
Termination  Date,  and  the  Working  Capital  Termination  Date,  the  pledge,
assignment and security  interest  granted hereby shall terminate and all rights
to the  Collateral  shall  revert  to the  applicable  Grantor.  Upon  any  such
termination,  the Collateral  Agent will, at the applicable  Grantor's  expense,
execute  and  deliver to such  Grantor  such  documents  as such  Grantor  shall
reasonably request to evidence such termination.

          Section 27.  Investing of Amounts in the Cash  Collateral  Account and
the L/C Cash  Collateral  Account.  If requested by a Borrower,  the  Collateral
Agent  will,  subject to the  provisions  of Section  20,  from time to time (a)
invest  amounts  on  deposit  in the Cash  Collateral  Account  and the L/C Cash
Collateral  Account in such Cash Equivalents (as to which all action required by
Section 8 shall have been taken) as such Borrower may select and the  Collateral
Agent may approve and (b) invest interest paid on the Cash Equivalents  referred
to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents
that may mature or be sold, in each case in such Cash  Equivalents  (as to which
all actions  required by Section 8 shall have been taken) as such  Borrower  may
select and the Collateral Agent may approve (the Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Collateral Investments"). Interest
and proceeds that are not invested or reinvested  in Collateral  Investments  as

                                       24
<PAGE>

provided above shall be deposited and held in the Cash Collateral Account or the
L/C Cash Collateral Account, as the case may be.

          Section 28. Execution in Counterparts.  This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.  Delivery of an  executed  counterpart  of a  signature  page to this
Agreement by telecopier  shall be effective as delivery of an original  executed
counterpart of this Agreement.

          Section  29. The  Mortgages.  In the event that any of the  Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent  with the terms of this
Agreement,  then with  respect to such  Collateral,  the terms of such  Mortgage
shall be  controlling  in the case of fixtures and leases,  letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms  of  this  Agreement  shall  be  controlling  in the  case  of  all  other
Collateral.

          Section 30.  Governing  Law. This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of New York,  except to the
extent that the validity or 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.

                                       25
<PAGE>

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

                                   ICG EQUIPMENT, INC.



                                   By  /s/ H. Don Teague
                                      ---------------------
                                     Title:

                                   Address:     161 Inverness Drive West
                                                Englewood, CO 80112



                                   ICG NETAHEAD, INC.



                                   By  /s/ H. Don Teague
                                      ---------------------
                                     Title:

                                   Address:     161 Inverness Drive West
                                                Englewood, CO 80112
<PAGE>

                                   Schedule I


                        PLEDGED SHARES AND PLEDGED DEBT


                                     Part I

<TABLE>
<CAPTION>
                                                                                     Percentage of
                                                  Stock Certificate      Number       Outstanding
Stock Issuer   Class of Stock      Par Value            No(s)          of Shares         Shares
--------------------------------------------------------------------------------------------------

<S>  <C>             <C>              <C>                <C>              <C>              <C>
     NIL             NIL              NIL                NIL              NIL              NIL
</TABLE>



                                    Part II


<TABLE>
                                                                                     Original
                                                                                     Principal
Debt Issuer    Description of Debt     Debt Certificate No(s).     Final Maturity     Amount
----------------------------------------------------------------------------------------------
<S><C>                 <C>                       <C>                     <C>            <C>
   NIL                 NIL                       NIL                     NIL            NIL
</TABLE>

<PAGE>

                                  Schedule II

                              ASSIGNED AGREEMENTS

                           Please see attached lists.



<PAGE>

                                  Schedule III



                      LOCATIONS OF EQUIPMENT AND INVENTORY



             Locations of Equipment & Inventory: see attached list



<PAGE>


                                                              Schedule IV to the
                                                              Security Agreement


                            PATENTS, TRADEMARKS AND
                      TRADE NAMES, COPYRIGHTS AND LICENSES




Grantor   Patents   Country   Patent No.  Applic. No.   Filing Date   Issue Date
--------------------------------------------------------------------------------


                                     NONE.




          Trademarks and                    Reg.   Applic.    Filing    Issue
Grantor    Trade Names     Country   Mark    No.     No.       Date     Date
--------------------------------------------------------------------------------

                                     NONE.


                                                                 Filing    Issue
Grantor   Copyrights   Country   Title   Reg. No.   Applic. No.   Date     Date
--------------------------------------------------------------------------------

                                     NONE.



Grantor   Licenses  Title     Date      Parties
--------------------------------------------------------------------------------

                ORDINARY COURSE OF BUSINESS SOFTWARE AGREEMENTS.

<PAGE>

                                   Schedule V



                                PLEDGED ACCOUNTS


Name and Address of Bank      Grantor        Account Number

         NIL                    NIL               NIL


<PAGE>


                                  Schedule VI


                          PERMITTED UNPLEDGED ACCOUNTS


                        Name and Address       Account
                            of Bank            Number


                           Please see attached list.


<PAGE>


                                                                Exhibit A to the
                                                              Security Agreement



                     FORM OF SECURITY AGREEMENT SUPPLEMENT

                                   [Date of Security Agreement Supplement]

   Royal Bank of Canada,
   as the Collateral Agent for the
   Secured Parties referred to in the
   Credit Agreement referred to below
   1585 Broadway
   New York, New York
   Attn: ___________________



                              ICG Equipment, Inc.
                              ICG NetAhead, Inc.


Ladies and Gentlemen:

     Reference is made to (i) the Credit  Agreement  dated as of August 12, 1999
(as amended, amended and restated,  supplemented or otherwise modified from time
to time,  the  "Credit  Agreement"),  among  ICG  Equipment,  Inc.,  a  Colorado
corporation,  ICG NetAhead,  Inc., a Delaware  corporation,  the Lender  Parties
party  thereto,  Royal Bank of Canada,  as collateral  agent  (together with any
successor  collateral  agent  appointed  pursuant  to Article  VII of the Credit
Agreement,  the "Collateral Agent"), and Royal Bank of Canada, as administrative
agent for the Lender Parties,  and (ii) the Security  Agreement dated August 12,
1999 (as amended, amended and restated,  supplemented or otherwise modified from
time to time, the "Security  Agreement")  made by the Grantors from time to time
party thereto in favor of the Collateral  Agent for the Secured  Parties.  Terms
defined in the Credit  Agreement or the  Security  Agreement  and not  otherwise
defined  herein  are used  herein as  defined  in the  Credit  Agreement  or the
Security Agreement.

          Section 1. Grant of  Security.  The  undersigned  hereby  assigns  and
pledges to the Collateral  Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties,  a security interest in, all of its right, title and interest in and to
all of the  Collateral  of the  undersigned,  whether  now  owned  or  hereafter
acquired by the  undersigned,  wherever  located  and  whether now or  hereafter
existing or arising,  including,  without limitation, the property and assets of
the  undersigned  set  forth  on  the  attached  supplemental  schedules  to the
Schedules to the Security Agreement.

          Section 2. Security for Obligations. The pledge and assignment of, and
the grant of a security  interest in, the  Collateral by the  undersigned  under
this  Security  Agreement  Supplement  and the  Security  Agreement  secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in  respect of the Loan  Documents,  whether  direct or  indirect,  absolute  or
contingent,  and whether for  principal,  reimbursement  obligations,  interest,
premiums,  penalties, fees, indemnifications,  contract causes of action, costs,

<PAGE>

expenses or otherwise.  Without  limiting the generality of the foregoing,  this
Security Agreement  Supplement and the Security Agreement secures the payment of
all amounts that  constitute  part of the Secured  Obligations and that would be
owed by the  undersigned  to any Secured Party under the Loan  Documents but for
the fact that such Secured Obligations are unenforceable or not allowable due to
the existence of a bankruptcy,  reorganization or similar  proceeding  involving
the undersigned or any Grantor.

          Section  3.   Supplements  to  Security   Agreement   Schedules.   The
undersigned has attached hereto supplemental Schedules I, II, III, IV, V, VI and
VII to Schedules I, II, III,  IV, V, VI and VII,  respectively,  to the Security
Agreement,  and the  undersigned  hereby  certifies,  as of the date first above
written, that such supplemental  schedules have been prepared by the undersigned
in substantially the form of the equivalent  Schedules to the Security Agreement
and are complete and correct in all material respects.

          Section 4.  Representations  and Warranties.  The  undersigned  hereby
makes each  representation  and  warranty set forth in Section 7 of the Security
Agreement (as supplemented by the attached  supplemental  schedules) to the same
extent as each other Grantor.

          Section 5. Obligations Under the Security  Agreement.  The undersigned
hereby agrees,  as of the date first above written,  to be bound as a Grantor by
all of the terms and provisions of the Security  Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written,  that each reference in the Security  Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.

          Section 6.  Governing Law.  This Security Agreement Supplement shall
be governed by, and construed in accordance with, the laws of the State of New
York.

                                   Very truly yours,

                                   [NAME OF ADDITIONAL GRANTOR]


                                   By_______________________________
                                     Title:

                                             Address for notices:
                                             _______________________
                                             _______________________
                                             _______________________



<PAGE>



                                   Exhibit B


                         FORM OF PLEDGED ACCOUNT LETTER



                                   _______________, 19__

[Name and address
of Pledged Account Bank]

                              ICG Equipment, Inc.
                               ICG NetAhead, Inc.

Gentlemen/women:

          Reference  is made to [deposit  account no.  __________]  [the certain
deposit  accounts  listed on  Schedule  I hereto]  into  which  certain  monies,
instruments  and other  properties  are deposited  from time to time and deposit
account no. __________ (collectively, the "Pledged Account") maintained with you
by  ____________________  (the  "Grantor").  Pursuant to the Security  Agreement
dated  August 12, 1999 (the  "Security  Agreement"),  the Grantor has granted to
Royal Bank of Canada,  as collateral  agent (the "Agent") for the Lender Parties
referred to in the Credit  Agreement  dated as of August 12,  1999 (the  "Credit
Agreement")  with ICG  Equipment,  Inc.,  and ICG  NetAhead,  Inc.,  a  security
interest in certain property of the Grantor,  including, among other things, the
following  (the  "Account  Collateral"):  the  Pledged  Account,  all funds held
therein  and  all  certificates  and  instruments,  if  any,  from  time to time
representing or evidencing the Pledged Account, all interest,  dividends,  cash,
instruments  and  other  property  from  time to time  received,  receivable  or
otherwise  distributed  in respect of or in exchange  for any or all of the then
existing  Account  Collateral  and all proceeds of any and all of the  foregoing
Account Collateral and, to the extent not otherwise  included,  all (i) payments
under insurance (whether or not the Collateral Agent is the loss payee thereof),
or any indemnity,  warranty or guaranty,  payable by reason of loss or damage to
or otherwise  with respect to any of the foregoing  Account  Collateral and (ii)
cash. It is a condition to the continued maintenance of the Pledged Account with
you that you agree to this letter agreement.

          By signing  this  letter  agreement,  you  acknowledge  notice of, and
consent to the terms and  provisions  of, the Security  Agreement and confirm to
the Collateral  Agent that the  description of the Pledged  Account set forth on
Schedule V of the Security  Agreement  is correct and that you have  received no
notice of any other pledge or assignment of the Pledged  Account.  Further,  you
hereby agree with the Collateral Agent that:

          (a)  Notwithstanding  anything to the contrary in any other  agreement
     relating to the Pledged Account, the Pledged Account is and will be subject
     to the terms and conditions of the Security  Agreement,  will be maintained
     solely for the benefit of the  Collateral  Agent,  will be entitled  "Royal
     Bank of Canada, as Collateral Agent, Re: [name of the Grantor]" and will be
     subject to  written  instructions  only from an  officer of the  Collateral
     Agent.

          (b) You will  collect  mail from the  Pledged  Account on each of your
     business days at times that coincide with the delivery of mail thereto.


<PAGE>

          (c) You will follow your usual  operating  procedures for the handling
     of any remittance received in the Pledged Account that contains restrictive
     endorsements,  irregularities  (such as a variance  between the written and
     numerical  amounts),   undated  or  postdated  items,  missing  signatures,
     incorrect payees, etc.

          (d) You will  endorse  and  process  all  eligible  checks  and  other
     remittance  items not covered by paragraph  (c) and deposit such checks and
     remittance items in the Pledged Account.

          (e) You will  maintain  a record of all  checks  and other  remittance
     items  received in the Pledged  Account and, in addition to  providing  the
     Grantor  with  photostats,  vouchers,  enclosures,  etc. of such checks and
     remittance  items on a daily basis,  furnish to the Collateral  Agent (i) a
     monthly  statement of the Pledged  Account and (ii) a daily  collection and
     check float report,  to be  transmitted  electronically  to the  Collateral
     Agent at: 1585 Broadway, New York, New York, Attention: __________.

          (f) You will  transfer,  in same day funds,  on each of your  business
     days,  [after you have received  written notice from the  Collateral  Agent
     that a  Default  has  occurred  under the  Credit  Agreement]  all  amounts
     collected  from the Pledged  Account on such day to the  following  account
     (the "Cash Collateral Account"):

               ICG Equipment, Inc.
               ICG NetAhead, Inc.
               Account No. __________
               ______________________
               ______________,
               New York, New York _____
               Attention:  ____________________

     Each  such  transfer  of  funds  shall  neither  comprise  only  part  of a
     remittance nor reflect the rounding off of any funds so transferred.

          (g) All transfers  referred to in paragraph (f) above shall be made by
     the   undersigned   irrespective   of,  and  without   deduction  for,  any
     counterclaim,  defense,  recoupment or set-off and shall be final,  and the
     undersigned  will not seek to  recover  from the  Collateral  Agent for any
     reason any such payment once made.

          (h) All service  charges and fees with respect to the Pledged  Account
     shall be payable by the  Grantor,  and  deposited  checks  returned for any
     reason shall not be charged to the Pledged Account.

          (i) The  Collateral  Agent shall be  entitled to exercise  any and all
     rights of the Grantor in respect of the Pledged  Account in accordance with
     the terms of the Security  Agreement,  and the undersigned  shall comply in
     all respects with such exercise.

          You hereby represent and warrant that the person executing this letter
agreement on your behalf is duly authorized to do so.

          No amendment or waiver of any provision of this letter agreement,  nor
consent to any  departures  by you or the Grantor  herefrom,  shall be effective
unless  the same  shall be in  writing  as signed by you,  the  Grantor  and the
Collateral Agent.

                                       2
<PAGE>

          This letter  agreement  shall be binding upon you and your  successors
and assigns and shall inure to the benefit of the Collateral  Agent, the Secured
Parties and their  successors,  transferees and assigns.  You may terminate this
letter  agreement only upon thirty days' prior written notice to the Grantor and
the Collateral  Agent. Upon such termination you shall close the Pledged Account
and transfer all funds in the Pledged  Account to the Cash  Collateral  Account.
After any such termination,  you shall nonetheless  remain obligated promptly to
transfer to the Cash Collateral Account all funds and other property received in
respect of the Pledged Account.

          This letter  agreement  may be executed in any number of  counterparts
and by different parties hereto in separate counterparts,  each of which when so
executed  shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of an original executed counterpart of this letter agreement.

          Please indicate your acknowledgment of and agreement to the provisions
of this letter agreement by signing in the appropriate  space provided below and
returning  this letter  agreement to Royal Bank of Canada,  1585  Broadway,  New
York, New York, Telecopier No.: (212) ___-____, Attention:  ________________. If
you elect to deliver this letter agreement by telecopier, please arrange for the
executed original to follow by next-day courier.

          This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York.

                                Very truly yours,

                                [NAME OF GRANTOR]


                                   By:
                                     Title:


                                   Royal Bank of Canada, as Collateral Agent


                                   By:
                                     Title:


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

[NAME OF BANK]


By:
     Title:

                                       3
<PAGE>


                                                                    Exhibit C to
                                                          the Security Agreement


                         FORM OF CONSENT AND AGREEMENT

          The  undersigned  hereby  acknowledges  notice of, and consents to the
terms and  provisions  of, the  Security  Agreement  dated  August 12, 1999 (the
"Security  Agreement",  the terms  defined  therein being used herein as therein
defined) from  ____________________  (the  "Grantor") to Royal Bank of Canada as
collateral  agent (the  "Collateral  Agent") for the Lender Parties  referred to
therein, and hereby agrees with the Collateral Agent that:

          (a) The  undersigned  will make all payments to be made by it under or
     in connection  with the __________  Agreement dated  _______________,  19__
     (the "Assigned Agreement") between the undersigned and the Grantor directly
     to the  Cash  Collateral  Account  or  otherwise  in  accordance  with  the
     instructions of the Collateral Agent.

          (b) All payments  referred to in paragraph  (a) above shall be made by
     the   undersigned   irrespective   of,  and  without   deduction  for,  any
     counterclaim,  defense,  recoupment or set-off and shall be final,  and the
     undersigned  will not seek to  recover  from  the  Collateral  Agent or any
     Lender Party for any reason any such payment once made.

          (c) The  Collateral  Agent shall be  entitled to exercise  any and all
     rights  and  remedies  of the  Grantor  under  the  Assigned  Agreement  in
     accordance  with the terms of the Security  Agreement,  and the undersigned
     shall comply in all respects with such exercise.

          (d) The  undersigned  has not and will not,  without the prior written
     consent of the  Collateral  Agent,  (i)  assign,  cancel or  terminate  the
     Assigned Agreement or consent to or accept any assignment,  cancellation or
     termination  thereof,  or (ii)  amend  or  otherwise  modify  the  Assigned
     Agreement, or (iii) consent to any assignment of the Assigned Agreements to
     any Person other than the Collateral Agent for the Secured Parties.

          (e) In the event of a default by the Grantor in the performance of any
     of its obligations under the Assigned Agreement,  or upon the occurrence or
     non-occurrence of any event or condition under the Assigned Agreement which
     would immediately or with the passage of any applicable grace period or the
     giving of notice,  or both,  enable the undersigned to terminate or suspend
     its obligations  under the Assigned  Agreement,  the undersigned  shall not
     terminate  the  Assigned  Agreement  until it first  gives  written  notice
     thereof to the Collateral  Agent and permits the Grantor and the Collateral
     Agent the  period  of time  afforded  to the  Grantor  under  the  Assigned
     Agreement to cure such default.

          (f)  The   undersigned   shall  deliver  to  the   Collateral   Agent,
     concurrently  with the  delivery  thereof  to the  Grantor,  a copy of each
     notice, request or demand given by the undersigned pursuant to the Assigned
     Agreement.

          (g) Except as  specifically  provided in this  Consent and  Agreement,
     neither the  Collateral  Agent nor any other  Secured  Party shall have any
     liability or  obligation  under the Assigned  Agreement as a result of this
     Consent and Agreement, the Security Agreement or otherwise.


<PAGE>

          In order to induce  the  Lender  Parties  to make  Advances  and issue
Letters of Credit under the Credit  Agreement  and the Hedge Banks to enter into
Secured  Hedge  Agreements  from  time to  time,  the  undersigned  repeats  and
reaffirms  for the  benefit  of the  Secured  Parties  the  representations  and
warranties made by it in the Assigned Agreement.

          This letter  agreement  may be executed in any number of  counterparts
and by different parties hereto in separate counterparts,  each of which when so
executed  shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of an original executed counterpart of this letter agreement.

          This Consent and Agreement  shall be binding upon the  undersigned and
its  successors  and  assigns,  and shall  inure,  together  with the rights and
remedies of the  Collateral  Agent  hereunder,  to the benefit of the Collateral
Agent, the Lender Parties and their  successors,  transferees and assigns.  This
Consent and Agreement  shall be governed by and construed in accordance with the
laws of the State of New York.

          IN WITNESS  WHEREOF,  the undersigned has duly  executed  this Consent
and  Agreement as of the date set opposite its name below.


Dated:  _______________, 19__               [NAME OF OBLIGOR]

                                   By:
                                        Title:




                                       3
<PAGE>


                                                                Exhibit D to the
                                                              Security Agreement

                FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT


          This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement")  dated  August  12,  1999,  is made  by the  Persons  listed  on the
signature pages hereof (collectively,  the "Grantors") in favor of Royal Bank of
Canada, as collateral agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).

          WHEREAS,  __________________________,   a  ________  corporation,  has
entered into a Credit Agreement dated as of August 12, 1999 (as amended, amended
and restated,  supplemented or otherwise modified from time to time, the "Credit
Agreement"),  with Royal Bank of Canada, as Administrative  Agent, Royal Bank of
Canada, as Collateral Agent, and the Lender Parties party thereto. Terms defined
in the Credit  Agreement  and not  otherwise  defined  herein are used herein as
defined in the Credit Agreement.

          WHEREAS,  as a condition  precedent  to the making of Advances and the
issuance of Letters of Credit by the Lender  Parties under the Credit  Agreement
and the entry into  Secured  Hedge  Agreements  by the Hedge  Banks from time to
time,  each Grantor has executed and delivered that certain  Security  Agreement
made by the Grantors to the Collateral  Agent dated August 12, 1999 (as amended,
amended and restated,  supplemented or otherwise modified from time to time, the
"Security Agreement").

          WHEREAS,  under the terms of the  Security  Agreement,  Grantors  have
granted a security  interest  in,  among other  property,  certain  intellectual
property of the Grantors to the Collateral  Agent for the ratable benefit of the
Secured  Parties,  and have  agreed as a  condition  thereof to execute  this IP
Security  Agreement  covering such intellectual  property for recording with the
U.S. Patent and Trademark  Office,  the United States Copyright Office and other
governmental authorities.

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

          SECTION  1.  Grant of  Security.  Each  Grantor  hereby  grants to the
Collateral  Agent for the  ratable  benefit  of the  Secured  Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):

          (i) The United  States,  international,  and foreign  patents,  patent
     applications  and patent  licenses  set forth in Schedule A hereto (as such
     Schedule  A may be  supplemented  from time to time by  supplements  to the
     Security  Agreement and this IP Security  Agreement,  each such  supplement
     being in substantially the form of Exhibit G to the Security  Agreement (an
     "IP Security Agreement Supplement"), executed and delivered by such Grantor
     to the  Collateral  Agent from time to time),  together  with all reissues,
     divisions,    continuations,    continuations-in-part,    extensions    and
     reexaminations  thereof,  and all rights therein  provided by international
     treaties or conventions (the "Patents");

          (ii)  The  United  States  and  foreign  trademark  and  service  mark
     registrations,  applications,  and  licenses set forth in Schedule B hereto

<PAGE>

     (as such  Schedule B may be  supplemented  from time to time by IP Security
     Agreement  Supplements  executed  and  delivered  by  such  Grantor  to the
     Collateral Agent from time to time), (the "Trademarks");

          (iii)  The   copyrights,   United   States   and   foreign   copyright
     registrations and applications and copyright licenses set forth in Schedule
     C hereto (as such  Schedule C may be  supplemented  from time to time by IP
     Security  Agreement  Supplements  executed and delivered by such Grantor to
     the Collateral Agent from time to time) (the "Copyrights");

          (iv) any and all  claims  for  damages  for past,  present  and future
     infringement,  misappropriation  or breach  with  respect  to the  Patents,
     Trademarks and Copyrights,  with the right, but not the obligation,  to sue
     for and collect, or otherwise recover, such damages; and

          (v) any and all proceeds of the foregoing.

          SECTION 2. Recordation.  Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.

          SECTION 3. Execution in  Counterparts.  This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.

          SECTION 4. Grants, Rights and Remedies. This IP Security Agreement has
been entered into in conjunction with the provisions of the Security  Agreement.
Each Grantor does hereby  acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the  Collateral  are more fully set forth in the Security  Agreement,
the terms and  provisions  of which are  incorporated  herein by reference as if
fully set forth herein.

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

                         [NAME OF BORROWER]


                         By
                             Name:
                             Title:

                         Address for Notices:
                         161 Inverness Drive West
                         Englewood, CO  80112



                                       2
<PAGE>


                         [NAME OF GRANTOR]


                         By
                             Name:
                             Title:

                         Address for Notices:





                         [NAME OF GRANTOR]


                         By
                             Name:
                             Title:

                         Address for Notices:




                         [ETC.]


                     [IS AN ACKNOWLEDGMENT FORM NECESSARY?]


                                       3
<PAGE>


                                                                Exhibit E to the
                                                              Security Agreement

          FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT


          This  INTELLECTUAL  PROPERTY SECURITY  AGREEMENT  SUPPLEMENT (this "IP
Security  Agreement  Supplement")  dated  ________,  ____, is made by the Person
listed on the  signature  page hereof (the  "Grantor") in favor of Royal Bank of
Canada, as collateral agent (the "Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).

          WHEREAS,  __________________________,   a  ________  corporation,  has
entered into a Credit Agreement dated as of August 12, 1999 (as amended, amended
and restated,  supplemented or otherwise modified from time to time, the "Credit
Agreement"),  with Royal Bank of Canada, as Administrative  Agent, Royal Bank of
Canada, as Collateral Agent, and the Lender Parties party thereto. Terms defined
in the Credit  Agreement  and not  otherwise  defined  herein are used herein as
defined in the Credit Agreement.

          WHEREAS,  pursuant  to the Credit  Agreement,  the Grantor and certain
other Persons have executed and delivered that certain  Security  Agreement made
by the Grantor and such other Persons to the  Collateral  Agent dated August 12,
1999 (as amended, amended and restated,  supplemented or otherwise modified from
time to time, the "Security  Agreement").  To create a short form version of the
Security  Agreement  covering certain  intellectual  property of the Grantor and
such other Persons for recording with the U.S. Patent and Trademark Office,  the
United States Copyright Office and other governmental  authorities,  the Grantor
and such other  Persons have executed and  delivered  that certain  Intellectual
Property  Security  Agreement  made by the Grantor and such other Persons to the
Collateral  Agent dated  ________,  ______ (as  amended,  amended and  restated,
supplemented  or  otherwise  modified  from  time  to  time,  the  "IP  Security
Agreement").

          WHEREAS, under the terms of the Security Agreement and the IP Security
Agreement,  the  Grantor  has  granted a  security  interest  in the  Additional
Collateral  (as  defined  in Section 1 below) of the  Grantor to the  Collateral
Agent  for the  ratable  benefit  of the  Secured  Parties  and has  agreed as a
condition thereof to execute this IP Security Agreement Supplement for recording
with the U.S. Patent and Trademark  Office,  the United States  Copyright Office
and other governmental authorities.

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

          SECTION 1.  Confirmation  of Grant of  Security.  The  Grantor  hereby
acknowledges  and  confirms the grant of a security  interest to the  Collateral
Agent  for the  ratable  benefit  of the  Secured  Parties  under  the  Security
Agreement and the IP Security  Agreement in and to all of the  Grantor's  right,
title and interest in and to the following (the "Additional Collateral"):

          (i) The United  States,  international,  and foreign  patents,  patent
     applications,  and patent licenses set forth in Schedule A hereto, together
     with  all  reissues,   divisions,   continuations,   continuations-in-part,
     extensions and reexaminations  thereof,  and all rights therein provided by
     international treaties or conventions (the "Patents");

          (ii)  The  United  States  and  foreign  trademark  and  service  mark
     registrations,  applications,  and  licenses set forth in Schedule B hereto
     (the "Trademarks");

<PAGE>

          (iii) The copyrights,  associated  United States and foreign copyright
     registrations and applications and copyright licenses set forth in Schedule
     C hereto (the "Copyrights");

          (iv) any and all  claims  for  damages  for past,  present  and future
     infringement,  misappropriation  or breach  with  respect  to the  Patents,
     Trademarks and Copyrights,  with the right, but not the obligation,  to sue
     for and collect, or otherwise recover, such damages; and

          (v) any and all proceeds of the foregoing.

          SECTION 2. Supplement to Security Agreement and IP Security Agreement.
Schedule V to the Security  Agreement and Schedule[s] [A,] [B and] [C] to the IP
Security  Agreement  are  each,   effective  as  of  the  date  hereof,   hereby
supplemented to add to such Schedules the Additional Collateral.

          SECTION 3. Recordation.  The Grantor  authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement.

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

                         [NAME OF GRANTOR]


                         By
                             Name:
                             Title:

                         Address for Notices:
                         161 Inverness Drive West
                         Englewood, CO  80112



                     [IS AN ACKNOWLEDGMENT FORM NECESSARY?]



                                      2