SECURITY AGREEMENT

This SECURITY AGREEMENT (this “ Agreement ”), dated as of September 29, 2008, is made by and among the Grantors listed on the signature pages hereof (collectively, jointly and severally, the “ Grantors ” and each, individually, a “ Grantor ”), and MKM Opportunity Master Fund, LLC (“ MKM ”), in its capacity as Collateral Agent (as set forth in Section 20 hereof, together with its successors and assigns in such capacity (the “ Secured Party ”) for itself and each of the Buyers (as hereinafter defined).

WHEREAS , pursuant to that certain Securities Purchase Agreement dated as of July 3, 2008 (as amended, restated, supplemented, or otherwise modified from time to time, including all schedules thereto, the “ Prior Agreement ”) by and among VALLEY FORGE COMPOSITE TECHNOLOGIES, INC., a Florida corporation (“ Parent ”), and MKM, Parent has agreed to sell, and MKM has agreed to purchase, certain Prior Notes and Prior Warrants, and

WHEREAS , pursuant to that certain Securities Purchase Agreement dated as of September 29, 2008 (as amended, restated, supplemented, or otherwise modified from time to time, including all schedules thereto, the “ Purchase Agreement ”) by and among VALLEY FORGE COMPOSITE TECHNOLOGIES, INC., a Florida corporation (“ Parent ”), and the Buyers, Parent has agreed to sell, and the Buyers have agreed to purchase, certain Notes and Warrants, and

WHEREAS , in order to induce the Buyers to enter into the Purchase Agreement and to purchase the Notes and Warrants as provided for in the Purchase Agreement, Grantors have agreed to grant the Secured Party, for the benefit of itself and the Buyers, a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of the Secured Obligations, and

NOW, THEREFORE , for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.   Defined Terms . All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Purchase Agreement.  Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein or in the Purchase Agreement; provided , however , that if the Code is used to define any term used herein and if such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:

(a)   “ Account ” means an account (as that term is defined in the Code).

(b)   “ Account Debtor ” means an account debtor (as that term is defined in the Code).

(c)   “ Bankruptcy Code ” means title 11 of the United States Code, as in effect from time to time.

(d)   “ Books ” means books and records (including each Grantor’s Records indicating, summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, each Grantor’s Records relating to such Grantor’s business operations or financial condition, and each Grantor’s goods or General Intangibles related to such information).

(e)   “ Buyers ” mean the investors listed on Schedule of Buyers attached to the Purchase Agreement.

(f)   “ Chattel Paper ” means chattel paper (as that term is defined in the Code) and includes tangible chattel paper and electronic chattel paper.

(g)   “ Code ” means the New York Uniform Commercial Code, as in effect from time to time; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Secured Party’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies.

(h)   “ Collateral ” has the meaning specified therefor in Section 2 .

(i)   “ Commencement Notice ” means a written notice, given by the Secured Party to the other Buyers in accordance with the notice provisions set forth in the Purchase Agreement, pursuant to which the Secured Party notifies the other Buyers of the existence of one or more Events of Default and of the Secured Party’s intent to commence the exercise of one or more of the remedies provided for under this Agreement with respect to all or any portion of the Collateral as a consequence thereof, which notice shall incorporate a reasonably detailed description of each Event of Default then existing and of the remedial action proposed to be taken.

(j)   “ Commercial Tort Claims ” means commercial tort claims (as that term is defined in the Code), and includes those commercial tort claims listed on Schedule 1 attached hereto..

(k)   “ Copyrights ” means copyrights and copyright registrations, and also includes (i) the copyright registrations and recordings thereof and all applications in connection therewith listed on Schedule 2 attached hereto and made a part hereof, (ii) all reissues, continuations, extensions or renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the foregoing or connected therewith, and (vi) all of each Grantor’s rights corresponding thereto throughout the world.

(l)   “ Copyright Security Agreement ” means each Copyright Security Agreement among Grantors, or any of them, and the Secured Party, in substantially the form of Exhibit A attached hereto, pursuant to which Grantors have granted to the Secured Party, for the benefit of itself and the Buyers, a security interest in all their respective Copyrights.

(m)   “ Deposit Account ” means a deposit account (as that term is defined in the Code).

(n)   “ Equipment ” means equipment (as that term is defined in the Code).

(o)   “ Event of Default ” means any “Event of Default” under, as and as defined in, the Notes, the Prior Notes and, without duplication, any of the following events:

(i)   If any Grantor fails to pay when due and payable, or when declared due and payable, all or any portion of the Secured Obligations (whether consisting of principal, interest, fees, or charges, reimbursement of expenses, or other amounts);

(ii)   If any Grantor fails to perform or observe any other covenant or agreement contained in this Agreement or in any of the other Purchase Documents;

(iii)   If an Insolvency Proceeding is commenced by any Grantor;

(iv)   If an Insolvency Proceeding is commenced against any Grantor, and any of the following events occur:  (A) the applicable Grantor consents to the institution of such Insolvency Proceeding against it, (B) the petition commencing the Insolvency Proceeding is not timely controverted, (C) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (D) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Grantor, or (E) an order for relief shall have been issued or entered therein;

(v)   If any Grantor is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

(vi)   If one or more judgments, orders, or awards involving an aggregate amount of $500,000 or more (except to the extent fully covered by insurance pursuant to which the insurer has accepted liability therefor in writing) shall be entered or filed against any Grantor or with respect to any of its assets, and the same is not released, discharged, bonded against, or stayed pending appeal before the earlier of 30 days after the date it first arises or 5 days prior to the date on which such asset is subject to being forfeited by the applicable Grantor;

(vii)   If there is a default in one or more agreements to which any Grantor is a party with one or more third Persons relative to Indebtedness of such Grantor involving an aggregate amount of $500,000 or more, and such default (A) occurs at the final maturity of the obligations thereunder, or (B) results in a right by such third Person(s), irrespective of whether exercised, to accelerate the maturity of such Grantor’s obligations thereunder;

(viii)   If any warranty, representation, statement, or Record made herein or in any other Purchase Document or delivered to the Secured Party in connection with this Agreement or any Buyer in connection with any other Purchase Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

(ix)   If this Agreement or any other Security Document that purports to create a Lien shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement; or

(x)   Any provision of any Purchase Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by any Grantor, or a proceeding shall be commenced by any Grantor, or by any Governmental Authority having jurisdiction over any Grantor, seeking to establish the invalidity or unenforceability thereof, or any Grantor shall deny that it has any liability or obligation purported to be created under any Purchase Document.

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

(q)   “ Governmental Authority ” means any domestic or foreign federal, state, local, or other governmental or administrative body, instrumentality, board, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

(r)   “ Grantor ” and “ Grantors ” have the meanings specified therefor in the recitals to this Agreement.

(s)   “ Guaranties ” means each Guaranty dated of even date herewith executed by Guarantors in favor of any or all of the Buyers, together with any other guaranty or similar agreement now or hereafter executed by a Guarantor in favor of any or all of the Buyers in connection with the Notes or any of the other Purchase Documents.

(t)   “ Guarantor ” means each Grantor, other than Parent, and each other Person that now or hereafter executes a Guaranty.

(u)   “ Insolvency Proceeding ” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law or any equivalent laws in any other jurisdiction, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

(v)   “ Intellectual Property ” means Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks, trade secrets and customer lists, and Intellectual Property Licenses.

(w)   “ Intellectual Property Licenses ” means rights under or interests in any patent, trademark, copyright or other intellectual property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor under any such license agreement, including the license agreements listed on Schedule 3 attached hereto and made a part hereof.

(x)   “ Inventory ” means inventory (as that term is defined in the Code).

(y)   “ Investment Related Property ” means (i) investment property (as that term is defined in the Code), and (ii) all of the following (regardless of whether classified as investment property under the Code): all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

(z)   “ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a capital lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

(aa)   “ MKM ” has the meaning specified therefor in the recitals to this Agreement.

(bb)   “ Negotiable Collateral ” means letters of credit, letter-of-credit rights, instruments, promissory notes, drafts, and documents.

(cc)   “ Notes ” has the meaning specified therefor in the Purchase Agreement.

(dd)   “ Parent ” has the meaning specified therefor in the recitals to this Agreement.

(ee)   “ Patents ” means patents and patent applications, and also includes (i) the patents and patent applications listed on Schedule 4 attached hereto and made a part hereof, (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions thereof, and (v) all of each Grantor’s rights corresponding thereto throughout the world.

(ff)   “ Patent Security Agreement ” means each Patent Security Agreement among Grantors and the Secured Party, for the benefit of itself and the Buyers, in substantially the form of Exhibit B attached hereto, pursuant to which Grantors have granted to the Secured Party, for the benefit of itself and the Buyers, a security interest in all their respective Patents.

(gg)   “ Permitted Liens ” means (i) Liens held by the Secured Party, for the benefit of itself and the Buyers, to secure the Secured Obligations, (ii) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (A) are not yet delinquent, or (B) do not have priority over the Secured Party’s Liens and the underlying taxes, assessments, or charges or levies are the subject of Permitted Protests, (iii) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (A) are for sums not yet delinquent, or (B) are the subject of Permitted Protests, (iv) Liens on amounts deposited in connection with obtaining worker’s compensation or other unemployment insurance, (v) Liens on amounts deposited in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money, (vi) Liens on amounts deposited as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business, and (vii) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof.

(hh)   “ Permitted Protest ” means the right of any Grantor to protest any Lien (other than any Lien that secures the Secured Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with respect to such obligation is established on such Grantor’s books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Grantor in good faith, and (c) while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of the Secured Party’s Liens.

(ii)   “ Person ” means any individual, limited liability company, corporation, partnership, association, trust or unincorporated organization, or a government or any agency or political subdivision thereof.

(jj)   “ Pledged Companies ” means, each Person listed on Schedule 5 hereto as a “Pledged Company”, together with each other Person all or a portion of whose Stock is acquired or otherwise owned by a Grantor after the date hereof.

(kk)   “ Pledged Interests ” means all of each Grantor’s right, title and interest in and to all of the Stock now or hereafter owned by such Grantor, regardless of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, also including any certificates representing the Stock, the right to receive any certificates representing any of the Stock, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing.

(ll)   “ Pledged Operating Agreements ” means all of each Grantor’s rights, powers, and remedies under the limited liability company operating agreements of each of the Pledged Companies that are limited liability companies.

(mm)   “ Pledged Partnership Agreements ” means all of each Grantor’s rights, powers, and remedies under the partnership agreements of each of the Pledged Companies that are partnerships.

(nn)   “ Prior Agreement ” has the meaning specified therefor in the recitals to this Agreement.

(oo)   “ Prior Note ” has the meaning specified therefor in the Purchase Agreement.

(pp)   “ Prior Warrants ” has the meaning specified therefor in the Purchase Agreement.

(qq)   “ Proceeds ” has the meaning specified therefor in Section 2 .

(rr)   “ Purchase Agreement ” has the meaning specified therefor in the recitals to this Agreement.

(ss)   “ Purchase Documents ” means, collectively, the Purchase Agreement, the Prior Agreement, the Notes, the Prior Notes, the Warrants, the Prior Warrants, this Agreement, the Security Documents, and each other agreement, instrument and certificate executed and delivered by a Grantor in connection with the Purchase Agreement and Prior Agreement.

(tt)   “ Real Property ” means any estates or interests in real property now owned or hereafter acquired by any Grantor and the improvements thereto.

(uu)   “ Records ” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

(vv)   “ Secured Obligations ” mean all of the present and future payment and performance obligations of Grantors arising under this Agreement, the Notes, the Prior Agreement, the Prior Notes, the Guaranties, and the other Purchase Documents, including, without duplication, reasonable attorneys fees and expenses and any interest, fees, or expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any Insolvency Proceeding.

(ww)   “ Securities Account ” means a securities account (as that term is defined in the Code).

(xx)   “ Security Documents ” means, collectively, this Agreement, each Copyright Security Agreement, each Patent Security Agreement, each Trademark Security Agreement, and each other security agreement, pledge agreement, assignment, mortgage, security deed, deed of trust, and other agreement or document executed and delivered by a Grantor as security for any of the Secured Obligations.

(yy)   “ Security Interest ” and “ Security Interests ” have the meanings specified therefor in Section 2 .

(zz)   “ Stock ” means all shares, options, warrants, interests (including membership and partnership interests), participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the United States Securities and Exchange Commission and any successor thereto under the Securities Exchange Act of 1934, as in effect from time to time).

(aaa)   “ Supporting Obligations ” means supporting obligations (as such term is defined in the Code).

(bbb)   “ Trademarks ” means trademarks, trade names, trademark applications, service marks, service mark applications, and also includes (i) the trade names, trademarks, trademark applications, service marks, and service mark applications listed on Schedule 6 attached hereto and made a part hereof, and (ii) all renewals thereof, (iii) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iv) the right to sue for past, present and future infringements and dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the foregoing or connected therewith, and (vi) all of each Grantor’s rights corresponding thereto throughout the world.

(ccc)   “ Trademark Security Agreement ” means each Trademark Security Agreement among Grantors and the Secured Party in substantially the form of Exhibit C attached hereto, pursuant to which Grantors have granted to the Secured Party, for the benefit of itself and the Buyers, a security interest in all their respective Trademarks.

(ddd)   “ URL ” means “uniform resource locator,” an internet web address.

(eee)   “ Warrants ” has the meaning specified therefor in the Purchase Agreement.

2.   Grant of Security .  Each Grantor hereby unconditionally grants, assigns, and pledges to the Secured Party, for the benefit of itself and the Buyers, a separate, continuing security interest (each, a “ Security Interest ” and, collectively, the “ Security Interests ”) in all assets of such Grantor whether now owned or hereafter acquired or arising and wherever located, including, without limitation, such Grantor’s right, title, and interest in and to the following, whether now owned or hereafter acquired or arising and wherever located (collectively, the “ Collateral ”):

(a)   all of such Grantor’s Accounts;

(b)   all of such Grantor’s Books;

(c)   all of such Grantor’s Chattel Paper;

(d)   all of such Grantor’s Deposit Accounts;

(e)   all of such Grantor’s Equipment and fixtures;

(f)   all of such Grantor’s General Intangibles;

(g)   all of such Grantor’s Inventory;

(h)   all of such Grantor’s Investment Related Property;

(i)   all of such Grantor’s Negotiable Collateral;

(j)   all of such Grantor’s rights in respect of Supporting Obligations;

(k)   all of such Grantor’s Commercial Tort Claims;

(l)   all of such Grantor’s money, cash, cash equivalents, or other assets of each such Grantor that now or hereafter come into the possession, custody, or control of the Secured Party;

(m)   all of the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or Commercial Tort Claims covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, money, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation with respect to any of the foregoing, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing (the “ Proceeds ”).  Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable to any Grantor or the Secured Party, for the benefit of itself and the Buyers, from time to time with respect to any of the Investment Related Property.

3.   Security for Obligations .  This Agreement and the Security Interests created hereby secure the payment and performance of the Secured Obligations, whether now existing or arising hereafter.  Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to the Secured Party, for the benefit of itself and the Buyers, but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Grantor.

4.   Grantors Remain Liable .  Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Secured Party, of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) the Secured Party shall not have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Secured Party be obligated to perform any of the obligations or duties of any Grantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.  Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement or any other Purchase Document, Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and the other Purchase Documents.  Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including all voting, consensual, and dividend rights, shall remain in the applicable Grantor until the occurrence of an Event of Default and until the Secured Party shall notify the applicable Grantor of the Secured Party’s exercise of voting, consensual, or dividend rights with respect to the Pledged Interests pursuant to Section 15 hereof.

5.   Representations and Warranties .  Each Grantor hereby represents and warrants as follows:

(a)   The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement.

(b)   Schedule 7 attached hereto sets forth all Real Property owned or leased by Grantors as of the date hereof.

(c)   As of the date hereof, no Grantor has any interest in, or title to, any Copyrights, Intellectual Property Licenses, Patents, or Trademarks except as set forth on Schedules 2, 3, 4 and 6 , respectively, attached hereto.  This Agreement is effective to create a valid and continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and Trademarks and, upon filing of the Copyright Security Agreement with the United States Copyright Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United State Patent and Trademark Office, and the filing of appropriate financing statements in the jurisdictions listed on Schedule 8 hereto, all action necessary or desirable to protect and perfect the Security Interests in and to each Grantor’s Patents, Trademarks, or Copyrights has been taken and such perfected Security Interests are enforceable as such as against any and all creditors of and purchasers from any Grantor.  No Grantor has any interest in any Copyright that is necessary in connection with the operation of such Grantor’s business, except for those Copyrights identified on Schedule 2 attached hereto which have been registered with the United States Copyright Office.

(d)   This Agreement creates a valid security interest in the Collateral of each of Grantors, to the extent a security interest therein can be created under the Code, securing the payment of the Secured Obligations.  Except to the extent a security interest in the Collateral cannot be perfected by the filing of a financing statement under the Code, all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken or will have been taken upon the filing of financing statements listing each applicable Grantor, as a debtor, and the Secured Party, for the benefit of itself and the Buyers, as secured party, in the jurisdictions listed next to such Grantor’s name on Schedule 8 attached hereto.  Upon the making of such filings, the Secured Party, for the benefit of itself and the Buyers, shall each have a first priority perfected security interest in the Collateral of each Grantor to the extent such security interest can be perfected by the filing of a financing statement.  All action by any Grantor necessary to protect and perfect such security interest on each item of Collateral has been duly taken.

(e)   (i) Except for the Security Interests created hereby, such Grantor is and will at all times be the sole holder of record and the legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged Interests indicated on Schedule 5 as being owned by such Grantor and, when acquired by such Grantor, any Pledged Interests acquired after the date hereof; (ii) all of the Pledged Interests are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests constitute or will constitute the percentage of the issued and outstanding Stock of the Pledged Companies of such Grantor identified on Schedule 5 hereto; (iii) such Grantor has the right and requisite authority to pledge the Investment Related Property pledged by such Grantor to the Secured Party as provided herein; (iv) all actions necessary or desirable to perfect, establish the first priority of, or otherwise protect, Secured Party’s Liens in the Investment Related Collateral, and the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement; (B) upon the taking of possession by the Secured Party of any certificates constituting the Pledged Interests, to the extent such Pledged Interests are represented by certificates, together with undated powers endorsed in blank by the applicable Grantor; and (C) upon the filing of financing statements in the applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor with respect to the Pledged Interests of such Grantor that are not represented by certificates; and (v) each Grantor, within 10 days from the date of this Agreement, shall have delivered to and deposited with the Secured Party (or, with respect to any Pledged Interests created or obtained after the date hereof, will deliver and deposit in accordance with Sections 6(a) and 8 hereof) all certificates representing the Pledged Interests owned by such Grantor to the extent such Pledged Interests are represented by certificates, and undated powers endorsed in blank with respect to such certificates. None of the Pledged Interests owned or held by such Grantor has been issued or transferred in violation of any securities registration, securities disclosure, or similar laws of any jurisdiction to which such issuance or transfer may be subject.

(f)   No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor, or (ii) for the exercise by the Secured Party of the voting or other rights provided in this Agreement with respect to Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally.

6.   Covenants .  Each Grantor, jointly and severally, covenants and agrees with the Secured Party that from and after the date of this Agreement and until the date of termination of this Agreement in accordance with Section 24 hereof (but only to the extent the particular assets described in this Section 6 constitute Collateral hereunder):

(a)   Possession of Collateral .  In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property, or Chattel Paper, and if and to the extent that perfection or priority of the Secured Party’s Security Interests is dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of the Secured Party, shall execute such other documents and instruments as shall be requested by the Secured Party or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property, or Chattel Paper to the Secured Party, together with such undated powers endorsed in blank as shall be requested by the Secured Party.

(b)   Chattel Paper .

(i)   Each Grantor shall take all steps reasonably necessary to grant to the Secured Party, for the benefit of itself and the Buyers, control of all Chattel Paper in accordance with the Code and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Purchase Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction; and

(ii)   If any Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Purchase Agreement), promptly upon the request of the Secured Party, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interests of [name of Secured Party, for the benefit of itself and the Buyers]”.

(c)   Letter-of-Credit Rights .  Each Grantor that is or becomes the beneficiary of a letter of credit shall promptly (and in any event within 2 Business Days after becoming a beneficiary), notify the Secured Party thereof and, upon the request by the Secured Party, enter into a multi-party agreement with the Secured Party and the issuing or confirming bank with respect to letter-of-credit rights assigning such letter-of-credit rights to the Secured Party and directing all payments thereunder to the Secured Party, for the benefit of itself and the Buyers, all in form and substance satisfactory to the Secured Party.

(d)   Commercial Tort Claims .  Each Grantor shall promptly (and in any event within 2 Business Days of receipt thereof), notify the Secured Party in writing upon incurring or otherwise obtaining a Commercial Tort Claim after the date hereof and, upon request of the Secured Party, promptly amend Schedule 1 to this Agreement to describe such after-acquired Commercial Tort Claim in a manner that reasonably identifies such Commercial Tort Claim, and hereby authorizes the filing of additional financing statements or amendments to existing financing statements describing such Commercial Tort Claims, and agrees to do such other acts or things deemed necessary or desirable by the Secured Party to give the Secured Party, for the benefit of itself and the Buyers, a first priority, perfected security interest in any such Commercial Tort Claim.

(e)   Government Contracts .  If any Account or Chattel Paper arises out of a contract or contracts with the United States of America or any department, agency, or instrumentality thereof, Grantors shall promptly (and in any event within 2 Business Days of the creation thereof) notify the Secured Party thereof in writing and execute any instruments or take any steps reasonably required by the Secured Party in order that all moneys due or to become due under such contract or contracts shall be assigned to the Secured Party, and shall provide written notice thereof under the Assignment of Claims Act or other applicable law.

(f)   Intellectual Property .

(i)   Upon request of the Secured Party, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office or any other applicable Governmental Authority, each Grantor shall execute and deliver to the Secured Party one or more Copyright Security Agreements, Trademark Security Agreements, or Patent Security Agreements to further evidence the Secured Party’s Liens on such Grantor’s Patents, Trademarks, or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;

(ii)   Each Grantor shall have the duty, to the extent necessary or economically desirable in the operation of such Grantor’s business, (A) to promptly sue for infringement, misappropriation, or dilution and to recover any and all damages for such infringement, misappropriation, or dilution, (B) to prosecute diligently any trademark application or service mark application that is part of the Trademarks pending as of the date hereof or hereafter until the termination of this Agreement, (C) to prosecute diligently any patent application that is part of the Patents pending as of the date hereof or hereafter until the termination of this Agreement, and (D) to take all reasonable and necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights therein, including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings.  Each Grantor shall promptly file an application with the United States Copyright Office for any Copyright that has not been registered with the United States Copyright Office if such Copyright is necessary in connection with the operation of such Grantor’s business. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Grantor.  Each Grantor further agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is necessary or economically desirable in the operation of such Grantor’s business;

(iii)   Grantors acknowledge and agree that the Secured Party shall have no duties with respect to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses.  Without limiting the generality of this Section 6(f) , Grantors acknowledge and agree that the Secured Party shall not be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but the Secured Party may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of the Grantors and shall be deemed to be Secured Obligations; and

(iv)   In no event shall any Grantor, either itself or through any agent, employee, licensee, or designee, file an application for the registration of any Patent, Trademark, or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Secured Party prior written notice thereof.  Promptly upon any such filing, each Grantor shall comply with Section 6(f)(i) hereof.

(g)   Investment Related Property .

(i)   If any Grantor shall receive or become entitled to receive any Pledged Interests after the date hereof, it shall promptly (and in any event within 2 Business Days of receipt thereof) identify such Pledged Interests in a written notice to the Secured Party;

(ii)   All sums of money and property paid or distributed in respect of the Investment Related Property which are received by any Grantor shall be held by the Grantors in trust for the benefit of the Secured Party segregated from such Grantor’s other property, and such Grantor shall deliver it forthwith to the Secured Party in the exact form received;

(iii)   Each Grantor shall promptly deliver to the Secured Party a copy of each notice or other communication received by it in respect of any Pledged Interests;

(iv)   No Grantor shall make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Purchase Agreement;

(v)   Each Grantor agrees that it will cooperate with the Secured Party in obtaining all necessary approvals and making all necessary filings under federal, state, local, or foreign law in connection with the Security Interests on the Investment Related Property or any sale or transfer thereof; and

(vi)   As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Grantor in a Securities Account.  In addition, none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction.

(h)   Transfers and Other Liens .  Grantors shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except as expressly permitted by this Agreement and the other Purchase Documents, or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral of any of Grantors, except for Permitted Liens.  The inclusion of Proceeds in the Collateral shall not be deemed to constitute consent by the Secured Party to any sale or other disposition of any of the C