Document:

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                                                                    Exhibit 10.3

                               SECURITY AGREEMENT

     THIS SECURITY AGREEMENT is dated as of this 19th day of June, 2002, by and
among TREX COMPANY, LLC, a Delaware limited liability company, TREX COMPANY,
INC., a Delaware corporation (collectively, the "Debtor") and BRANCH BANKING AND
TRUST COMPANY OF VIRGINIA, a national banking association (the "Collateral
Agent"), as collateral agent for the benefit of the Secured Parties (as defined
in the Intercreditor Agreement (as hereinafter defined)).

     The Debtor and Branch Banking and Trust Company of Virginia, a Virginia
banking corporation (the "Lender") are parties to a Credit Agreement dated as
even date herewith (as from time to time amended, restated, supplemented or
otherwise modified, the "Credit Agreement"), pursuant to which the Lender is
making a $20,000,000 revolving credit facility (the "Revolving Credit Facility")
and term loans of up to $12,600,000 (the "Term Loans") available to the Debtor.
The Debtor and the Noteholders (as defined in and identified therein) are
parties to a Note Purchase Agreement dated as of June 19, 2002 (as from time to
time amended, restated, supplemented or otherwise modified, the "Note
Agreement"), pursuant to which the Debtor is selling Senior Secured Notes (as
defined in the Note Agreement) in the aggregate principal amount of $40,000,000
to the Noteholders.

     The Collateral Agent has entered into that certain Intercreditor and
Collateral Agency Agreement dated as of June 19, 2002 by and among the
Collateral Agent and certain Secured Parties identified and defined therein in
connection with certain extensions of credit and financial accommodations to the
Debtor (as from time to time amended, restated, supplemented or otherwise
modified, the "Intercreditor Agreement").

     The execution and delivery of this Security Agreement by the Debtor is
required by Section 4.01 of the Credit Agreement and Section 4.10 of the Note
Agreement, and the Debtor desires to grant to the Collateral Agent for the
benefit of the Secured Parties a security interest in and Lien on and against
its property to secure its obligations under the Credit Agreement and the Note
Agreement.

     Accordingly, for and in consideration of good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Debtor and the
Collateral Agent hereby agree as follows:

SECTION 1 - DEFINITIONS

     The following terms shall have the following respective meanings:

          "Accounts" means all of the Debtor's now owned or hereafter acquired
or arising "accounts," as defined in the UCC, including any rights to payment
for the sale or lease of goods or rendition of services, whether or not they
have been earned by performance.

          "Chattel Paper" means all of the Debtor's now owned or hereafter
acquired "chattel paper," as defined in the UCC, including electronic chattel
paper.

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          "Collateral" has the meaning set forth in Section 2.

          "Collection Account" has the meaning set forth in Section 6.3.

          "Deposit Accounts" means all "deposit accounts," as defined in the
UCC, now or hereafter held in the name of the Debtor.

          "Dispute" has the meaning set forth in Section 10.4.

          "Documents" means all "documents," as defined in the UCC, including
bills of lading, warehouse receipts or other documents of title, now owned or
hereafter acquired by Debtor.

          "Equipment" means all of the Debtor's now owned or hereafter acquired
"equipment," as defined in the UCC, including all of the Debtor's machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory), including embedded software, motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, molds and office equipment, as well as all of such types of property
leased by the Debtor and all of the Debtor's rights and interests with respect
thereto under such leases (including, without limitation, options to purchase);
together with all present and future additions and accessions thereto,
replacements therefor, component and auxiliary parts and supplies used or to be
used in connection therewith, and all substitutes for any of the foregoing, and
all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.

          "Event of Default" and "Default" have the respective meanings assigned
thereto in the Intercreditor Agreement.

          "General Intangibles" means all of the Debtor's now owned or hereafter
acquired "general intangibles," as defined in the UCC, including all general
intangibles, choses in action and causes of action and all other intangible
personal property of the Debtor of every kind and nature (other than Accounts),
including, without limitation, all contract rights, payment intangibles,
Proprietary Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications, trademarks,
service marks, trade names, trade secrets, goodwill, copyrights, computer
software, customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to the Debtor in connection with the
termination of any employee benefit plan or any rights thereto and any other
amounts payable to the Debtor from any employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which the Debtor is beneficiary, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged equity interests or Investment Property and any letter of credit,
guarantee, claim, security interest or other security held by or granted to the
Debtor.

          "Goods" means all "goods," as defined in the UCC, now owned or
hereafter acquired by the Debtor, wherever located, including embedded software
to the extent included in

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"goods" as defined in the UCC, manufactured homes, standing timber that is cut
and removed for sale and unborn young of animals.

          "Instruments" means all "instruments," as defined in the UCC, now
owned or hereafter acquired by the Debtor.

          "Intercreditor Agreement" has the meaning set forth in the
introductory paragraphs of this Agreement.

          "Inventory" means all of the Debtor's now owned or hereafter acquired
"inventory," as defined in the UCC, including all goods and merchandise,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, work-in-process, finished goods
(including embedded software), other materials and supplies of any kind, nature
or description which are used or consumed in the Debtor's business or used in
connection with the packing, shipping, advertising, selling or finishing of such
goods, merchandise, and all documents of title or other Documents representing
them.

          "Investment Property" means all of the Debtor's now existing or
hereafter arising right, title and interest in and to any and all "investment
property," as defined in the UCC, including all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.

          "Lease" has the meaning set forth in Section 4.4 hereof.

          "Letter-of-Credit Rights" means "letter-of-credit rights," as defined
in the UCC, now owned or hereafter acquired by the Debtor, including rights to
payment or performance under a letter of credit, whether or not the Debtor, as
beneficiary, has demanded or is entitled to demand payment or performance.

          "Obligations" has the meaning set forth in Section 3.

          "Permitted Liens" means "Permitted Liens" under the Credit
Agreement and the Liens permitted under Section 10.3 of the Note Agreement.

          "Proprietary Rights" means all of the Debtor's now owned or hereafter
arising or acquired: licenses, franchises, permits, patents, patent rights,
copyrights, works which are the subject matter of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing, and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing, and
all rights to sue for past, present and future infringement of any of the
foregoing.

          "Secured Party" and "Secured Parties" have the meanings assigned
thereto in the Intercreditor Agreement.

          "Secured Obligations" has the meaning assigned thereto in the
Intercreditor Agreement.

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          "Software" means all "software" as such term is defined in the UCC,
now owned or hereafter acquired by the Debtor, other than software embedded in
any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

          "Supporting Obligations" means all supporting obligations as such term
is defined in the UCC.

          "UCC" means the Uniform Commercial Code, as in effect from time to
time, of the Commonwealth of Virginia or of any other state the laws of which
are required as a result thereof to be applied in connection with the issue of
perfection of security interests.

          "Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted "Revised Article 9" of the UCC on or after July 1, 2001.

All other capitalized terms used but not otherwise defined herein have the
meanings given to them in the Credit Agreement. All other undefined terms
contained in this Security Agreement, unless the context indicates otherwise,
have the meanings provided for by the UCC to the extent the same are used or
defined therein.

SECTION 2 - GRANT OF SECURITY INTEREST

     The Debtor hereby grants to the Collateral Agent for the ratable benefit of
the Secured Parties a continuing security interest in, lien on, assignment of
and right of set-off against, all of the following property and assets of the
Debtor, whether now owned or hereafter acquired or arising, regardless of where
located:

          (i)    all Accounts;

          (ii)   all Inventory;

          (iii)  all Chattel Paper;

          (iv)   all Documents;

          (v)    all Instruments;

          (vi)   all Supporting Obligations and Letter-of-Credit Rights;

          (vii)  all General Intangibles (including payment intangibles and
Software);

          (viii) all Investment Property;

          (ix)   all Goods;

          (x)    all Equipment;

          (xi)   all money, cash, cash equivalents, securities and other
property of any kind of the Debtor held directly or indirectly by the Collateral
Agent or any Secured Party;

          (xii)  all of the Debtor's Deposit Accounts, credits, and balances
with and other claims against the Collateral Agent or any Secured Party or any
of their respective affiliates or

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any other financial institution with which the Debtor maintains deposits,
including the Collection Account;

          (xiii) all books, records and other property related to or referring
to any of the foregoing, including books, records, account ledgers, data
processing records, computer software and other property and General Intangibles
at any time evidencing or relating to any of the foregoing; and

          (xiv)  all accessions to, substitutions for and replacements, products
and proceeds of any of the foregoing, including, but not limited to, proceeds of
any insurance policies (whether or not such policy shall contain an endorsement
in favor of the Collateral Agent or any Secured Party), claims against third
parties, and condemnation or requisition payments with respect to all or any of
the foregoing.

All of the foregoing is herein collectively referred to as the "Collateral."
Notwithstanding the foregoing, it is understood and agreed that the Collateral
shall not include: (a) fixtures (as defined in the UCC) located in or at the
Debtor's Winchester, Virginia facilities excluding manufacturing equipment or
production equipment located at such facility, (b) fixtures (as defined in the
Uniform Commercial Code as in effect from time to time in the State of Nevada)
located in or at the Debtor's Lyon County, Nevada facility excluding
manufacturing equipment or production equipment located at such facility, or (c)
any Investment Property consisting of equity interests in TREX Company, LLC or
any Subsidiary or Affiliate.

SECTION 3 - OBLIGATIONS SECURED

     The security interests granted to the Collateral Agent herein for the
ratable benefit of the Secured Parties shall secure: (a) the payment and
performance of the Secured Obligations; and (b) all reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees incurred by
the Collateral Agent or the Secured Parties, or any of them, for taxes and/or
insurance relating to, or maintenance or preservation of, the Collateral or any
part thereof or incurred by the Collateral Agent or any of the Secured Parties,
or any of them, arising from or in connection with the modification, workout,
collection or enforcement of any of Secured Obligations, including, without
limitation, any such collection or enforcement of the Obligations by any action
or participation in, or in connection with a case or proceeding under, Chapter 7
or Chapter 11 of the U.S. Bankruptcy Code or any successor statute
(collectively, the "Obligations").

SECTION 4 - REPRESENTATIONS

     The Debtor represents and warrants to the Collateral Agent and to each of
the Secured Parties (which representations and warranties will survive the
execution of the Revolving Note, the making of the Revolving Loans and the
purchase of the Notes by the purchasers identified in the Note Agreement) that:

     4.1  Ownership of Collateral. The Debtor now owns or will become the owner
of the Collateral in which it has granted the Collateral Agent a security
interest hereunder and has the unrestricted right to grant the Collateral Agent
a security interest therein.

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     4.2  Location of Records. The chief executive office of the Debtor and the
principal office where the Debtor maintains its books and records relating to
the Collateral is located at the address listed next to the Debtor's name on
Schedule 4.2 attached hereto and by this reference incorporated herein. The
Debtor will not change the location of its chief executive office or the
location of the principal office in which it maintains its books and records
without giving the Collateral Agent and each of the Secured Parties at least
thirty (30) days' prior written notice and, unless prior to such change, the
Debtor shall have taken all action reasonably necessary or desirable or that the
Collateral Agent may reasonably request, to preserve, perfect, confirm and
protect in the manner and to the extent provided for in this Security Agreement
the security interests granted hereby.

     4.3  [Reserved.]

     4.4  Inventory. The Inventory owned by the Debtor is maintained at the
locations specified on Schedule 4.4 attached hereto and by this reference
incorporated herein. Except for Inventory in transit to manufacturing plants or
warehouses owned or leased by the Debtor or to customers in the ordinary course
of business, the Debtor does not store and will not store any Inventory on any
real property which is not owned by the Debtor in fee simple or subject to a
lease of real property under which the Debtor is the lessee (each such lease, a
"Lease"), and the Debtor will not permit any finished goods Inventory of any
dollar amount or any other Inventory having an aggregate value of $250,000 or
greater to be maintained or stored in any location other than those listed on
Schedule 4.4 without giving the Collateral Agent at least fifteen (15) days'
prior written notice and, unless prior to such change, the Debtor shall have
taken all action reasonably necessary or desirable or that the Collateral Agent
may reasonably request, to preserve, perfect, confirm and protect in the manner
and to the extent provided for in this Security Agreement the security interests
granted hereby. Without limiting the foregoing, the Debtor represents that all
of its finished goods Inventory (other than finished goods Inventory in transit)
is, and covenants that all of its finished goods Inventory will be, located
either (a) on premises owned by the Debtor in fee simple, (b) on premises leased
by the Debtor, provided that the Collateral Agent has received an executed
landlord waiver from the landlord of such premises in form and substance
satisfactory to the Collateral Agent, or (c) in a warehouse or with a bailee,
provided that the Collateral Agent has received an executed bailee letter from
the applicable Person in form and substance satisfactory to the Collateral
Agent.

     4.5  Location of Equipment. The Equipment owned by the Debtor is maintained
at the locations specified next to the Debtor's name on Schedule 4.5 attached
hereto and by this reference incorporated herein. The Debtor does not store and
will not store any Equipment having a value in excess of $250,000 on any real
property which is not owned by the Debtor in fee simple or subject to a Lease,
and the Debtor will not permit any Equipment to be maintained or stored in any
location other than those listed on Schedule 4.5 without giving the Collateral
Agent at least thirty (30) days' prior written notice and, unless prior to such
change, the Debtor shall have taken all action reasonably necessary or desirable
or that the Collateral Agent may reasonably request, to preserve, perfect,
confirm and protect in the manner and to the extent provided for in this
Security Agreement the security interests granted hereby. Without limiting the
foregoing, the Debtor represents that all of its Equipment is, and covenants
that all of its Equipment will be, located either (a) on premises owned by the
Debtor in fee simple, or (b) on premises leased by the Debtor, provided that the
Collateral Agent has received an executed

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landlord waiver from the landlord and mortgagee of such premises in form and
substance satisfactory to the Collateral Agent.

     4.6  Documents, Instruments and Chattel Paper. All Documents, Instruments,
and Chattel Paper describing, evidencing, or constituting Collateral are and
will be owned by the Debtor, free and clear of all Liens other than Permitted
Liens. If the Debtor retains possession of any Chattel Paper or Instruments with
the Collateral Agent's consent, such Chattel Paper and Instruments shall be
marked with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security interest of Branch Banking and Trust
Company of Virginia, as Collateral Agent, for the benefit of the Secured Parties
under and pursuant to Intercreditor and Collateral Agency Agreement dated as of
June 19, 2002."

     4.7  Patents, Trademarks and Copyrights. (a) The Debtor does not have any
interest in, or title to, any registered patent, trademark or copyright except
as set forth in Schedule 4.7 attached hereto and by this reference incorporated
herein; (b) this Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of this Security Agreement together with
an appropriately completed Recordation Form Cover Sheet (Patents Only) with the
United States Patent and Trademark Office, Assignment Division, the filing of
this Security Agreement together with an appropriately completed Recordation
Form Cover Sheet (Trademarks Only) with the United States Patent and Trademark
Office, Assignments Division, the filing of this Security Agreement, together
with an appropriately completed Document Coversheet for Recordation of Documents
with the Copyright Office of the Library of Congress and the filing of
appropriate financing statements in the Uniform Commercial Code records of the
Delaware Secretary of State and the Virginia State Corporation Commission,
perfected Liens in favor of the Collateral Agent on the Debtor's registered
United States patents, trademarks and copyrights disclosed on Schedule 4.7, and
such perfected Liens are enforceable as against any and all creditors of and
purchasers from the Debtor; and (c) upon the filing of this Security Agreement,
together with an appropriately completed Recordation Form Cover Sheet (Patents
Only) with the United States Patent and Trademark Office, the filing of this
Security Agreement together with an appropriately completed Recordation Form
Cover Sheet (Trademarks Only) with the United States Patent and Trademark
Office, the filing of this Security Agreement together an appropriately
completed Document Coversheet for Recordation of Documents with the Copyright
Office of the Library of Congress, and the filing of the appropriate financing
statements in the UCC records of the Delaware Secretary of State and the
Virginia State Corporation Commission, all actions necessary or desirable to
perfect the Collateral Agent's Lien on the Debtor's registered United States
patents, trademarks and copyrights shall have been duly taken.

     4.8  Prior Encumbrances. There are no existing mortgages, pledges, liens or
other encumbrances of any kind upon, or any security interests in, any of the
Collateral, except for Permitted Liens. The Debtor will defend the Collateral
against all claims and demands of all Persons at any time claiming any interest
therein, except for claims and demands relating to Permitted Liens.

     4.9  Financing Statements. Except for financing statements specified on
Schedule 4.9 attached hereto and by this reference incorporated herein, no
financing statement under the UCC of any state which names the Debtor or any of
its trade names or divisions as debtor is on file in any state or other
jurisdiction, and the Debtor has not signed or authorized any financing

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statement to be filed and the Debtor has not signed any security agreement
authorizing any secured party thereunder to file any financing statements,
except financing statements filed to perfect Permitted Liens.

     4.10 Organizational Information. The jurisdiction of incorporation, the
organizational identification number and the Federal Employer Identification
Number of the Debtor are specified next to the Debtor's name on Schedule 4.10
attached hereto and by this reference incorporated herein. The Debtor has only
one state of organization.

SECTION 5 - COVENANTS

     Until all of the Obligations have been finally and indefeasibly paid and
satisfied in full and the Revolving Commitment terminated, the Debtor covenants
and agrees that:

     5.1  Perfection and Protection of Security Interest. (a) The Debtor shall,
at its expense, perform all steps reasonably requested by the Collateral Agent
at any time to perfect, maintain, protect, and enforce the Collateral Agent's
Liens, including: (i) filing financing or continuation statements, and
amendments thereof, in form and substance reasonably satisfactory to the
Collateral Agent; (ii) delivering to the Collateral Agent warehouse receipts
covering any portion of the Collateral located in warehouses and for which
warehouse receipts are issued and certificates of title covering any portion of
the Collateral for which certificates of title have been issued; (iii) when any
Event of Default has occurred and is continuing, transferring Inventory to
warehouses or other locations designated by the Collateral Agent; (iv) placing
notations on the Debtor's books of account to disclose the Collateral Agent's
security interest; and (v) taking such other steps as are deemed reasonably
necessary or desirable by the Collateral Agent to maintain and protect the
Collateral Agent's Liens. Notwithstanding the foregoing, unless any Event of
Default shall have occurred and be continuing, the Debtor shall not be required
to take any action to perfect the Collateral Agent's Liens in (w) Investment
Property with an aggregate value less than $100,000, (x) any Letter-of-Credit
Rights with respect to any letter of credit with a face amount of $150,000 or
less, but only to the extent that the aggregate face amount of all letters of
credit does not exceed $750,000, (y) any Deposit Account with a balance of
$150,000 or less at the close of any Business Day, but only to the extent that
the aggregate number of Deposit Accounts does not exceed five (5) at any time,
or (z) electronic chattel paper in an aggregate amount of less than $100,000.
The Debtor agrees that a carbon, photographic, photostatic, or other
reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement.

          (b)    Upon the Collateral Agent's request, the Debtor shall deliver
to the Collateral Agent all Collateral consisting of negotiable Documents,
certificated securities (accompanied by stock powers executed in blank), Chattel
Paper and Instruments promptly after the Debtor receives the same.

          (c)    Subject to Section 5.1(a) hereof, the Debtor shall take all
steps necessary to grant the Collateral Agent control of all electronic chattel
paper in accordance with the UCC.

          (d)    The Debtor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any filing office in any Uniform
Commercial Code jurisdiction

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any initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all personal property assets of the Debtor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC of the State of Delaware or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC of the State of Delaware for the sufficiency or filing office acceptance
of any financing statement or amendment, including (A) whether the Debtor is an
organization, the type of organization and any organizational identification
number issued to the Debtor, and (B) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of the real property to which the
Collateral relates. The Debtor agrees to furnish any such information to the
Collateral Agent promptly upon request, and to pay on demand all fees, costs and
expenses associated with all such filings. The Debtor also ratifies its
authorization for the Collateral Agent to have filed in any Uniform Commercial
Code jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.

          (e)    The Debtor shall promptly notify the Collateral Agent of any
commercial tort claim (as defined in the UCC) in excess of $250,000 acquired by
it and unless otherwise consented to by the Collateral Agent, the Debtor shall
enter into a supplement to this Security Agreement, granting to the Collateral
Agent a Lien in such commercial tort claim.

          (f)    Upon the Collateral Agent's request, but not more frequently
than once during each calendar year, the Debtor shall provide to the Collateral
Agent a certificate of good standing from its state of incorporation or
organization.

          (g)    Without limiting the prohibitions on mergers involving the
Debtor contained in the Credit Agreement and the Note Agreement, the Debtor will
not change its name, operate under any assumed name, change its structure,
reincorporate or reorganize itself, or change its jurisdiction of incorporation
without giving the Collateral Agent at least thirty (30) days' prior written
notice and, unless prior to such change, the Debtor shall have taken all action
reasonably necessary or desirable or that the Collateral Agent may reasonably
request, to preserve, perfect, confirm and protect in the manner and to the
extent provided for in this Security Agreement the security interests granted
hereby.

          (h)    The Debtor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of the Collateral Agent
and agrees that it will not do so without the prior written consent of the
Collateral Agent, subject to the Debtor's rights under Section 9-509(d)(2) of
the UCC.

          (i)    The Debtor shall not, except in connection with any Permitted
Lien, enter into any contract or agreement that restricts or prohibits the grant
of a security interest in Accounts, Chattel Paper, Instruments or payment
intangibles or the proceeds of the foregoing to the Collateral Agent.

     5.2  Accounts. (a) The Debtor shall not re-date any invoice, provided that
the Debtor shall have the right, in the exercise of its reasonable business
judgment, to re-date

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invoices that in the aggregate do not exceed at any one time $100,000. The
Debtor shall not make sales on extended terms dating beyond that customary in
the Debtor's business (which customary terms include customer incentive terms)
or extend or modify any Account except in the ordinary course of business.

          (b)    The Debtor shall not accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without providing to the Collateral Agent prompt written
notice thereof. Any such instrument shall be considered as evidence of the
Account and not payment thereof and the Debtor will promptly deliver such
instrument to the Collateral Agent, endorsed without recourse by the Debtor to
the Collateral Agent in a manner reasonably satisfactory in form and substance
to the Collateral Agent.

          (c)    The Debtor shall notify the Collateral Agent promptly of all
disputes and claims in excess of $250,000 with any Account Debtor, and agrees to
settle, contest, or adjust such dispute or claim at no expense to the Collateral
Agent. No discount, credit or allowance shall be granted to any such Account
Debtor without the Collateral Agent's prior written consent, except for
discounts, credits and allowances made or given in the ordinary course of the
Debtor's business when no Event of Default exists hereunder. The Debtor shall
send the Collateral Agent a copy of each credit memorandum in excess of $250,000
as soon as issued, and the Debtor shall promptly report that credit on Borrowing
Base Certificates submitted by it.

          (d)    If an Account Debtor returns any Inventory to the Debtor when
no Event of Default exists, then the Debtor shall promptly determine the reason
for such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. The Debtor shall immediately report to the Collateral Agent
any return involving an amount in excess of $250,000. Each such report shall
indicate the reasons for the return and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to the
Debtor when any Event of Default exists, the Debtor, upon the request of the
Collateral Agent, shall: (i) hold the returned Inventory in trust for the
Collateral Agent; (ii) segregate all returned Inventory from all of its other
property; (iii) dispose of the returned Inventory solely according to the
Collateral Agent's written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Collateral Agent's prior written
consent. All returned Inventory shall be subject to the Collateral Agent's Liens
thereon. Whenever any Inventory is returned, the related Account shall be deemed
ineligible to the extent of the amount owing by the Account Debtor with respect
to such returned Inventory and such returned Inventory shall not be Eligible
Inventory.

     5.3  Inventory. (a) The Debtor will keep its Inventory in good and
marketable condition, except for damaged or defective goods arising in the
ordinary course of the Debtor's business. The Debtor will not, without the prior
written consent of the Collateral Agent, acquire or accept any Inventory on
consignment or approval. The Debtor agrees that all Inventory produced by the
Debtor in the United States of America will be produced in accordance with the
Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. The Debtor will conduct a physical count of
the Inventory at least once during each of its fiscal years, and after and
during the continuation of any Event of Default, at such other times as the
Collateral Agent requests. The Debtor will maintain a perpetual inventory
reporting

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system at all times. The Debtor will not, without the Collateral Agent's written
consent, sell any Inventory on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis.

          (b)    In connection with all Inventory financed by a Letter of Credit
with a face amount in excess of $150,000, the Debtor will, at the Collateral
Agent's request, instruct all suppliers, carriers, forwarders, customs brokers,
warehouses or others receiving or holding cash, checks, Inventory, Documents or
Instruments in which the Collateral Agent holds a security interest to deliver
them to the Collateral Agent and/or subject to the Collateral Agent's order, and
if they shall come into the Debtor's possession, to deliver them, upon request,
to the Collateral Agent in their original form. The Debtor shall also, at the
Collateral Agent's request, designate the Collateral Agent as the consignee on
all bills of lading and other negotiable and non-negotiable documents.

     5.4  Equipment. The Debtor shall keep and maintain its Equipment in good
operating condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof. The Debtor shall not permit any Equipment
that is part of the Collateral to become a fixture with respect to real property
or to become an accession with respect to other personal property with respect
to which real or personal property the Collateral Agent does not have a Lien.
The Debtor will not, without the Collateral Agent's prior written consent, alter
or remove any identifying symbol or number on any of the Debtor's Equipment
constituting Collateral. Except to the extent permitted by the Credit Agreement
and the Note Agreement, the Debtor shall not, without the Collateral Agent's
prior written consent, sell, license, lease as a lessor, or otherwise dispose of
any of the Equipment. The Debtor will not use the Equipment or any of the other
Collateral illegally.

     5.5  Patents, Trademarks and Copyrights. (a) The Debtor shall notify the
Collateral Agent immediately if it knows or has reason to know that any
application or registration relating to any patent, trademark or copyright (now
or hereafter existing) will be abandoned or dedicated, or of any material
adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding the
Debtor's ownership of any patent, trademark or copyright, its right to register
the same, or to keep and maintain the same.

          (b)    In no event shall the Debtor, either directly or through any
agent, employee, licensee or designee, file an application for the registration
of any patent, trademark or copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency without giving the Collateral Agent prior written notice thereof, and,
upon request of the Collateral Agent, the Debtor shall execute and deliver any
and all such agreements, assignments and security agreements as the Collateral
Agent may reasonably request to evidence the Collateral Agent's Lien on such
patent, trademark or copyright, and the General Intangibles of the Debtor
relating thereto or represented thereby.

          (c)    The Debtor shall take all actions necessary or advisable, in
the exercise of its prudent business judgment, to maintain and pursue each
application, to obtain the relevant

                                      -11-

<PAGE>

registration and to maintain the registration of each of the patents, trademarks
and copyrights (now or hereafter existing), including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings.

          (d)    In the event that any of the patent, trademark or copyright
Collateral is infringed upon, or misappropriated or diluted by a third party,
the Debtor shall notify the Collateral Agent promptly after the Debtor learns
thereof. The Debtor shall, unless it shall reasonably determines that such
patent, trademark or copyright Collateral is not material to the conduct of its
business or operations, take such actions as the Debtor shall deem appropriate
to protect such patent, trademark or copyright Collateral.

     5.6  Maintenance of Records. The Debtor will keep and maintain, at its own
cost and expense, in a manner consistent with past practice, complete and
current records of the Collateral owned by it, including, but not limited to, a
record of all shipments received, deliveries made, contracts performed, payments
received, credits granted thereon and other dealings therewith. The Debtor shall
timely provide the Collateral Agent with all such collateral reports as are
required by the Credit Agreement and the Note Agreement, and all such additional
reports as the Collateral Agent shall reasonably require. These reports shall be
in the form previously provided to the Collateral Agent for its review or in
form and detail as is reasonably satisfactory to the Collateral Agent. The
Debtor will use all reasonable efforts to protect its records and books
pertaining to any Collateral against fire, theft, loss or any other manner of
destruction or loss. Such protection will consist of such protective means and
devices as from time to time reasonably deemed necessary by the Collateral
Agent. If the Debtor maintains its records of Accounts on a computer, it will
maintain backup copies of such records, updated at reasonable intervals.

     5.7  Inspection and Delivery of Collateral, Books and Records. The
Collateral Agent or the Secured Parties, or any of them, or their respective
agents, may at any reasonable time and from time to time and, if no Event of
Default has occurred, upon reasonable prior notice, inspect the Collateral, and
the books and records of the Debtor pertaining thereto. Not more frequently than
one (1) time during each calendar year if no Event of Default has occurred and
is continuing (there being no such limitation if any Event of Default has
occurred and is continuing), the Debtor shall, at its own expense and cost,
deliver or make available, at the Collateral Agent's election, books and records
pertaining to the Accounts (including chattel paper) to the Collateral Agent, or
any designated agent of the Collateral Agent, at such time and place as the
Collateral Agent may reasonably request.

     5.8  Expenses. The Debtor shall be liable for, and agrees to pay the
Collateral Agent on demand, any and all reasonable expenses incurred or paid by
the Collateral Agent or the Secured Parties, or any of them, in protecting or
enforcing their respective rights under this Security Agreement, including,
without limitation, reasonable attorneys' fees, whether incurred in collecting
specific Accounts or otherwise. If the Debtor shall fail, in violation of the
terms of the Credit Agreement or the Note Agreement, to discharge taxes, liens,
security interests or other encumbrances on the Collateral, other than Permitted
Liens, or to repair any damage to the Collateral, or to maintain or preserve the
Collateral or to maintain adequate insurance on the Collateral, in each case
within twenty (20) days after written notice from the Collateral Agent, the
Collateral Agent may, at its option, discharge such taxes, liens, security
interests or other

                                      -12-

<PAGE>

encumbrances on or in the Collateral, pay for the repair or damage to the
Collateral, pay for the maintenance and preservation of the Collateral,
and/or pay for insurance on the Collateral. The Debtor agrees to reimburse the
Collateral Agent on demand for any payments so made and, until such
reimbursement, to pay interest thereon at a fluctuating rate of interest equal
to the Default Rate applicable to the Revolving Loans from the date of the
payment until reimbursement therefor, which reimbursement and interest shall be
a part of the Obligations. Any payment made or other action taken by the
Collateral Agent under this Section 5.8 shall be without prejudice to any right
to assert an Event of Default hereunder and to proceed thereafter as herein
provided.

     5.9  Insurance. The Debtor will continuously insure the Collateral with a
responsible company or companies reasonably satisfactory to the Collateral Agent
against fire (with extended coverage) in the full insurable value of the
Collateral, and against such other casualties and in such amounts and with such
deductibles as are usually carried by owners of similar businesses and
properties in the same general areas in which the Debtor operates. The insurance
policy (or policies) shall have attached thereto a standard loss payable clause,
without contribution, in favor of the Collateral Agent as agent for the Secured
Parties as its interest may appear, and shall otherwise be in form reasonably
acceptable to the Collateral Agent, and the Debtor will cause such policy (or
policies) to provide that it (they) may not be canceled without thirty (30)
days' prior written notice to the Collateral Agent. The Debtor will deliver to
the Collateral Agent as agent for the Secured Parties evidence of the renewal or
continuation of insurance at least ten (10) days before the expiration of the
existing insurance. The Debtor hereby assigns to the Collateral Agent as agent
for the Secured Parties any return of unearned premiums which may be due upon
cancellation of any such policy or policies for any reason whatsoever and, upon
the occurrence of any Event of Default and during the continuance thereof,
directs the insurer(s) to pay to the Collateral Agent as agent for the Secured
Parties any amounts so due.

     5.10 Damage or Loss and Replacement. (a) The Debtor shall promptly notify
the Collateral Agent of any fire, theft, water damage, vandalism or other damage
to or loss of any Inventory or Equipment to the extent that the uninsured
portion of such damaged or lost Inventory or Equipment is in excess of $250,000.
In the case of any loss, damage to or destruction of the Inventory or Equipment
or any part thereof, the Debtor, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at the Debtor's cost and expense, will promptly repair or replace the
Inventory or Equipment so lost, damaged or destroyed.

          (b)    In the event that the Debtor or the Collateral Agent shall
receive any proceeds of insurance with respect to Inventory, provided no Default
or Event of Default then exists, (a) the Debtor shall pay to the Collateral
Agent, or the Collateral Agent shall retain, as applicable, an amount of such
proceeds equal to the balance then outstanding under the Revolving Credit Loan
Obligations, which amount the Collateral Agent shall promptly pay to BB&T-VA for
application to the Revolving Credit Loan Obligations, and the Debtor shall be
entitled to retain, or the Collateral Agent shall pay to the Debtor, as
applicable, any such excess insurance proceeds or (b) if there is no balance
then outstanding under the Revolving Credit Loan Obligations, then the Debtor
shall be entitled to retain, or the Collateral Agent shall pay to the Debtor, as
applicable, all such proceeds of insurance with respect to Inventory.

                                      -13-

<PAGE>

          (c)    In the event the Debtor shall receive any proceeds of insurance
with respect to the Equipment in excess of $1,000,000 in the aggregate in any
fiscal year of the Debtor, the Debtor shall immediately pay over such proceeds
in excess of $1,000,000 to the Collateral Agent. Insurance proceeds received by
the Collateral Agent under the provisions hereof or under any policy or policies
of insurance covering the Equipment or any part thereof pursuant to the terms
hereof in excess of $1,000,000 in the aggregate in any fiscal year of the Debtor
shall be applied to the reduction of, or otherwise held as security for, the
Secured Obligations (whether or not then due); provided, however, that the
Collateral Agent agrees to release such insurance proceeds to the Debtor for the
replacement, repair or restoration of the portion of the Equipment lost, damaged
or destroyed if, but only if, (i) at the time of release no Default or Event of
Default exists, (ii) a written request for such release is received from the
Debtor within thirty (30) calendar days of receipt of, or in the event received
by the Collateral Agent notice of the Collateral Agent's receipt of, such
insurance proceeds and (iii) the Debtor provides the Collateral Agent purchase
orders or invoices for replacement property for, or for the repair or
restoration of, the Equipment that was lost, damaged or destroyed giving rise to
the payment of such insurance proceeds within 210 days of the occurrence of such
loss, damage or destruction. Notwithstanding the foregoing, if, following the
application of insurance proceeds to replace, repair or restore Equipment as
provided in this Section 5.10(c), there is an amount of such proceeds which is
less than $50,000 remaining, provided that no Default or Event of Default shall
have occurred and be continuing, the Collateral Agent shall return such amount
to the Debtor.

     5.11 Further Assurances. Subject to the provisions of Section 5.1(a)
hereof, the Debtor will from time to time, at the sole expense of the Debtor,
promptly execute, deliver, file and record (as appropriate) all further
instruments and documents, and take all further action as the Collateral Agent
or the Secured Parties, or any of them, may reasonably deem necessary or prudent
in order to perfect, continue and protect the security interests granted hereby
or to enable the Collateral Agent or the Secured Parties, or any of them, to
exercise and enforce its rights and remedies hereunder with respect to the
Collateral or any part thereof.

SECTION 6 - SALES AND COLLECTIONS

     6.1  Processing and Sales of Inventory. So long as no Event of Default
shall have occurred and be continuing and the Collateral Agent shall not have
notified the Debtor to the contrary, the Debtor shall have the right in the
regular course of its business to process and sell the Inventory. The security
interests granted hereunder to the Collateral Agent as agent for the Secured
Parties shall attach to all proceeds of all sales, leases, or other dispositions
of the Inventory.

     6.2  Inventory Controls. Upon the occurrence and during the continuation of
any Event of Default, the Collateral Agent or its agents may secure all
entrances to those parts of the premises of the Debtor in which any Inventory is
stored and keep such entrances locked or otherwise sealed or institute such
other control measures with respect to the movement of Inventory as the
Collateral Agent may deem necessary or prudent, subject to the rights of third
parties under the Leases.

                                      -14-

<PAGE>

     6.3  Collection of Accounts. The Collateral Agent as agent for the Secured
Parties hereby authorizes the Debtor to collect and dispose of the proceeds of
the Accounts, which authority the Collateral Agent may curtail or terminate at
any time following the occurrence and during the continuance of any Event of
Default. After such authority has been curtailed or terminated, the Debtor
shall, upon receipt of all checks, drafts, cash, and other remittances in
payment of or on account of the Accounts, deposit the same in a special account
designated by the Collateral Agent, over which account the Collateral Agent as
agent for the Secured Parties alone shall have the power of withdrawal (the
"Collection Account"). The remittance of the proceeds of such Accounts shall
not, however, constitute payment or liquidation of such Accounts until the
Collateral Agent as agent for the Secured Parties shall receive good funds for
such proceeds.

     For purposes of computing interest, the Collateral Agent shall treat
deposited checks, drafts and other items as collected in accordance with the
Collateral Agent's normal availability schedule, but in doing so the Collateral
Agent is not agreeing that such funds have in fact been paid, nor is the
Collateral Agent as agent for the Secured Parties waiving any right it may have
to charge back returned items to the Debtor and to collect interest on such
charged-back items. Funds placed in the Collection Account shall be held by the
Collateral Agent as agent for the Secured Parties as security for the
Obligations. These proceeds shall be deposited in precisely the form received,
except for the endorsement of the Debtor where necessary to permit collection of
items, which endorsement the Debtor agrees to make, and which endorsement the
Collateral Agent is also hereby authorized to make on behalf of the Debtor.
Pending such deposit, the Debtor agrees that it will not commingle any such
checks, drafts, cash or other remittances with any funds or other property of
the Debtor but will hold them separate and apart therefrom, and upon an express
trust for the Collateral Agent until deposit thereof is made in the Collection
Account. The Collateral Agent as agent for the Secured Parties will from time to
time apply the funds on deposit in the Collection Account against the
Obligations in such order of application as is required by the Intercreditor
Agreement.

SECTION 7 - POWER OF ATTORNEY

     Effective upon the occurrence and during the continuance of any Event of
Default, the Debtor hereby appoints the Collateral Agent and the Collateral
Agent's designee as the Debtor's attorney-in-fact, with full power of
substitution: (a) to endorse the Debtor's name on any checks, notes,
acceptances, money orders, or other forms of payment or security that come into
the Collateral Agent's or any Secured Party's possession; (b) to sign the
Debtor's name on any invoice, bill of lading, warehouse receipt or other
negotiable or non-negotiable Document constituting Collateral, on drafts against
customers, on assignments of Accounts, on notices of assignment, financing
statements and other public records and to file any such financing statements by
electronic means with or without a signature as authorized or required by
applicable law or filing procedure; (c) to execute loss claims and other
applications for payment of benefits under any insurance policy covering any of
the Collateral in the name of the Debtor or the Collateral Agent, to receive all
monies and endorse drafts, checks, and other instruments for the payment of any
proceeds of any insurance or in order to collect any return of unearned
premiums, (d) to notify the post office authorities to change the address for
delivery of the Debtor's mail to an address designated by the Collateral Agent
and to receive, open and dispose of all mail addressed to the Debtor; (e) to
send requests for verification of Accounts to customers

                                      -15-

<PAGE>

or Account Debtors; (f) to complete in the Debtor's name or the Collateral
Agent's name, any order, sale or transaction, obtain the necessary Documents in
connection therewith, and collect the proceeds thereof; (g) to clear Inventory
through customs in the Debtor's name, the Collateral Agent's name or the name of
the Collateral Agent's designee, and to sign and deliver to customs officials
powers of attorney in the Debtor's name for such purpose; (h) to the extent that
the Debtor's authorization given in Section 5.1(d) of this Security Agreement is
not sufficient (which authorization in Section 5.1(d) is effective, and which
powers under Section 5.1(d) may be exercised by the Collateral Agent, before the
occurrence of an Event of Default), to file such financing statements with
respect to this Security Agreement, with or without the Debtor's signature, or
to file a photocopy of this Security Agreement in substitution for a financing
statement, as the Collateral Agent may deem appropriate and to execute in the
Debtor's name such financing statements and amendments thereto and continuation
statements which may require the Debtor's signature; and (i) to do all things
necessary to carry out the terms of this Security Agreement. The Collateral
Agent shall not be obligated to do any of the acts or exercise any of the powers
hereinabove authorized, but, if the Collateral Agent elects to do any such act
or exercise any such power, unless the Collateral Agent is guilty of gross
negligence or willful misconduct in the exercise of such power, it shall not be
accountable to the Debtor for more than it actually receives as a result of such
exercise of power, and, in any event, none of the Collateral Agent or any of the
Secured Parties, nor any of their respective attorneys, will be liable for any
acts or omissions or for any error of judgment or mistake of fact or law except
for their gross negligence or willful misconduct. This appointment shall be
deemed a power coupled with an interest, shall be irrevocable, and shall not
terminate until the Obligations have been fully satisfied, the Credit Agreement
has been terminated and the Notes (as defined in the Note Agreement) have been
paid in full under the Note Agreement. The Debtor hereby ratifies and approves
all acts of such attorney-in-fact.

SECTION 8 - NO LIABILITY

          (a)    The Debtor assumes all responsibility and liability arising
from or relating to the use, sale, license or other disposition of the
Collateral. The Obligations shall not be affected by any failure of the
Collateral Agent or any of the Secured Parties to take any steps to perfect the
Collateral Agent's Liens or to collect or realize upon the Collateral, nor shall
loss of or damage to the Collateral release the Debtor from any of the
Obligations. Following the occurrence and during the continuation of any Event
of Default, the Collateral Agent may (but shall not be required to), without
notice to or consent from the Debtor, sue upon or otherwise collect, extend the
time for payment of, modify or amend the terms of, compromise or settle for
cash, credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of the Debtor for the Obligations, or any
other agreement now or hereafter existing between the Collateral Agent and/or
any Secured Party and the Debtor.

          (b)    It is expressly agreed by the Debtor that, anything herein to
the contrary notwithstanding, the Debtor shall remain liable under each of its
contracts and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. None of the
Collateral Agent or any of the Secured Parties shall have any

                                      -16-

<PAGE>

obligation or liability under any contract or license by reason of or arising
out of this Security Agreement or the granting herein of a Lien thereon or the
receipt by the Collateral Agent or any Secured Party of any payment relating to
any contract or license pursuant hereto. None of the Collateral Agent or any
Secured Party shall be required or obligated in any manner to perform or fulfill
any of the obligations of the Debtor under or pursuant to any contract or
license, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party under any contract or license, or to present or file any claims, or
to take any action to collect or enforce any performance or the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.

          (c)    The Collateral Agent may at any time after any Event of Default
shall have occurred and be continuing (or if any rights of set-off (other than
set-offs against an Account arising under the contract giving rise to the same
Account) or contra accounts may be asserted with respect to the following),
without prior notice to the Debtor, notify Account Debtors, and other Persons
obligated on the Collateral that the Collateral Agent has a security interest
therein, and that payments shall be made directly to the Collateral Agent, for
the benefit of the Secured Parties. Upon the request of the Collateral Agent,
the Debtor shall so notify Account Debtors, and other Persons obligated on
Collateral. Once any such notice has been given to any Account Debtor or other
Person obligated on the Collateral, the Debtor shall not give any contrary
instructions to such Account Debtor or other Person without the Collateral
Agent's prior written consent.

          (d)    After the occurrence and during the continuance of any Event of
Default, the Collateral Agent may at any time in the Collateral Agent's own name
or in the name of the Debtor communicate with Account Debtors, parties to
contracts and agreements to which the Debtor is a party, and obligors in respect
of Instruments to verify with such Persons, to the Collateral Agent's
satisfaction, the existence, amount and terms of Accounts, contracts and
agreements, payment intangibles, Instruments or Chattel Paper. If any Event of
Default shall have occurred and be continuing, the Debtor, at its own expense,
shall cause the independent certified public accountants then engaged by the
Debtor to prepare and deliver to the Collateral Agent and each of the Secured
Parties at any time and from time to time promptly upon the Collateral Agent's
request the following reports with respect to the Debtor: (i) a reconciliation
of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a
test verification of such Accounts as the Collateral Agent may request. The
Debtor, at its own expense, shall deliver to the Collateral Agent the results of
each physical verification, if any, which the Debtor may in its discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory.

          (e)    The Collateral Agent shall use reasonable care with respect to
the Collateral in its possession or under its control. The Collateral Agent
shall not have any other duty as to any Collateral in its possession or control
or in the possession or control of any agent or nominee of the Collateral Agent,
or any income thereon or as to the preservation of rights against prior parties
or any other rights pertaining thereto.

                                      -17-

<PAGE>

SECTION 9 - DEFAULT AND REMEDIES

          (a)    In addition to all other rights and remedies granted to it
under this Security Agreement, the Credit Agreement, the other Loan Documents,
the Note Agreement, and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations, upon the occurrence of any
Event of Default, the Collateral Agent, as agent for the Secured Parties, may,
subject to the provisions of the Intercreditor Agreement, exercise all rights
and remedies of a secured party under the UCC. Without limiting the generality
of the foregoing, the Debtor expressly agrees that in any such event the
Collateral Agent, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon the Debtor or any other Person (all and each
of which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
enter upon the premises of the Debtor where any Collateral is located through
self-help, without judicial process, without first obtaining a final judgment or
giving the Debtor or any other Person notice and opportunity for a hearing on
the Collateral Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver the Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. The Collateral Agent shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of the Collateral Agent and the Secured Parties the
whole or any part of the Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Debtor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. The
Collateral Agent shall have the right to conduct such sales on the Debtor's
premises or elsewhere and shall have the right to use the Debtor's premises
without charge for such time or times as the Collateral Agent deems necessary or
advisable. Expenses of retaking, holding, preparing for sale, selling and the
like shall include the reasonable attorneys' fees and legal expenses of the
Collateral Agent and the Secured Parties, and each of them.

          (b)    After the occurrence and during the continuance of any Event of
Default, the Debtor further agrees, at the Collateral Agent's request, to
assemble the Collateral and make it available to the Collateral Agent at a place
or places designated by the Collateral Agent which are reasonably convenient to
the Collateral Agent and the Debtor, whether at the Debtor's premises or
elsewhere. Until the Collateral Agent is able to effect a sale, lease, or other
disposition of Collateral, the Collateral Agent shall have the right to hold or
use Collateral, or any part thereof, to the extent that it deems appropriate for
the purpose of preserving the Collateral or its value or for any other purpose
deemed appropriate by the Collateral Agent. The Collateral Agent shall have no
obligation to the Debtor to maintain or preserve the rights of the Debtor as
against third parties with respect to Collateral while Collateral is in the
possession of the Collateral Agent. The Collateral Agent may, if it so elects,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of the Collateral Agent's remedies (for the benefit of the
Collateral Agent and the Secured Parties), with respect to such appointment
without prior notice or hearing as to such appointment. The Collateral Agent
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale

                                      -18-

<PAGE>

to the Obligations in such order of application as is required by the
Intercreditor Agreement, and only after so paying over such net proceeds, and
after the payment by the Collateral Agent of any other amount required by any
provision of law, need the Collateral Agent account for the surplus, if any, to
the Debtor. To the maximum extent permitted by applicable law, the Debtor waives
all claims, damages, and demands against the Collateral Agent and each Secured
Party arising out of the repossession, retention or sale of the Collateral
except such as arise solely out of the gross negligence or willful misconduct of
the Collateral Agent or any Secured Party as finally determined by a court of
competent jurisdiction. The Collateral Agent will give the Debtor reasonable
notice of the time and place of any public sale of the Collateral or any part
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. The Debtor and the Collateral Agent agree
that the requirements of reasonable notice shall be met if such notice is given
to the Debtor at the address of the Debtor specified in Section 10.2 of this
Security Agreement (or such other address that the Debtor may provide to the
Collateral Agent in writing) at least ten (10) days before the time of the sale
or disposition, but nothing contained herein shall be construed to mean that any
other notice or a shorter period of time does not constitute reasonable notice
for the sale of the Collateral or any part thereof. The Debtor shall remain
liable for any deficiency if the proceeds of any sale or disposition of the
Collateral are insufficient to pay all Obligations, including any attorneys'
fees or other expenses incurred by the Collateral Agent or any Secured Party to
collect such deficiency.

          (c)    After the occurrence and during the continuance of any Event of
Default, the Collateral Agent shall have the right to enter upon the premises of
the Debtor at any time for the purpose of reducing to possession the Accounts
(including Chattel Paper) and all cash or non-cash proceeds thereof, for the
purpose of taking possession of and using the current version of the Debtor's
accounts receivable computer software, and/or for the purpose of inspecting the
Inventory and Equipment and inspecting and/or auditing the books, records and
procedures of the Debtor. The Collateral Agent may deduct its expenses in
collecting the Accounts from the proceeds applicable to the Obligations. Such
expenses shall include, without limitation, the costs of posting transactions to
the books of the Debtor and performing such other bookkeeping and accounting
tasks as the Collateral Agent may deem appropriate to collect any Account.

          (d)    Except as otherwise specifically provided herein, the Debtor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

          (e)    For the purpose of enabling the Collateral Agent to exercise
rights and remedies under this Section 9 (including, without limiting the terms
of this Section, in order to take possession of, hold, preserve, process,
assemble, prepare for sale, market for sale, sell or otherwise dispose of
Collateral) at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, the Debtor hereby grants to the Collateral
Agent, for the benefit of the Collateral Agent and the Secured Parties, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Debtor) to use, license or sublicense any Proprietary
Rights now owned or hereafter acquired by the Debtor, and wherever the same may
be located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.

                                      -19-

<PAGE>

SECTION 10 - MISCELLANEOUS

     10.1 Cumulative Rights and No Waiver. Each and every right granted to the
Collateral Agent and the Secured Parties, and each of them, hereunder or under
any other document delivered under or in connection with the Credit Agreement or
the Note Agreement, or allowed it by law or equity, shall be cumulative and may
be exercised from time to time. No failure on the part of the Collateral Agent
or the Secured Parties, or any of them, to exercise, and no delay in exercising
any right, shall operate as a waiver thereof, nor shall any single or partial
exercise by the Collateral Agent or the Secured Parties, or any of them, of any
right preclude any other or future exercise thereof or the exercise of any other
right.

     10.2 Notices.

          (a)    Method of Communication. Unless otherwise specified herein, all
notices, requests and other communications to a party hereunder shall be in
writing (including facsimile transmission) and shall be given to such party: (a)
at its address or facsimile number set forth below, or (b) at such other address
or facsimile number as such party may hereafter specify for the purpose of
communication hereunder by notice to the other party hereto. Each such notice,
request or other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails, certified mail, return receipt
requested, with appropriate first-class postage prepaid, addressed as specified
in this Section, or (iii) if given by any other means, when delivered at the
address specified in this Section 10.2. Rejection or refusal to accept or the
inability to deliver because of a changed address of which no notice was given
shall not affect the validity of notice given in accordance with this Section.

          (b)    Addresses for Notices. All notices to any party shall be sent
to it at the following addresses, or any other address as to which all other
parties are notified in writing.

     If to the Debtor:              TREX Company, LLC
                                    Trex Company, Inc.
                                    160 Exeter Drive
                                    Winchester, Virginia  22603-8605
                                    Attention:  Chief Financial Officer
                                    Telecopy No.:  (703) 542-6889

     With copies to:                TREX Company, LLC
                                    Trex Company, Inc.
                                    160 Exeter Drive
                                    Winchester, Virginia  22603-8605
                                    Attention:  William R. Gupp, Esquire
                                    Telecopy No.:  (703) 542-6889

                                    and

                                      -20-

<PAGE>

                                    Kevin G. Gralley, Esquire
                                    Hogan & Hartson L.L.P.
                                    111 South Calvert Street, Suite 1600
                                    Baltimore, Maryland 21202

                                    Telecopy No.: (410) 539-6981

     If to the Collateral Agent:    Branch Banking & Trust Company of Virginia
                                    110 South Stratford Road, Suite 301
                                    Winston-Salem, North Carolina  27104
                                    Attention:  Cory Boyte
                                    Telecopy No.: (336) 733-3254383-0288

     With copies to:                Thomas E. duB. Fauls, Esquire
                                    Troutman Sanders LLP
                                    1111 East Main Street, 20th Floor
                                    Richmond, Virginia 23219
                                    Telecopy No.: (804) 697-1339

     10.3 Applicable Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth of Virginia, except
as otherwise required by mandatory provisions of law and except to the extent
that remedies provided by the laws of any jurisdiction other than Virginia are
governed by the laws of such jurisdiction.

     10.4 Arbitration; Submission to Jurisdiction; Waiver of Jury Trial.

          (a)    Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to this Security Agreement or any other Loan Documents between the
parties hereto (a "Dispute") shall be resolved by binding arbitration conducted
under and governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association (the "AAA") and the
Federal Arbitration Act. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, or claims arising from documents executed in the
future. A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does not
apply to disputes under or related to swap agreements.

          (b)    All arbitration hearings shall be conducted in the City of
Richmond, Virginia. A hearing shall begin within 90 days of demand for
arbitration and all hearings shall be concluded within 120 days of demand for
arbitration. These time limitations may not be extended unless a party shows
cause for extension and then for no more than a total of 60 days. The expedited
procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be
applicable to claims of less than $1,000,000. Arbitrators shall be licensed
attorneys selected from the Commercial Financial Dispute Arbitration Panel of
the AAA. The parties do not waive applicable federal or state substantive law
except as provided herein.

                                      -21-

<PAGE>

          (c)    Notwithstanding the preceding binding arbitration provisions,
the parties agree to preserve, without diminution, certain remedies that any
party may exercise before or after an arbitration proceeding is brought. The
parties shall have the right to proceed in any court of proper jurisdiction or
by self-help to exercise or prosecute the following remedies, as applicable: (i)
all rights to foreclose against any real or personal property or other security
by exercising a power of sale or under applicable law by judicial foreclosure,
including a proceeding to confirm the sale; (ii) all rights of self-help,
including peaceful occupation of real property and collection of rents, setoff
and peaceful possession of personal property; and (iii) obtaining provisional or
ancillary remedies, including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding. Any claim or controversy with regard to the parties' entitlement to
such remedies is a Dispute.

          (d)    Each party agrees that it shall not have a remedy of punitive
or exemplary damages against the other in any Dispute and hereby waives any
right or claim to punitive or exemplary damages it may have now or which may
arise in the future in connection with any Dispute, whether the Dispute is
resolved by arbitration or judicially.

          (e)    TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO
ANY DISPUTE.

     10.5 Severability; Modification. If any provision hereof is invalid or
unenforceable in any jurisdictions, then, to the fullest extent permitted by
law, (a) the other provisions hereof shall remain in full force and effect in
such jurisdiction; and (b) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provisions in any other jurisdiction. No modification, amendment or waiver
of any provision of this Security Agreement, nor consent to any departure by the
Debtor therefrom, shall in any event be effective unless the same shall be in
writing, made in accordance with the Intercreditor Agreement, and signed by the
Collateral Agent and the Debtor, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand upon the Debtor in any case shall entitle the Debtor to any
other or further notice or demand in the same or similar circumstances.

     10.6 Execution in Counterparts. This Security Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.

     10.7 Obligations Joint and Several. Each and every obligation of the Debtor
contained in this Security Agreement shall be the joint and several obligations
of TREX Company, LLC and Trex Company, Inc.

                                      -22-

<PAGE>

     IN WITNESS WHEREOF, the Debtor and the Collateral Agent have caused this
Security Agreement to be duly executed by their duly authorized officers, all as
of the date first above written.

                                    TREX COMPANY, LLC

                                    By:  /s/  Anthony J. Cavanna
                                         --------------------------------(SEAL)
                                    Name: Anthony J. Cavanna
                                    Title: Executive Vice President and
                                              Chief Financial Officer

                                    TREX COMPANY, INC.

                                    By:  /s/ Anthony J. Cavanna
                                         --------------------------------(SEAL)
                                    Name: Anthony J. Cavanna
                                    Title: Executive Vice President and
                                              Chief Financial Officer

                                    BRANCH BANKING AND TRUST COMPANY OF
                                    VIRGINIA, as Collateral Agent for
                                    the Secured Parties herein

                                    By:   /s/ David A. Chandler
                                          -------------------------------------
                                    Name:  David A. Chandler
                                          -------------------------------------
                                    Title: Senior Vice President
                                          -------------------------------------

                                      -23-<PAGE>

                                                                    Exhibit 10.4

================================================================================

                  Intercreditor And Collateral Agency Agreement

                            Dated as of June 19, 2002

                                  By and Among

                   The Noteholders Named In Schedule I Hereto,

                  Branch Banking and Trust Company of Virginia,

                                       And

        Branch Banking and Trust Company of Virginia, As Collateral Agent

================================================================================

<PAGE>

<TABLE>
<S>                                                                                         <C>
Section 1   Definitions ..................................................................   2

Section 2   Priority of Liens ............................................................   6

       Section 2.1.  Pari Passu Liens of the Secured Parties .............................   6
       Section 2.2.  Liens of Secured Parties in respect of Winchester Collateral ........   6
       Section 2.3.  Nonavoidability of Liens ............................................   6

Section 3   Relationships Among Secured Parties ..........................................   6

       Section 3.1.  Restrictions on Actions .............................................   6
       Section 3.2.  Representations and Warranties ......................................   7
       Section 3.3.  Cooperation; Accountings ............................................   8
       Section 3.4.  Termination of Credit Agreement and Note Agreement;
                     Amendments to Credit Agreement or Note Agreement ....................   8

Section 3.5. Additional Creditor .........................................................   9

Section 4   Appointment And Authorization Of Collateral Agent ............................  10

Section 5   Agency Provisions ............................................................  10

       Section 5.1. Delegation of Duties .................................................  10
       Section 5.2. Exculpatory Provisions ...............................................  10
       Section 5.3. Reliance by Collateral Agent .........................................  11
       Section 5.4. Knowledge or Notice of Default, Event of Default .....................  11
       Section 5.5. Non-Reliance on Collateral Agent and Other Secured Parties ...........  12
       Section 5.6. Indemnification ......................................................  12
       Section 5.7. Collateral Agent in Its Individual Capacity ..........................  12
       Section 5.8. Successor Collateral Agent ...........................................  13

Section 6   Actions By The Collateral Agent ..............................................  14

       Section 6.1.  Duties and Obligations ..............................................  14
       Section 6.2.  Notification of Default .............................................  14
       Section 6.3.  Exercise of Remedies ................................................  14
       Section 6.4.  Instructions from Secured Parties ...................................  14
       Section 6.5.  Emergency Actions ...................................................  15
       Section 6.6.  Changes to Collateral Documents .....................................  15
       Section 6.7.  Release of Collateral ...............................................  15
       Section 6.8.  Other Actions .......................................................  15
       Section 6.9.  Cooperation .........................................................  16
       Section 6.10. Distribution of Proceeds of Collateral and Subsidiary Guaranties ....  16
       Section 6.11. Senior Preferential Payments and Special Trust Account ..............  17
       Section 6.12. Authorized Investments ..............................................  18
       Section 6.13. Restoration of Obligations ..........................................  18
       Section 6.14. Bankruptcy, Preferences, etc. .......................................  18
       Section 6.15. Sharing of Proceeds .................................................  19

</TABLE>

                                      -i-

<PAGE>

<TABLE>
<S>                                                                                        <C>
Section 7   Bankruptcy Proceedings .......................................................  19

Section 8   Additional Agreements of Secured Parties .....................................  19

Section 9   Miscellaneous ................................................................  20

       Section 9.1.  Entire Agreement ....................................................  20
       Section 9.2.  Notices .............................................................  20
       Section 9.3.  Successors and Assigns ..............................................  21
       Section 9.4.  Consents, Amendment, Waivers ........................................  21
       Section 9.5.  Governing Law .......................................................  21
       Section 9.6.  Counterparts ........................................................  21
       Section 9.7.  Sale of Interest ....................................................  21
       Section 9.8.  Severability ........................................................  21
       Section 9.9.  Expenses ............................................................  21
       Section 9.10. Term of Agreement ...................................................  21
       Section 9.11. Obligations Several .................................................  21
</TABLE>

                                      -ii-

<PAGE>

                  Intercreditor and Collateral Agency Agreement

          This Intercreditor and Collateral Agency Agreement dated as of June
19, 2002 (this "Agreement") is among (1) the Noteholders named in Schedule I
hereto (collectively, the "Noteholders"), (2) Branch Banking and Trust Company
of Virginia, as lender ("BB&T-VA"), (3) the Additional Creditors (as described
below) (the Noteholders, BB&T-VA and the Additional Creditors are collectively
referred to as the "Secured Parties"), and (4) Branch Banking and Trust Company
of Virginia, as collateral agent for the Secured Parties (together with its
permitted successors and assigns, the "Collateral Agent") and acknowledged and
agreed to by each of Trex Company, Inc., a Delaware corporation (the "Parent"),
and TREX Company, LLC, a Delaware limited liability company ("TREX LLC", the
Parent and TREX LLC are hereinafter collectively referred to as the "Company").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned thereto in (S)1 below.

                                R E C I T A L S:

          A. Under and pursuant to the Credit Agreement dated as of June 19,
2002, among the Company and BB&T-VA, BB&T-VA has made available to the Company
Revolving Loans (as defined therein) up to an aggregate principal amount of
$20,000,000, together with a letter of credit subfacility (collectively, the
"Revolving Debt") together with other credit facilities thereunder (such Credit
Agreement, as the same may from time to time be amended, restated, supplemented
or otherwise modified, the "Credit Agreement").

          B. Under and pursuant to the Note Purchase Agreement dated as of June
19, 2002, among the Company and each of the Noteholders, the Company has issued
$40,000,000 in aggregate principal amount of the Company's 8.32% Senior Secured
Notes, Due June 19, 2009 (collectively, the "Notes") (such Note Purchase
Agreement, as the same may from time to time be further amended, restated,
supplemented or otherwise modified, the "Note Agreement").

          C. The obligations of the Parent and TREX LLC (hereinafter each
referred to as a "Grantor" and collectively as the "Grantors") under the Note
Agreement are secured by the Collateral Documents described below.

          D. The obligations of the Grantors under the Credit Agreement also are
secured by the Collateral Documents described below.

          E. The Company contemplates that from time to time after the date
hereof, the Company may, subject to the terms and conditions of the Note
Agreement and the Credit Agreement, incur additional Funded Debt (as defined in
the Note Agreement) or Debt issued under a Qualified Replacement Credit
Agreement (as defined in the Note Agreement and herein the "Qualified
Replacement Credit Agreement") (collectively, the "Additional Funded Debt")
under agreements evidencing such Additional Funded Debt (the "Additional
Facilities") which the Company desires to secure by the Collateral. Such
Additional Funded Debt shall be permitted to be secured by the Collateral if the
obligees of such Additional Funded Debt (the "Additional Creditors") execute and
deliver a joinder agreement hereto and become a party to this Agreement pursuant
to the requirements of (S)3.5 hereof.

<PAGE>

          F. Notwithstanding the time or order of attachment or perfection or
any provisions to the contrary in any of the Collateral Documents or the fact
that a portion of the Secured Obligations are secured by the same Collateral
Documents, the Secured Parties desire that the Secured Obligations shall be
secured on a senior pari passu basis by the Collateral.

          G. The Secured Parties desire to appoint Branch Banking and Trust
Company of Virginia as Collateral Agent to act on behalf of the Secured Parties
regarding the Collateral, all as more fully provided herein.

          H. The Secured Parties and the Collateral Agent desire to enter into
this Agreement to provide, among other things, for (i) the appointment, duties
and responsibilities of the Collateral Agent, (ii) the respective priorities,
rights and interests of the parties in and to the Collateral, (iii) the orderly
administration of the Collateral, (iv) the coordination of any enforcement by
the parties of their respective rights under the Note Agreement, the Credit
Agreement, the Additional Facility Documents, and the Collateral Documents and
(v) the allocation of payments, if any, made under the Collateral Documents and
any Material Subsidiary Guaranty, all upon the terms and subject to the
conditions set forth in this Agreement.

          I. Pursuant to the requirements of the Note Agreement and the Credit
Agreement, the Company has requested and the parties hereto have agreed to enter
into this Agreement.

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

SECTION 1  Definitions.

          The following terms shall have the meanings assigned to them below in
this (S)1 or in the provisions of this Agreement referred to below:

          "Additional Creditors" shall have the meaning assigned thereto in the
Recitals hereof.

          "Additional Facilities" shall have the meaning assigned thereto in the
Recitals hereof.

          "Additional Facility Documents" shall mean all outstanding Additional
Facilities (including the Qualified Replacement Credit Agreement, if any), the
Additional Facility Notes, the Security Documents and all other mortgages,
security agreements, documents, certificates and instruments relating to,
arising out of, or in any way connected therewith or any of the transactions
contemplated thereby.

          "Additional Facility Notes" shall mean the obligations of the Company
which are evidenced by the promissory notes issued under the Additional
Facilities.

          "Additional Funded Debt" shall have the meaning assigned thereto in
the Recitals hereof.

                                       2

<PAGE>

          "Affiliate" means any Person which, directly or indirectly, controls,
is controlled by or is under common control with another Person. For purposes of
the foregoing, "control," "controlled by" and "under common control with" with
respect to any Person shall mean the possession, directly or indirectly, of the
power (i) to vote 10% or more of the securities having ordinary voting power of
the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

          "Bankruptcy Proceeding" shall mean, with respect to any Person, a
general assignment of such Person for the benefit of its creditors, or the
institution by or against such Person of any proceeding seeking relief as
debtor, or seeking to adjudicate such Person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of such Person or
its debts, under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for such Person or for any substantial part of its
property.

          "Cash Equivalent Investments" shall mean, (a) direct obligations of
the United States Government or any agencies thereof and obligations guaranteed
by the United States Government, in each case having remaining terms to maturity
of not more than thirty days; and (b) certificates of deposit, time deposits and
acceptances, including Eurodollar deposits, having remaining terms to maturity
of not more than sixty days issued by a United States bank which has a combined
capital and surplus of at least $750,000,000 and whose long-term certificates of
deposit are rated "A" or better by Standard & Poor's Ratings Service or "A2" or
better by Moody's Investors Service, Inc.

          "Collateral" shall mean the "Collateral" as defined in the Security
Agreement and as more fully described in Exhibit A hereto.

          "Collateral Documents" shall mean the "Revolving Credit Loan
Collateral Documents" as defined in the Credit Agreement, which secure the
Revolving Credit Loan Obligations (as defined in the Credit Agreement) of the
Company under the Credit Agreement and the "Collateral Documents" as defined in
the Note Agreement, which secure the obligations of the Company under the Note
Agreement and the Notes.

          "Company" shall have the meaning assigned thereto in the Recitals
hereof.

          "Credit Agreement" shall have the meaning assigned thereto in the
Recitals hereof.

          "Default" shall mean an Event of Default or an event or condition
which with notice or lapse of time or both would constitute an Event of Default.

          "Event of Default" shall mean any "Event of Default" as defined in the
Note Agreement, the Credit Agreement or any Additional Facility Documents.

          "Grantors" shall have the meaning assigned thereto in the Recitals
hereof.

          "Letter of Credit Collateral Account" shall have the meaning assigned
thereto in (S)6.10 hereto.

                                       3

<PAGE>

          "Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge, encumbrance or other lien (statutory or
otherwise).

          "Make-Whole Amount" shall have the meaning assigned thereto in the
Note Agreement.

          "Material Subsidiary Guaranty" shall have the meaning assigned thereto
in the Note Agreement.

          "Note Agreement" shall have the meaning assigned thereto in the
Recitals hereof.

          "Noteholders" shall have the meaning assigned thereto in the Recitals
hereof.

          "Notes" shall have the meaning assigned thereto in the Recitals
hereof.

          "Person" shall mean an individual, partnership, limited liability
company, corporation, trust, unincorporated organization or any other entity
whatsoever, or any government or agency or political subdivision thereof.

          "Pro Rata Share" shall mean, in respect of any Secured Party as of any
date of determination, the proportion which the amount of the Secured
Obligations then owing to such Secured Party bears to the aggregate amount of
Secured Obligations then owing to all Secured Parties.

          "Required Secured Parties" shall mean Secured Parties holding more
than 75% of the sum of (a) the unused Revolving Commitment (as defined in the
Credit Agreement) for so long as the Revolving Commitment is in effect or, if
applicable, the unused revolving commitment of the Additional Creditors under
the Qualified Replacement Credit Agreement plus (b) the unpaid principal amount
of the Revolving and Noteholder Debt plus (c) without duplication with respect
to the amounts described in clause (a), the outstanding principal amount of the
Additional Funded Debt.

          "Revolving and Noteholder Debt" shall mean the Secured Obligations
consisting of (a) all unpaid principal of the Revolving Loans (as defined in the
Credit Agreement) (including therein the unpaid amount of any drawings under any
letters of credit issued under the Credit Agreement and, without duplication,
the undrawn portion of the face amount of any such letters of credit), (b) all
accrued and unpaid interest and breakage costs thereon, (c) all outstanding
principal of the Notes, (d) all accrued and unpaid interest and premium
(including without limitation Make-Whole Amount) on the Notes and (e) all fees,
commissions, indemnities and other amounts (without duplication of any Revolving
and Noteholder Debt) owing to the Revolving and Noteholder Debt Secured Parties.

          "Revolving and Noteholder Debt Secured Parties" shall mean those
Secured Parties which hold Revolving and Noteholder Debt.

          "Revolving Debt" shall have the meaning assigned thereto in the
Recitals hereof.

          "Secured Obligations" shall mean all indebtedness, liabilities and
other obligations of the Company to the Collateral Agent and the Secured Parties
under the Note

                                       4

<PAGE>

Agreement, the Notes, the Credit Agreement (but only to the extent such Credit
Agreement relates to the Revolving Debt), and the other Loan Documents (as
defined in the Credit Agreement)(but only to the extent such Loan Documents
relate to the Revolving Debt), including all principal in respect of the Notes
and the Revolving Debt (including therein the unpaid reimbursement obligations
relating to any drawings under letters of credit issued under the Credit
Agreement and, without duplication, the undrawn portion of the face amount of
any such letters of credit), all interest accrued thereon and all breakage costs
thereon, all fees due under the Note Agreement, the Notes, the Credit Agreement
(but only to the extent such fees relate to the Revolving Debt) and the other
Loan Documents (as defined in the Credit Agreement) (but only to the extent such
fees relate to the Revolving Debt), the indebtedness, obligations and
liabilities of the Company to the Additional Creditors under the Additional
Facilities and all other amounts payable by the Company to the Collateral Agent
or any Secured Party thereunder or in connection therewith, whether now or
hereafter existing or arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined; provided
however that it is understood and agreed that only indebtedness, liabilities and
other obligations of the Company evidenced by the Credit Agreement and the other
Loan Documents (as defined in the Credit Agreement) relating to the Revolving
Debt shall be included in this definition of "Secured Obligations" and that no
indebtedness, liabilities and other obligations evidenced thereunder relating to
the Real Estate Term Loans 1, 2, 3 & 4 (as defined in the Credit Agreement)
shall be included in this definition of "Secured Obligations".

          "Secured Party" shall have the meaning assigned thereto in the
introductory paragraph hereof.

          "Security Agreement" shall mean the Security Agreement dated the date
hereof from the Company to the Collateral Agent as the same shall be amended
from time to time in accordance with the terms and provisions hereof and
thereof.

          "Senior Preferential Payment" shall mean any payments, or proceeds of
the Collateral, from the Grantors or any other source with respect to the
Secured Obligations (including from the exercise of any set-off), cumulatively,
but without duplication, which are:

          (a) received by a Secured Party within 90 days prior to (1) the
     commencement of a Bankruptcy Proceeding with respect to any Grantor or (2)
     the acceleration of the Notes or the obligations under the Credit
     Agreement, and which payment reduces the amount of the Secured Obligations
     owed to such Secured Party below the amount owed to such Secured Party as
     of the 90th day prior to such commencement or acceleration,

          (b) received by a Secured Party (1) within 90 days prior to the
     occurrence of any Event of Default which has not been waived or cured
     within 30 days after the occurrence thereof and which payment reduces the
     amount of the Secured Obligations owed to such Secured Party below the
     amount owed to such Secured Party as of the 90th day prior to the
     occurrence of such Event of Default or (2) within 30 days after the
     occurrence of such Event of Default, or

          (c) received by a Secured Party after the occurrence of a Special
     Event of Default except as provided in (S)6.11(b).

                                    5

<PAGE>

          "Special Event of Default" shall mean (a) the commencement of a
Bankruptcy Proceeding with respect to any Grantor, (b) any other Event of
Default which has not been waived or cured within 30 days after the occurrence
thereof, or (c) the acceleration of the Notes or the obligations under the
Credit Agreement or under any Additional Facility Documents.

          "Special Trust Account" shall mean that certain restricted account
maintained by the Collateral Agent for the purpose of receiving and holding
Senior Preferential Payments.

          "Specified Amount" shall mean as to any Secured Party the aggregate
amount of the Secured Obligations owed to such Secured Party.

          "Term Debt" shall mean the Real Estate Term Loan Obligations (as
defined in the Credit Agreement).

          "Winchester Collateral" shall mean the real property and improvements
described on Exhibit B hereto.

SECTION 2  Priority of Liens.

     Section 2.1. Pari Passu Liens of the Secured Parties. All Liens now or
hereafter existing in favor of the Collateral Agent, any Secured Party or any
other Person on any Collateral to secure the Secured Obligations shall be pari
passu at all times, regardless of the fact that a portion of the Secured
Obligations are secured by the same Collateral Documents, the time or order of
attachment or perfection, any provisions to the contrary in any of the
Collateral Documents or any other circumstances whatsoever.

     Section 2.2. Liens of Secured Parties in respect of Winchester Collateral.
All Liens now or hereafter existing in favor of BB&T-VA or any other Person on
the Winchester Collateral shall be to secure the Term Debt only in all respects
and at all times, notwithstanding any provisions to the contrary in any of the
Collateral Documents or any other circumstances whatsoever.

     Section 2.3. Nonavoidability of Liens. The priorities specified in (S)2.1
hereof are expressly conditioned upon the nonavoidability and perfection of the
Lien to which another Lien is made pari passu and, if the Lien to which another
Lien is made pari passu is not perfected or is avoidable, for any reason, then
the relative priority agreements provided for in (S)2.1 hereof shall not be
effective as to the particular Collateral which is the subject of the
unperfected or avoidable lien.

SECTION 3  Relationships Among Secured Parties.

     Section 3.1. Restrictions on Actions. Each Secured Party agrees that, so
long as any Secured Obligations are outstanding or any Secured Party has any
commitment to extend credit in respect thereof pursuant to the terms of the
Credit Agreement, the provisions of this Agreement shall provide the exclusive
method by which any Secured Party may exercise rights and remedies with respect
to the Collateral under the Collateral Documents and under applicable law
relating to the rights and remedies of secured creditors. Therefore, each
Secured Party shall, for the mutual benefit of all Secured Parties, except as
permitted under this Agreement:

                                       6

<PAGE>

          (a) refrain from taking or filing any action, judicial or otherwise,
     to enforce any rights or pursue any remedy under the Collateral Documents,
     except for delivering notices hereunder;

          (b) refrain from (1) selling any Secured Obligations to the Company or
     any Affiliate of the Company and (2) accepting any guaranty of, or any
     other security for, the Secured Obligations from the Company or any
     Affiliate of the Company or any other Person, except any guaranty or
     security granted to the Collateral Agent for the benefit of all Secured
     Parties in the relative priorities set forth herein; and

          (c) refrain from exercising any rights or remedies with respect to the
     Collateral under the Collateral Documents, or under applicable law relating
     to the rights and remedies of secured creditors, which have or may have
     arisen or which may arise as a result of a Default or Event of Default or
     otherwise;

provided, however, that nothing contained in subsections (a) through (c) above
shall prevent any Secured Party from exercising or enforcing any other right or
remedy available to any Secured Party under the Note Agreement, the Notes, the
Credit Agreement, the other Loan Documents (as defined in the Credit Agreement),
or the Additional Facility Documents, as the case may be, including, without
limitation, accelerating the maturity of the Secured Obligations, terminating
any commitments to lend additional money to the Company under the Credit
Agreement (or, if applicable, under any Qualified Replacement Credit Agreement)
in accordance with the terms thereof, imposing a default rate of interest in
accordance with the Credit Agreement, the Note Agreement or the Additional
Facility Documents, as applicable, raising any defenses in any action in which
it has been made a party defendant or has been joined as a third party, except
that the Collateral Agent may, but shall not be obligated to, direct and control
any defense directly relating to the Collateral or any one or more of the
Collateral Documents, which shall be governed by the provisions of this
Agreement. NOTWITHSTANDING THE FOREGOING, NO SECURED PARTY SHALL EXERCISE, OR
ATTEMPT TO EXERCISE, ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE, AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES HELD
OR MAINTAINED BY THE SECURED PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COLLATERAL AGENT AND THE REQUIRED SECURED PARTIES.

     Section 3.2. Representations and Warranties. (a) Each of the Secured
Parties represents and warrants to the other parties hereto that:

               (1) It (i) is either (x) a corporation duly organized, existing
     and in good standing under the laws of the jurisdiction of its
     incorporation or (y) a national banking association duly incorporated and
     existing under the laws of the United States of America or a state-licensed
     branch of a foreign bank, and (ii) has all requisite power (corporate or
     otherwise) to own its property and conduct its business as now conducted
     and as presently contemplated.

               (2) The execution, delivery and performance by such Secured Party
     of this Agreement has been authorized by all necessary proceedings
     (corporate or otherwise) and does not and will not contravene any provision
     of law, its charter or by-laws or any

                                       7

<PAGE>

amendment thereof, or of any indenture, agreement, instrument or undertaking
binding upon such Secured Party.

               (3) The execution, delivery and performance by such Secured Party
     of this Agreement will result in a valid and legally binding obligation of
     such Secured Party enforceable in accordance with its terms.

          (b)  The Collateral Agent hereby represents and warrants as of the
     date hereof that:

               (1) Collateral Agent is a state banking corporation validly
     existing and in good standing under the laws of the State of Virginia.

               (2) Collateral Agent has full power, authority and legal right
     under the laws of Virginia pertaining to its banking powers to execute,
     deliver, and perform this Agreement and has taken all necessary action to
     authorize the execution, delivery and performance by it of this Agreement.

               (3) Execution, delivery and performance by the Collateral Agent
     of this Agreement will not contravene any law, rule or regulation of the
     United States or any United States governmental authority or agency
     regulating the Collateral Agent's banking activities or any judgment or
     order applicable to or binding on the Collateral Agent and will not
     contravene or result in any breach of, or constitute a default under, the
     Collateral Agent's constitutive documents or the provision of any
     indenture, mortgage, contract or other agreement to which it is a party or
     by which it or any of its properties is bound.

               (4) Execution, delivery and performance by the Collateral Agent
     of this Agreement will not require the authorization, consent, or approval
     of, the giving of notice to, the filing or registration with, or the taking
     of any other action in respect of, any United States governmental authority
     or agency regulating the banking activities of the Collateral Agent.

               (5) This Agreement has been duly executed and delivered by the
     Collateral Agent and constitutes the legal, valid, and binding agreement of
     the Collateral Agent, enforceable in accordance with its terms, subject to
     bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
     creditors' rights generally, and general principles of equity (regardless
     of whether the application of such principles is considered in a proceeding
     in equity or at law).

     Section 3.3. Cooperation; Accountings. Each of the parties hereto will,
upon the reasonable request of another party, from time to time execute and
deliver or cause to be executed and delivered such further instruments, and do
and cause to be done such further acts as may be necessary or proper to carry
out more effectively the provisions of this Agreement. The Secured Parties agree
to provide to each other upon reasonable request a statement of all payments
received in respect of Secured Obligations.

     Section 3.4. Termination of Credit Agreement and Note Agreement; Amendments
to Credit Agreement or Note Agreement. (a) Upon final payment in full of all
Secured Obligations owing to any Secured Party, and, in the case of BB&T-VA or
any Additional Creditors under the

                                       8

<PAGE>

Qualified Replacement Credit Agreement, after the termination of BB&T-VA's
Revolving Commitment (as defined in the Credit Agreement) or such Additional
Creditors' commitment to lend under the Qualified Replacement Credit Agreement,
as applicable, such Secured Party shall cease to be a party to this Agreement;
provided, however, if all or any part of any payments to such Secured Party are
invalidated or set aside or required to be paid or repaid to any Person in any
Bankruptcy Proceeding or otherwise (including, without limitation, any payment
required to be made by such Secured Party to one or more of the other Secured
Parties pursuant to (S)6.15 hereof), then this Agreement shall be renewed as of
such date and shall thereafter continue in full force and effect to the extent
of the Secured Obligations so invalidated, set aside, paid or repaid.

          (b) The Secured Parties agree with each other that neither (i) the
Noteholders in the case of the Note Agreement, (ii) BB&T-VA in the case of the
Credit Agreement, and (iii) the relevant Additional Creditors party to any
Qualified Replacement Credit Agreement, if any, will effect or agree to any
waiver, amendment, restatement, extension or modification to the Note Agreement,
the Credit Agreement, or the Qualified Replacement Credit Agreement, if any, as
the case may be, which shall have the effect of (1) increasing the aggregate
principal amount of indebtedness owed (or commitments to lend) thereunder other
than additional Funded Debt (as defined in the Note Agreement) which the Company
is permitted to incur under the relevant terms and provisions of the Note
Agreement without giving effect to any amendment thereto after the date hereof,
(2) shortening the scheduled amortization of the indebtedness (excluding the
Term Debt) issued thereunder from the amortization in effect as of the date
hereof or (3) (A) in the case of the Note Agreement, increase the rate of
interest borne by the Notes by more than 100 basis points per annum (other than
the imposition of the relevant default rate of interest; provided that there
shall be no increase in any such default rate from the rate imposed on the date
hereof), (B) in the case of the Credit Agreement, increase the interest rate on
the Revolving Debt by increasing any margin over the LIBOR rate (as defined in
the Credit Agreement) assessed with respect to the Revolving Debt by more than
100 basis points per annum from such margins which are in effect on the date
hereof, and with respect to any interest rate or percentage fee assessed with
respect to the Revolving Debt determined without reference to such LIBOR rate,
no increase in such interest rate or percentage fee shall be made by an amount
which exceeds 100 basis points per annum from such rate or percentage fee in
effect on the date hereof (other than the imposition of the relevant default
rate of interest; provided that there shall be no increase in any such default
rate from the rate imposed on the date hereof), and (C) in the case of any
Qualified Replacement Credit Agreement, increases the interest rate thereon
which would result in an interest rate in excess of such rate which is or would
have been permitted under clause (B) above if the Additional Funded Debt
thereunder was considered to be Revolving Debt under the Credit Agreement, in
each case without the prior written approval of BB&T-VA (or, if applicable, the
Additional Creditors under any Qualified Replacement Credit Agreement) and the
holders of at least 66-2/3% in principal amount of the Notes at the time
outstanding.

          Section 3.5. Additional Creditor. Additional Creditors may, upon
compliance with the relevant provisions of the Note Agreement, the Credit
Agreement and any outstanding Additional Facility, become "Secured Parties"
hereunder by executing and delivering to the Collateral Agent and to each of the
then existing Secured Parties (a) a joinder agreement in the form attached
hereto as Exhibit C and (b) a copy of the Additional Facility or Additional
Facilities to which such Person is a party. Accordingly, upon the execution and
delivery of any such copy of this Agreement by any such Person, such Person,
shall, upon delivery thereof to the

                                       9

<PAGE>

then existing Secured Parties, thereafter become a Secured Party for all
purposes of this Agreement.

SECTION 4 Appointment and Authorization Of Collateral Agent.

          (a) Each Secured Party hereby irrevocably designates and appoints
Branch Banking and Trust Company of Virginia as the Collateral Agent of such
Secured Party under this Agreement and the Collateral Documents, and each
Secured Party hereby irrevocably authorizes Branch Banking and Trust Company of
Virginia as the Collateral Agent for such Secured Party to execute and enter
into each of the Collateral Documents and all other instruments relating to said
Collateral Documents and (i) to take action on its behalf and exercise such
powers and use such discretion as are expressly permitted hereunder and under
the Collateral Documents and all instruments relating hereto and thereto and
(ii) to exercise such powers and perform such duties as are, in each case,
expressly delegated to the Collateral Agent by the terms hereof and thereof
together with such other powers and discretion as are reasonably incidental
hereto and thereto.

          (b) Notwithstanding any provision to the contrary elsewhere in this
Agreement or the Collateral Documents, the Collateral Agent shall not have any
duties or responsibilities except those expressly set forth herein or therein or
any fiduciary relationship with any Secured Party, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any Collateral Document or otherwise exist against the
Collateral Agent.

SECTION 5  Agency Provisions.

     Section 5.1. Delegation of Duties. The Collateral Agent may exercise its
powers and execute any of its duties under this Agreement and the Collateral
Documents by or through employees, agents or attorneys-in-fact and shall be
entitled to take and to rely on advice of counsel concerning all matters
pertaining to such powers and duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. The Collateral Agent may utilize the
services of such Persons as the Collateral Agent in its sole discretion may
determine, and all reasonable fees and expenses of such Persons shall be borne
by the Company.

     Section 5.2. Exculpatory Provisions. Neither the Collateral Agent nor any
of the Collateral Agent's officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or any Collateral Document or any Collateral (except for its or such
Person's own gross negligence or willful misconduct), or (b) responsible in any
manner to any of the Secured Parties for any recitals, statements,
representations or warranties made by the Grantors, any officer thereof or any
other Person contained in, or made or deemed made in connection with, the Credit
Agreement, the Note Agreement, any Additional Facility Document or any
Collateral Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Collateral Agent under or in
connection with, this Agreement, the Credit Agreement, the Note Agreement, any
Additional Facility Document or any Collateral Document, or for the due
execution, legality, value, validity, effectiveness, genuineness, enforceability
or sufficiency of the Credit Agreement, the Note Agreement, any Additional
Facility Document or any Collateral Document or any other document or instrument

                                       10

<PAGE>

furnished pursuant thereto or of any of the Collateral or for any failure of any
Grantor to perform its obligations under such documents. The Collateral Agent
shall be under no obligation to the Secured Parties to ascertain or to inquire
as to the observance or performance of any of the agreements contained in,
statements made in, or conditions of the Credit Agreement, the Note Agreement,
any Additional Facility Document or any Collateral Document or to inspect the
property (including the books and records) of the Grantors.

     Section 5.3. Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely, and shall be fully protected and shall incur no liability in
acting and relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Grantors), independent accountants and other
experts selected by the Collateral Agent. Without limiting the generality of the
foregoing, the Collateral Agent may treat the payee of any Revolving and
Noteholder Debt or any Additional Facility Note as the registered holder thereof
until it receives notice or otherwise has actual knowledge that such payee is no
longer the registered holder of such Revolving and Noteholder Debt or Additional
Facility Note. Notwithstanding anything to the contrary contained herein or in
any Collateral Document, the Collateral Agent shall be fully justified in
failing or refusing to take action under this Agreement or the Collateral
Documents (including, without limitation, the exercise of any rights or remedies
under, or the entering into of any agreement amending, modifying, supplementing,
waiving any provision of, or the giving of consent pursuant to, any of the
Collateral Documents) unless it shall first receive instructions of the Required
Secured Parties as is contemplated by (S)6 hereof and it shall first be
indemnified to its reasonable satisfaction by the relevant Secured Parties
against any and all liability and expense which may be incurred by it by reason
of taking, continuing to take or refraining from taking any such action. The
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the Collateral Documents in
accordance with the provisions of (S)6.5 hereof and in accordance with written
instructions of the Required Secured Parties pursuant to (S)6.3 hereof, and such
instructions and any action taken or failure to act pursuant thereto shall be
binding upon all the relevant Secured Parties.

     Section 5.4. Knowledge or Notice of Default, Event of Default. The
Collateral Agent shall not be deemed to have actual, constructive, direct or
indirect knowledge or notice of the occurrence of any Default or Event of
Default unless and until the Collateral Agent has received written notice from a
Secured Party or the Company referring to the Credit Agreement, the Note
Agreement, the Additional Facility Documents, or the Collateral Documents,
describing such Default or Event of Default and stating that it is a "notice of
default" or a "notice of event of default", setting forth in reasonable detail
the facts and circumstances thereof and stating that the Collateral Agent may
rely on such notice without further inquiry; provided that if BB&T-VA (or any
Additional Creditor under a Qualified Replacement Credit Agreement) is the
Collateral Agent hereunder, the Collateral Agent shall be deemed to have actual
knowledge and notice of the occurrence of any Default or Event of Default (as
defined in the Credit Agreement or Qualified Replacement Credit Agreement) under
the Credit Agreement or Qualified Replacement Credit Agreement if BB&T-VA (or
such Additional Creditor) has actual knowledge of such Default or Event of
Default or has declared an Event of Default under the Credit Agreement or
Qualified Replacement Credit Agreement. The Collateral Agent shall have

                                       11

<PAGE>

no obligation or duty prior to or after receiving any such notice to inquire
whether a Default or Event of Default has in fact occurred and shall be entitled
to rely, and shall be fully protected in so relying, on any such notice
furnished to it.

     Section 5.5. Non-Reliance on Collateral Agent and Other Secured Parties.
Each Secured Party expressly acknowledges that, except as expressly set forth in
this Agreement, neither the Collateral Agent nor any of the Collateral Agent's
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Collateral Agent
hereafter taken, including any review of the affairs of the Grantors, shall be
deemed to constitute any representation or warranty by the Collateral Agent to
any Secured Party. Each Secured Party represents that it has, independently and
without reliance upon the Collateral Agent or any other Secured Party, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and credit-worthiness of the Grantors and made its
own decision to enter into this Agreement, the Credit Agreement, the Note
Agreement, any Additional Facility Document or any Collateral Document. Each
Secured Party also represents that it will, independently and without reliance
upon the Collateral Agent or any other Secured Party, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under the Credit Agreement, the Note Agreement, any Additional Facility
Document or any Collateral Document and this Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and credit-worthiness of the
Grantors. Except for notices, reports and other documents expressly required to
be furnished to the Secured Parties by the Collateral Agent hereunder, the
Collateral Agent shall not have any duty or responsibility to provide the
Secured Parties with any credit or other information concerning the business,
operations, property, financial and other condition or credit-worthiness of the
Grantors which may come into the possession of the Collateral Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

     Section 5.6. Indemnification. The Secured Parties agree to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Company, but without limiting any obligation of the Company to do so) ratably in
accordance with the Secured Parties' Pro Rata Shares, against, and hold the
Collateral Agent harmless from, any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, which may be imposed on,
incurred by, or asserted against the Collateral Agent, in any way relating to or
arising out of this Agreement or any Collateral Document or the transactions
contemplated hereby or thereby or any action taken or omitted by the Collateral
Agent in connection with any of the foregoing; provided that no Secured Party
shall be liable to the Collateral Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent they are found by a final decision of a
court of competent jurisdiction to have resulted from the Collateral Agent's
gross negligence or willful misconduct. The agreements in this (S)5.6 shall
survive the payment of the Secured Obligations.

     Section 5.7. Collateral Agent in Its Individual Capacity. BB&T-VA and its
Affiliates may make loans to and generally engage in any kind of business with
the Company or any other Grantor as though such Person was not the Collateral
Agent hereunder and without any duty to

                                       12

<PAGE>

account therefor to the Secured Parties. With respect to any Revolving and
Noteholder Debt issued to it and advances made by it under the Credit Agreement,
if any, BB&T-VA shall have the same rights and powers under this Agreement as
any Secured Party and may exercise the same as though it were not the Collateral
Agent, and the terms "Secured Party" and "Secured Parties" shall include BB&T-VA
in its individual capacity. Any Additional Creditor which succeeds BB&T-VA as
Collateral Agent shall have the same rights as BB&T-VA under this Section 5.7
with respect to Debt issued to it and advances made by it under the Additional
Facilities.

     Section 5.8. Successor Collateral Agent.

          (a) The Collateral Agent may resign at any time upon thirty days'
notice to the Secured Parties and the Company and may be removed at any time,
with or without cause, by the Required Secured Parties by written notice
delivered to the Company, the Collateral Agent and the Secured Parties. If the
Collateral Agent is also BB&T-VA, or an Additional Creditor under the Qualified
Replacement Credit Agreement, then the Noteholders may remove the Collateral
Agent for a material breach of its obligations under this Agreement at any time
upon a vote of the holders of 75% or more of the aggregate principal amount of
outstanding Notes. After any resignation or removal hereunder of the Collateral
Agent, the provisions of this (S)5 shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it in connection with its role as
Collateral Agent hereunder while it was the Collateral Agent under this
Agreement and it shall be entitled to be paid promptly when due any amounts
owing to it pursuant to (S)5.6.

          (b) Upon receiving notice of any such resignation or removal, a
successor Collateral Agent shall be appointed by the Required Secured Parties;
provided, however, that such successor Collateral Agent shall be (i) a bank or
trust company having a combined capital and surplus of at least $500,000,000,
subject to supervision or examination by a federal or state banking authority;
and (ii) authorized under the laws of the jurisdiction of its incorporation or
organization to assume the functions of the Collateral Agent. If the appointment
of such successor shall not have become effective (as hereafter provided) (x)
within such thirty day period after the Collateral Agent's notice of resignation
or (y) upon removal of the Collateral Agent, then the Collateral Agent may
assign the Liens and its duties hereunder and under the Collateral Documents to
the Secured Parties, as their interests may appear, and in such case all
references herein to "Collateral Agent" shall be deemed to refer to the
"Required Secured Parties." Any Secured Party may petition a court of competent
jurisdiction for the appointment of a successor Collateral Agent. Such court
shall, after such notice as it may deem proper, appoint a successor Collateral
Agent meeting the qualifications specified in this (S)5.8(b). The Secured
Parties hereby consent to such petition and appointment so long as such criteria
are met.

          (c) The resignation or removal of a Collateral Agent shall become
effective upon the execution and delivery of such documents or instruments as
are necessary to transfer the rights and obligations of the Collateral Agent
under the Collateral Documents, including, without limitation, the delivery and
recordation of all amendments, instruments, deed of trusts, financing
statements, continuation statements and other documents necessary to maintain
the perfection of the security interests held by the Collateral Agent hereunder.
Copies of each such document or instrument shall be delivered to all Secured
Parties. Subject to the foregoing provisions of this (S)5.8(c), the appointment
of a successor Collateral Agent pursuant to this (S)5.8

                                       13

<PAGE>

shall become effective upon the acceptance of the appointment as Collateral
Agent hereunder by a successor Collateral Agent. Upon such effective
appointment, the successor Collateral Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent and the retiring Collateral Agent shall be discharged from its rights,
powers, privileges and duties under this Agreement and the other Collateral
Documents; provided, however, that the provisions of this (S)5 shall continue
to inure to the retiring Collateral Agent's benefit as to any actions taken or
omitted to be taken by it in connection with its role as Collateral Agent
hereunder while it was the Collateral Agent under this Agreement.

SECTION 6 Actions By The Collateral Agent.

     Section 6.1. Duties and Obligations. The duties and obligations of the
Collateral Agent are only those set forth in this Agreement and in the
Collateral Documents.

     Section 6.2. Notification of Default. If the Collateral Agent has been
notified in a writing conforming to the requirements of (S)5.4 by any Secured
Party that a Default, an Event of Default or a Special Event of Default has
occurred, the Collateral Agent shall furnish to the Secured Parties a copy of
such written notice and may, but is under no obligation to, furnish to the
Company a copy of the notice received by the Collateral Agent and a copy of the
Collateral Agent's notice to the Secured Parties. The failure of any Secured
Party having knowledge of the occurrence of a Default, an Event of Default or a
Special Event of Default to notify the Collateral Agent or any Secured Party of
such occurrence, however, does not constitute a waiver of such Default, Event of
Default or Special Event of Default by the Secured Parties. Upon receipt of a
notice conforming to the requirements of (S)5.4 from a Secured Party of the
occurrence of an Event of Default or a Special Event of Default, the Collateral
Agent shall (in addition to the action required by the first sentence of this
(S)6.2) promptly (and in any event no later than three Business Days after
receipt of such notice) issue its Notice of Default to all Secured Parties. Such
Notice of Default shall indicate the nature of such Event of Default or Special
Event of Default. The Notice of Default may contain a recommendation of actions
to be taken by the Secured Parties and/or request instructions from the Secured
Parties and shall specify the date on which responses are due in order to be
timely within (S)6.4 hereof.

     Section 6.3. Exercise of Remedies. Except as otherwise provided in (S)6.5,
the Collateral Agent shall take only such actions and exercise only such
remedies under the Collateral Documents as are approved in written instructions
delivered to the Collateral Agent and signed by the Required Secured Parties
required under (S)6.4. In the event that the Collateral Agent shall determine in
good faith that taking the actions specified in such instructions is contrary to
law, it may refrain (and shall be fully protected in so refraining) from taking
such action and shall immediately give notice of such fact to each of the
Secured Parties. In the event that instructions received by the Collateral Agent
are in its good faith judgment ambiguous or conflict with other instructions
received by the Collateral Agent, the Collateral Agent (a) shall promptly notify
the Secured Parties of such ambiguity or conflict and request clarifying
instructions, and (b) may either (1) delay taking any such action or exercising
any such remedy pending the receipt of such clarifying instructions (and shall
be fully protected in so delaying) or (2) take such actions as it is entitled
under (S)6.5.

     Section 6.4. Instructions from Secured Parties.

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<PAGE>

          Notwithstanding anything express or implied to the contrary in any
Collateral Document:

          (a) remedies and other actions to be taken under the Collateral
     Documents or applicable law with respect to the Collateral shall be
     directed by the Required Secured Parties; and

          (b) if any Secured Party does not respond in a timely manner to any
     notice (including, without limitation, a Notice of Default) from the
     Collateral Agent or request for instructions within the time period
     specified by the Collateral Agent in such notice or request for
     instructions (which shall be a minimum of five Business Days), the Secured
     Obligations held by such Secured Party which would otherwise be included in
     a determination of Required Secured Parties shall not be included in the
     determination of Required Secured Parties for purposes of such notice or
     request for instructions. Any action taken or not taken without the vote of
     such Secured Party or Secured Parties under this (S)6.4 shall nevertheless
     be binding on such Secured Party or Secured Parties.

     Section 6.5. Emergency Actions. If the Collateral Agent has asked the
Secured Parties for instruction and if the Required Secured Parties have not yet
responded to such request, the Collateral Agent shall be authorized to take, but
shall not be required to take and shall in no event have any liability for the
taking or the failure to take, such actions (other than any action described or
permitted under (S)6.7 hereof) with regard to a Default or Event of Default
which the Collateral Agent, in good faith, believes to be reasonably required to
promote and protect the interests of the Secured Parties and to preserve the
value of the Collateral and shall give the Secured Parties appropriate notice of
such action; provided that once instructions with respect to such request have
been received by the Collateral Agent from the Required Secured Parties, the
actions of the Collateral Agent shall be governed thereby and the Collateral
Agent shall not take any further action which would be contrary thereto.

     Section 6.6. Changes to Collateral Documents. Any term of the Collateral
Documents may be amended, and the performance or observance by the parties to a
Collateral Document of any term of such Collateral Document may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Required Secured Parties.

     Section 6.7. Release of Collateral. The release of any Collateral by the
Collateral Agent from the Lien of any Collateral Document shall be permitted
with the written consent of all of the Secured Parties; provided, however, that
if the Company or its Subsidiaries disposes of Collateral pursuant to a
disposition that is permitted under both the Credit Agreement and the Note
Agreement or Collateral is released as permitted under the terms of the
Collateral Documents, then the written consent of the Secured Parties to the
release by the Collateral Agent of such Collateral shall not be required.

     Section 6.8. Other Actions. The Collateral Agent shall have the right to
take such actions, or omit to take such actions, hereunder and under the
Collateral Documents not inconsistent with the written instructions of the
Required Secured Parties delivered pursuant to (S)6.3 hereof or the terms of
this Agreement, including actions the Collateral Agent deems necessary or
appropriate to perfect or continue the perfection of the Liens on the Collateral
for

                                       15

<PAGE>

the benefit of the Secured Parties. Except as otherwise provided by applicable
law, the Collateral Agent shall have no duty as to any Collateral, the
collection or protection of the Collateral or any income therefrom (including
any duty to ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of such
matters), nor as to the preservation of rights against prior parties, nor as to
the preservation of rights pertaining to the Collateral beyond the safe custody
of any Collateral in the Collateral Agent's actual possession.

     Section 6.9. Cooperation. To the extent that the exercise of the rights,
powers and remedies of the Collateral Agent in accordance with this Agreement
requires that any action be taken by any Secured Party, such Secured Party shall
take such action and cooperate with the Collateral Agent to ensure that the
rights, powers and remedies of all Secured Parties are exercised in full.

     Section 6.10. Distribution of Proceeds of Collateral and Subsidiary
Guaranties.

          (a) Upon any realization upon the Collateral, the Secured Parties
agree that the proceeds thereof shall be applied (i) first, to the amounts owing
to the Collateral Agent, solely in its capacity as Collateral Agent (or owing to
the Secured Parties in such capacity if the Collateral Agent has resigned or has
been removed), by the Grantors or the Secured Parties pursuant to this Agreement
or the Collateral Documents; (ii) second, to reimburse the Secured Parties for
any amounts paid under (S)5.6 hereof ratably; (iii) third, ratably to the
payment of all amounts of accrued and unpaid interest (other than breakage costs
or any Make-Whole Amount) which constitute Secured Obligations according to the
aggregate amounts of such interest then owing to each Secured Party; (iv)
fourth, ratably to all amounts of principal outstanding in respect of the
Secured Obligations (including therein the unpaid reimbursement obligations
relating to any drawings under letters of credit issued under the Credit
Agreement or any Qualified Replacement Credit Agreement and, without
duplication, in the manner set forth in the following paragraph the undrawn
portion of any face amount of any such letters of credit) according to the
aggregate amounts of such principal then owing to each Secured Party; (v) fifth,
ratably to all other Secured Obligations then owing to the Secured Parties
according to the aggregate amounts of such Secured Obligations then owing to
each Secured Party; and (vi) sixth, the balance, if any, shall be returned to
the Grantors or such other Persons as are entitled thereto.

          Any payment pursuant to this (S)6.10 with respect to the undrawn
amount of any letters of credit shall be paid to the Collateral Agent for
deposit in an account (the "Letter of Credit Collateral Account") to be held as
collateral for the Secured Obligations and disposed of as provided herein. On
each date after the occurrence of a Special Event of Default on which a payment
is made to a beneficiary pursuant to a draw on a letter of credit, the
Collateral Agent shall distribute from the Letter of Credit Collateral Account
for application to the payment of the reimbursement obligation due to BB&T-VA or
any Additional Creditors under the Qualified Replacement Credit Agreement, as
applicable, with respect to such draw an amount equal to the product of (1) the
amount then on deposit in the Letter of Credit Collateral Account, and (2) a
fraction, the numerator of which is the amount of such draw and the denominator
of which is the aggregate amount of all undrawn letters of credit with respect
to the Revolving Debt (or, if applicable, revolving debt under the Qualified
Replacement Credit Agreement) immediately prior to such draw. On each date on
which a reduction in the aggregate amount of all undrawn

                                       16

<PAGE>

letters of credit occurs other than on account of a payment made to a
beneficiary pursuant to a draw on a letter of credit, then the Collateral Agent
shall distribute from the Letter of Credit Collateral Account an amount equal to
the product of (1) the amount then on deposit in the Letter of Credit Collateral
Account, and (2) a fraction, the numerator of which is the amount of such
reduction in the aggregate amount of all undrawn letters of credit and the
denominator of which is the aggregate amount of all undrawn letters of credit
with respect to the Revolving Debt (or, if applicable, revolving debt under the
Qualified Replacement Credit Agreement), immediately prior to such reduction,
which amount shall be distributed as provided in the first paragraph of this
(S)6.10. At such time as the aggregate amount of all undrawn letters of credit
is reduced to zero, any amount remaining in the Letter of Credit Collateral
Account, after the distribution therefrom as provided above, shall be
distributed as provided in the first paragraph of this (S)6.10.

          (b) Upon the request of the Collateral Agent prior to any distribution
under this (S)6.10, each Secured Party shall provide to the Collateral Agent
certificates, in form and substance reasonably satisfactory to the Collateral
Agent, setting forth the respective amounts referred to in (S)6.10(a) hereof
which each such Secured Party believes it is entitled to receive.

     Section 6.11. Senior Preferential Payments and Special Trust Account.

          (a) After the receipt by each Secured Party of a Notice of Default
pursuant to (S)6.2 stating that a Special Event of Default has occurred, all
Senior Preferential Payments other than those payments received pursuant to
subsection (b) of this (S)6.11 shall be delivered to the Collateral Agent for
deposit into the Special Trust Account.

          (b) If (i) such Special Event of Default is waived by BB&T-VA, the
Additional Creditors, and the Noteholders and if no other Event of Default has
occurred and is continuing, (ii) such Special Event of Default is cured by the
Company or by any amendment of the Credit Agreement, the Additional Facility
Documents, or the Note Agreement, as the case may be, and if no other Event of
Default has occurred and is continuing or (iii) any or all of the Secured
Obligations have not been accelerated and the Required Secured Parties have not
instructed the Collateral Agent to foreclose on a substantial portion of the
Collateral, seek the appointment of a receiver, commence litigation against the
Company, liquidate the Collateral, commence a Bankruptcy Proceeding against the
Company, seize Collateral, or exercise other remedies of similar character prior
to the 180th day following such Special Event of Default, the Collateral Agent
thereupon shall return all amounts, together with their pro rata share of any
interest earned thereon, held in the Special Trust Account representing payment
of any Secured Obligations to the Secured Party initially entitled thereto, and
no payments thereafter received by a Secured Party shall constitute a Senior
Preferential Payment by reason of such cured or waived Special Event of Default.
No payment returned to a Secured Party for which such Secured Party has been
obligated to make a deposit into the Special Trust Account shall thereafter ever
be characterized as a Senior Preferential Payment.

          (c) Each Secured Party agrees that upon the occurrence of a Special
Event of Default it shall (i) promptly notify the Collateral Agent of the
receipt of any Senior Preferential Payments, (ii) hold such amounts in trust for
the Secured Parties and act as agent of the Secured Parties during the time any
such amounts are held by it, and (iii) deliver promptly to the Collateral Agent
such amounts for deposit into the Special Trust Account as soon as practicable.

                                       17

<PAGE>

          (d) If the Secured Obligations have been accelerated or the Required
Secured Parties have instructed the Collateral Agent to foreclose on a
substantial portion of the Collateral, seek the appointment of a receiver,
commence litigation against the Company, liquidate the Collateral, commence a
Bankruptcy Proceeding against the Company, seize Collateral, or exercise other
remedies of similar character, then all funds, together with interest earned
thereon, held in the Special Trust Account and all subsequent Senior
Preferential Payments shall be applied in accordance with the provisions of
(S)6.10 above.

     Section 6.12. Authorized Investments. Any and all funds held by the
Collateral Agent in its capacity as Collateral Agent, whether pursuant to any
provision of this Agreement or any of the Collateral Documents, shall to the
extent feasible within a reasonable time be invested by the Collateral Agent in
Cash Equivalent Investments. Prior to making such investment or to the extent it
is not feasible to invest such funds in Cash Equivalent Investments, the
Collateral Agent shall hold any such funds in an interest bearing account. Any
interest earned on such funds shall be disbursed to the Secured Parties in
accordance with (S)6.10 or (S)6.11, as applicable. The Collateral Agent shall
have no duty to place funds held and invested pursuant to this (S)6.12 in
investments which provide a maximum return. The Collateral Agent shall not be
responsible for any loss of any funds invested in accordance with this (S)6.12.

     Section 6.13. Restoration of Obligations. For the purposes of determining
the amount of outstanding Secured Obligations, if any Secured Party is required
to deposit any Senior Preferential Payment in the Special Trust Account, then
the obligations intended to be satisfied by such Senior Preferential Payment
shall be revived, as of the date of the deposit of such amount with the
Collateral Agent, in the amount of such Senior Preferential Payment and such
obligation shall continue in full force and effect (and, if applicable, bear
interest from such deposit date at the non-default rate as provided in the Notes
or in the Credit Agreement or in the Additional Facility Documents, as the case
may be) as if such Secured Party had not received such payment. All such revived
obligations shall be included as Secured Obligations for purposes of allocating
any payments under (S)6.10 and for applying the definition of Required Secured
Parties. If any such revived obligation shall not be allowed as a claim under
the Bankruptcy Code due to the fact that the Senior Preferential Payment has in
fact been made by the Company, the Secured Parties shall make such other
equitable arrangements for the purchase and sale of participations in the
Secured Obligations to effectuate the intent of this (S)6.13.

     Section 6.14. Bankruptcy, Preferences, etc. If any payment to a Secured
Party is subsequently invalidated, declared to be fraudulent or preferential or
set aside and is required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or Federal law, common law or equitable cause,
and such Secured Party has previously made a deposit in respect of such payment
into the Special Trust Account pursuant to (S)6.11, then the Collateral Agent
shall distribute to such Secured Party proceeds from the Special Trust Account
in an amount equal to such deposit or so much thereof as is affected by such
events and if, due to previous disbursements to the Secured Parties pursuant to
(S)6.11(d), the proceeds in the Special Trust Account are insufficient for such
purpose, then each other Secured Party shall pay to such Secured Party upon
demand an amount equal to a ratable portion of such disbursements of the deposit
which was distributed to each such Secured Party according to the aggregate
amounts so distributed to each such Secured Party.

                                       18

<PAGE>

     Section 6.15. Sharing of Proceeds. If, despite the provisions of this
Agreement, any Secured Party shall receive any payment or other recovery in
excess of its portion of payments on account of the Secured Obligations to which
it is then entitled in accordance with this Agreement, such Secured Party shall
hold such payment or other recovery in trust for the benefit of the parties
entitled thereto and promptly pay over or deliver such payment or other recovery
to the Collateral Agent for application by the Collateral Agent in accordance
with this Agreement.

SECTION 7 Bankruptcy Proceedings.

          The following provisions shall apply during any Bankruptcy Proceeding
of any Grantor:

          (a) The Collateral Agent shall represent all Secured Parties in
connection with all matters directly relating to the Collateral, including
without limitation, use, sale or lease of Collateral, use of cash collateral,
relief from the automatic stay and adequate protection. The Collateral Agent
shall act on the instructions of the Required Secured Parties; provided that
such instructions by the Required Secured Parties shall not treat any Secured
Party differently with respect to rights in the Collateral from any other
Secured Party; and provided further that if action is required prior to the time
such instructions are received or if the Required Secured Parties fail to give
instructions with respect to any matter, the Collateral Agent shall be
authorized to act, or refrain from acting, in accordance with (S)6.5 hereof.

          (b) Each Secured Party shall be free to act independently on any issue
not directly relating to the Collateral, including without limitation, matters
relating to appointment of a trustee, conversion of a case, filing of claims,
and plans of reorganization. Each Secured Party shall give prior notice to the
Collateral Agent of any such action to the extent that such notice is possible.
If such prior notice is not given, such Secured Party shall give prompt notice
following any such action.

SECTION 8 Additional Agreements of Secured Parties.

          (a) BB&T-VA, in its capacity as the Lender under the Credit Agreement
agrees that the Secured Parties, through their authorized representatives or
agents, may (to the extent BB&T-VA has the right to restrict access to the
Winchester Collateral) enter upon any real property constituting Winchester
Collateral from time to time during normal business hours for the sole purpose
of inspecting, repairing, removing, caring for, protecting or conducting a sale
or sales of any or all of the Collateral if the Collateral Agent provides
BB&T-VA notice prior to each entry (which shall not be less than two (2)
business days except in the case of emergency). BB&T-VA further agrees that
neither the Collateral Agent nor any Secured Party shall have any obligation or
liability to BB&T-VA, except, however, that the Secured Parties shall promptly
repair any damage to the Winchester Collateral caused by the removal, repair,
sale or inspection and the Secured Parties shall be liable for, and shall
indemnify, defend and hold the Collateral Agent and BB&T-VA harmless from the
gross negligence or willful misconduct of their employees or agents in
connection with such removal, repairs, sale or inspection. The Collateral Agent
and the Secured Parties agree that neither the Collateral Agent nor BB&T-VA
shall have any obligation or liability to preserve, protect, manage, maintain,
safekeep or otherwise have any responsibility for the Collateral beyond the safe
custody of any Collateral in any such Person's actual possession.

                                       19

<PAGE>

          (b) The Collateral Agent agrees to use its best efforts to give to
BB&T-VA, via certified mail, written notice prior to the exercise by the
Collateral Agent of any of its rights or remedies against the Collateral at the
address provided for in (S)10.2 below; provided, however, that any failure to so
provide such notice shall have no effect on the ability of the Collateral Agent
to exercise any of its rights or remedies against the Collateral.

          (c) BB&T-VA agrees to use its best efforts to give to the Secured
Parties, via certified mail, written notice prior to the exercise by BB&T-VA of
any of its rights or remedies against the Winchester Collateral at the address
provided for in (S)10.2 below; provided, however, that any failure to so provide
such notice shall have no effect on the ability of BB&T-VA to exercise any of
its rights or remedies against the Winchester Collateral.

          (d) If the Collateral Agent takes possession of the Grantors' books
and records included in the Collateral, the Collateral Agent shall provide
BB&T-VA reasonable access to inspect and copy such books and records if BB&T-VA
provides prior notice (which shall be not less than two (2) business days except
in the case of emergency) and if such access is necessary to exercise its rights
and remedies in the Winchester Collateral.

          (e) If the Collateral Agent or the Secured Parties receives any
Winchester Collateral or any proceeds thereof or if BB&T-VA (in its capacity as
lender of the Term Debt under the Credit Agreement) receives any Collateral or
any proceeds thereof in which the Secured Parties have a prior perfected
security interest, such party shall (i) notify the other party in writing of the
nature of such receipt, the date of the receipt and the amount thereof; (ii)
deduct from the proceeds received any costs or expenses (including attorneys'
fees and expenses) incurred in connection with the acquisition of such proceeds;
(iii) hold the remaining amount of such proceeds in trust for the benefit of the
other party until paid over to the other party; and (iv) pay the remaining
amount of such proceeds or deliver the applicable Collateral to the other party
hereto promptly upon receipt thereof. If at any time payment, in whole or in
part, of any Collateral or proceeds of Collateral distributed hereunder is
rescinded or must otherwise be restored or returned as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, then
each party receiving any portion of such proceeds agrees, upon demand, to return
the portion of such proceeds it has received to the party responsible for
restoring or returning such proceeds.

          (f) References to BB&T-VA in this Section 8 shall also refer to all
Additional Creditors under the Qualified Replacement Credit Agreement if such
Additional Creditors are also the holders of a Lien on the Winchester
Collateral.

SECTION 9 Miscellaneous.

     Section 9.1. Entire Agreement. This Agreement represents the entire
Agreement among the Collateral Agent, the Secured Parties and the Grantors in
respect of the subject matter hereof.

     Section 9.2. Notices. Notices hereunder shall be given to the Secured
Parties at their addresses as set forth in the Note Agreement or the Credit
Agreement or at such other address as may be designated by each in a written
notice to the other parties hereto.

                                       20

<PAGE>

     Section 9.3. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Collateral Agent and each of the Secured Parties
and their respective successors and assigns, whether so expressed or not, and,
in particular, shall inure to the benefit of and be enforceable by and against
any future holder or holders of any Secured Obligations, and the term "Secured
Party" shall include any such subsequent holder of Secured Obligations, wherever
the context permits.

     Section 9.4. Consents, Amendment, Waivers. All amendments, waivers or
consents of any provision of this Agreement shall be effective only if the same
shall be in writing and signed by the Collateral Agent and all of the Secured
Parties.

     Section 9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any conflicts of law principles.

     Section 9.6. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one Agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.

     Section 9.7. Sale of Interest. No Secured Party will sell, transfer or
otherwise dispose of any interest in the Secured Obligations unless such
purchaser or transferee shall agree, in writing, to be bound by the terms of
this Agreement.

     Section 9.8. Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby.

     Section 9.9. Expenses. In the event of any litigation to enforce this
Agreement, the prevailing party shall be entitled to its reasonable attorney's
fees (including the allocated costs of in-house counsel).

     Section 9.10. Term of Agreement. This Agreement shall terminate when all
Secured Obligations are paid in full and such payments are not subject to any
possibility of revocation or rescission and no Secured Party has any commitment
to extend any additional credit constituting Secured Obligations under the terms
of the Credit Agreement or any Qualified Replacement Credit Agreement, or when
the Collateral Agent, BB&T-VA (if then a Secured Party) and all of the other
Secured Parties mutually agree in a writing to terminate this Agreement,
whichever occurs earlier.

     Section 9.11. Obligations Several. The obligations of the Secured Parties
and the Collateral Agent hereunder are several. The failure of any Secured Party
or the Collateral Agent to carry out its obligations hereunder shall not relieve
any other Secured Party or the Collateral Agent of any obligation hereunder, nor
shall any Secured Party or the Collateral Agent be responsible for the
obligations of, or any action taken or omitted by, any other Person hereunder.
Nothing contained in this Agreement shall be deemed to cause any Secured Party
or the Collateral Agent to be considered a partner of or joint venturer with any
other Secured Party, the Collateral Agent, the Subsidiary Guarantors or the
Company.

                                       21

<PAGE>

          In Witness Whereof, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.

                                  Branch Banking and Trust Company of
                                  Virginia, As Collateral Agent

                                  By:   /s/ David A. Chandler
                                        ---------------------------------------
                                  Name: David A. Chandler
                                        ---------------------------------------
                                  Its:  Senior Vice President
                                        ---------------------------------------

                                       22

<PAGE>

                                  Teachers Insurance and Annuity
                                  Association of America

                                  By:   /s/ John Goodreds
                                        ---------------------------------------
                                  Name: John Goodreds
                                        ---------------------------------------
                                  Its:  Associate Director--Private Placements
                                        ---------------------------------------

                                       23

<PAGE>

                                  Nationwide Life Insurance Company

                                  By:   /s/ Joseph P. Young
                                        ---------------------------------------
                                  Name: Joseph P. Young
                                        ---------------------------------------
                                  Its:  Credit Officer--Fixed Income Securities
                                        ---------------------------------------

                                       24

<PAGE>

                                  Nationwide Life and Annuity Insurance
                                  Company

                                  By:   /s/ Joseph P. Young
                                        ---------------------------------------
                                  Name: Joseph P. Young
                                        ---------------------------------------
                                  Its:  Credit Officer--Fixed Income Securities
                                        ---------------------------------------

                                       25

<PAGE>

                            AMCO Insurance Company

                            By:   /s/ Joseph P. Young
                                  ----------------------------------------
                            Name: Joseph P. Young
                                  ----------------------------------------
                            Its:  Credit Officer--Fixed Income Securities
                                  ----------------------------------------

                                       26

<PAGE>

                           Nationwide Mutual Insurance Company

                           By:   /s/   Joseph P. Young
                                 ---------------------------------------
                           Name: Joseph P. Young
                                 ---------------------------------------
                           Its:  Credit Officer--Fixed Income Seucrities
                                 ---------------------------------------
                             27

<PAGE>

                                      Great West Life & Annuity Insurance
                                      Company

                                      By:   /S/ Wayne T. Hoffman
                                            ------------------------------------

                                      Name: Wayne T. Hoffman
                                            ------------------------------------

                                      Its:  Senior Vice President - Investments
                                            ------------------------------------

                                      By:   /s/ Tad Anderson
                                            ------------------------------------

                                      Name: Tad Anderson
                                            ------------------------------------

                                      Its:  Manager -- Investments
                                           ------------------------------------

                                       28

<PAGE>

                                          Branch Banking and Trust Company of
                                          Virginia

                                          By:   /s/ David A. Chandler
                                                ------------------------------
                                          Name: David A. Chandler
                                                ------------------------------
                                                Senior Vice President
                                          Its:  ------------------------------

                                       29

<PAGE>

The Undersigned Hereby Acknowledge and Agree to the foregoing Agreement.

                                          Trex Company, Inc.

                                          By: /s/ Anthony J. Cavanna
                                              --------------------------
                                          Name: Anthony J. Cavanna
                                          Its: Executive Vice President and
                                               Chief Financial Officer

                                          TREX Company, LLC

                                          By: /s/ Anthony J. Cavanna
                                              --------------------------
                                          Name: Anthony J. Cavanna
                                          Its: Executive Vice President and
                                               Chief Financial Officer

                                       30

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