SECURITY AGREEMENT

Exhibit 10.2

EXECUTION COPY

SECURITY AGREEMENT

SECURITY AGREEMENT (this “ Agreement ”), dated as of January 15, 2009, by and among (a) each of the Persons listed on Schedule I hereto (each such Person, individually, a “ Borrower ” and, collectively, the “ Borrowers ”), (b) each of the Persons listed on Schedule II hereto (each such Person, individually, a “ Guarantor ” and, collectively, the “ Guarantors ”) (the Borrowers and the Guarantors are hereinafter referred to, individually, as a “ Grantor ” and, collectively with any other Person now or hereafter party hereto, as the “ Grantors ”), and (c) WELLS FARGO RETAIL FINANCE, LLC, a Delaware limited liability company, as collateral agent (in such capacity, the “ Collateral Agent ”) for its own benefit and the benefit of the other Credit Parties (as defined in the Credit Agreement referred to below), in consideration of the mutual covenants contained herein and benefits to be derived herefrom.

WITNESSETH:

WHEREAS, reference is made to that certain Credit Agreement, dated as of January 15, 2009 (as amended, modified, supplemented or restated and in effect from time to time, the “ Credit Agreement ”), by and among (i) the Grantors, (ii) the Lenders from time to time party thereto (individually, a “ Lender ” and, collectively, the “ Lenders ”), and (iii) Wells Fargo Retail Finance, LLC, as Administrative Agent, Collateral Agent and Swing Line Lender, pursuant to which the Lenders have agreed to make Loans to the Borrowers upon the terms and subject to the conditions specified in the Credit Agreement;

WHEREAS, reference is also made to that certain Guaranty, dated as of January 15, 2009 (as amended, modified, supplemented or restated and in effect from time to time, the “ Guaranty ”), executed by the Guarantors in favor of the Administrative Agent, the Collateral Agent and the other Credit Parties, pursuant to which each Guarantor guarantees the payment and performance of the Guaranteed Obligations (as defined in the Guaranty); and

WHEREAS, the obligations of the Lenders to make Loans are conditioned upon, among other things, the execution and delivery by the Grantors of an agreement in the form hereof to secure the Secured Obligations (as defined herein).

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantors and the Collateral Agent, on its own behalf and on behalf of the other Credit Parties (and each of their respective successors or assigns), hereby agree as follows:

ARTICLE 1

Definitions

SECTION 1.01 Generally . All references herein to the UCC shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however , that if a term is defined in Article 9 of the UCC differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of the Security Interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

SECTION 1.02 Definition of Certain Terms Used Herein . Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement. In addition, as used herein, the following terms shall have the following meanings:

“ Accessions ” shall have the meaning given that term in the UCC.

“ Account Debtor ” shall have the meaning given that term in the UCC.

“ Blue Sky Laws ” shall have the meaning assigned to such term in Section 6.01(c) of this Agreement.

“ Borrower ” and “ Borrowers ” shall have the meaning assigned to such terms in the preamble of this Agreement.

“ Chattel Paper ” shall have the meaning given that term in the UCC.

“ Collateral ” shall mean all personal property of each Grantor, including, without limitation, all: (a) Accounts, (b) Chattel Paper, (c) Commercial Tort Claims (including, but not limited to, those Commercial Tort Claims listed on Schedule 3.07 hereto), (d) Deposit Accounts, (e) Documents, (f) Equipment, (g) Fixtures, (h) General Intangibles (including Payment Intangibles), (i) Goods, (j) Instruments, (k) Inventory, (l) Investment Property, (m) Letter-of-Credit Rights, (n) Software, (o) Supporting Obligations, (p) money, policies and certificates of insurance, deposits, cash, cash equivalents, or other property, (q) all books, records, and information relating to any of the foregoing ((a) through (p)) and/or to the operation of any Grantor’s business, and all rights of access to such books, records, and information, and all property in which such books, records, and information are stored, recorded and maintained, (r) all insurance proceeds, refunds, and premium rebates, including, without limitation, proceeds of fire and credit insurance, whether any of such proceeds, refunds, and premium rebates arise out of any of the foregoing ((a) through (q)) or otherwise, (s) all Liens, guaranties, rights, remedies, and privileges pertaining to any of the foregoing ((a) through (r)), including the right of stoppage in transit, and (t) any of the foregoing, whether now owned or now due, or in which any Grantor has an interest, or hereafter acquired, arising, or to become due, or in which any Grantor obtains an interest, and all products, Proceeds, substitutions, and Accessions of or to any of the foregoing; provided , however , that the Collateral shall not include, and the Security Interest shall not attach to, any Excluded Assets.

“ Collateral Agent ” shall have the meaning assigned to such term in the preamble of this Agreement.

“ Collateral Agent’s Rights and Remedies ” shall have the meaning assigned to such term in Section 8.08(a).

“ Commercial Tort Claim ” shall have the meaning given that term in the UCC.

“ Commodity Account ” shall have the meaning given that term in the UCC.

“ Commodity Intermediary ” shall have the meaning given that term in the UCC.

“ Control ” shall have the meaning given that term in the UCC.

“ Credit Agreement ” shall have the meaning assigned to such term in the preliminary statement of this Agreement.

“ Deposit Account ” shall have the meaning given that term in the UCC and shall also include all demand, time, savings, passbook, or similar accounts maintained with a bank or other financial institution.

“ Documents ” shall have the meaning given that term in the UCC.

“ Electronic Chattel Paper ” shall have the meaning given that term in the UCC.

“ Equipment ” shall mean “equipment”, as defined in the UCC, and shall also mean all furniture, store fixtures, motor vehicles, rolling stock, machinery, office equipment, plant equipment, tools, dies, molds, and other goods, property, and assets which are used and/or were purchased for use in the operation or furtherance of a Grantor’s business, and any and all Accessions or additions thereto, and substitutions therefor.

“ Excluded Assets ” shall mean (a) rights or property acquired under a lease, contract, property rights agreement, permit or license, the grant of a security interest in which shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, contract, property rights agreement, permit or license or a violation of Law (other than to the extent that any restriction on such assignment would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable Law or principles of equity), provided that the Proceeds therefrom shall not constitute “Excluded Assets” to the extent that the assignment of such Proceeds is not prohibited, (b) any insurance or condemnation proceeds covering any Real Estate leased by any Grantor, or any fixtures attached or appurtenant thereto, to the extent that the same are required by the terms of the applicable lease to be maintained for the benefit of, and paid over to, the landlord of such Real Estate, (c) any Excluded Equity Interests, (d) property that is subject to a purchase money lien or capital lease that is permitted under the Credit Agreement, provided that the agreement pursuant to which such Lien or capital lease is created requires the consent of any Person other than a Grantor as a condition to the creation of any other Lien on such property, to the extent that, and solely during the period in which, such consent has not been obtained, (e) United States “intent to use” Trademark applications to the extent that, and solely during the period in which, a statement of use has not been filed, (f) payroll and withholding tax accounts, and (g) Equity Interests of Parent that are placed into an equity incentive plan of Parent, which is permitted under the Credit Agreement.

“ Excluded Equity Interests ” means (a) any Equity Interest or group of Equity Interests issued by any CFC representing more than 65% of the total voting power of all outstanding “stock entitled to vote” within the meaning of Treasury Regulations sections 1.956-2(c)(2), (b) any Equity Interest issued by a Subsidiary of a CFC, and (c) any Equity Interest issued by Industrial Center Management Association, LLC, a New Jersey limited liability company.

“ Financial Asset ” shall have the meaning given that term in the UCC.

“ Financing Statement ” shall have the meaning given that term in the UCC.

“ Fixtures ” shall have the meaning given that term in the UCC.

“ General Intangibles ” shall have the meaning given that term in the UCC, and shall also include, without limitation, all: Payment Intangibles; rights to payment for credit extended; deposits; amounts due to any Grantor; credit memoranda in favor of any Grantor; warranty claims; tax refunds and abatements; insurance refunds and premium rebates; all means and vehicles of investment or hedging, including, without limitation, options, warrants, and futures contracts; records; customer lists; telephone numbers; goodwill; causes of action; judgments; rights to collect payments under any settlement or other agreement; literary rights; rights to performance; royalties; license and/or franchise fees; rights of admission; licenses; franchises; license agreements, including all rights of any Grantor to enforce same; permits, certificates of convenience and necessity, and similar rights granted by any governmental authority; developmental ideas and concepts; proprietary processes; blueprints, drawings, designs, diagrams, plans, reports, and charts; catalogs; technical data; tapes, disks, semi-conductors chips and printouts; IP Collateral (as defined in the Intellectual Property Security Agreement); proposals; cost estimates, and reproductions on paper, or otherwise, of any and all concepts or ideas, and any matter related to, or connected with, the design, development, manufacture, sale, marketing, leasing, or use of any or all property produced, sold, or leased, by or credit extended or services performed, by any Grantor, whether intended for an individual customer or the general business of any Grantor, or used or useful in connection with research by any Grantor.

“ Goods ” shall have the meaning given that term in the UCC.

“ Grantor ” and “ Grantors ” shall have the meaning assigned to such terms in the preamble of this Agreement.

“ Guarantor ” and “ Guarantors ” shall have the meaning assigned to such terms in the preamble of this Agreement.

“ Guaranty ” shall have the meaning assigned to such term in the preliminary statement of this Agreement.

“ Indemnitee ” shall have the meaning assigned to such term in Section 8.06(b) of this Agreement.

“ Instruments ” shall have the meaning given that term in the UCC.

“ Inventory ” shall have the meaning given that term in the UCC, and shall also include, without limitation, all: (a) Goods which (i) are leased by a Person as lessor, (ii) are held by a Person for sale or lease or to be furnished under a contract of service, (iii) are furnished by a Person under a contract of service, or (iv) consist of raw materials, work in process, or materials used or consumed in a business; (b) Goods of said description in transit; (c) Goods of said description which are returned, repossessed or rejected; and (d) packaging, advertising, and shipping materials related to any of the foregoing.

“ Investment Property ” shall have the meaning given that term in the UCC.

“ Joinder Agreement ” shall mean an agreement substantially in the form of Exhibit A hereto.

“ Lender ” and “ Lenders ” shall have the meaning assigned to such terms in the preliminary statement of this Agreement.

“ Letter-of-Credit Right ” shall have the meaning given that term in the UCC and shall also mean any right to payment or performance under a letter of credit, whether or not the beneficiary has demanded, or is at the time entitled to demand, payment or performance.

“ Letters of Credit ” shall have the meaning given that term in the UCC.

“ Payment Intangible ” shall have the meaning given that term in the UCC and shall also mean any General Intangible under which the Account Debtor’s primary obligation is a monetary obligation.

“ Proceeds ” shall have the meaning given that term in the UCC.

“ Secured Obligations ” shall mean, collectively, the Obligations (as defined in the Credit Agreement) and the Guaranteed Obligations (as defined in the Guaranty).

“ Securities Act ” shall have the meaning assigned to such term in Section 6.01(c) of this Agreement.

“ Securities Account ” shall have the meaning given that term in the UCC.

“ Securities Intermediary ” shall have the meaning given that term in the UCC.

“ Security ” shall have the meaning given that term in the UCC.

“ Security Entitlement ” shall have the meaning given that term in the UCC.

“ Security Interest ” shall have the meaning assigned to such term in Section 2.01 of this Agreement.

“ Software ” shall have the meaning given that term in the UCC.

“ Supporting Obligation ” shall have the meaning given that term in the UCC and shall also refer to a Letter-of-Credit Right or secondary obligation that supports the payment or performance of an Account, Chattel Paper, a Document, a General Intangible, an Instrument, or Investment Property.

SECTION 1.03 Rules of Interpretation . The rules of interpretation specified in Sections 1.02 through 1.05 of the Credit Agreement shall be applicable to this Agreement.

ARTICLE 2

Security Interest

SECTION 2.01 Security Interest . As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants to the Collateral Agent, its successors and permitted assigns, for its own benefit and the benefit of the other Credit Parties, a security interest in all of such Grantor’s right, title and interest in, to and under the Collateral (the “ Security Interest ”). Without limiting the foregoing, each Grantor hereby designates the Collateral Agent as such Grantor’s true and lawful attorney, exercisable by the Collateral Agent whether or not an Event of Default exists, with full power of substitution, at the Collateral Agent’s option, to file one or more Financing Statements, continuation statements, or to sign other documents for the purpose of perfecting, confirming or continuing the Security Interest granted by each Grantor, without the signature of any Grantor (each Grantor hereby appointing the Collateral Agent as such Person’s attorney to sign such Person’s name to any such instrument or document, whether or not an Event of Default exists), and naming any Grantor or the Grantors, as debtors, and the Collateral Agent, as secured party. Any such financing statement may indicate the Collateral as “all assets of the Grantor”, “all personal property of the debtor” or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC.

SECTION 2.02 No Assumption of Liability . The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Credit Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

ARTICLE 3

Representations and Warranties

Each Grantor represents and warrants to the Collateral Agent and the other Credit Parties that:

SECTION 3.01 Title and Authority . Each Grantor has good and valid rights in, and title to, the Collateral with respect to which it has purported to grant a Security Interest hereunder and has full power and authority to grant to the Collateral Agent the Security Interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person, other than any consent or approval which has been obtained.

SECTION 3.02 Filings . Upon the filing of UCC Financing Statements or other appropriate filings, recordings or registrations naming each Grantor as “debtor” and the Collateral Agent as “secured party” and containing a description of the Collateral in each governmental, municipal or other office as is necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for its own benefit and the benefit of the other Credit Parties) in respect of all Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, the Security Interest granted to the Collateral Agent (for its own benefit and the benefit of the other Credit Parties) hereunder shall constitute a legal, valid and perfected security interest in the Collateral, and no further or subsequent filing, refiling, recording, rerecording, registration or re-registration is necessary in any such jurisdiction, except as provided under applicable Law with respect to the filing of continuation statements or analogous filings or as a result of any change in a Grantor’s name or jurisdiction of incorporation or formation or under any other circumstances under which, pursuant to the UCC or other applicable recording or registration system, filings, registrations or recordings previously made have become misleading or ineffective in whole or in part.

SECTION 3.03 Validity and Priority of Security Interest . The Security Interest constitutes (a) a legal and valid security interest in all of the Collateral securing the payment and performance of the Secured Obligations, and (b) subject to the making of the filings described in Section 3.02 above, a perfected security interest in all of the Collateral (to the extent perfection in the Collateral can be accomplished by such filing) and (c) subject to the obtaining of Control, a perfected security interest in all of the Collateral (to the extent perfection in the Collateral can be accomplished by Control). The Security Interest is and shall be prior to any other Lien on any of the Collateral, subject only to Permitted Encumbrances having priority by operation of applicable Law.

SECTION 3.04 Absence of Other Liens . The Collateral is owned by the Grantors free and clear of any Lien, except for (i) Permitted Encumbrances or (ii) Liens for which termination statements or releases (or payoff letters providing for the delivery or filing of termination statements or releases) have been delivered to the Collateral Agent. Except, in each case, for Permitted Encumbrances, no Grantor has (a) filed or consented to the filing of (i) any Financing Statement or analogous document under the UCC or any other applicable Law covering any Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (iii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, or (b) entered into any agreement in which any Grantor grants Control over any Collateral, which Financing Statement, control agreement or analogous document, assignment, security agreement or similar instrument is still in effect.

SECTION 3.05 Bailees, Warehousemen, Etc . Except as set forth on Schedule 3.05 hereto and except for Inventory in transit to a location of such Grantor, no Inventory of any Grantor is in the care or custody of any third party or stored or entrusted with a bailee or other third party, and none shall hereafter be placed under such care, custody, storage or entrustment unless a Collateral Access Agreement is delivered to the Collateral Agent by such third party or bailee.

SECTION 3.06 Consignments . As of the Closing Date, except as set forth on Schedule 3.06 hereto, no Grantor has possession of any property on consignment. After the Closing Date, no Grantor shall have possession of any property on consignment without the prior written consent of the Collateral Agent (which consent shall not be unreasonably withheld, but which shall be subject to such conditions as the Collateral Agent may reasonably require).

SECTION 3.07 Commercial Tort Claims . As of the Closing Date, none of the Collateral consists of a Commercial Tort Claim, except as set forth on Schedule 3.07 hereto.

SECTION 3.08 Instruments and Chattel Paper . As of the Closing Date, no amounts payable under or in connection with any of the Collateral are evidenced by any Instrument or Chattel Paper, other than such Instruments and Chattel Paper listed in Schedule 3.08 hereto. Each Instrument and each item of Chattel Paper listed in Schedule 3.08 hereto has been properly endorsed, assigned and delivered to the Collateral Agent, accompanied by instruments of transfer or assignment duly executed in blank.

SECTION 3.09 Securities Accounts and Commodity Accounts . As of the Closing Date, no Grantor has any Securities Accounts or Commodity Accounts other than those listed in Schedule 3.09 hereto.

SECTION 3.10 Electronic Chattel Paper and Transferable Records . As of the Closing Date, no amount under or in connection with any of the Collateral is evidenced by any Electronic Chattel Paper or any “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act, as in effect in any relevant jurisdiction), other than such Electronic Chattel Paper and transferable records listed in Schedule 3.10 hereto.

SECTION 3.11 Intellectual Property . This Agreement is effective to create a valid and continuing Lien on and, upon filing of the Intellectual Property Security Agreement with the United States Copyright Office or the United States Patent and Trademark Office, as applicable, perfected Liens in favor of the Collateral Agent on each Grantor’s Patents, Trademarks and Copyrights (as such terms are defined in the Intellectual Property Security Agreement) and such perfected Liens are enforceable as such as against any and all creditors of, and purchasers from, any Grantor. Upon filing of the Intellectual Property Security Agreement with the United States Copyright Office or the United States Patent and Trademark Office, as applicable, and the filing of appropriate Financing Statements, all action necessary or desirable to perfect the Collateral Agent’s Lien on each Grantor’s Patents, Trademarks or Copyrights shall have been duly taken.

ARTICLE 4

Covenants

SECTION 4.01 Change of Name; Location of Collateral; Records; Place of Business .

(a) Each Grantor will furnish to the Collateral Agent at least thirty (30) days prior written notice (or such shorter period as may be agreed to in writing by the Collateral Agent in its sole discretion) of any change in: (i) any Grantor’s name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties; (ii) the location of any Grantor’s chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility, but excluding the establishment of any such new Stores); (iii) any Grantor’s organizational structure or jurisdiction of incorporation or formation; or (iv) any Grantor’s Federal Taxpayer Identification Number or organizational identification number, if any, assigned to it by its state of organization. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings, publications and registrations have been made under the UCC or other applicable Law that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Collateral (subject only to Permitted Encumbrances having priority by operation of applicable Law) for its own benefit and the benefit of the other Credit Parties.

(b) Each Grantor agrees (i) to maintain, at its own cost and expense, records with respect to the Collateral owned by it which are complete and accurate in all material respects and which are consistent with its current practices, but in any event to include accounting records which are complete in all material respects indicating all payments and proceeds received with respect to any part of the Collateral, and (ii) at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail reasonably satisfactory to the Collateral Agent showing the identity, amount and location of any and all Collateral.

SECTION 4.02 Protection of Security . Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to defend title to the Collateral against all Persons (other than holders of Permitted Encumbrances having priority by operation of applicable Law) and to defend the Security Interest of the Collateral Agent in the Collateral and the priority thereof against any Lien (other than Permitted Encumbrances having priority by operation of applicable Law).

SECTION 4.03 Further Assurances . Each Grantor agrees, at its own expense, to execute, acknowledge, promptly deliver and cause to be duly filed all such further documents, Financing Statements, agreements and instruments and take all such further actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby or the validity or priority of such Security Interest, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any Financing Statements or other documents in connection herewith or therewith. Without limiting the foregoing, each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further documents, Financing Statements, agreements and instruments and take all such further actions as the Collateral Agent may from time to time reasonably request to perfect the Collateral Agent’s Security Interest in all Accounts, Inventory, Deposit Accounts, Investment Property, and the Proceeds therefrom (including causing the Collateral Agent to have Control of any such Collateral to the extent required under the Credit Agreement and to the extent perfection in such Collateral can be accomplished by Control).

SECTION 4.04 Inspection and Verification . Each Grantor shall, and shall cause each of its Subsidiaries to, permit representatives and independent contractors of the Collateral Agent to visit its properties and inspect the Collateral and all records related thereto (and to make extracts and copies from such records), to discuss its affairs, finances and accounts with its directors, officers and Registered Public Accounting Firm, and to conduct appraisals, commercial finance examinations and other evaluations, all in accordance with, and subject to the terms and conditions of, Section 6.10 of the Credit Agreement. The Collateral Agent and such Persons as the Collateral Agent may reasonably designate shall have the right to verify the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Collateral, including, in the case of Accounts or Collateral in the possession of any third Person, by contacting Account Debtors or the third Person possessing such Collateral for the purpose of making such a verification. The Collateral Agent shall have the right, subject to the confidentiality provisions of Section 10.07 of the Credit Agreement, to share any information it gains from such inspection or verification with any Credit Party. The Grantors shall pay the fees and expenses of the Collateral Agent or such other Persons with respect to such inspections and verifications to the extent required by the terms of Section 6.10 of the Credit Agreement.

SECTION 4.05 Taxes; Encumbrances . At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral (other than Permitted Encumbrances), and may take any other action which the Collateral Agent may reasonably deem necessary or desirable to repair, maintain or preserve any of the Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided , however , that the Collateral Agent shall not have any obligation to undertake any of the foregoing and shall have no liability on account of any action so undertaken except where a court of competent jurisdiction determines by final and nonappealable judgment that the Collateral Agent’s actions constitute gross negligence or willful misconduct; provided further that the making of any such payments or the taking of any such action by the Collateral Agent shall not be deemed to constitute a waiver of any Default or Event of Default arising from any Grantor’s failure to have made such payments or taken such action. Nothing in this Section 4.05 shall be interpreted as excusing any Grantor from the performance of any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

SECTION 4.06 Assignment of Security Interest . If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person to secure payment and performance of an Account, such Grantor shall promptly assign such security interest to the Collateral Agent. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of, and transferees from, the Account Debtor or other Person granting the security interest.

SECTION 4.07 Continuing Obligations of the Grantors . Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the other Credit Parties from and against any and all liability for such performance.

SECTION 4.08 Use and Disposition of Collateral . None of the Grantors shall make or permit to be made a collateral assignment, pledge or hypothecation of the Collateral or shall grant any other Lien in respect of the Collateral or shall grant Control of any Collateral to any Person, in each case except for Permitted Encumbrances. Except for Permitted Dispositions, none of the Grantors shall make or permit to be made any transfer of the Collateral. Each Grantor shall remain at all times in possession of the Collateral owned by it, except with respect to the following: (a) Inventory placed under the care, custody, storage or entrustment of a bailee or other third party, provided that , such bailee or other third party shall have delivered to the Collateral Agent a Collateral Access Agreement on terms reasonably satisfactory to the Collateral Agent; (b) sales of Inventory in the ordinary course of business; (c) movement of Inventory from one location of such Grantor to another location of such Grantor and Inventory in transit to a location of such Grantor; (d) disposal of Equipment which is obsolete, worn out, or damaged beyond repair, or no longer used or useful; (e) Equipment which is out for repair; and (f) other Permitted Dispositions.

SECTION 4.09 Limitation on Modification of Accounts . N