Document:

<PAGE>

                                                                 EXHIBIT 10(xcv)

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of December 17, 2002 by and among HAMILTON BEACH/PROCTOR-SILEX, INC., a Delaware
corporation (the "Company"), its U.S. Subsidiaries identified as U.S. Subsidiary
Borrowers on the signature pages hereto and any additional U.S. Subsidiaries of
the Company which become parties hereto from time to time (the "U.S. Subsidiary
Borrowers") (hereinafter, the Company and U.S. Subsidiary Borrowers are
collectively referred to as the "Obligors" and individually as a "Obligor"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as the administrative agent
under the Credit Agreement referred to below (in such capacity, the
"Administrative Agent" or the "Agent").

                                    RECITALS

         WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "Credit Agreement"), among the Company, the other Borrowers identified
therein, the Lenders party thereto from time to time, the Agent, and ABN AMRO
Bank N.V., Canada Branch, as Canadian Agent, the U.S. Lenders have agreed to
make U.S. Revolving Loans and to issue or participate in Letters of Credit under
the Credit Agreement and the Canadian Lenders have agreed to make Canadian
Revolving Loans and to create Bankers' Acceptances under the Credit Agreement
upon the terms and subject to the conditions set forth therein; and

         WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement, the obligation of the U.S. Lenders to make their respective U.S.
Revolving Loans and to issue or participate in Letters of Credit under the
Credit Agreement and the Canadian Lenders to make Canadian Revolving Loans and
to create Bankers' Acceptances under the Credit Agreement that the Obligors
shall have executed and delivered this Security Agreement to the Agent for the
benefit of the Lenders.

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

         1.       Definitions.

                  (a)      Unless otherwise defined herein, capitalized terms
         used herein shall have the meanings ascribed to such terms in the
         Credit Agreement, and the following terms which are defined in the
         Uniform Commercial Code from time to time in effect in the State of New
         York (the "UCC") are used herein as so defined: Accessions, Accounts,
         As-Extracted Collateral, Chattel Paper, Commercial Tort Claims,
         Consumer Goods, Control, Deposit Accounts, Documents, Equipment, Farm
         Products, Fixtures, General Intangibles, Goods, Instruments, Inventory,
         Investment Property, Letter-of-Credit Rights,

<PAGE>

         Manufactured Homes, Proceeds, Securities Intermediary, Software,
         Supporting Obligations and Tangible Chattel Paper. For purposes of this
         Security Agreement, the term "Lender" shall include any Affiliate of
         any Lender which has entered into a Lender Hedging Agreement (to the
         extent the obligations of any Borrower thereunder constitute Secured
         Obligations).

                  (b)      In addition, the following terms shall have the
         following meaning:

                  "Copyright Licenses": any written agreement providing for the
         grant by or to any Obligor of any right under any Copyright including,
         without limitation, any thereof referred to in Schedule 1(b) hereto.

                  "Copyrights": (a) all copyrights in all Works, now existing or
         hereafter created or acquired (and whether or not registered in the
         United States and/or any other jurisdiction), all registrations and
         recordings thereof, and all applications in connection therewith,
         including, without limitation, registrations, recordings and
         applications in the United States Copyright Office or in any similar
         office or agency of any other country including, without limitation,
         any thereof referred to in Schedule 1(b) hereto, and (b) all renewals
         thereof including, without limitation, any thereof referred to in
         Schedule 1(b) hereto.

                  "Insurance Account": has the meaning ascribed thereto in
         Section 7 hereof.

                  "Intellectual Property": all Copyrights, Copyright Licenses,
         Patents, Patent Licenses, Trademarks, Trademark Licenses and all other
         intellectual property of the Obligors.

                  "Material Intellectual Property": (a) the Intellectual
         Property listed on Schedule 1.1B to the Credit Agreement and (b) all
         Intellectual Property material to the business of an Obligor.

                  "Patent License": all agreements, whether written or oral,
         providing for the grant by or to an Obligor of any right to
         manufacture, use or sell any invention covered by a Patent, including,
         without limitation, any thereof referred to in Schedule 1(b) hereto.

                  "Patents": (a) all letters patent of the United States or any
         other country and all reissues and extensions thereof, including,
         without limitation, any thereof referred to in Schedule 1(b) hereto,
         and (b) all applications for letters patent of the United States or any
         other country and all divisions, continuations and
         continuations-in-part thereof, including, without limitation, any
         thereof referred to in Schedule 1(b) hereto.

                  "Secured Obligations": (a) all of the Obligations, howsoever
         evidenced, created, incurred or acquired, whether primary, secondary,
         direct, contingent, or joint and several and (b) all reasonable
         expenses and charges, legal and otherwise, incurred by the Agent and/or
         the Lenders in collecting or enforcing any Obligation or in realizing
         on or protecting any security therefor, including without limitation
         the security granted hereunder.

                                       2

<PAGE>

                  "Trademark License": means any agreement, written or oral,
         providing for the grant by or to an Obligor of any right to use any
         Trademark, including, without limitation, any thereof referred to in
         Schedule 1(b) hereto.

                  "Trademarks": (a) all trademarks, trade names, corporate
         names, company names, business names, fictitious business names, trade
         styles, service marks, logos and other source or business identifiers,
         and the goodwill associated therewith, now existing or hereafter
         adopted or acquired, all registrations and recordings thereof, and all
         applications in connection therewith, whether in the United States
         Patent and Trademark Office or in any similar office or agency of the
         United States, any State thereof or any other country or any political
         subdivision thereof, or otherwise, including, without limitation, any
         thereof referred to in Schedule 1(b) hereto, and (b) all renewals
         thereof.

                  "Work": any work which is subject to copyright protection
         pursuant to Title 17 of the United States Code or under the legislation
         of any other country.

         2.       Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Obligor hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against, any and all
right, title and interest of such Obligor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter (collectively, the
"Collateral"):

                  (a)      all Accounts;

                  (b)      all cash and Cash Equivalents;

                  (c)      all Chattel Paper;

                  (d)      those certain Commercial Tort Claims of the Obligors
                           in which an Obligor is the claimant set forth on
                           Schedule 2(d) attached hereto (as such Schedule may
                           be updated from time to time by the Obligors);

                  (e)      all Copyrights;

                  (f)      all Copyright Licenses;

                  (g)      all Deposit Accounts;

                  (h)      all Documents;

                  (i)      all Equipment;

                  (j)      all Fixtures;

                                       3

<PAGE>

                  (k)      all General Intangibles;

                  (l)      all Goods;

                  (m)      all Instruments;

                  (n)      the Insurance Account and all cash deposited therein
                           from time to time;

                  (o)      all Inventory;

                  (p)      all Investment Property (subject to the percentage
                           restrictions described in Section 2 of the Pledge
                           Agreement);

                  (q)      all Letter-of-Credit Rights;

                  (r)      the U.S. Lockbox Accounts, the Wachovia Clearing
                           Account, the Wachovia Account and any replacement or
                           successor accounts relating thereto;

                  (s)      all Material Contracts and all such other agreements,
                           contracts, leases, licenses, tax sharing agreements
                           or hedging arrangements now or hereafter entered into
                           by an Obligor, as such agreements may be amended or
                           otherwise modified from time to time (collectively,
                           the "Assigned Agreements"), including without
                           limitation, (i) all rights of an Obligor to receive
                           moneys due and to become due under or pursuant to the
                           Assigned Agreements, (ii) all rights of an Obligor to
                           receive proceeds of any insurance, indemnity,
                           warranty or guaranty with respect to the Assigned
                           Agreements, (iii) claims of an Obligor for damages
                           arising out of or for breach of or default under the
                           Assigned Agreements and (iv) the right of an Obligor
                           to terminate the Assigned Agreements, to perform
                           thereunder and to compel performance and otherwise
                           exercise all remedies thereunder;

                  (t)      all Patent Licenses;

                  (u)      all Patents;

                  (v)      all Software;

                  (w)      all Supporting Obligations;

                  (x)      all Trademarks;

                  (y)      all Trademark Licenses;

                                       4

<PAGE>

                  (z)      all books, records, ledger cards, files,
                           correspondence, computer programs, tapes, disks, and
                           related data processing software (owned by such
                           Obligor or in which it has an interest) that at any
                           time evidence or contain information relating to any
                           Collateral or are otherwise necessary or helpful in
                           the collection thereof or realization thereupon;

                  (aa)     all other personal property of any kind or type
                           whatsoever owned by such Obligor; and

                  (bb)     to the extent not otherwise included, all Accessions,
                           Proceeds and products of any and all of the
                           foregoing.

         The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising, (ii) is not to be
construed as an assignment or sale of any Intellectual Property or a right to
use any Intellectual Property unless and until an Event of Default shall have
occurred and be continuing and (iii) shall not include any specific contract
rights to the extent the granting of a security interest therein is prohibited
by or would constitute a default under any agreement or document related thereto
(so long as such agreement is otherwise permitted under the Credit Agreement)
(but only to the extent such prohibition is enforceable under applicable law);
provided, however, that in no event, shall this provision have the effect of
limiting the "blanket" lien nature of the foregoing granting clause except with
respect to any such specific contract rights.

         3.       Provisions Relating to Accounts, Contracts and Agreements.

                  (a)      Anything herein to the contrary notwithstanding, each
         of the Obligors shall remain liable under each of its Accounts,
         contracts and agreements to observe and perform all the conditions and
         obligations to be observed and performed by it thereunder, all in
         accordance with the terms of any agreement giving rise to each such
         Account or the terms of such contract or agreement. Neither the Agent
         nor any Lender shall have any obligation or liability under any Account
         (or any agreement giving rise thereto), contract or agreement by reason
         of or arising out of this Security Agreement or the receipt by the
         Agent or any Lender of any payment relating to such Account, contract
         or agreement pursuant hereto, nor shall the Agent or any Lender be
         obligated in any manner to perform any of the obligations of an Obligor
         under or pursuant to any Account (or any agreement giving rise
         thereto), contract or agreement, to make any payment, to make any
         inquiry as to the nature or the sufficiency of any payment received by
         it or as to the sufficiency of any performance by any party under any
         Account (or any agreement giving rise thereto), contract or agreement,
         to present or file any claim, to take any action to enforce any
         performance or to collect the payment of any amounts which may have
         been assigned to it or to which it may be entitled at any time or
         times.

                                       5

<PAGE>

                  (b)      At any time and from time to time, the Agent shall
         have the right, but not the obligation, to make test verifications of
         the Accounts in any manner and through any medium that it reasonably
         considers advisable, and the Obligors shall furnish all such assistance
         and information as the Agent may require in connection with such test
         verifications. Upon the Agent's request and at the expense of the
         Obligors, the Obligors shall cause independent public accountants or
         others satisfactory to the Agent to furnish to the Agent reports
         showing reconciliations, aging and test verifications of, and trial
         balances for, the Accounts, to the extent provided for in the Credit
         Agreement. The Agent in its own name or in the name of others may
         communicate with account debtors on the Accounts to verify with them to
         the Agent's satisfaction the existence, amount and terms of any
         Accounts.

         4.       Representations and Warranties. Each Obligor hereby represents
and warrants to the Agent, for the benefit of the Lenders, on the Closing Date
and the date on which any Loan is made or Letter of Credit or Bankers'
Acceptance is issued, that:

                  (a)      Chief Executive Office; Books and Records; Legal
         Name; State of Formation. Each Obligor's chief executive office and
         chief place of business are (and for the prior four months has been)
         located at the locations set forth on Schedule 6.22 to the Credit
         Agreement and each Obligor keeps its books and records at such
         locations. Each Obligor's exact legal name is as shown in this Security
         Agreement and its state of formation is (and for the prior four months
         has been) the state set forth on Schedule 6.22 to the Credit Agreement.
         No Obligor has in the past four months changed its name, been party to
         a merger, consolidation or other change in structure or used any trade
         name not disclosed on Schedule 6.23 to the Credit Agreement.

                  (b)      Location of Tangible Collateral. The location of all
         tangible Collateral owned by each Obligor is as shown on Schedule 6.22
         to the Credit Agreement.

                  (c)      Ownership. Each Obligor is the legal and beneficial
         owner of its Collateral and has the right to pledge, sell, assign or
         transfer the same.

                  (d)      Security Interest/Priority. This Security Agreement
         creates a valid security interest in favor of the Agent, for the
         benefit of the Lenders, in the Collateral of such Obligor and, when
         properly perfected by filing or upon the Agent obtaining Control of
         such Collateral, shall constitute a valid first priority, perfected
         security interest in such Collateral, to the extent such security
         interest can be perfected by filing or through Control under the UCC
         (or equivalent local law), free and clear of all Liens except for
         Permitted Liens.

                  (e)      Consents. Except for the filing or recording of UCC
         financing statements (or comparable Canadian filings, as applicable) or
         obtaining Control to perfect the Liens created by this Security
         Agreement that may be perfected through the filing of a UCC financing
         statement (or comparable Canadian filing, as applicable) or obtaining
         Control, no consent or authorization of, filing with, or other act by
         or in respect of, any arbitrator

                                       6

<PAGE>

         or Governmental Authority and no consent of any other Person
         (including, without limitation, any stockholder, member or creditor of
         such Obligor), is required (except as such have been duly obtained,
         made or given, or will be duly obtained, made or given prior to or
         contemporaneously with the granting of the security interest hereunder,
         and are in full force and effect) (i) for the grant by such Obligor of
         the security interest in the Collateral granted hereby or for the
         execution, delivery or performance of this Security Agreement by such
         Obligor or (ii) for the perfection of such security interest or the
         exercise by the Agent of the rights and remedies provided for in this
         Security Agreement (other than as may be required by laws affecting the
         offering and sale of securities).

                  (f)      Types of Collateral. None of the Collateral consists
         of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods,
         Farm Products, Manufactured Homes or standing timber.

                  (g)      Accounts. With respect to the Accounts of the
         Obligors: (i) the goods sold and/or services furnished giving rise to
         each Account are not subject to any security interest or Lien except
         the first priority, perfected security interest granted to the Agent
         herein and except for Permitted Liens; (ii) each Account and the papers
         and documents of the applicable Obligor relating thereto are genuine
         and in all material respects what they purport to be; (iii) each
         Account arises out of a bona fide transaction for goods sold and
         delivered (or in the process of being delivered) by an Obligor or for
         services actually rendered by an Obligor, which transaction was
         conducted in the ordinary course of the Obligor's business and was
         completed in accordance with the terms of any documents pertaining
         thereto; (iv) no Account of an Obligor is evidenced by any Instrument
         or Chattel Paper unless such Instrument or Chattel Paper has been
         endorsed over and delivered to, or submitted to the control of, the
         Agent; (v) the amount of each Account as shown on the applicable
         Obligor's books and records, and on all invoices and statements which
         may be delivered to the Agent with respect thereto, is due and payable
         to the applicable Obligor; (vi) to each of the Obligors' knowledge, the
         account debtor with respect to each Account has the capacity to
         contract; and (vii) no surety bond was required or given in connection
         with any Account of an Obligor or the contracts or purchase orders out
         of which they arose.

                  (h)      Inventory. No Inventory of an Obligor is held by a
         third party (other than a Credit Party) pursuant to a consignment, sale
         or return, sale on approval or similar arrangement.

                  (i)      Intellectual Property.

                           (i)      Schedule 1(b) hereto includes all registered
                  and unregistered Copyrights, Patents and Trademarks owned by
                  or licensed (pursuant to a written license) by or to the
                  Obligors as of the date hereof.

                           (ii)     Except as set forth on Schedule 1(b) hereto,
                  all Material Intellectual Property of each Obligor is valid,
                  subsisting, unexpired, enforceable

                                       7

<PAGE>

                  and has not been abandoned, and each Obligor is legally
                  entitled to use each of its trade names.

                           (iii)    Except as set forth on Schedule 1(b) hereto,
                  as of the date hereof, none of the Intellectual Property of
                  the Obligors is the subject of any licensing or franchise
                  agreement.

                           (iv)     No holding, decision or judgment has been
                  rendered by any Governmental Authority which would limit,
                  cancel or question the validity of any Material Intellectual
                  Property of the Obligors, other than any such holding,
                  decision or judgment with respect to an immaterial portion of
                  any Patent application which application constitutes Material
                  Intellectual Property.

                           (v)      No action or proceeding is pending seeking
                  to limit, cancel or question the validity of any Material
                  Intellectual Property of the Obligors, other than any such
                  action or proceeding which the Obligor and the Agent determine
                  to be frivolous in their reasonable independent judgment.

                           (vi)     All applications pertaining to the Material
                  Intellectual Property of each Obligor have been duly and
                  properly filed, and all registrations or letters pertaining to
                  the Material Intellectual Property of such Obligor have been
                  duly and properly filed and issued.

                           (vii)    No Obligor has made any assignment or
                  agreement in conflict with the security interest of the Agent
                  in the Intellectual Property of each Obligor hereunder.

                  (j)      Documents, Instruments and Chattel Paper. All
         Documents, Instruments and Chattel Paper describing, evidencing or
         constituting Collateral are, to the Obligors' knowledge, complete,
         valid, and genuine, in all material respects.

                  (k)      Equipment. With respect to each Obligor's Equipment:
         (i) such Obligor has good and marketable title thereto or a valid
         leasehold interest therein; and (ii) all such Equipment is in normal
         operating condition and repair, other than ordinary wear and tear and
         normal obsolescence, and is suitable for the uses to which it is
         customarily put in the conduct of such Obligor's business.

                  (l)      Restrictions on Security Interest. Other than as
         shown on Schedule 4(l) hereto, none of the Obligors is party to any
         material license or any material lease that contains legally
         enforceable restrictions on the granting of a security interest therein
         unless such restrictions have been waived in writing to the
         satisfaction of the Agent.

         5.       Covenants. Each Obligor covenants that so long as any of the
Secured Obligations remain outstanding or any Credit Document or Lender Hedging
Agreement is in

                                       8

<PAGE>

effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Obligor shall:

                  (a)      Other Liens. Defend the Collateral against the claims
         and demands of all third parties claiming an interest therein, and keep
         the Collateral free from all Liens, except for Permitted Liens. Neither
         the Agent nor any Lender authorizes any Obligor to, and no Obligor
         shall, sell, exchange, transfer, assign, lease or otherwise dispose of
         the Collateral or any interest therein, except as permitted under the
         Credit Agreement.

                  (b)      Preservation of Collateral. Keep the Collateral in
         good order, condition and repair in all material respects; not use the
         Collateral in violation of the provisions of this Security Agreement;
         not use the Collateral in violation of the provisions of any policy
         insuring the Collateral; and not use the Collateral in violation of the
         provisions of any applicable statute, law, bylaw, rule, regulation or
         ordinance, unless such violations, individually or in the aggregate,
         could not reasonably be expected to have a Material Adverse Effect.

                  (c)      Possession or Control of Certain Collateral. If (i)
         any amount payable under or in connection with any of the Collateral
         shall be or become evidenced by any Instrument, Tangible Chattel Paper
         or Supporting Obligation or (ii) if any Collateral shall be stored or
         shipped subject to a Document or (iii) if any Collateral shall consist
         of Investment Property in the form of certificated securities,
         immediately notify the Agent of the existence of such Collateral and,
         at the request of the Agent, deliver such Instrument, Chattel Paper,
         Supporting Obligation, Document or Investment Property to the Agent,
         duly endorsed in a manner satisfactory to the Agent, to be held as
         Collateral pursuant to this Security Agreement. If any Collateral shall
         consist of Deposit Accounts, Chattel Paper in electronic form,
         Letter-of-Credit Rights or uncertificated Investment Property, execute
         and deliver (and, with respect to any Collateral consisting of
         uncertificated Investment Property, cause the Securities Intermediary,
         if any, with respect to such Investment Property to execute and
         deliver) to the Agent, upon the Agent's request, all control
         agreements, assignments, instruments or other documents as reasonably
         requested by the Agent for the purposes of obtaining and maintaining
         Control of such Collateral within the meaning of the UCC (or equivalent
         local law).

                  (d)      Changes in Corporate Structure or Location. Not,
         without providing 30 days prior written notice to the Agent and without
         filing (or confirming that the Agent has filed) such amendments to any
         previously filed financing statements as the Agent may require, (i)
         alter its corporate existence or, in one transaction or a series of
         transactions, merge into or consolidate with any other entity, or sell
         all or substantially all of its assets, (ii) change its state of
         incorporation or formation, (iii) change its registered corporate name,
         (iv) change the location of its chief executive office and chief place
         of business (as well as its books and records) from the locations set
         forth on Schedule 6.22 to the Credit Agreement (as such Schedule may be
         updated from time to time pursuant to Section 7.21 of the Credit
         Agreement) or (v) change the location of its Collateral from the
         locations set

                                       9

<PAGE>

         forth for such Obligor on Schedule 6.22 to the Credit Agreement (as
         such Schedule may be updated from time to time pursuant to Section 7.21
         of the Credit Agreement).

                  (e)      Inspection. Allow the Agent or its representatives to
         visit and inspect the Collateral as set forth in Section 7.12 of the
         Credit Agreement.

                  (f)      Perfection of Security Interest. Authorize the Agent
         to prepare and file such financing statements (including renewal
         statements and in lieu statements) or amendments thereof or supplements
         thereto or other instruments as the Agent may from time to time deem
         necessary or appropriate in order to perfect and maintain the security
         interests granted hereunder in accordance with the UCC (or equivalent
         local law). Any financing statement filed by the Agent may contain a
         general description of the collateral covered thereby, as permitted by
         the UCC, which may state that the security interest attaches to all
         personal property of the debtor. Each Obligor shall also execute, if
         necessary, and deliver to the Agent such agreements, assignments or
         instruments (including affidavits, notices, reaffirmations and
         amendments and restatements of existing documents, as the Agent may
         reasonably request) and do all such other things as the Agent may
         reasonably deem necessary or appropriate (i) to assure to the Agent its
         security interests hereunder are perfected, including (A) such
         financing statements (including renewal statements and in lieu
         statements) or amendments thereof or supplements thereto or other
         instruments as the Agent may from time to time reasonably request in
         order to perfect and maintain the security interests granted hereunder
         in accordance with the UCC and any other personal property security
         legislation in the appropriate state(s) or province(s), (B) with regard
         to Copyrights, a Notice of Grant of Security Interest in Copyrights for
         filing with the United States Copyright Office or in any similar office
         or agency of the United States or any other country, substantially in
         the form of Schedule 5(f)(i) attached hereto, (C) with regard to
         Patents, a Notice of Grant of Security Interest in Patents for filing
         with the United States Patent and Trademark Office or in any similar
         office or agency of the United States or any other country,
         substantially in the form of Schedule 5(f)(ii) attached hereto and (D)
         with regard to Trademarks, a Notice of Grant of Security Interest in
         Trademarks for filing with the United States Patent and Trademark
         Office or in any similar office or agency of the United States or any
         other country, substantially in the form of Schedule 5(f)(iii) attached
         hereto, (ii) to consummate the transactions contemplated hereby and
         (iii) to otherwise protect and assure the Agent of its rights and
         interests hereunder. To that end, each Obligor hereby makes,
         constitutes and appoints the Agent, its nominee or any other person
         whom the Agent may designate, as such Obligor's attorney-in-fact with
         full power and for the limited purpose to sign in the name of such
         Obligor any such financing statements, or amendments and supplements to
         financing statements, in lieu statements, renewal financing statements,
         notices or any similar documents which in the Agent's reasonable
         discretion would be necessary, appropriate or convenient in order to
         perfect and maintain perfection of the security interests granted
         hereunder, such power, being coupled with an interest, being and
         remaining irrevocable so long as any of the Secured Obligations remain
         outstanding or any Credit Document or Lender Hedging Agreement is in
         effect or any Letter of Credit shall remain outstanding and until all
         of the Commitments shall have terminated. Each

                                       10

<PAGE>

         Obligor hereby agrees that a carbon, photographic or other reproduction
         of this Security Agreement or any such financing statement is
         sufficient for filing as a financing statement by the Agent without
         notice thereof to such Obligor wherever the Agent may in its sole
         discretion desire to file the same. In the event for any reason the law
         of any jurisdiction other than New York, Canada or any province thereof
         becomes or is applicable to the Collateral of any Obligor or any part
         thereof, or to any of the Secured Obligations, such Obligor agrees to
         execute and deliver all such instruments and to do all such other
         things as the Agent in its sole discretion reasonably deems necessary
         or appropriate to preserve, protect and enforce the security interests
         of the Agent under the law of such other jurisdiction (and, if an
         Obligor shall fail to do so promptly upon the request of the Agent,
         then the Agent may execute any and all such requested documents on
         behalf of such Obligor pursuant to the power of attorney granted
         hereinabove). Each Obligor agrees to mark its books and records to
         reflect the security interest of the Agent in the Collateral.

                  (g)      Collateral Held by Warehouseman, Bailee, etc. If any
         Collateral valued at $100,000 or more is at any time in the possession
         or control of a warehouseman, bailee or any agent or processor of such
         Obligor, (i) notify the Agent of such possession, (ii) notify such
         Person of the Agent's security interest for the benefit of the Lenders
         in such Collateral, and (iii) assist the Agent in obtaining executed
         Acknowledgment Agreements from such Person.

                  (h)      Treatment of Accounts. (i) Comply with all provisions
         of the Credit Agreement relating to the establishment and maintenance
         of the Lockboxes, (ii) comply with all reporting requirements set forth
         in the Credit Agreement with respect to Accounts, (iii) not grant or
         extend the time for payment of any Account, or compromise or settle any
         Account for less than the full amount thereof, or release any person or
         property, in whole or in part, from payment thereof, or allow any
         credit or discount thereon, other than as normal and customary in the
         ordinary course of an Obligor's business and (iv) maintain at its
         principal place of business a record of Accounts consistent with
         customary business practices.

                  (i)      Covenants Relating to Inventory.

                           (i)      Maintain, keep and preserve its Inventory in
                  good salable condition at its own cost and expense, other than
                  a de minimis amount of Inventory which, in the ordinary course
                  of the Obligors' business, fails to be so maintained, kept and
                  preserved.

                           (ii)     Comply with all reporting requirements set
                  forth in the Credit Agreement with respect to Inventory.

                           (iii)    If any of the Inventory is at any time
                  evidenced by a document of title, promptly upon request by the
                  Agent, deliver such document of title to the Agent.

                                       11

<PAGE>

                  (j)      Covenants Relating to Copyrights.

                           (i)      Employ the Copyright for each material work
                  which is subject to copyright protection pursuant to Title 17
                  of the United States Code with such notice of copyright as may
                  be required by law to secure copyright protection, except as
                  could not reasonably be expected to have a Material Adverse
                  Effect.

                           (ii)     Not do any act or knowingly omit to do any
                  act whereby any Copyright of the Obligors may become
                  invalidated, except to the extent that the invalidation of
                  such Copyright could not reasonably be expected to have a
                  Material Adverse Effect and (A) not do any act, or knowingly
                  omit to do any act, whereby any Copyright constituting
                  Material Intellectual Property may become injected into the
                  public domain; (B) promptly notify the Agent if it has
                  knowledge that any Copyright constituting Material
                  Intellectual Property may become injected into the public
                  domain or of any adverse determination or development
                  (including, without limitation, the institution of, or any
                  such determination or development in, any proceeding in any
                  court or tribunal in the United States or any other country)
                  regarding an Obligor's ownership of any such Copyright or its
                  validity; (C) take all necessary steps as it shall deem
                  appropriate under the circumstances, to maintain and pursue
                  each application (and to obtain the relevant registration) and
                  to maintain each registration of each Copyright constituting
                  Material Intellectual Property owned by an Obligor, including,
                  without limitation, filing of applications for renewal where
                  necessary; and (D) promptly notify the Agent of any
                  infringement of any Copyright of an Obligor constituting
                  Material Intellectual Property of which it becomes aware and
                  take such actions as it shall reasonably deem appropriate
                  under the circumstances to protect such Copyright, including,
                  where appropriate, the bringing of suit for infringement,
                  seeking injunctive relief and seeking to recover any and all
                  damages for such infringement.

                           (iii)    Not make any assignment or agreement in
                  conflict with the security interest in the Copyrights of each
                  Obligor hereunder.

                                       12

<PAGE>

                  (k)      Covenants Relating to Patents and Trademarks.

                           (i)      (A) Continue to use each Trademark
                  constituting Material Intellectual Property in order to
                  maintain such Trademark in full force free from any claim of
                  abandonment for non-use, (B) maintain as in the past the
                  quality of products and services offered under such Trademark,
                  (C) employ such Trademark with the appropriate notice of
                  registration, (D) not adopt or use any mark which is
                  confusingly similar or a colorable imitation of such Trademark
                  unless the Agent, for the benefit of the Lenders, shall obtain
                  a perfected security interest in such mark pursuant to this
                  Security Agreement, and (E) not (and not permit any licensee
                  or sublicensee thereof to) do any act or knowingly omit to do
                  any act whereby any such Trademark may become invalidated.

                           (ii)     Not do any act, or omit to do any act,
                  whereby any Patent constituting Material Intellectual Property
                  may become abandoned or dedicated to the public domain.

                           (iii)    Promptly notify the Agent if it has
                  knowledge that any application or registration relating to any
                  Patent or Trademark constituting Material Intellectual
                  Property may become abandoned or dedicated to the public
                  domain, or of any adverse determination or development
                  (including, without limitation, the institution of, or any
                  such determination or development in, any proceeding in the
                  United States Patent and Trademark Office or any court or
                  tribunal in Canada or in any other country) regarding an
                  Obligor's ownership of any such Patent or Trademark or its
                  right to register the same or to keep, maintain and use the
                  same.

                           (iv)     Whenever an Obligor, either by itself or
                  through an agent, employee, licensee or designee, shall file
                  an application for the registration of any Patent or Trademark
                  with the United States Patent and Trademark Office or any
                  similar office or agency in Canada or in any other country or
                  any political subdivision thereof, such Obligor shall report
                  such filing to the Agent and the Lenders quarterly, together
                  with the officer's certificate delivered pursuant to Section
                  7.1(d) of the Credit Agreement. Upon request of the Agent, an
                  Obligor shall execute and deliver any and all agreements,
                  instruments, documents and papers as the Agent may request to
                  evidence the Agent's and the Lenders' security interest in any
                  Patent or Trademark and the goodwill and General Intangibles
                  of such Obligor relating thereto or represented thereby.

                           (v)      Take all reasonable and necessary steps,
                  including, without limitation, in any proceeding before the
                  United States Patent and Trademark Office, or any similar
                  office or agency in Canada or in any other country or any
                  political subdivision thereof, to maintain and pursue each
                  application, to obtain the relevant registration and to
                  maintain each registration of the Patents and Trademarks,
                  including, without limitation, filing of applications for
                  renewal, affidavits of use and affidavits of incontestability,
                  except to the extent that the

                                       13

<PAGE>

                  failure to do so could not reasonably be expected to have a
                  Material Adverse Effect.

                           (vi)     Promptly notify the Agent and the Lenders
                  after it learns that any Patent or Trademark included in the
                  Collateral is infringed, misappropriated or diluted by a third
                  party to an extent that could reasonably be expected to have a
                  Material Adverse Effect and promptly sue for infringement,
                  misappropriation or dilution, to seek injunctive relief where
                  appropriate and to recover any and all damages for such
                  infringement, misappropriation or dilution, or take such other
                  actions as it shall reasonably deem appropriate under the
                  circumstances to protect such Patent or Trademark.

                           (vii)    Not make any assignment or agreement in
                  conflict with the security interest in the Patents or
                  Trademarks of any Obligor hereunder.

                  (l)      New Patents, Copyrights and Trademarks. Provide the
         Agent (i) quarterly, together with the officer's certificate delivered
         pursuant to Section 7.1(d) of the Credit Agreement, a listing of all
         applications, if any, for new Copyrights, Patents or Trademarks
         (together with a listing of the issuance of registrations or letters on
         present applications), which new applications and issued registrations
         or letters shall be subject to the terms and conditions hereunder and
         of all license agreements entered into with respect to any Copyright,
         Patent or Trademark, and (ii) promptly, from time to time upon the
         written request of the Agent, (A) with respect to Copyrights, a duly
         executed Notice of Grant of Security Interest in Copyrights, (B) with
         respect to Patents, a duly executed Notice of Grant of Security
         Interest in Patents, (C) with respect to Trademarks, a duly executed
         Notice of Grant of Security Interest in Trademarks or (D) such other
         duly executed documents as the Agent may reasonably request in a form
         reasonably acceptable to the Agent and suitable for recording to
         evidence the security interest in the Copyright, Patent or Trademark
         which is the subject of such new application.

                  (m)      Commercial Tort Claims; Notice of Litigation. (i)
         Quarterly, together with the officer's certificate delivered pursuant
         to Section 7.1(d) of the Credit Agreement, forward to the Agent written
         notification of any and all Commercial Tort Claims of the Obligors in
         which an Obligor is the claimant, including, but not limited to, any
         and all actions, suits, and proceedings before any court or
         Governmental Authority by or affecting such Obligor or any of its
         Subsidiaries and (ii) execute and deliver such statements, documents
         and notices and do and cause to be done all such things as may be
         required by the Agent, or required by law, including all things which
         may from time to time be necessary under the UCC (or equivalent local
         law) to fully create, preserve, perfect and protect the priority of the
         Agent's security interest in any such Commercial Tort Claims.

                  (n)      Bank Accounts. At all times, maintain the U.S.
         Lockbox Accounts, the Wachovia Clearing Account and the Wachovia
         Account and any replacement or successor accounts relating thereto in
         accordance with the terms of the Lockbox

                                       14

<PAGE>

         Agreements and the Credit Agreement, as applicable, and in accordance
         with the terms of the applicable Lockbox Agreement and the Credit
         Agreement, cause all amounts received in the U.S. Lockboxes relating
         thereto to be deposited into the applicable U.S. Lockbox Account, the
         Wachovia Clearing Account or the Wachovia Account, as the case may be,
         and to be applied as set forth in the applicable Lockbox Agreement and
         the Credit Agreement, as appropriate. All amounts on deposit in the
         U.S. Lockbox Accounts, the Wachovia Clearing Account and the Wachovia
         Account and any replacement or successor accounts relating thereto
         shall be subject to the Lien of the Agent hereunder.

                  (o)      Insurance. Insure, repair and replace the Collateral
         of such Obligor as set forth in the Credit Agreement and herein. All
         insurance proceeds shall be subject to the security interest of the
         Agent hereunder.

                  (p)      Covenants Relating to the Material Contracts.

                           (i)      Upon the reasonable request of the Agent,
                  each Obligor shall, at its expense, (A) furnish to the Agent
                  copies of all material notices, requests and other documents
                  received by such Obligor under or pursuant to the Material
                  Contracts, and such other information and reports regarding
                  the Material Contracts and (B) make to any other party to any
                  Material Contracts such demands and requests for information
                  and reports or for action as an Obligor is entitled to make
                  thereunder and as may be reasonably related to obtaining the
                  principal benefits of such Material Contract.

                           (ii)     Subject to the provisions of Section 9.13 of
                  the Credit Agreement, unless the applicable Obligor believes
                  it is necessary or advisable in the prudent conduct of its
                  business, no Obligor shall (A) cancel or terminate any
                  Material Contracts of such Obligor or consent to or accept any
                  cancellation or termination thereof; (B) amend or otherwise
                  modify any Material Contracts of such Obligor or give any
                  consent, waiver or approval thereunder; (C) waive any default
                  under or breach of any Material Contracts of such Obligor; or
                  (D) take any other action in connection with any Material
                  Contracts of such Obligor which would impair the value of the
                  interest or rights of such Obligor thereunder or which would
                  impair the interests or rights of the Agent.

                  (q)      New Material Contracts. Whenever an Obligor shall
         enter into a Material Contract, such Obligor shall, as soon as
         available or practicable and in any event no later than quarterly,
         together with the officer's certificate delivered pursuant to Section
         7.1(d) of the Credit Agreement, provide the Agent with a true and
         complete copy of such Material Contract and such other related
         documents as the Agent may reasonably request in a form acceptable to
         the Agent and, if reasonably requested by the Agent, execute and
         deliver (or use commercially reasonable efforts to cause to be executed
         and delivered) to the Agent a collateral assignment of such Material
         Contract and a consent to such collateral assignment, in each case in a
         form acceptable to the Agent. Upon the reasonable request of the Agent,
         an Obligor will do any act, or execute any additional

                                       15

<PAGE>

         documents required by the Agent to ensure to the Agent the
         effectiveness and first priority of its security interest in such
         Material Contract.

         6.       Special Provisions Regarding Inventory.

                  (a)      Notwithstanding anything to the contrary contained in
         this Security Agreement, each Obligor may, unless and until an Event of
         Default occurs and is continuing and the Agent instructs such Obligor
         otherwise, without further consent or approval of the Agent, use,
         consume, sell, lease and exchange its Inventory in the ordinary course
         of its business as presently conducted, whereupon, in the case of such
         a sale or exchange, the security interest created hereby in the
         Inventory so sold or exchanged (but not in any Proceeds arising from
         such sale or exchange) shall cease immediately without any further
         action on the part of the Agent.

                  (b)      Upon the Lenders' making any Loan pursuant to the
         Credit Agreement, the Issuing Bank issuing any Letter of Credit or any
         Canadian Lender creating a Bankers' Acceptance pursuant to the Credit
         Agreement, each Obligor shall be deemed to have warranted that all
         warranties of such Obligor set forth in this Security Agreement with
         respect to its Inventory are true and correct in all material respects
         with respect to such Inventory, including without limitation that such
         Inventory is located at a location set forth on Schedule 6.22 to the
         Credit Agreement, as the same may be updated from time to time pursuant
         to Section 7.21 of the Credit Agreement.

         7.       Special Provisions Regarding Insurance Account.

                  (a)      Promptly upon and at all times after the receipt of
         any cash proceeds of a Casualty Loss required to be paid to the Agent
         pursuant to Section 7.6 of the Credit Agreement (the "Insurance
         Proceeds"), the Company shall establish and shall thereafter maintain
         an additional cash collateral account (the "Insurance Account") at the
         offices of the Agent or such other bank as the Company and the Agent
         may agree (the "Insurance Account Bank"), under the dominion and
         control of the Agent. Forthwith upon such establishment, the Company
         shall notify the Agent of the location, account name and account number
         of such account. The Company hereby agrees to cause any Insurance
         Proceeds received from time to time after the establishment of the
         Insurance Account to be deposited therein as set forth in this
         paragraph. Any income received with respect to the balance from time to
         time standing to the credit of the Insurance Account, including any
         interest or capital gains on investments therein, shall remain, or be
         deposited, in the Insurance Account. All right, title and interest in
         and to the cash amounts on deposit from time to time in the Insurance
         Account together with any investments from time to time made pursuant
         to clause (c) of this Section shall constitute part of the Collateral
         hereunder and shall not constitute payment of the Secured Obligations
         until applied thereto as hereinafter provided.

                  (b)      The balance from time to time standing to the credit
         of the Insurance Account shall be subject to withdrawal only upon the
         instructions of the Agent. Except

                                       16

<PAGE>

         upon the occurrence and continuation of an Event of Default or with
         respect to amounts attributable to proceeds deposited in the Insurance
         Account which the Agent has elected to apply to repay the Loans in
         accordance with Section 7.6(c) of the Credit Agreement, the Agent
         agrees to give instructions to distribute amounts standing to the
         credit of the Insurance Account to the Company at such times and in
         such amounts as the Company shall request for the purpose of repairing,
         reconstructing or replacing the property in respect of which such
         Insurance Proceeds were received. Any such request shall be accompanied
         by a certificate of a Senior Financial Officer of the Company setting
         forth in detail reasonably satisfactory to the Agent the repair,
         reconstruction or replacement for which such funds will be expended. If
         immediately available cash on deposit in the Insurance Account is not
         sufficient to make any distribution to the Company referred to in the
         previous sentence of this Section 7(b), the Agent shall cause to be
         liquidated as promptly as practicable such investments in the Insurance
         Account designated by the Company as required to obtain sufficient cash
         to make such distribution and, notwithstanding any other provision of
         this Section 7, such distribution shall not be made until such
         liquidation has taken place. Upon the occurrence and continuation of an
         Event of Default, the Agent may apply (subject to collection) any or
         all of the balance from time to time standing to the credit of the
         Insurance Account in the manner specified in Section 4.7 of the Credit
         Agreement.

                  (c)      Amounts on deposit in the Insurance Account shall be
         invested and re-invested from time to time in such Cash Equivalents as
         the Company shall determine, which Cash Equivalents shall be held under
         the dominion and control of the Agent; provided that, if an Event of
         Default has occurred and is continuing, the Agent may cause such Cash
         Equivalents to be liquidated and apply or cause to be applied the
         proceeds thereof to the payment of the Secured Obligations in the
         manner specified in Section 4.7 of the Credit Agreement.

         8.       Performance of Obligations; Advances by Agent. On failure of
any Obligor to perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform or cause to be
performed the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien (other than a Permitted
Lien), expenditures made in defending against any adverse claim and all other
expenditures which the Agent may make for the protection of the security
interest hereof or may be compelled to make by operation of law. All such sums
and amounts so expended shall be repayable by the Obligors on a joint and
several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate set forth in Section 4.2(b) of the
Credit Agreement. No such performance of any covenant or agreement by the Agent
on behalf of any Obligor, and no such advance or expenditure therefor, shall
relieve the Obligors of any default under the terms of this Security Agreement,
the other Credit Documents or any Lender Hedging Agreement. The Agent may make
any payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the

                                       17

<PAGE>

accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with U.S. GAAP.

         9.       Events of Default.

         The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an event of default hereunder (an "Event
of Default").

         10.      Remedies.

                  (a)      General Remedies. Upon the occurrence and during the
         continuance of an Event of Default, the Lenders shall have, in addition
         to the rights and remedies provided herein, in the Credit Documents, in
         any Lender Hedging Agreement or by law (including, but not limited to,
         levy of attachment, garnishment and the rights and remedies set forth
         in the Uniform Commercial Code (or equivalent local law) of the
         jurisdiction applicable to the affected Collateral), the rights and
         remedies of a secured party under the UCC (regardless of whether the
         UCC is the law of the jurisdiction where the rights and remedies are
         asserted and regardless of whether the UCC applies to the affected
         Collateral), and further, the Agent may, with or without judicial
         process or the aid and assistance of others, (i) enter on any premises
         on which any of the Collateral may be located and, without resistance
         or interference by the Obligors, take possession of the Collateral,
         (ii) dispose of any Collateral on any such premises, (iii) require the
         Obligors to assemble and make available to the Agent at the expense of
         the Obligors any Collateral at any place and time designated by the
         Agent which is reasonably convenient to both parties, (iv) remove any
         Collateral from any such premises for the purpose of effecting sale or
         other disposition thereof, and/or (v) without demand and without
         advertisement, notice, hearing or process of law, all of which each of
         the Obligors hereby waives to the fullest extent permitted by law, at
         any place and time or times, sell and deliver any or all Collateral
         held by or for it at public or private sale, by one or more contracts,
         in one or more parcels, for cash, upon credit or otherwise, at such
         prices and upon such terms as the Agent deems advisable, in its sole
         discretion. Neither the Agent's compliance with any applicable state or
         federal law in the conduct of such sale, nor its disclaimer of any
         warranties relating to the Collateral, shall be considered to adversely
         affect the commercial reasonableness of such sale. In addition to all
         other sums due the Agent and the Lenders with respect to the Secured
         Obligations, the Obligors shall pay the Agent and each of the Lenders
         all reasonable costs and expenses incurred by the Agent or any such
         Lender, including, but not limited to, reasonable attorneys' fees and
         court costs, in obtaining or liquidating the Collateral, in enforcing
         payment of the Secured Obligations, or in the prosecution or defense of
         any action or proceeding by or against the Agent or the Lenders or the
         Obligors concerning any matter arising out of or connected with this
         Security Agreement, any Collateral or the Secured Obligations,
         including, without limitation, any of the foregoing arising in, arising
         under or related to a case under any bankruptcy, insolvency or similar
         law. To the extent the rights of notice cannot be legally waived

                                       18

<PAGE>

         hereunder, each Obligor agrees that any requirement of reasonable
         notice shall be met if such notice is personally served on or mailed,
         postage prepaid, to the Company in accordance with the notice
         provisions of Section 14.1 of the Credit Agreement at least ten (10)
         days before the time of sale or other event giving rise to the
         requirement of such notice. The Agent and the Lenders shall not be
         obligated to make any sale or other disposition of the Collateral
         regardless of notice having been given. To the extent permitted by law,
         the Agent and any Lender may be a purchaser at any such sale. To the
         extent permitted by applicable law, each of the Obligors hereby waives
         all of its rights of redemption with respect to any such sale. Subject
         to the provisions of applicable law, the Agent and the Lenders may
         postpone or cause the postponement of the sale of all or any portion of
         the Collateral by announcement at the time and place of such sale, and
         such sale may, without further notice, to the extent permitted by law,
         be made at the time and place to which the sale was postponed, or the
         Agent and the Lenders may further postpone such sale by announcement
         made at such time and place. Upon the occurrence and during the
         continuance of an Event of Default, the Company shall endorse over and
         deliver to the Agent any checks that it receives in its capacity as
         sublessor of any real property and shall not first deposit the funds
         evidenced thereby into an account of the Company or otherwise commingle
         such funds with its own.

                  (b)      Remedies Relating to Accounts. Upon the occurrence
         and during the continuance of an Event of Default, whether or not the
         Agent has exercised any or all of its rights and remedies hereunder,
         the Agent shall have the right to enforce any Obligor's rights against
         any account debtors and obligors on such Obligor's Accounts. Each
         Obligor acknowledges and agrees that the Proceeds of its Accounts
         remitted to or on behalf of the Agent in accordance with the provisions
         hereof shall be solely for the Agent's own convenience and that such
         Obligor shall not have any right, title or interest in such Proceeds or
         in any such other amounts except as expressly provided herein. The
         Agent and the Lenders shall have no liability or responsibility to any
         Obligor for acceptance of a check, draft or other order for payment of
         money bearing the legend "payment in full" or words of similar import
         or any other restrictive legend or endorsement or be responsible for
         determining the correctness of any remittance. The Agent shall have no
         obligation to apply or give credit for any item included in proceeds of
         Accounts or other Collateral until the applicable Lockbox Bank has
         received final payment therefor at its offices in cash. However, if the
         Agent does permit credit to be given for any item prior to a Lockbox
         Bank receiving final payment therefor and such Lockbox Bank fails to
         receive such final payment or an item is charged back to the Agent or
         any Lockbox Bank for any reason, the Agent may at its election in
         either instance charge the amount of such item back against any such
         U.S. Lockbox Accounts, together with interest thereon at a rate per
         annum equal to the default rate set forth in Section 4.2(b) of the
         Credit Agreement. Each Obligor hereby agrees to indemnify the Agent and
         the Lenders from and against all liabilities, damages, losses, actions,
         claims, judgments, costs, expenses, charges and reasonable attorneys'
         fees suffered or incurred by the Agent or the Lenders (each, an
         "Indemnified Party") because of the maintenance of the foregoing
         arrangements except as relating to or arising out of the gross
         negligence or willful misconduct of an Indemnified Party or its
         officers, employees or agents. In the

                                       19

<PAGE>

         case of any investigation, litigation or other proceeding, the
         foregoing indemnity shall be effective whether or not such
         investigation, litigation or proceeding is brought by an Obligor, its
         directors, shareholders or creditors or an Indemnified Party or any
         other Person or any other Indemnified Party is otherwise a party
         thereto. The Agent shall have no liability or responsibility to any
         Obligor for a Lockbox Bank accepting any check, draft or other order
         for payment of money bearing the legend "payment in full" or words of
         similar import or any other restrictive legend or endorsement
         whatsoever or be responsible for determining the correctness of any
         remittance (it being understood that this sentence shall in no way
         affect the liability or responsibility of any such Lockbox Bank).

                  (c)      Access. In addition to the rights and remedies
         hereunder, upon the occurrence and during the continuance of an Event
         of Default, the Agent shall have the right to enter and remain upon the
         various premises of the Obligors without cost or charge to the Agent,
         and use the same, together with materials, supplies, books and records
         of the Obligors for the purpose of collecting and liquidating the
         Collateral, or for preparing for sale and conducting the sale of the
         Collateral, whether by foreclosure, auction or otherwise. In addition,
         the Agent may remove Collateral, or any part thereof, from such
         premises and/or any records with respect thereto, in order to
         effectively collect or liquidate such Collateral. If the Agent
         exercises its right to take possession of the Collateral, each Obligor
         shall also at its expense perform any and all other steps reasonably
         requested by the Agent to preserve and protect the security interest
         hereby granted in the Collateral, such as placing and maintaining signs
         indicating the security interest of the Agent, appointing overseers for
         the Collateral and maintaining inventory records.

                  (d)      Nonexclusive Nature of Remedies. Failure by the Agent
         or the Lenders to exercise any right, remedy or option under this
         Security Agreement, any other Credit Document, any Lender Hedging
         Agreement or as provided by law, or any delay by the Agent or the
         Lenders in exercising the same, shall not operate as a waiver of any
         such right, remedy or option. No waiver hereunder shall be effective
         unless it is in writing, signed by the party against whom such waiver
         is sought to be enforced and then only to the extent specifically
         stated, which in the case of the Agent or the Lenders shall only be
         granted as provided herein. To the extent permitted by law, neither the
         Agent, the Lenders, nor any party acting as attorney for the Agent or
         the Lenders, shall be liable hereunder for any acts or omissions or for
         any error of judgment or mistake of fact or law other than their gross
         negligence or willful misconduct hereunder. The rights and remedies of
         the Agent and the Lenders under this Security Agreement shall be
         cumulative and not exclusive of any other right or remedy which the
         Agent or the Lenders may have.

                                       20

<PAGE>

                  (e)      Retention of Collateral. In addition to the rights
         and remedies hereunder, upon the occurrence and during the continuance
         of an Event of Default, the Agent may, after providing the notices and
         obtaining the consents required by Section 9-620 of the UCC or
         otherwise complying with the requirements of applicable law of the
         relevant jurisdiction, accept or retain the Collateral in satisfaction
         of the Secured Obligations. Unless and until the Agent shall have
         provided such notices, however, the Agent shall not be deemed to have
         retained any Collateral in satisfaction of any Secured Obligations for
         any reason.

                  (f)      Deficiency. In the event that the proceeds of any
         sale, collection or realization are insufficient to pay all amounts to
         which the Agent and the Lenders are legally entitled, the Obligors
         shall be jointly and severally liable for the deficiency, together with
         interest thereon at the default rate set forth in Section 4.2(b) of the
         Credit Agreement, together with the costs of collection and the
         reasonable fees of any attorneys employed by the Agent to collect such
         deficiency. Any surplus remaining after the full payment and
         satisfaction of the Secured Obligations shall be returned to the
         Obligors or to whomsoever a court of competent jurisdiction shall
         determine to be entitled thereto.

                  (g)      Other Security. To the extent that any of the Secured
         Obligations are now or hereafter secured by property other than the
         Collateral (including, without limitation, real and other personal
         property owned by an Obligor), or by a guarantee, endorsement or
         property of any other Person, then the Agent and the Lenders shall have
         the right to proceed against such other property, guarantee or
         endorsement upon the occurrence and during the continuance of any Event
         of Default, and the Agent and the Lenders have the right, in their sole
         discretion, to determine which rights, security, liens, security
         interests or remedies the Agent and the Lenders shall at any time
         pursue, relinquish, subordinate, modify or take with respect thereto,
         without in any way modifying or affecting any of them or any of the
         Agent's and the Lenders' rights or the Secured Obligations under this
         Security Agreement, under any other of the Credit Documents or under
         any Lender Hedging Agreement.

                  (h)      PPSA. In addition to, and not in any way in
         limitation of any of the foregoing rights and remedies, the Agent may
         exercise any and all remedies available to the Agent under the PPSA.

         11.      Rights of the Agent.

                  (a)      Power of Attorney. In addition to other powers of
         attorney contained herein, each Obligor hereby designates and appoints
         the Agent, on behalf of the Lenders, and each of its designees or
         agents, as attorney-in-fact of such Obligor, irrevocably and with power
         of substitution, with authority to take any or all of the following
         actions upon the occurrence and during the continuation of an Event of
         Default:

                           (i)      to demand, collect, settle, compromise,
                  adjust, give discharges and releases, all as the Agent may
                  reasonably determine;

                                       21

<PAGE>

                           (ii)     to commence and prosecute any actions at any
                  court for the purposes of collecting any Collateral and
                  enforcing any other right in respect thereof;

                           (iii)    to defend, settle, adjust or compromise any
                  action, suit or proceeding brought and, in connection
                  therewith, give such discharge or release as the Agent may
                  deem reasonably appropriate;

                           (iv)     to receive, open and dispose of mail
                  addressed to an Obligor and endorse checks, notes, drafts,
                  acceptances, money orders, bills of lading, warehouse receipts
                  or other instruments or documents evidencing payment, shipment
                  or storage of the goods giving rise to the Collateral of such
                  Obligor, or securing or relating to such Collateral, on behalf
                  of and in the name of such Obligor;

                           (v)      to sell, assign, transfer, make any
                  agreement in respect of, or otherwise deal with or exercise
                  rights in respect of, any Collateral or the goods or services
                  which have given rise thereto, as fully and completely as
                  though the Agent were the absolute owner thereof for all
                  purposes;

                           (vi)     to adjust and settle claims under any
                  insurance policy relating thereto;

                           (vii)    to execute and deliver all assignments,
                  conveyances, statements, financing statements, renewal
                  financing statements, security agreements, affidavits, notices
                  and other agreements, instruments and documents that the Agent
                  may determine necessary in order to perfect and maintain the
                  security interests and liens granted in this Security
                  Agreement and in order to fully consummate all of the
                  transactions contemplated herein;

                           (viii)   to institute any foreclosure proceedings
                  that the Agent may deem appropriate; and

                           (ix)     to do and perform all such other acts and
                  things as the Agent may reasonably deem to be necessary,
                  proper or convenient in connection with the Collateral.

         This power of attorney is a power coupled with an interest and shall be
         irrevocable (i) for so long as any of the Secured Obligations remain
         outstanding, any Credit Document or any Lender Hedging Agreement is in
         effect or any Letter of Credit shall remain outstanding and (ii) until
         all of the Commitments shall have been terminated. The Agent shall be
         under no duty to exercise or withhold the exercise of any of the
         rights, powers, privileges and options expressly or implicitly granted
         to the Agent in this Security

                                       22

<PAGE>

         Agreement, and shall not be liable for any failure to do so or any
         delay in doing so. The Agent shall not be liable for any act or
         omission or for any error of judgment or any mistake of fact or law in
         its individual capacity or its capacity as attorney-in-fact except acts
         or omissions resulting from its gross negligence or willful misconduct.
         This power of attorney is conferred on the Agent solely to protect,
         preserve and realize upon its security interest in the Collateral.

                  (b)      Assignment by the Administrative Agent. The
         Administrative Agent may from time to time assign the Secured
         Obligations and the Collateral to a successor Administrative Agent
         appointed pursuant to Section 13.9 of the Credit Agreement, and such
         successor shall be entitled to all of the rights and remedies of the
         Administrative Agent under this Security Agreement in relation thereto.

                  (c)      The Agent's Duty of Care. Other than the exercise of
         reasonable care to assure the safe custody of the Collateral while
         being held by the Agent hereunder, the Agent shall have no duty or
         liability to preserve rights pertaining thereto, it being understood
         and agreed that the Obligors shall be responsible for preservation of
         all rights in the Collateral, and the Agent shall be relieved of all
         responsibility for the Collateral upon surrendering it or tendering the
         surrender of it to the Obligors. The Agent shall be deemed to have
         exercised reasonable care in the custody and preservation of the
         Collateral in its possession if the Collateral is accorded treatment
         substantially equal to that which the Agent accords its own property,
         which shall be no less than the treatment employed by a reasonable and
         prudent agent in the industry, it being understood that the Agent shall
         not have responsibility for taking any necessary steps to preserve
         rights against any parties with respect to any of the Collateral. In
         the event of a public or private sale of Collateral pursuant to Section
         10 hereof, the Agent shall have no obligation to clean-up, repair or
         otherwise prepare the Collateral for sale.

         12.      Application of Proceeds. Any amounts on deposit in the U.S.
Lockbox Accounts, the Wachovia Clearing Accounts and the Wachovia Account and
any replacement or successor accounts relating thereto, as applicable, shall be
applied by the Agent in accordance with the terms of the Credit Agreement and
the Lockbox Agreement relating thereto. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent or
any of the Lenders in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in Section 4.7 of the Credit
Agreement, and each Obligor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Agent shall have the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.

         13.      Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the

                                       23

<PAGE>

Collateral, or to protect the Collateral or exercise any rights or remedies
under this Security Agreement or with respect to the Collateral, then the
Obligors agree to promptly pay upon demand any and all such reasonable costs and
expenses of the Agent, all of which costs and expenses shall constitute Secured
Obligations hereunder.

         14.      Continuing Agreement.

                  (a)      This Security Agreement shall be a continuing
         agreement in every respect and shall remain in full force and effect so
         long as any of the Secured Obligations remain outstanding or any Credit
         Document or Lender Hedging Agreement is in effect or any Letter of
         Credit shall remain outstanding and until all of the Commitments
         thereunder shall have terminated. Upon such payment and termination,
         this Security Agreement shall be automatically terminated and the
         Agent, upon the request and at the expense of the Obligors, forthwith
         release all of their liens and security interests hereunder and shall
         execute, if necessary, and deliver all UCC termination statements
         and/or other documents reasonably requested by the Obligors evidencing
         such termination. Notwithstanding the foregoing all releases and
         indemnities provided hereunder shall survive termination of this
         Security Agreement.

                  (b)      This Security Agreement shall continue to be
         effective or be automatically reinstated, as the case may be, if at any
         time payment, in whole or in part, of any of the Secured Obligations is
         rescinded or must otherwise be restored or returned by the Agent or any
         Lender as a preference, fraudulent conveyance or otherwise under any
         bankruptcy, insolvency or similar law, all as though such payment had
         not been made; provided that in the event payment of all or any part of
         the Secured Obligations is rescinded or must be restored or returned,
         all reasonable costs and expenses (including without limitation any
         reasonable legal fees and disbursements) incurred by the Agent or any
         Lender in defending and enforcing such reinstatement shall be deemed to
         be included as a part of the Secured Obligations.

         15.      Amendments; Waivers; Modifications. This Security Agreement
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 14.6 of the Credit
Agreement.

         16.      Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent
and the Lenders and their successors and permitted assigns; provided, however,
that none of the Obligors may assign its rights or delegate its duties hereunder
without the prior written consent of each Lender or the Required Lenders, as
required by the Credit Agreement. To the fullest extent permitted by law, each
Obligor hereby releases the Agent and each Lender, each of their respective
officers, employees and agents and each of their respective successors and
assigns, from any liability for any act or omission relating to this Security
Agreement or the Collateral, except for any liability arising from the gross
negligence or willful misconduct of the Agent or such Lender or their respective
officers, employees and agents.

                                       24

<PAGE>

         17.      Notices. All notices required or permitted to be given under
this Security Agreement shall be in conformance with Section 14.1 of the Credit
Agreement.

         18.      Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.

         19.      Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Security Agreement.

         20.      Governing Law; Submission to Jurisdiction and Service of
Process; Waiver of Jury Trial. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The terms of
Sections 14.12 and 14.14 of the Credit Agreement are incorporated herein by
reference, mutatis mutandis, and the parties hereto agree to such terms.

         21.      Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.

         22.      Entirety. This Security Agreement, the other Credit Documents
and any Lender Hedging Agreement represent the entire agreement of the parties
hereto and thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any commitment letters or correspondence relating
to the Credit Documents, any such Lender Hedging Agreement or the transactions
contemplated herein and therein.

         23.      Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the Lender Hedging Agreements, the delivery of
the Notes and the making of the Loans, the issuance of the Letters of Credit and
the creation of Bankers' Acceptances under the Credit Agreement.

         24.      Joint and Several Obligations of Obligors.

                  (a)      Each of the Obligors is accepting joint and several
         liability hereunder in consideration of the financial accommodation to
         be provided by the Lenders under the Credit Agreement, for the mutual
         benefit, direct and indirect, of each of the Obligors and in
         consideration of the undertakings of each of the Obligors to accept
         joint and several liability for the obligations of each of them.

                                       25

<PAGE>

                  (b)      Each of the Obligors, jointly and severally, hereby
         irrevocably and unconditionally accepts, not merely as a surety but
         also as a co-debtor, joint and several liability with the other
         Obligors with respect to the payment and performance of all of the
         Secured Obligations arising under this Security Agreement, the other
         Credit Documents and any Lender Hedging Agreement, it being the
         intention of the parties hereto that all the Secured Obligations shall
         be the joint and several obligations of each of the Obligors without
         preferences or distinction among them.

                  (c)      Notwithstanding any provision to the contrary
         contained herein or in any other of the Credit Documents, to the extent
         the obligations of an Obligor shall be adjudicated to be invalid or
         unenforceable for any reason (including, without limitation, because of
         any applicable state, provincial or federal law relating to fraudulent
         conveyances or transfers) then the obligations of such Obligor
         hereunder shall be limited to the maximum amount that is permissible
         under applicable law (whether state, provincial or federal or and
         including, without limitation, the Bankruptcy Code).

         25.      Rights of Required Lenders. All rights of the Agent hereunder,
if not exercised by the Agent, may be exercised by the Required Lenders.

         26.      Judgment Currency.

                  (a)      If for the purposes of obtaining judgment in any
         court it is necessary to convert all or any part of the Secured
         Obligations or any other amount due to the Lenders hereunder or under
         other Credit Document in respect of the Obligors' obligations hereunder
         in any currency (the "Original Currency") into another currency (the
         "Other Currency") each Obligor to the fullest extent that it may
         effectively do so, agrees that the rate of exchange used shall be that
         at which, in accordance with normal banking procedures, the Agent could
         purchase the Original Currency with the Other Currency at its principal
         offices in Charlotte, North Carolina on the Business Day on which the
         Agent is open for the transaction of its banking business at such
         offices immediately preceding the day on which any such judgment, or
         any relevant part thereof, is paid or otherwise satisfied.

                  (b)      The obligation of each Obligor in respect of any sum
         due in the Original Currency from it to the Agent or the Lenders
         hereunder or under any other Credit Document in respect of the
         Obligors' obligation hereunder shall, notwithstanding any judgment in
         any Other Currency, be discharged only to the extent that on the
         Business Day following receipt by the Agent of any sum adjudged to be
         so due in such Other Currency or of any other sum in any Other Currency
         the Agent may, in accordance with its normal banking procedures,
         purchase the Original Currency with such Other Currency. If the amount
         of the Original Currency so purchased is less than the sum originally
         due to the Agent and the Lenders in the Original Currency, the Obligors
         shall, as a separate obligation and notwithstanding any such judgment,
         indemnify the Agent against such loss, and if the amount of the
         Original Currency so purchased exceeds the sum originally due to the
         Lenders, the Agent shall remit such excess to the Obligors.

                                       26

<PAGE>

                  [remainder of page intentionally left blank]

                                       27

<PAGE>

         Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.

BORROWERS:                          HAMILTON BEACH/PROCTOR-SILEX, INC., a
                                    Delaware corporation

                                    By:   /s/ James H. Taylor
                                       ---------------------------------------
                                    Name:  James H. Taylor
                                    Title: Vice President and Treasurer

U.S. SUBSIDIARY BORROWERS:          [NONE]

                                       1

<PAGE>

Accepted and agreed to as of the date first above written.

                                    WACHOVIA BANK, NATIONAL ASSOCIATION,
                                    as Agent

                                    By:   /s/ Steven J. Haas
                                       ---------------------------------------
                                    Name:  Steven J. Haas
                                    Title: Director

                                       2<PAGE>

                                                                EXHIBIT 10(xcvi)

                               SECURITY AGREEMENT

         THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of December 17, 2002 by and among PROCTOR-SILEX CANADA INC., an Ontario
Corporation (the "Canadian Borrower"), such Canadian subsidiaries of the
Canadian Borrower which may from time to time become parties hereto
(collectively, the "Canadian Subsidiaries") (hereinafter, the Canadian Borrower
and the Canadian Subsidiaries are collectively referred to as the "Obligors" and
individually as a "Obligor"), WACHOVIA BANK, NATIONAL ASSOCIATION, in its
capacity as the administrative agent under the Credit Agreement referred to
below (in such capacity, the "Administrative Agent" or the "Agent"), and ABN
AMRO BANK N.V., CANADA BRANCH, in its capacity as the Canadian Agent under the
Credit Agreement referred to below (in such capacity, the "Canadian Agent" and
together with the Agent, the "Agents").

                                    RECITALS

         WHEREAS, pursuant to that certain Credit Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "Credit Agreement") among Hamilton Beach/Proctor-Silex, Inc., a Delaware
corporation (the "Company"), the Canadian Borrower, the other Borrowers
identified therein, the Lenders party thereto from time to time and the Agents,
the U.S. Lenders have agreed to make U.S. Revolving Loans and to issue or
participate in Letters of Credit under the Credit Agreement and the Canadian
Lenders have agreed to make Canadian Revolving Loans and to create Bankers'
Acceptances under the Credit Agreement upon the terms and subject to the
conditions set forth therein; and

         WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement, the obligation of the U.S. Lenders to make their respective U.S.
Revolving Loans and to issue or participate in Letters of Credit under the
Credit Agreement and the Canadian Lenders to make Canadian Revolving Loans and
to create Bankers' Acceptances under the Credit Agreement that the Obligors
shall have executed and delivered this Security Agreement to the Agent for the
benefit of the Lenders.

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

         1.       Definitions.

                  (a)      Unless otherwise defined herein, capitalized terms
         used herein shall have the meanings ascribed to such terms in the
         Credit Agreement, and the following terms which are defined in the
         Uniform Commercial Code from time to time in effect in the State of New
         York (the "UCC") are used herein as so defined: Accessions, Accounts,

<PAGE>

         As-Extracted Collateral, Chattel Paper, Commercial Tort Claims,
         Consumer Goods, Control, Deposit Accounts, Documents, Equipment, Farm
         Products, Fixtures, General Intangibles, Goods, Instruments, Inventory,
         Investment Property, Letter-of-Credit Rights, Manufactured Homes,
         Proceeds, Securities Intermediary, Software, Supporting Obligations and
         Tangible Chattel Paper. For purposes of this Security Agreement, the
         term "Lender" shall include any Affiliate of any Lender which has
         entered into a Lender Hedging Agreement (to the extent the obligations
         of any Borrower thereunder constitute Secured Obligations).

                  (b)      In addition, the following terms shall have the
         following meaning:

                  "Copyright Licenses": any written agreement providing for the
         grant by or to any Obligor of any right under any Copyright including,
         without limitation, any thereof referred to in Schedule 1(b) hereto.

                  "Copyrights": (a) all copyrights in all Works, now existing or
         hereafter created or acquired (and whether or not registered in the
         United States and/or any other jurisdiction), all registrations and
         recordings thereof, and all applications in connection therewith,
         including, without limitation, registrations, recordings and
         applications in the United States Copyright Office or in any similar
         office or agency of any other country including, without limitation,
         any thereof referred to in Schedule 1(b) hereto, and (b) all renewals
         thereof including, without limitation, any thereof referred to in
         Schedule 1(b) hereto.

                  "Insurance Account": has the meaning ascribed thereto in
         Section 7 hereof.

                  "Intellectual Property": all Copyrights, Copyright Licenses,
         Patents, Patent Licenses, Trademarks, Trademark Licenses and all other
         intellectual property of the Obligors.

                  "Material Intellectual Property": (a) the Intellectual
         Property listed on Schedule 1.1B to the Credit Agreement and (b) all
         Intellectual Property material to the business of an Obligor.

                  "Patent License": all agreements, whether written or oral,
         providing for the grant by or to an Obligor of any right to
         manufacture, use or sell any invention covered by a Patent, including,
         without limitation, any thereof referred to in Schedule 1(b) hereto.

                  "Patents": (a) all letters patent of the United States or any
         other country and all reissues and extensions thereof, including,
         without limitation, any thereof referred to in Schedule 1(b) hereto,
         and (b) all applications for letters patent of the United States or any
         other country and all divisions, continuations and
         continuations-in-part thereof, including, without limitation, any
         thereof referred to in Schedule 1(b) hereto.

                  "Secured Obligations": (a) all of the Canadian Obligations,
         howsoever evidenced, created, incurred or acquired, whether primary,
         secondary, direct, contingent, or joint and

                                       2

<PAGE>

         several and (b) all reasonable expenses and charges, legal and
         otherwise, incurred by the Agent, the Canadian Agent and/or the Lenders
         in collecting or enforcing any Canadian Obligation or in realizing on
         or protecting any security therefor, including without limitation the
         security granted hereunder.

                  "Trademark License": means any agreement, written or oral,
         providing for the grant by or to an Obligor of any right to use any
         Trademark, including, without limitation, any thereof referred to in
         Schedule 1(b) hereto.

                  "Trademarks": (a) all trademarks, trade names, corporate
         names, company names, business names, fictitious business names, trade
         styles, service marks, logos and other source or business identifiers,
         and the goodwill associated therewith, now existing or hereafter
         adopted or acquired, all registrations and recordings thereof, and all
         applications in connection therewith, whether in the United States
         Patent and Trademark Office or in any similar office or agency of the
         United States, any State thereof or any other country or any political
         subdivision thereof, or otherwise, including, without limitation, any
         thereof referred to in Schedule 1(b) hereto, and (b) all renewals
         thereof.

                  "Work": any work which is subject to copyright protection
         pursuant to Title 17 of the United States Code or under the legislation
         of any other country.

         2.       Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Obligor hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right to set off against, any and all
right, title and interest of such Obligor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter (collectively, the
"Collateral"):

                  (a)      all Accounts;

                  (b)      all cash and Cash Equivalents;

                  (c)      all Chattel Paper;

                  (d)      those certain Commercial Tort Claims of the Obligors
                           in which an Obligor is the claimant set forth on
                           Schedule 2(d) attached hereto (as such Schedule may
                           be updated from time to time by the Obligors);

                  (e)      all Copyrights;

                  (f)      all Copyright Licenses;

                  (g)      all Deposit Accounts;

                  (h)      all Documents;

                                       3

<PAGE>

                  (i)      all Equipment;

                  (j)      all Fixtures;

                  (k)      all General Intangibles;

                  (l)      all Goods;

                  (m)      all Instruments;

                  (n)      the Insurance Account and all cash deposited therein
                           from time to time;

                  (o)      all Inventory;

                  (p)      all Investment Property;

                  (q)      all Letter-of-Credit Rights;

                  (r)      the Canadian Account and any replacement or successor
                           accounts relating thereto;

                  (s)      all Material Contracts and all such other agreements,
                           contracts, leases, licenses, tax sharing agreements
                           or hedging arrangements now or hereafter entered into
                           by an Obligor, as such agreements may be amended or
                           otherwise modified from time to time (collectively,
                           the "Assigned Agreements"), including without
                           limitation, (i) all rights of an Obligor to receive
                           moneys due and to become due under or pursuant to the
                           Assigned Agreements, (ii) all rights of an Obligor to
                           receive proceeds of any insurance, indemnity,
                           warranty or guaranty with respect to the Assigned
                           Agreements, (iii) claims of an Obligor for damages
                           arising out of or for breach of or default under the
                           Assigned Agreements and (iv) the right of an Obligor
                           to terminate the Assigned Agreements, to perform
                           thereunder and to compel performance and otherwise
                           exercise all remedies thereunder;

                  (t)      all Patent Licenses;

                  (u)      all Patents;

                  (v)      all Software;

                  (w)      all Supporting Obligations;

                  (x)      all Trademarks;

                                       4

<PAGE>

                  (y)      all Trademark Licenses;

                  (z)      all books, records, ledger cards, files,
                           correspondence, computer programs, tapes, disks, and
                           related data processing software (owned by such
                           Obligor or in which it has an interest) that at any
                           time evidence or contain information relating to any
                           Collateral or are otherwise necessary or helpful in
                           the collection thereof or realization thereupon;

                  (aa)     all other personal property of any kind or type
                           whatsoever owned by such Obligor; and

                  (bb)     to the extent not otherwise included, all Accessions,
                           Proceeds and products of any and all of the
                           foregoing.

         The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising, (ii) is not to be
construed as an assignment or sale of the ownership interest of any Intellectual
Property of the Obligors or a right to use any Intellectual Property unless and
until an Event of Default shall have occurred and be continuing and (iii) shall
not include any specific contract rights to the extent the granting of a
security interest therein is prohibited by or would constitute a default under
any agreement or document related thereto (so long as such agreement is
otherwise permitted under the Credit Agreement) (but only to the extent such
prohibition is enforceable under applicable law); provided, however, that in no
event, shall this provision have the effect of limiting the "blanket" lien
nature of the foregoing granting clause except with respect to any such specific
contract rights.

         3.       Provisions Relating to Accounts, Contracts and Agreements.

                  (a)      Anything herein to the contrary notwithstanding, each
         of the Obligors shall remain liable under each of its Accounts,
         contracts and agreements to observe and perform all the conditions and
         obligations to be observed and performed by it thereunder, all in
         accordance with the terms of any agreement giving rise to each such
         Account or the terms of such contract or agreement. Neither of the
         Agents nor any Lender shall have any obligation or liability under any
         Account (or any agreement giving rise thereto), contract or agreement
         by reason of or arising out of this Security Agreement or the receipt
         by either of the Agents or any Lender of any payment relating to such
         Account, contract or agreement pursuant hereto, nor shall either of the
         Agents or any Lender be obligated in any manner to perform any of the
         obligations of an Obligor under or pursuant to any Account (or any
         agreement giving rise thereto), contract or agreement, to make any
         payment, to make any inquiry as to the nature or the sufficiency of any
         payment received by it or as to the sufficiency of any performance by
         any party under any Account (or any agreement giving rise thereto),
         contract or agreement, to present or file any claim, to take

                                       5

<PAGE>

         any action to enforce any performance or to collect the payment of any
         amounts which may have been assigned to it or to which it may be
         entitled at any time or times.

                  (b)      At any time and from time to time, the Agent shall
         have the right, but not the obligation, to make test verifications of
         the Accounts in any manner and through any medium that it reasonably
         considers advisable, and the Obligors shall furnish all such assistance
         and information as the Agent may require in connection with such test
         verifications. Upon the Agent's request and at the expense of the
         Obligors, the Obligors shall cause independent public accountants or
         others satisfactory to the Agent to furnish to the Agent reports
         showing reconciliations, aging and test verifications of, and trial
         balances for, the Accounts, to the extent provided for in the Credit
         Agreement. The Agent in its own name or in the name of others may
         communicate with account debtors on the Accounts to verify with them to
         the Agent's satisfaction the existence, amount and terms of any
         Accounts.

         4.       Representations and Warranties. Each Obligor hereby represents
and warrants to the Agent, for the benefit of the Lenders, on the Closing Date
and the date on which any Loan is made or Letter of Credit or Bankers'
Acceptance is issued, that:

                  (a)      Chief Executive Office; Books and Records; Legal
         Name; State of Formation. Each Obligor's chief executive office and
         chief place of business are (and for the prior four months has been)
         located at the locations set forth on Schedule 6.22 to the Credit
         Agreement and each Obligor keeps its books and records at such
         locations. Each Obligor's exact legal name is as shown in this Security
         Agreement and its jurisdiction of formation is (and for the prior four
         months has been) the jurisdiction set forth on Schedule 6.22 to the
         Credit Agreement. No Obligor has in the past four months changed its
         name, been party to a merger, consolidation or other change in
         structure or used any trade name not disclosed on Schedule 6.23 to the
         Credit Agreement.

                  (b)      Location of Tangible Collateral. The location of all
         tangible Collateral owned by each Obligor is as shown on Schedule 6.22
         to the Credit Agreement.

                  (c)      Ownership and Authority. Each Obligor is the legal
         and beneficial owner of its Collateral and has the right, corporate
         power and authority to pledge, sell, assign or transfer the same.

                  (d)      Security Interest/Priority. This Security Agreement
         creates a valid security interest in favor of the Agent, for the
         benefit of the Lenders, in the Collateral of such Obligor and, when
         properly perfected by filing or upon the Agent obtaining Control of
         such Collateral, shall constitute a valid first priority, perfected
         security interest in such Collateral, to the extent such security
         interest can be perfected by filing or through Control under the UCC
         (or equivalent local law), free and clear of all Liens except for
         Permitted Liens. Each Obligor hereby acknowledges and agrees that: (i)
         value has been given to such Obligor; (ii) each Obligor has rights in
         the Collateral (other than Collateral acquired after the date hereof)
         in which such Obligor has granted a security interest hereunder; and

                                       6

<PAGE>

         (iii) the Obligors and the Agent have not agreed to postpone the time
         for attachment of the security interest created by this Security
         Agreement, which shall attach upon the execution of this Security
         Agreement and, in the case of Collateral acquired after the date
         hereof, when such Obligor has rights therein.

                  (e)      Consents. Except for the filing or recording of UCC
         financing statements (or comparable Canadian filings, as applicable) or
         obtaining Control to perfect the Liens created by this Security
         Agreement that may be perfected through the filing of a UCC financing
         statement (or comparable Canadian filing, as applicable) or obtaining
         Control, no consent or authorization of, filing with, or other act by
         or in respect of, any arbitrator or Governmental Authority and no
         consent of any other Person (including, without limitation, any
         stockholder, member or creditor of such Obligor), is required (except
         as such have been duly obtained, made or given, or will be duly
         obtained, made or given prior to or contemporaneously with the granting
         of the security interest hereunder, and are in full force and effect)
         (i) for the grant by such Obligor of the security interest in the
         Collateral granted hereby or for the execution, delivery or performance
         of this Security Agreement by such Obligor or (ii) for the perfection
         of such security interest or the exercise by the Agent of the rights
         and remedies provided for in this Security Agreement (other than as may
         be required by laws affecting the offering and sale of securities).

                  (f)      Types of Collateral. None of the Collateral consists
         of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods,
         Farm Products, Manufactured Homes or standing timber.

                  (g)      Accounts. With respect to the Accounts of the
         Obligors: (i) the goods sold and/or services furnished giving rise to
         each Account are not subject to any security interest or Lien except
         the first priority, perfected security interest granted to the Agent
         herein and except for Permitted Liens; (ii) each Account and the papers
         and documents of the applicable Obligor relating thereto are genuine
         and in all material respects what they purport to be; (iii) each
         Account arises out of a bona fide transaction for goods sold and
         delivered (or in the process of being delivered) by an Obligor or for
         services actually rendered by an Obligor, which transaction was
         conducted in the ordinary course of the Obligor's business and was
         completed in accordance with the terms of any documents pertaining
         thereto; (iv) no Account of an Obligor is evidenced by any Instrument
         or Chattel Paper unless such Instrument or Chattel Paper has been
         endorsed over and delivered to, or submitted to the control of, the
         Agent; (v) the amount of each Account as shown on the applicable
         Obligor's books and records, and on all invoices and statements which
         may be delivered to the Agent with respect thereto, is due and payable
         to the applicable Obligor; (vi) to each of the Obligors' knowledge, the
         account debtor with respect to each Account has the capacity to
         contract; and (vii) no surety bond was required or given in connection
         with any Account of an Obligor or the contracts or purchase orders out
         of which they arose.

                  (h)      Inventory. No Inventory of an Obligor is held by a
         third party (other than a Credit Party) pursuant to a consignment, sale
         or return, sale on approval or similar arrangement.

                                       7

<PAGE>

                  (i)      Intellectual Property.

                           (i)      Schedule 1(b) hereto includes all registered
                  and unregistered Copyrights, Patents and Trademarks owned by
                  or licensed (pursuant to a written license) by or to the
                  Obligors as of the date hereof.

                           (ii)     Except as set forth on Schedule 1(b) hereto,
                  all Material Intellectual Property of each Obligor is valid,
                  subsisting, unexpired, enforceable and has not been abandoned,
                  and each Obligor is legally entitled to use each of its trade
                  names.

                           (iii)    Except as set forth on Schedule 1(b) hereto,
                  as of the date hereof, none of the Intellectual Property of
                  the Obligors is the subject of any licensing or franchise
                  agreement.

                           (iv)     No holding, decision or judgment has been
                  rendered by any Governmental Authority which would limit,
                  cancel or question the validity of any Material Intellectual
                  Property of the Obligors, other than any such holding,
                  decision or judgment with respect to an immaterial portion of
                  any Patent application which application constitutes Material
                  Intellectual Property.

                           (v)      No action or proceeding is pending seeking
                  to limit, cancel or question the validity of any Material
                  Intellectual Property of the Obligors, other than any such
                  action or proceeding which the Obligor and the Agent determine
                  to be frivolous in their reasonable independent judgment.

                           (vi)     All applications pertaining to the Material
                  Intellectual Property of each Obligor have been duly and
                  properly filed, and all registrations or letters pertaining to
                  the Material Intellectual Property of such Obligor have been
                  duly and properly filed and issued.

                           (vii)    No Obligor has made any assignment or
                  agreement in conflict with the security interest of the Agent
                  in the Intellectual Property of each Obligor hereunder.

                  (j)      Documents, Instruments and Chattel Paper. All
         Documents, Instruments and Chattel Paper describing, evidencing or
         constituting Collateral are, to the Obligors' knowledge, complete,
         valid, and genuine, in all material respects.

                  (k)      Equipment. With respect to each Obligor's Equipment:
         (i) such Obligor has good and marketable title thereto or a valid
         leasehold interest therein; and (ii) all such Equipment is in normal
         operating condition and repair, other than ordinary wear and tear and
         normal obsolescence, and is suitable for the uses to which it is
         customarily put in the conduct of such Obligor's business.

                                       8

<PAGE>

                  (l)      Restrictions on Security Interest. Other than as
         shown on Schedule 4(l) hereto, none of the Obligors is party to any
         material license or any material lease that contains legally
         enforceable restrictions on the granting of a security interest therein
         unless such restrictions have been waived in writing to the
         satisfaction of the Agent.

         5.       Covenants. Each Obligor covenants that so long as any of the
Secured Obligations remain outstanding or any Credit Document or Lender Hedging
Agreement is in effect or any Letter of Credit or any Bankers' Acceptances (or
equivalent loans under paragraph 2.5(i)(iii) of the Credit Agreement) shall
remain outstanding, and until all of the Commitments shall have been terminated,
such Obligor shall:

                  (a)      Other Liens. Defend the Collateral against the claims
         and demands of all third parties claiming an interest therein, and keep
         the Collateral free from all Liens, except for Permitted Liens. Neither
         the Agent nor any Lender authorizes any Obligor to, and no Obligor
         shall, sell, exchange, transfer, assign, lease or otherwise dispose of
         the Collateral or any interest therein, except as permitted under the
         Credit Agreement.

                  (b)      Preservation of Collateral. Keep the Collateral in
         good order, condition and repair in all material respects; not use the
         Collateral in violation of the provisions of this Security Agreement;
         not use the Collateral in violation of the provisions of any policy
         insuring the Collateral; and not use the Collateral in violation of the
         provisions of any applicable statute, law, bylaw, rule, regulation or
         ordinance, unless such violations, individually or in the aggregate,
         could not reasonably be expected to have a Material Adverse Effect.

                  (c)      Possession or Control of Certain Collateral. If (i)
         any amount payable under or in connection with any of the Collateral
         shall be or become evidenced by any Instrument, Tangible Chattel Paper
         or Supporting Obligation or (ii) if any Collateral shall be stored or
         shipped subject to a Document or (iii) if any Collateral shall consist
         of Investment Property in the form of certificated securities,
         immediately notify the Canadian Agent and the Agent of the existence of
         such Collateral and, at the request of the Agent, deliver such
         Instrument, Chattel Paper, Supporting Obligation, Document or
         Investment Property to the Agent, duly endorsed in a manner
         satisfactory to the Agent, to be held as Collateral pursuant to this
         Security Agreement. If any Collateral shall consist of Deposit
         Accounts, Chattel Paper in electronic form, Letter-of-Credit Rights or
         uncertificated Investment Property, execute and deliver (and, with
         respect to any Collateral consisting of uncertificated Investment
         Property, cause the Securities Intermediary, if any, with respect to
         such Investment Property to execute and deliver) to the Canadian Agent,
         upon either the Agent's or the Canadian Agent's request, all control
         agreements, assignments, instruments or other documents (including an
         acknowledgment that the Canadian Agent holds such Collateral for the
         benefit of the Agent) as reasonably requested by the Agent or the
         Canadian Agent for the purposes of obtaining and maintaining Control of
         such Collateral within the meaning of the UCC (or equivalent local
         law).

                                       9

<PAGE>

                  (d)      Changes in Corporate Structure or Location. Not,
         without providing 30 days prior written notice to the Agent and without
         filing (or confirming that the Agent has filed) such amendments to any
         previously filed financing statements (or comparable filings) as the
         Agent may require, (i) alter its corporate existence or, in one
         transaction or a series of transactions, merge into or consolidate with
         any other entity, or sell all or substantially all of its assets, (ii)
         change its jurisdiction of incorporation or formation, (iii) change its
         registered corporate name, (iv) change the location of its chief
         executive office and chief place of business (as well as its books and
         records) from the locations set forth on Schedule 6.22 to the Credit
         Agreement (as such Schedule may be updated from time to time pursuant
         to Section 7.21 of the Credit Agreement) or (v) change the location of
         its Collateral from the locations set forth for such Obligor on
         Schedule 6.22 to the Credit Agreement (as such Schedule may be updated
         from time to time pursuant to Section 7.21 of the Credit Agreement).

                  (e)      Inspection. Allow the Agent or its representatives to
         visit and inspect the Collateral as set forth in Section 7.12 of the
         Credit Agreement.

                  (f)      Perfection of Security Interest. Authorize the Agent
         to prepare and file such financing statements (including renewal
         statements and in lieu statements) or amendments thereof or supplements
         thereto or other instruments as the Agent may from time to time deem
         necessary or appropriate in order to perfect and maintain the security
         interests granted hereunder in accordance with the UCC (or equivalent
         local law). Any financing statement filed by the Agent may contain a
         general description of the collateral covered thereby, as permitted by
         the UCC (or equivalent local law), which may state that the security
         interest attaches to all present and after acquired personal property
         of the debtor. Each Obligor shall also execute, if necessary, and
         deliver to the Agent such agreements, assignments or instruments
         (including affidavits, notices, reaffirmations and amendments and
         restatements of existing documents, as the Agent may reasonably
         request) and do all such other things as the Agent may reasonably deem
         necessary or appropriate (i) to assure to the Agent its security
         interests hereunder are perfected, including (A) such financing
         statements (including renewal statements and in lieu statements) or
         amendments thereof or supplements thereto or other instruments as the
         Agent may from time to time reasonably request in order to perfect and
         maintain the security interests granted hereunder in accordance with
         the UCC and any other personal property security legislation in the
         appropriate state(s) or province(s), (B) with regard to Copyrights, a
         Notice of Grant of Security Interest in Copyrights for filing with the
         United States Copyright Office or in any similar office or agency of
         the United States or any other country, substantially in the form of
         Schedule 5(f)(i) attached hereto, (C) with regard to Patents, a Notice
         of Grant of Security Interest in Patents for filing with the United
         States Patent and Trademark Office or in any similar office or agency
         of the United States or any other country, substantially in the form of
         Schedule 5(f)(ii) attached hereto and (D) with regard to Trademarks, a
         Notice of Grant of Security Interest in Trademarks for filing with the
         United States Patent and Trademark Office or in any similar office or
         agency of the United States or any other country, substantially in the
         form of Schedule 5(f)(iii) attached hereto, (ii) to consummate the
         transactions contemplated hereby and (iii) to otherwise

                                       10

<PAGE>

         protect and assure the Agent of its rights and interests hereunder. To
         that end, each Obligor hereby makes, constitutes and appoints the
         Agent, its nominee or any other person whom the Agent may designate, as
         such Obligor's attorney-in-fact with full power and for the limited
         purpose to sign in the name of such Obligor any such financing
         statements, or amendments and supplements to financing statements, in
         lieu statements, renewal financing statements, notices or any similar
         documents which in the Agent's reasonable discretion would be
         necessary, appropriate or convenient in order to perfect and maintain
         perfection of the security interests granted hereunder, such power,
         being coupled with an interest, being and remaining irrevocable so long
         as any of the Secured Obligations remain outstanding or any Credit
         Document or Lender Hedging Agreement is in effect or any Letter of
         Credit or Bankers' Acceptances (or equivalent loans under paragraph
         2.5(i)(iii) of the Credit Agreement) shall remain outstanding and until
         all of the Commitments shall have terminated. Each Obligor hereby
         agrees that a carbon, photographic or other reproduction of this
         Security Agreement or any such financing statement is sufficient for
         filing as a financing statement by the Agent without notice thereof to
         such Obligor wherever the Agent may in its sole discretion desire to
         file the same. In the event for any reason the law of any jurisdiction
         other than New York, Canada or any province thereof becomes or is
         applicable to the Collateral of any Obligor or any part thereof, or to
         any of the Secured Obligations, such Obligor agrees to execute and
         deliver all such instruments and to do all such other things as the
         Agent in its sole discretion reasonably deems necessary or appropriate
         to preserve, protect and enforce the security interests of the Agent
         under the law of such other jurisdiction (and, if an Obligor shall fail
         to do so promptly upon the request of the Agent, then the Agent may
         execute any and all such requested documents on behalf of such Obligor
         pursuant to the power of attorney granted hereinabove). Each Obligor
         agrees to mark its books and records to reflect the security interest
         of the Agent in the Collateral.

                  (g)      Collateral Held by Warehouseman, Bailee, etc. If any
         Collateral valued at $100,000 or more is at any time in the possession
         or control of a warehouseman, bailee or any agent or processor of such
         Obligor, (i) notify the Agent of such possession, (ii) notify such
         Person of the Agent's security interest for the benefit of the Lenders
         in such Collateral, and (iii) assist the Agent in obtaining executed
         Acknowledgment Agreements from such Person.

                  (h)      Treatment of Accounts. (i) Comply with all provisions
         of the Credit Agreement relating to the establishment and maintenance
         of the Lockboxes, (ii) comply with all reporting requirements set forth
         in the Credit Agreement with respect to Accounts, (iii) not grant or
         extend the time for payment of any Account, or compromise or settle any
         Account for less than the full amount thereof, or release any person or
         property, in whole or in part, from payment thereof, or allow any
         credit or discount thereon, other than as normal and customary in the
         ordinary course of an Obligor's business and (iv) maintain at its
         principal place of business a record of Accounts consistent with
         customary business practices.

                                       11

<PAGE>

                  (i)      Covenants Relating to Inventory.

                           (i)      Maintain, keep and preserve its Inventory in
                  good salable condition at its own cost and expense, other than
                  a de minimis amount of Inventory which, in the ordinary course
                  of the Obligors' business, fails to be so maintained, kept and
                  preserved.

                           (ii)     Comply with all reporting requirements set
                  forth in the Credit Agreement with respect to Inventory.

                           (iii)    If any of the Inventory is at any time
                  evidenced by a document of title, promptly upon request by the
                  Agent, deliver such document of title to the Agent.

                  (j)      Covenants Relating to Copyrights.

                           (i)      Employ the Copyright for each material work
                  which is subject to copyright protection pursuant to Title 17
                  of the United States Code (or equivalent local law) with such
                  notice of copyright as may be required by law to secure
                  copyright protection, except as could not reasonably be
                  expected to have a Material Adverse Effect.

                           (ii)     Not do any act or knowingly omit to do any
                  act whereby any Copyright of the Obligors may become
                  invalidated, except to the extent that the invalidation of
                  such Copyright could not reasonably be expected to have a
                  Material Adverse Effect and (A) not do any act, or knowingly
                  omit to do any act, whereby any Copyright constituting
                  Material Intellectual Property may fall into the public
                  domain; (B) promptly notify the Agent if it has knowledge that
                  any Copyright constituting Material Intellectual Property may
                  become injected into the public domain or of any adverse
                  determination or development (including, without limitation,
                  the institution of, or any such determination or development
                  in, any proceeding in any court or tribunal in the United
                  States or any other country) regarding an Obligor's ownership
                  of any such Copyright or its validity; (C) take all necessary
                  steps as it shall deem appropriate under the circumstances, to
                  maintain and pursue each application (and to obtain the
                  relevant registration) and to maintain each registration of
                  each Copyright constituting Material Intellectual Property
                  owned by an Obligor, including, without limitation, filing of
                  applications for renewal where necessary; and (D) promptly
                  notify the Agent of any infringement of any Copyright of an
                  Obligor constituting Material Intellectual Property of which
                  it becomes aware and take such actions as it shall reasonably
                  deem appropriate under the circumstances to protect such
                  Copyright, including, where appropriate, the bringing of suit
                  for infringement, seeking injunctive relief and seeking to
                  recover any and all damages for such infringement.

                                       12

<PAGE>

                           (iii)    Not make any assignment or agreement in
                  conflict with the security interest in the Copyrights of each
                  Obligor hereunder.

                  (k)      Covenants Relating to Patents and Trademarks.

                           (i)      (A) Continue to use each Trademark
                  constituting Material Intellectual Property in order to
                  maintain such Trademark in full force free from any claim of
                  abandonment for non-use, (B) maintain as in the past the
                  quality of products and services offered under such Trademark,
                  (C) employ such Trademark with the appropriate notice of
                  registration, (D) not adopt or use any mark which is
                  confusingly similar or a colorable imitation of such Trademark
                  unless the Agent, for the benefit of the Lenders, shall obtain
                  a perfected security interest in such mark pursuant to this
                  Security Agreement, and (E) not (and not permit any licensee
                  or sublicensee thereof to) do any act or knowingly omit to do
                  any act whereby any such Trademark may become invalidated.

                           (ii)     Not do any act, or omit to do any act,
                  whereby any Patent constituting Material Intellectual Property
                  may become abandoned or dedicated to the public domain.

                           (iii)    Promptly notify the Agent if it has
                  knowledge that any application or registration relating to any
                  Patent or Trademark constituting Material Intellectual
                  Property may become abandoned or dedicated to the public
                  domain, or of any adverse determination or development
                  (including, without limitation, the institution of, or any
                  such determination or development in, any proceeding in the
                  United States Patent and Trademark Office or any court or
                  tribunal in Canada or in any other country) regarding an
                  Obligor's ownership of any such Patent or Trademark or its
                  right to register the same or to keep, maintain and use the
                  same.

                           (iv)     Whenever an Obligor, either by itself or
                  through an agent, employee, licensee or designee, shall file
                  an application for the registration of any Patent or Trademark
                  with the United States Patent and Trademark Office or any
                  similar office or agency in Canada or in any other country or
                  any political subdivision thereof, such Obligor shall report
                  such filing to the Agent and the Lenders quarterly, together
                  with the officer's certificate delivered pursuant to Section
                  7.1(d) of the Credit Agreement. Upon request of the Agent, an
                  Obligor shall execute and deliver any and all agreements,
                  instruments, documents and papers as the Agent may request to
                  evidence the Agent's and the Lenders' security interest in any
                  Patent or Trademark and the goodwill and General Intangibles
                  of such Obligor relating thereto or represented thereby.

                           (v)      Take all reasonable and necessary steps,
                  including, without limitation, in any proceeding before the
                  United States Patent and Trademark Office, or any similar
                  office or agency in Canada or in any other country or any
                  political subdivision thereof, to maintain and pursue each
                  application, to obtain

                                       13

<PAGE>

                  the relevant registration and to maintain each registration of
                  the Patents and Trademarks, including, without limitation,
                  filing of applications for renewal, affidavits of use and
                  affidavits of incontestability, except to the extent that the
                  failure to do so could not reasonably be expected to have a
                  Material Adverse Effect.

                           (vi)     Promptly notify the Agent and the Lenders
                  after it learns that any Patent or Trademark included in the
                  Collateral is infringed, misappropriated or diluted by a third
                  party to an extent that could reasonably be expected to have a
                  Material Adverse Effect and promptly sue for infringement,
                  misappropriation or dilution, to seek injunctive relief where
                  appropriate and to recover any and all damages for such
                  infringement, misappropriation or dilution, or take such other
                  actions as it shall reasonably deem appropriate under the
                  circumstances to protect such Patent or Trademark.

                           (vii)    Not make any assignment or agreement in
                  conflict with the security interest in the Patents or
                  Trademarks of any Obligor hereunder.

                  (l)      New Patents, Copyrights and Trademarks. Provide the
         Agent (i) quarterly, together with the officer's certificate delivered
         pursuant to Section 7.1(d) of the Credit Agreement, a listing of all
         applications, if any, for new Copyrights, Patents or Trademarks
         (together with a listing of the issuance of registrations or letters on
         present applications), which new applications and issued registrations
         or letters shall be subject to the terms and conditions hereunder and
         of all license agreements entered into with respect to any Copyright,
         Patent or Trademark, and (ii) promptly, from time to time upon the
         written request of the Agent, (A) with respect to Copyrights, a duly
         executed Notice of Grant of Security Interest in Copyrights, (B) with
         respect to Patents, a duly executed Notice of Grant of Security
         Interest in Patents, (C) with respect to Trademarks, a duly executed
         Notice of Grant of Security Interest in Trademarks or (D) such other
         duly executed documents as the Agent may reasonably request in a form
         reasonably acceptable to the Agent and suitable for recording to
         evidence the security interest in the Copyright, Patent or Trademark
         which is the subject of such new application.

                  (m)      Commercial Tort Claims; Notice of Litigation. (i)
         Quarterly, together with the officer's certificate delivered pursuant
         to Section 7.1(d) of the Credit Agreement, forward to the Agent written
         notification of any and all Commercial Tort Claims of the Obligors in
         which an Obligor is the claimant, including, but not limited to, any
         and all actions, suits, and proceedings before any court or
         Governmental Authority by or affecting such Obligor or any of its
         Subsidiaries and (ii) execute and deliver such statements, documents
         and notices and do and cause to be done all such things as may be
         required by the Agent, or required by law, including all things which
         may from time to time be necessary under the UCC (or equivalent local
         law) to fully create, preserve, perfect and protect the priority of the
         Agent's security interest in any such Commercial Tort Claims.

                                       14

<PAGE>

                  (n)      Bank Accounts. At all times, maintain the Canadian
         Account and any replacement or successor accounts relating thereto with
         the Canadian Agent in accordance with the terms of the Credit Agreement
         and cause all amounts received from the Accounts and other Collateral
         to be deposited into the Canadian Account in accordance with the terms
         of the Credit Agreement. All amounts on deposit in the Canadian Account
         and any replacement or successor accounts relating thereto shall be
         subject to the Lien of the Agent hereunder. All funds deposited into
         the Canadian Account and any other account subject to a blocked account
         agreement shall immediately become the property of the Canadian Agent
         for the benefit of the Agent on behalf of the Canadian Lenders and the
         Canadian Agent hereby waives any offset rights against the funds so
         deposited. The Canadian Agent is hereby authorized to take direction
         from the Administrative Agent with respect to funds in the Canadian
         Account upon the occurrence of a Cash Management Event.

                  (o)      Insurance. Insure, repair and replace the Collateral
         of such Obligor as set forth in the Credit Agreement and herein. All
         insurance proceeds shall be subject to the security interest of the
         Agent hereunder.

                  (p)      Covenants Relating to the Material Contracts.

                           (i)      Upon the reasonable request of the Agent,
                  each Obligor shall, at its expense, (A) furnish to the Agent
                  copies of all material notices, requests and other documents
                  received by such Obligor under or pursuant to the Material
                  Contracts, and such other information and reports regarding
                  the Material Contracts and (B) make to any other party to any
                  Material Contracts such demands and requests for information
                  and reports or for action as an Obligor is entitled to make
                  thereunder and as may be reasonably related to obtaining the
                  principal benefits of such Material Contract.

                           (ii)     Subject to the provisions of Section 9.13 of
                  the Credit Agreement, unless the applicable Obligor believes
                  it is necessary or advisable in the prudent conduct of its
                  business, no Obligor shall (A) cancel or terminate any
                  Material Contracts of such Obligor or consent to or accept any
                  cancellation or termination thereof; (B) amend or otherwise
                  modify any Material Contracts of such Obligor or give any
                  consent, waiver or approval thereunder; (C) waive any default
                  under or breach of any Material Contracts of such Obligor; or
                  (D) take any other action in connection with any Material
                  Contracts of such Obligor which would impair the value of the
                  interest or rights of such Obligor thereunder or which would
                  impair the interests or rights of the Agent.

                  (q)      New Material Contracts. Whenever an Obligor shall
         enter into a Material Contract, such Obligor shall, as soon as
         available or practicable and in any event no later than quarterly,
         together with the officer's certificate delivered pursuant to Section
         7.1(d) of the Credit Agreement, provide the Agent with a true and
         complete copy of such Material Contract and such other related
         documents as the Agent may reasonably request

                                       15

<PAGE>

         in a form acceptable to the Agent and, if reasonably requested by the
         Agent, execute and deliver (or use commercially reasonable efforts to
         cause to be executed and delivered) to the Agent a collateral
         assignment of such Material Contract and a consent to such collateral
         assignment, in each case in a form acceptable to the Agent. Upon the
         reasonable request of the Agent, an Obligor will do any act, or execute
         any additional documents required by the Agent to ensure to the Agent
         the effectiveness and first priority of its security interest in such
         Material Contract.

         6.       Special Provisions Regarding Inventory.

                  (a)      Notwithstanding anything to the contrary contained in
         this Security Agreement, each Obligor may, unless and until an Event of
         Default occurs and is continuing and the Agent instructs such Obligor
         otherwise, without further consent or approval of the Agent, use,
         consume, sell, lease and exchange its Inventory in the ordinary course
         of its business as presently conducted, whereupon, in the case of such
         a sale or exchange, the security interest created hereby in the
         Inventory so sold or exchanged (but not in any Proceeds arising from
         such sale or exchange) shall cease immediately without any further
         action on the part of the Agent.

                  (b)      Upon the Lenders' making any Loan or issuing any
         Letter of Credit pursuant to the Credit Agreement or any Canadian
         Lender creating a Bankers' Acceptance pursuant to the Credit Agreement,
         each Obligor shall be deemed to have warranted that all warranties of
         such Obligor set forth in this Security Agreement with respect to its
         Inventory are true and correct in all material respects with respect to
         such Inventory, including without limitation that such Inventory is
         located at a location set forth on Schedule 6.22 to the Credit
         Agreement, as the same may be updated from time to time pursuant to
         Section 7.21 of the Credit Agreement.

         7.       Special Provisions Regarding Insurance Account.

                  (a)      Promptly upon and at all times after the receipt of
         any cash proceeds of a Casualty Loss required to be paid to the Agent
         pursuant to Section 7.6 of the Credit Agreement (the "Insurance
         Proceeds"), the Company shall establish and shall thereafter maintain
         an additional cash collateral account (the "Insurance Account") at the
         offices of the Agent or such other bank as the Company and the Agent
         may agree (the "Insurance Account Bank"), under the dominion and
         control of the Agent. Forthwith upon such establishment, the Company
         shall notify the Agent of the location, account name and account number
         of such account. The Company hereby agrees to cause any Insurance
         Proceeds received from time to time after the establishment of the
         Insurance Account to be deposited therein as set forth in this
         paragraph. Any income received with respect to the balance from time to
         time standing to the credit of the Insurance Account, including any
         interest or capital gains on investments therein, shall remain, or be
         deposited, in the Insurance Account. All right, title and interest in
         and to the cash amounts on deposit from time to time in the Insurance
         Account together with any investments from time to time made pursuant
         to clause (c) of this Section shall constitute part of the Collateral

                                       16

<PAGE>

         hereunder and shall not constitute payment of the Secured Obligations
         until applied thereto as hereinafter provided.

                  (b)      The balance from time to time standing to the credit
         of the Insurance Account shall be subject to withdrawal only upon the
         instructions of the Agent. Except upon the occurrence and continuation
         of an Event of Default or with respect to amounts attributable to
         proceeds deposited in the Insurance Account which the Agent has elected
         to apply to repay the Loans in accordance with Section 7.6(c) of the
         Credit Agreement, the Agent agrees to give instructions to distribute
         amounts standing to the credit of the Insurance Account to the Company
         at such times and in such amounts as the Company shall request for the
         purpose of repairing, reconstructing or replacing the property in
         respect of which such Insurance Proceeds were received. Any such
         request shall be accompanied by a certificate of a Senior Financial
         Officer of the Company setting forth in detail reasonably satisfactory
         to the Agent the repair, reconstruction or replacement for which such
         funds will be expended. If immediately available cash on deposit in the
         Insurance Account is not sufficient to make any distribution to the
         Company referred to in the previous sentence of this Section 7(b), the
         Agent shall cause to be liquidated as promptly as practicable such
         investments in the Insurance Account designated by the Company as
         required to obtain sufficient cash to make such distribution and,
         notwithstanding any other provision of this Section 7, such
         distribution shall not be made until such liquidation has taken place.
         Upon the occurrence and continuation of an Event of Default, the Agent
         may apply (subject to collection) any or all of the balance from time
         to time standing to the credit of the Insurance Account in the manner
         specified in Section 4.7 of the Credit Agreement.

                  (c)      Amounts on deposit in the Insurance Account shall be
         invested and re-invested from time to time in such Cash Equivalents as
         the Company shall determine, which Cash Equivalents shall be held under
         the dominion and control of the Agent; provided that, if an Event of
         Default has occurred and is continuing, the Agent may cause such Cash
         Equivalents to be liquidated and apply or cause to be applied the
         proceeds thereof to the payment of the Secured Obligations in the
         manner specified in Section 4.7 of the Credit Agreement.

         8.       Performance of Obligations; Advances by Agent. On failure of
any Obligor to perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform or cause to be
performed the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien (other than a Permitted
Lien), expenditures made in defending against any adverse claim and all other
expenditures which the Agents may make for the protection of the security
interest hereof or may be compelled to make by operation of law. All such sums
and amounts so expended shall be repayable by the Obligors on a joint and
several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate set forth in Section 4.2(b) of the
Credit Agreement. No such performance of any

                                       17

<PAGE>

covenant or agreement by the Agent or the Canadian Agent (acting on behalf of
the Agent) on behalf of any Obligor, and no such advance or expenditure
therefor, shall relieve the Obligors of any default under the terms of this
Security Agreement, the other Credit Documents or any Lender Hedging Agreement.
The Agent may make any payment hereby authorized in accordance with any bill,
statement or estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by an Obligor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with U.S. GAAP.

         9.       Events of Default.

         The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an event of default hereunder (an "Event
of Default").

         10.      Remedies.

                  (a)      General Remedies. Upon the occurrence and during the
         continuance of an Event of Default, the Lenders shall have, in addition
         to the rights and remedies provided herein, in the Credit Documents, in
         any Lender Hedging Agreement or by law (including, but not limited to,
         levy of attachment, garnishment and the rights and remedies set forth
         in the Uniform Commercial Code (or equivalent local law) of the
         jurisdiction applicable to the affected Collateral), the rights and
         remedies of a secured party under the UCC (regardless of whether the
         UCC is the law of the jurisdiction where the rights and remedies are
         asserted and regardless of whether the UCC applies to the affected
         Collateral), and further, the Agent may, with or without judicial
         process or the aid and assistance of others, (i) enter on any premises
         on which any of the Collateral may be located and, without resistance
         or interference by the Obligors, take possession of the Collateral,
         (ii) dispose of any Collateral on any such premises, (iii) require the
         Obligors to assemble and make available to the Agent at the expense of
         the Obligors any Collateral at any place and time designated by the
         Agent which is reasonably convenient to both parties, (iv) remove any
         Collateral from any such premises for the purpose of effecting sale or
         other disposition thereof, and/or (v) without demand and without
         advertisement, notice, hearing or process of law, all of which each of
         the Obligors hereby waives to the fullest extent permitted by law, at
         any place and time or times, sell and deliver any or all Collateral
         held by or for it at public or private sale, by one or more contracts,
         in one or more parcels, for cash, upon credit or otherwise, at such
         prices and upon such terms as the Agent deems advisable, in its sole
         discretion. Neither the Agent's compliance with any applicable federal,
         state or provincial law in the conduct of such sale, nor its disclaimer
         of any warranties relating to the Collateral, shall be considered to
         adversely affect the commercial reasonableness of such sale. In
         addition to all other sums due the Agent, the Canadian Agent and the
         Lenders with respect to the Secured Obligations, the Obligors shall pay
         the Agent, the Canadian Agent and each of the Lenders all reasonable
         costs and expenses incurred by the Agent, the Canadian Agent or any
         such Lender, including, but not limited to, reasonable attorneys' fees
         and court costs, in obtaining or liquidating the

                                       18

<PAGE>

         Collateral, in enforcing payment of the Secured Obligations, or in the
         prosecution or defense of any action or proceeding by or against the
         Agent, the Canadian Agent or the Lenders or the Obligors concerning any
         matter arising out of or connected with this Security Agreement, any
         Collateral or the Secured Obligations, including, without limitation,
         any of the foregoing arising in, arising under or related to a case
         under any bankruptcy, insolvency or similar law. To the extent the
         rights of notice cannot be legally waived hereunder, each Obligor
         agrees that any requirement of reasonable notice shall be met if such
         notice is personally served on or mailed, postage prepaid, to the
         Company in accordance with the notice provisions of Section 14.1 of the
         Credit Agreement at least ten (10) days before the time of sale or
         other event giving rise to the requirement of such notice. The Agent,
         the Canadian Agent and the Lenders shall not be obligated to make any
         sale or other disposition of the Collateral regardless of notice having
         been given. To the extent permitted by law, the Agent and any Lender
         may be a purchaser at any such sale. To the extent permitted by
         applicable law, each of the Obligors hereby waives all of its rights of
         redemption with respect to any such sale. Subject to the provisions of
         applicable law, the Agent and the Lenders may postpone or cause the
         postponement of the sale of all or any portion of the Collateral by
         announcement at the time and place of such sale, and such sale may,
         without further notice, to the extent permitted by law, be made at the
         time and place to which the sale was postponed, or the Agent and the
         Lenders may further postpone such sale by announcement made at such
         time and place.

                  (b)      Remedies Relating to Accounts. Upon the occurrence
         and during the continuance of an Event of Default, whether or not the
         Agent has exercised any or all of its rights and remedies hereunder,
         the Agent shall have the right to enforce any Obligor's rights against
         any account debtors and obligors on such Obligor's Accounts. Each
         Obligor acknowledges and agrees that the Proceeds of its Accounts
         remitted to or on behalf of the Canadian Agent or the Agent in
         accordance with the provisions hereof shall be solely for the Agent's
         own convenience and that such Obligor shall not have any right, title
         or interest in such Proceeds or in any such other amounts except as
         expressly provided herein. The Agent and the Lenders shall have no
         liability or responsibility to any Obligor for acceptance of a check,
         draft or other order for payment of money bearing the legend "payment
         in full" or words of similar import or any other restrictive legend or
         endorsement or be responsible for determining the correctness of any
         remittance. The Agent shall have no obligation to apply or give credit
         for any item included in proceeds of Accounts or other Collateral until
         the final payment therefor has been deposited into the Canadian Account
         or any other account covered by a blocked account agreement in favor of
         the Agent. However, if the Agent does permit credit to be given for any
         item prior to deposit of final payment into the Canadian Account or
         such other account and such final payment is not made or an item is
         charged back to the Agent or the Canadian Agent for any reason, the
         Agent may at its election in either instance charge or cause to be
         charged the amount of such item back against the Canadian Account or
         such other account, together with interest thereon at a rate per annum
         equal to the default rate set forth in Section 4.2(b) of the Credit
         Agreement. Each Obligor hereby agrees to indemnify the Agent, the
         Canadian Agent and the Lenders from and against all liabilities,
         damages, losses, actions, claims, judgments, costs, expenses, charges
         and reasonable attorneys' fees

                                       19

<PAGE>

         suffered or incurred by the Agents or the Lenders (each, an
         "Indemnified Party") because of the maintenance of the foregoing
         arrangements except as relating to or arising out of the gross
         negligence or willful misconduct of an Indemnified Party or its
         officers, employees or agents. In the case of any investigation,
         litigation or other proceeding, the foregoing indemnity shall be
         effective whether or not such investigation, litigation or proceeding
         is brought by an Obligor, its directors, shareholders or creditors or
         an Indemnified Party or any other Person or any other Indemnified Party
         is otherwise a party thereto. The Agents shall have no liability or
         responsibility to any Obligor for any bank maintaining the Canadian
         Account or any other account covered by a blocked account agreement in
         favor of the Agent accepting any check, draft or other order for
         payment of money bearing the legend "payment in full" or words of
         similar import or any other restrictive legend or endorsement
         whatsoever or be responsible for determining the correctness of any
         remittance (it being understood that this sentence shall in no way
         affect the liability or responsibility of any such bank).

                  (c)      Access. In addition to the rights and remedies
         hereunder, upon the occurrence and during the continuance of an Event
         of Default, the Agent shall have the right to enter and remain upon the
         various premises of the Obligors without cost or charge to the Agent,
         and use the same, together with materials, supplies, books and records
         of the Obligors for the purpose of collecting and liquidating the
         Collateral, or for preparing for sale and conducting the sale of the
         Collateral, whether by foreclosure, auction or otherwise. In addition,
         the Agent may remove Collateral, or any part thereof, from such
         premises and/or any records with respect thereto, in order to
         effectively collect or liquidate such Collateral. If the Agent
         exercises its right to take possession of the Collateral, each Obligor
         shall also at its expense perform any and all other steps reasonably
         requested by the Agent to preserve and protect the security interest
         hereby granted in the Collateral, such as placing and maintaining signs
         indicating the security interest of the Agent, appointing overseers for
         the Collateral and maintaining inventory records.

                  (d)      Nonexclusive Nature of Remedies. Failure by the
         Canadian Agent, the Agent or the Lenders to exercise any right, remedy
         or option under this Security Agreement, any other Credit Document, any
         Lender Hedging Agreement or as provided by law, or any delay by the
         Agent, the Canadian Agent or the Lenders in exercising the same, shall
         not operate as a waiver of any such right, remedy or option. No waiver
         hereunder shall be effective unless it is in writing, signed by the
         party against whom such waiver is sought to be enforced and then only
         to the extent specifically stated, which in the case of the Agent, the
         Canadian Agent or the Lenders shall only be granted as provided herein.
         To the extent permitted by law, neither the Agent, the Canadian Agent,
         the Lenders, nor any party acting as attorney for the Agent, the
         Canadian Agent or the Lenders, shall be liable hereunder for any acts
         or omissions or for any error of judgment or mistake of fact or law
         other than their gross negligence or willful misconduct hereunder. The
         rights and remedies of the Agent, the Canadian Agent and the Lenders
         under this Security Agreement shall be cumulative and not exclusive of
         any other right or remedy which the Agent, the Canadian Agent or the
         Lenders may have.

                                       20

<PAGE>

                  (e)      Retention of Collateral. In addition to the rights
         and remedies hereunder, upon the occurrence and during the continuance
         of an Event of Default, the Agent may, after providing the notices and
         obtaining the consents required by Section 9-620 of the UCC or
         otherwise complying with the requirements of applicable law of the
         relevant jurisdiction, accept or retain the Collateral in satisfaction
         of the Secured Obligations. Unless and until the Agent shall have
         provided such notices, however, the Agent and the Canadian Agent shall
         not be deemed to have retained any Collateral in satisfaction of any
         Secured Obligations for any reason.

                  (f)      Deficiency. In the event that the proceeds of any
         sale, collection or realization are insufficient to pay all amounts to
         which the Agent, the Canadian Agent and the Lenders are legally
         entitled, the Obligors shall be jointly and severally liable for the
         deficiency, together with interest thereon at the default rate set
         forth in Section 4.2(b) of the Credit Agreement, together with the
         costs of collection and the reasonable fees of any attorneys employed
         by the Agent to collect such deficiency. Any surplus remaining after
         the full payment and satisfaction of the Secured Obligations shall be
         returned to the Obligors or to whomsoever a court of competent
         jurisdiction shall determine to be entitled thereto.

                  (g)      Other Security. To the extent that any of the Secured
         Obligations are now or hereafter secured by property other than the
         Collateral (including, without limitation, real and other personal
         property owned by an Obligor), or by a guarantee, endorsement or
         property of any other Person, then the Agent and the Lenders shall have
         the right to proceed against such other property, guarantee or
         endorsement upon the occurrence and during the continuance of any Event
         of Default, and the Agent and the Lenders have the right, in their sole
         discretion, to determine which rights, security, liens, security
         interests or remedies the Agent and the Lenders shall at any time
         pursue, relinquish, subordinate, modify or take with respect thereto,
         without in any way modifying or affecting any of them or any of the
         Agent's and the Lenders' rights or the Secured Obligations under this
         Security Agreement, under any other of the Credit Documents or under
         any Lender Hedging Agreement.

                  (h)      PPSA. In addition to, and not in any way in
         limitation of any of the foregoing rights and remedies, the Agent may
         exercise any and all remedies available to the Agent under the PPSA.

         11.      Rights of the Agent.

                  (a)      Power of Attorney. In addition to other powers of
         attorney contained herein, each Obligor hereby designates and appoints
         the Agent, on behalf of the Lenders, and each of its designees or
         agents, as attorney-in-fact of such Obligor, irrevocably and with power
         of substitution, with authority to take any or all of the following
         actions upon the occurrence and during the continuation of an Event of
         Default:

                                       21

<PAGE>

                           (i)      to demand, collect, settle, compromise,
                  adjust, give discharges and releases, all as the Agent may
                  reasonably determine;

                           (ii)     to commence and prosecute any actions at any
                  court for the purposes of collecting any Collateral and
                  enforcing any other right in respect thereof;

                           (iii)    to defend, settle, adjust or compromise any
                  action, suit or proceeding brought and, in connection
                  therewith, give such discharge or release as the Agent may
                  deem reasonably appropriate;

                           (iv)     to receive, open and dispose of mail
                  addressed to an Obligor and endorse checks, notes, drafts,
                  acceptances, money orders, bills of lading, warehouse receipts
                  or other instruments or documents evidencing payment, shipment
                  or storage of the goods giving rise to the Collateral of such
                  Obligor, or securing or relating to such Collateral, on behalf
                  of and in the name of such Obligor;

                           (v)      to sell, assign, transfer, make any
                  agreement in respect of, or otherwise deal with or exercise
                  rights in respect of, any Collateral or the goods or services
                  which have given rise thereto, as fully and completely as
                  though the Agent were the absolute owner thereof for all
                  purposes;

                           (vi)     to adjust and settle claims under any
                  insurance policy relating thereto;

                           (vii)    to execute and deliver all assignments,
                  conveyances, statements, financing statements, renewal
                  financing statements, security agreements, affidavits, notices
                  and other agreements, instruments and documents that the Agent
                  may determine necessary in order to perfect and maintain the
                  security interests and liens granted in this Security
                  Agreement and in order to fully consummate all of the
                  transactions contemplated herein;

                           (viii)   to institute any foreclosure proceedings
                  that the Agent may deem appropriate; and

                           (ix)     to do and perform all such other acts and
                  things as the Agent may reasonably deem to be necessary,
                  proper or convenient in connection with the Collateral.

         This power of attorney is a power coupled with an interest and shall be
         irrevocable (i) for so long as any of the Secured Obligations remain
         outstanding, any Credit Document or any Lender Hedging Agreement is in
         effect or any Letter of Credit or Bankers' Acceptances (or equivalent
         loans under paragraph 2.5(i)(iii) of the Credit Agreement)

                                       22

<PAGE>

         shall remain outstanding and (ii) until all of the Commitments shall
         have been terminated. The Agent shall be under no duty to exercise or
         withhold the exercise of any of the rights, powers, privileges and
         options expressly or implicitly granted to the Agent in this Security
         Agreement, and shall not be liable for any failure to do so or any
         delay in doing so. The Agent shall not be liable for any act or
         omission or for any error of judgment or any mistake of fact or law in
         its individual capacity or its capacity as attorney-in-fact except acts
         or omissions resulting from its gross negligence or willful misconduct.
         This power of attorney is conferred on the Agent solely to protect,
         preserve and realize upon its security interest in the Collateral.

                  (b)      Assignment by the Administrative Agent. The
         Administrative Agent may from time to time assign the Secured
         Obligations and the Collateral to a successor Administrative Agent
         appointed pursuant to Section 13.9 of the Credit Agreement, and such
         successor shall be entitled to all of the rights and remedies of the
         Administrative Agent under this Security Agreement in relation thereto.

                  (c)      The Agent's and the Canadian Agent's Duty of Care.
         Other than the exercise of reasonable care to assure the safe custody
         of the Collateral while being held by the Agent or the Canadian Agent
         hereunder, the Agent and the Canadian Agent shall have no duty or
         liability to preserve rights pertaining thereto, it being understood
         and agreed that the Obligors shall be responsible for preservation of
         all rights in the Collateral, and the Agent and the Canadian Agent
         shall be relieved of all responsibility for the Collateral upon
         surrendering it or tendering the surrender of it to the Obligors. Each
         of the Agent and the Canadian Agent shall be deemed to have exercised
         reasonable care in the custody and preservation of the Collateral in
         its possession if the Collateral is accorded treatment substantially
         equal to that which the Agent or the Canadian Agent, as applicable,
         accords its own property, which shall be no less than the treatment
         employed by a reasonable and prudent agent in the industry, it being
         understood that the Agent and the Canadian Agent shall not have
         responsibility for taking any necessary steps to preserve rights
         against any parties with respect to any of the Collateral. In the event
         of a public or private sale of Collateral pursuant to Section 10
         hereof, the Agent shall have no obligation to clean-up, repair or
         otherwise prepare the Collateral for sale.

         12.      Role of Canadian Agent; Authority of Agent. The Canadian Agent
shall maintain and administer the Canadian Account in accordance with the terms
of the Credit Agreement. Notwithstanding anything contained herein or in any of
the Credit Documents to the contrary, the Agent shall have absolute and sole
authority regarding any action to be taken or determination to be made pursuant
to this Security Agreement, other than in respect of any action to be taken or
determination to be made by the Required Lenders or the Lenders, as the case may
be.

         13.      Application of Proceeds. Any amounts on deposit in the
Canadian Account and any replacement or successor accounts relating thereto, as
applicable, shall be applied by the Agent and the Canadian Agent in accordance
with the terms of the Credit Agreement. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Agent, the

                                       23

<PAGE>

Canadian Agent or any of the Lenders in cash or its equivalent, will be applied
in reduction of the Secured Obligations in the order set forth in Section 4.7 of
the Credit Agreement, and each Obligor irrevocably waives the right to direct
the application of such payments and proceeds and acknowledges and agrees that
the Agent and the Canadian Agent shall have the continuing and exclusive right
to apply and reapply any and all such payments and proceeds in the Agents' sole
discretion, notwithstanding any entry to the contrary upon any of its books and
records.

         14.      Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent or the Canadian Agent
(acting on behalf of the Agent) employs counsel to prepare or consider
amendments, waivers or consents with respect to this Security Agreement, or to
take action or make a response in or with respect to any legal or arbitral
proceeding relating to this Security Agreement or relating to the Collateral, or
to protect the Collateral or exercise any rights or remedies under this Security
Agreement or with respect to the Collateral, then the Obligors agree to promptly
pay upon demand any and all such reasonable costs and expenses of the Agent or
the Canadian Agent, all of which costs and expenses shall constitute Secured
Obligations hereunder.

         15.      Continuing Agreement.

                  (a)      This Security Agreement shall be a continuing
         agreement in every respect and shall remain in full force and effect so
         long as any of the Secured Obligations remain outstanding or any Credit
         Document or Lender Hedging Agreement is in effect or any Letter of
         Credit or Bankers' Acceptances (or equivalent loans under paragraph
         2.5(i)(iii) of the Credit Agreement) shall remain outstanding and until
         all of the Commitments thereunder shall have terminated. Upon such
         payment and termination, this Security Agreement shall be automatically
         terminated and the Agent and the Canadian Agent, upon the request and
         at the expense of the Obligors, forthwith release all of their liens
         and security interests hereunder and shall execute, if necessary, and
         deliver all UCC termination statements and/or other documents
         reasonably requested by the Obligors evidencing such termination.
         Notwithstanding the foregoing all releases and indemnities provided
         hereunder shall survive termination of this Security Agreement.

                  (b)      This Security Agreement shall continue to be
         effective or be automatically reinstated, as the case may be, if at any
         time payment, in whole or in part, of any of the Secured Obligations is
         rescinded or must otherwise be restored or returned by the Agent or any
         Lender as a preference, fraudulent conveyance or otherwise under any
         bankruptcy, insolvency or similar law, all as though such payment had
         not been made; provided that in the event payment of all or any part of
         the Secured Obligations is rescinded or must be restored or returned,
         all reasonable costs and expenses (including without limitation any
         reasonable legal fees and disbursements) incurred by the Agent or any
         Lender in defending and enforcing such reinstatement shall be deemed to
         be included as a part of the Secured Obligations.

                                       24

<PAGE>

         16.      Amendments; Waivers; Modifications. This Security Agreement
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 14.6 of the Credit
Agreement.

         17.      Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Agent, the Canadian Agent and the Lenders hereunder, to the
benefit of the Agent, the Canadian Agent and the Lenders and their successors
and permitted assigns; provided, however, that none of the Obligors may assign
its rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Credit Agreement. To the
fullest extent permitted by law, each Obligor hereby releases the Agent, the
Canadian Agent and each Lender, each of their respective officers, employees and
agents and each of their respective successors and assigns, from any liability
for any act or omission relating to this Security Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Agent, the Canadian Agent or such Lender or their respective officers,
employees and agents.

         18.      Notices. All notices required or permitted to be given under
this Security Agreement shall be in conformance with Section 14.1 of the Credit
Agreement.

         19.      Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.

         20.      Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Security Agreement.

         21.      Governing Law; Submission to Jurisdiction and Service of
Process; Waiver of Jury Trial. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The terms of
Sections 14.12 and 14.14 of the Credit Agreement are incorporated herein by
reference, mutatis mutandis, and the parties hereto agree to such terms.

         22.      Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in full force
and effect and shall be construed without giving effect to the illegal, invalid
or unenforceable provisions.

         23.      Entirety. This Security Agreement, the other Credit Documents
and any Lender Hedging Agreement represent the entire agreement of the parties
hereto and thereto, and supersede all prior agreements and understandings, oral
or written, if any, including any

                                       25

<PAGE>

commitment letters or correspondence relating to the Credit Documents, any such
Lender Hedging Agreement or the transactions contemplated herein and therein.

         24.      Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the Lender Hedging Agreements, the delivery of
the Notes and the making of the Loans, the issuance of the Letters of Credit and
the creation of Bankers' Acceptances under the Credit Agreement.

         25.      Joint and Several Obligations of Obligors.

                  (a)      Each of the Obligors is accepting joint and several
         liability hereunder in consideration of the financial accommodation to
         be provided by the Lenders under the Credit Agreement, for the mutual
         benefit, direct and indirect, of each of the Obligors and in
         consideration of the undertakings of each of the Obligors to accept
         joint and several liability for the obligations of each of them.

                  (b)      Each of the Obligors, jointly and severally, hereby
         irrevocably and unconditionally accepts, not merely as a surety but
         also as a co-debtor, joint and several liability with the other
         Obligors with respect to the payment and performance of all of the
         Secured Obligations arising under this Security Agreement, the other
         Credit Documents and any Lender Hedging Agreement, it being the
         intention of the parties hereto that all the Secured Obligations shall
         be the joint and several obligations of each of the Obligors without
         preferences or distinction among them.

                  (c)      Notwithstanding any provision to the contrary
         contained herein or in any other of the Credit Documents, to the extent
         the obligations of an Obligor shall be adjudicated to be invalid or
         unenforceable for any reason (including, without limitation, because of
         any applicable state, provincial or federal law relating to fraudulent
         conveyances or transfers) then the obligations of such Obligor
         hereunder shall be limited to the maximum amount that is permissible
         under applicable law (whether state, provincial or federal or and
         including, without limitation, the Bankruptcy Code).

         26.      Rights of Required Lenders. All rights of the Agent hereunder,
if not exercised by the Agent, may be exercised by the Required Lenders.

         27.      Judgment Currency.

                  (a)      If for the purposes of obtaining judgment in any
         court it is necessary to convert all or any part of the Secured
         Obligations or any other amount due to the Lenders hereunder or under
         other Credit Document in respect of the Obligors' obligations hereunder
         in any currency (the "Original Currency") into another currency (the
         "Other Currency") each Obligor to the fullest extent that it may
         effectively do so, agrees that the rate of exchange used shall be that
         at which, in accordance with normal banking procedures, the Agent could
         purchase the Original Currency with the Other Currency at

                                       26

<PAGE>

         its principal offices in Charlotte, North Carolina on the Business Day
         on which the Agent is open for the transaction of its banking business
         at such offices immediately preceding the day on which any such
         judgment, or any relevant part thereof, is paid or otherwise satisfied.

                  (b)      The obligation of each Obligor in respect of any sum
         due in the Original Currency from it to the Agent or the Lenders
         hereunder or under any other Credit Document in respect of the
         Obligors' obligation hereunder shall, notwithstanding any judgment in
         any Other Currency, be discharged only to the extent that on the
         Business Day following receipt by the Agent of any sum adjudged to be
         so due in such Other Currency or of any other sum in any Other Currency
         the Agent may, in accordance with its normal banking procedures,
         purchase the Original Currency with such Other Currency. If the amount
         of the Original Currency so purchased is less than the sum originally
         due to the Agent and the Lenders in the Original Currency, the Obligors
         shall, as a separate obligation and notwithstanding any such judgment,
         indemnify the Agent against such loss, and if the amount of the
         Original Currency so purchased exceeds the sum originally due to the
         Lenders, the Agent shall remit such excess to the Obligors.

                  [remainder of page intentionally left blank]

                                       27

<PAGE>

         Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:                           PROCTOR-SILEX CANADA, INC.,
                                    An Ontario Corporation

                                    By:   /s/ James H. Taylor
                                       --------------------------------------
                                    Name:  James H. Taylor
                                    Title: Treasurer

CANADIAN SUBSIDIARIES:              [NONE]

<PAGE>

Accepted and agreed to as of the date first above written.

                    WACHOVIA BANK, NATIONAL ASSOCIATION,
                    as Agent

                    By:   /s/ Steven J. Haas
                       -------------------------------------------------
                    Name:  Steven J. Haas
                    Title: Director

                    ABN AMRO BANK N.V., CANADA BRANCH,
                    as Canadian Agent

                    By:  /s/ Darcy Mack             /s/ D. Keith Hughes
                       --------------------------------------------------
                    Name:  Darcy Mack                D. Keith Hughes
                    Title: V.P., Asset Based Lending S.V.P., Asset Based Lending

                                       1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]