SECURITY AGREEMENT

Exhibit 10.38

EXECUTION VERSION

SECURITY AGREEMENT

Dated July 2, 2009

From

The Grantors referred to herein

as Grantors

to

BANK OF AMERICA, N.A.

as Agent

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

i

Schedules

ii

SECURITY AGREEMENT

SECURITY AGREEMENT dated July 2, 2009 made by SOLO CUP COMPANY, a Delaware corporation (the “ Company ”), SOLO CUP OPERATING CORPORATION, a Delaware corporation (“ SCOC ,” and together with the Company, the “ Borrowers ”), and the other Persons listed on the signature pages hereof (the Borrowers and the Persons so listed being, collectively, the “ Grantors ”), to Bank of America, N.A., as administrative agent (in such capacity, together with any successor administrative agent appointed pursuant to Section 12 of the Loan Agreement (as hereinafter defined), the “ Agent ”) for the Secured Parties (as defined in the Loan Agreement).

PRELIMINARY STATEMENTS.

(1) The Grantors have entered into a Loan Agreement dated as of July 2, 2009 (said Agreement, as it may hereafter be amended, amended and restated, supplemented or otherwise modified from time to time, being the “ Loan Agreement ”) with certain other Restricted Subsidiaries of the Borrowers, the Agent, the other agents named therein and the Lenders (each as defined therein).

(2) Terms defined in the Loan Agreement and not otherwise defined in this Agreement are used in this Agreement as defined in the Loan Agreement; and terms set forth on Schedule X are used in this Agreement as defined in the Intercreditor Agreement (as defined in the Loan Agreement). Further, unless otherwise defined in this Agreement or in the Loan Agreement or the Intercreditor Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) and/or in the Federal Book Entry Regulations (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9 and/or in the Federal Book Entry Regulations. “ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non perfection or the priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “ UCC ” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non perfection or priority. “ Federal Book-Entry Regulations ” means (A) the federal regulations contained in Subpart B (“Treasury/Reserve Automated Debt Entry System (TRADES)”) governing book-entry securities consisting of U.S. Treasury notes, bills and bonds and Subpart D (“Additional Provisions”) of 31 C.F.R. Part 357, 31 C.F.R. § 357.10 through § 357.15 and § 357.40 through § 357.45, including related defined terms in 31 C.F.R. § 357.2); and (B) to the extent substantially identical to the federal regulations referred to in clause (A) above, the federal regulations governing other book-entry securities.

(3) Each Grantor is the owner of the promissory notes set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule I hereto and issued by the obligors named therein (the “ Initial Pledged Debt ”).

(4) Each Grantor is the owner of the deposit accounts set forth opposite such Grantor’s name on Schedule II hereto (the “ Pledged Deposit Accounts ”).

(5) SCOC is the owner of Account No. 8666216501 (the “ Cash Collateral Account ”), maintained with Bank of America, N.A. and subject to the terms of this Agreement.

(6) Each Grantor is the owner of the securities accounts set forth in Part II of Schedule I (the “ Securities Accounts ”).

(7) It is a condition precedent to the making of Loans by the Lenders and the issuance of Letters of Credit by the Issuing Banks under the Loan Agreement and the providing of Bank Products by the Lenders or their Affiliates from time to time that the Grantors shall have granted the security interest contemplated by this Agreement. Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Loan Documents and the Bank Products.

NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit under the Loan Agreement and to induce certain Lenders and their Affiliates to provide Bank Products from time to time, each Grantor hereby agrees with the Agent for the ratable benefit of the Secured Parties as follows:

Section 1. Grant of Security . Each Grantor hereby grants to the Agent, for the ratable benefit of the Secured Parties, a security interest in such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “ Collateral ”):

(a) all equipment in all of its forms, including, without limitation, all machinery, tools, furniture and fixtures, and all parts thereof and all accessions thereto, including, without limitation, computer programs and supporting information that constitute equipment within the meaning of the UCC (any and all such property being the “ Equipment ”);

(b) all inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by such Grantor, and all accessions thereto and products thereof and documents therefor, including, without limitation, computer programs and supporting information that constitute inventory within the meaning of the UCC (any and all such property being the “ Inventory ”);

(c) all accounts (including, without limitation, health-care-insurance receivables), chattel paper (including, without limitation, tangible chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts, letter-of-credit rights, general intangibles (including, without limitation, payment intangibles) and all other right to payment of monetary obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and

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to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise supporting payment of any of the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights, general intangibles and other obligations, to the extent not referred to in clause (d), (e) or (f) below, being the “ Receivables ,” and any and all such supporting obligations, security agreements, mortgages, Liens, leases, letters of credit and other contracts being the “ Related Contracts ”);

(d) the following (collectively, the “ Security Collateral ”):

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

(ii) all additional monetary obligations from time to time owed to such Grantor (such indebtedness, together with the Initial Pledged Debt, being the “ Pledged Debt ”) and the instruments, if any, evidencing such monetary obligations, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such monetary obligations;

(iii) the Securities Accounts, all security entitlements with respect to all financial assets from time to time credited to the Securities Accounts, and all financial assets, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such security entitlements or financial assets and all warrants, rights or options issued thereon or with respect thereto; and

(iv) all other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts) in which such Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments, if any, representing or evidencing such investment property, and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such investment property and all warrants, rights or options issued thereon or with respect thereto;

(e) each of the agreements listed on Schedule III hereto as such agreements may be amended, amended and restated, supplemented or otherwise modified from time to time (collectively, the “ Assigned Agreements ”), including, without limitation, (i) all rights of such Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (ii) all

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rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii) claims of such Grantor for damages arising out of or for breach of or default under the Assigned Agreements and (iv) the right of such Grantor to terminate the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder (all such Collateral being the “ Agreement Collateral ”);

(f) the following (collectively, the “ Account Collateral ”):

(i) the Pledged Deposit Accounts, the Cash Collateral Account and all funds and financial assets from time to time credited thereto (including, without limitation, all Cash Equivalents), and all certificates and instruments, if any, from time to time representing or evidencing the Pledged Deposit Accounts or the Cash Collateral Account;

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

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

(g) the following (collectively, the “ Intellectual Property Collateral ”):

(i) all patents, patent applications, utility models and statutory invention registrations, together with all inventions claimed or disclosed therein and all improvements thereto (“ Patents ”);

(ii) all trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, fictitious business names, corporate names, certification marks, collective marks and other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in any United States intent-to-use trademark application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent that and solely during the period in which the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use trademark applications under applicable federal law), together, in each case, with the goodwill symbolized thereby (“ Trademarks ”);

(iii) all copyrights (whether or not the underlying works of authorship have been published), including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the content thereof, whether registered or unregistered (“ Copyrights ”);

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(iv) all computer software, programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing (“ Computer Software ”);

(v) all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (collectively, “ Trade Secrets ”), and all other intellectual, industrial and intangible property of any type, including, without limitation, industrial designs and mask works;

(vi) all registrations and applications for registration for any of the foregoing, including, without limitation, those registrations and applications for registration set forth in Schedule IV hereto, together with all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof;

(vii) all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;

(viii) all agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any of the foregoing to which such Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth in Schedule IV hereto (“ IP Agreements ”);

(ix) all tangible embodiments of any of the foregoing, and

(x) any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

(h) the commercial tort claims described in Schedule V hereto (together with any commercial tort claims as to which the Grantors have complied with the requirements of Section 17, the “ Commercial Tort Claims Collateral ”);

(i) all books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) of such Grantor pertaining to any of the foregoing Collateral or any of the Collateral referred to in clause (j) below; and

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(j) all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting obligations relating to, any and all of the foregoing Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (i) of this Section 1) and, to the extent not otherwise included, all (A) payments under insurance (whether or not the Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral, and (B) cash;

provided that Collateral shall not include the following (collectively, the “ Excluded Assets ”):

(1) all interests in real property other than fee interests and other interests appurtenant thereto;

(2) fee interests in real property if the greater of the cost or the book value of such fee interest is less than $1,000,000;

(3) any property or asset to the extent that the grant of a Lien under the Security Documents (as defined in the Intercreditor Agreement) in such property or asset is prohibited by applicable law or requires any consent of any governmental authority not obtained pursuant to applicable law; provided that such property or asset will be an Excluded Asset only to the extent and for so long as the consequences specified above will result and will cease to be an Excluded Asset and will become subject to the Lien granted under the Security Documents (as defined in the Intercreditor Agreement), immediately and automatically, at such time as such consequences will no longer result;

(4) any lease, license, contract, property right or agreement to which any Grantor is a party or any of its rights or interests thereunder only to the extent and only for so long as the grant of a Lien under the Security Documents (as defined in the Intercreditor Agreement) will constitute or result in a breach, termination or default under or requires any consent not obtained under any such lease, license, contract, agreement or property right (other than to the extent that any such term 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 (including the Bankruptcy Code) or principles of equity); provided that such lease, license, contract, property right or agreement will be an Excluded Asset only to the extent and for so long as the consequences specified above will result and will cease to be an Excluded Asset and will become subject to the Lien granted under the Security Documents (as defined in the Intercreditor Agreement), immediately and automatically, at such time as such consequences will no longer result;

(5) any motor vehicles, vessels and aircraft, or other property subject to a certificate of title statute of any jurisdiction;

(6) cash or Cash Equivalents (or deposits or securities accounts that solely contain such cash or cash equivalents) (i) securing reimbursement obligations under letters of credit or surety bonds (other than, in the case of ABL Collateral, reimbursement obligations in respect of letters of credit securing or constituting ABL Debt Obligations), (ii) solely consisting of earnest money

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deposits made or received in connection with any disposition of property or assets or in connection with any investment or (iii) securing Hedging Obligations (as defined in the Intercreditor Agreement), in each case to the extent permitted under all Secured Documents (as defined in the Intercreditor Agreement);

(7) assets or property subject to purchase money liens or capital leases permitted to be incurred under all Secured Documents (as defined in the Intercreditor Agreement), to the extent a Lien on such assets or property is not permitted, under the terms of the documents governing such purchase money liens, purchase money indebtedness or capital leases, to be created to secure any Secured Debt Obligations (as defined in the Intercreditor Agreement);

(8) all “securities” of any of the Issuers’ “affiliates” (as the terms “securities” and “affiliates” are used in Rule 3-16 of Regulation S-X under the Securities Act of 1933, as amended);

(9) Equity Interests in any joint venture with a third party that is not an Affiliate of such Grantor, to the extent a pledge of such Equity Interests is prohibited by the documents governing such joint venture;

(10) the real property located at 1951 Highway 304, Belen, New Mexico, the real property located at 177 Florence Street, Leominster, Massachusetts, and the real property located at 1900 S. Clark Road, Havre de Grace, Maryland, in each case, including all fixtures and improvements located thereon; and

(11) the real property located at 3333 East 87th Street, Chicago, Illinois (formerly known as the USX South Works site), including all fixtures and improvements located thereon;

provided further that notwithstanding the foregoing proviso, the Collateral does include all deposit and securities accounts identified on Schedules I and II hereto and all instruments identified on Schedule I hereto. For the avoidance of doubt, the security interest created in this Section 1 is subject to the Intercreditor Agreement, including without limitation Section 2.01 thereof.

Section 2. Security for Obligations . The security interest in the Collateral created hereunder secures, in the case of each Grantor, the payment of all Obligations of such Grantor now or hereafter existing under the Loan Documents and the Bank Products, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations being the “ Secured Obligations ”). Without limiting the generality of the foregoing, the security interest in the Collateral created hereunder secures, as to each Grantor, the payment of all amounts that constitute part of the Secured Obligations and would be owed by such Grantor to any Secured Party under the Loan Documents or the Bank Products but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving an Obligor.

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Section 3. Grantors Remain Liable . Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Loan Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Delivery and Control of Security Collateral . (a) All instruments representing or evidencing Pledged Debt (except to the extent the aggregate outstanding principal amount of Pledged Debt owing to such Grantor does not exceed $200,000) with respect to any Grantor shall be delivered to and held by or on behalf of the Agent pursuant hereto (unless the Noteholder Collateral Trustee is granted a prior security interest in such instruments and the same are required to be delivered (and are so delivered) to the Noteholder Collateral Trustee for the benefit of the Priority Lien Secured Parties pursuant to the Intercreditor Agreement) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Agent.

(b) With respect to any Securities Account and any Security Collateral that constitutes a security entitlement (except for any Securities Account that is an Excluded Account (as defined below)), the relevant Grantor will cause the securities intermediary with respect to such Securities Account and security entitlement either (i) to identify in its records the Agent as the entitlement holder thereof, unless the Noteholder Collateral Trustee is granted a prior security interest in such security entitlement and such Grantor is required to cause (and has so caused) such securities intermediary to identify in its records the Noteholder Collateral Trustee as the entitlement holder thereof for the benefit of the Priority Lien Secured Parties pursuant to the Intercreditor Agreement, or (ii) to agree with such Grantor and the Agent that such securities intermediary will comply with entitlement orders originated by the Agent without further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Agent (and if the Noteholder Collateral Trustee is required to be granted (and has been granted) a prior security interest in such Securities Account and security entitlement for the benefit of the Priority Lien Secured Parties pursuant to the Intercreditor Agreement, with provisions instructing such securities intermediary that entitlement orders originated by the Noteholder Collateral Trustee controls pursuant to the Intercreditor Agreement) (a “ Securities Account Control Agreement ”).

(c) Subject to the Intercreditor Agreement, the Agent shall have the right, at any time after the occurrence and during the continuation of an Event of Default, (i) in its discretion and without notice to any Grantor, to transfer to or to register in the name of the Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 14(a) and (ii) to convert Security Collateral consisting of financial assets credited to the Securities Account to Security Collateral consisting of financial assets held directly by the Agent, and to convert Security Collateral consisting of financial assets held directly by the Agent to Security Collateral consisting of financial assets credited to the Securities Account.

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(d) Upon the request of the Agent following the occurrence and during the continuance of an Event of Default, each Grantor will notify each issuer of Security Collateral granted by it hereunder that such Security Collateral is subject to the security interest granted hereunder.

Section 5. Maintaining the Account Collateral . Until Full Payment of the Obligations (the “ Discharge ”):

(a) Each Grantor will maintain deposit accounts (other than an account exclusively used for payroll, payroll taxes, employee benefits or other similar fiduciary obligations, any trust account, any zero-balance disbursement account (i.e., any account used only for disbursement purposes in which a balance of zero is maintained by automatically transferring funds from another account in an amount only large enough to cover checks presented), any account used to settle foreign exchange trades, accounts having an aggregate balance of not more than $250,000 or the account number 8666823891 maintained with Bank of America, N.A. so long as the ending daily balance of such account does not exceed $500,000 (collectively, the “ Excluded Accounts ”)) only with a bank (a “ Pledged Account Bank ”) that has agreed with such Grantor and the Agent to comply with instructions originated by the Agent directing the disposition of funds in such deposit account without the further consent of such Grantor, such agreement to be in form and substance reasonably satisfactory to the Agent and each of the Collateral Agents (in the case of the Collateral Proceeds Account, with provisions instructing such bank that pursuant to the Intercreditor Agreement, instructions originated by the Noteholder Collateral Trustee controls) (a “ Deposit Account Control Agreement ”).

(b) Each Grantor will (i) immediately instruct each Person obligated at any time to make any payment to such Grantor for any reason (an “ Obligor ”) to make such payment to a Pledged Deposit Account or the Cash Collateral Account and (ii) deposit in a Pledged Deposit Account or the Cash Collateral Account, at the end of each Business Day, all proceeds of Collateral and all other cash of such Grantor; provided that only proceeds of the Noteholder First Lien Collateral shall be deposited in the Collateral Proceeds Account and each Grantor shall so instruct each such Person, shall so deposit proceeds of any Collateral and other cash and shall take all other actions necessary to give effect to the intent of this proviso.

(c) Subject to the Intercreditor Agreement, the Agent may, at any time and without notice to, or consent from, the Grantor, transfer, or direct the transfer of, funds from the Pledged Deposit Accounts or the Cash Collateral Account to satisfy the Grantor’s Obligations if an Event of Default shall have occurred and be continuing.

Section 6. Investing of Amounts in the Cash Collateral Account . The Agent will, subject to the provisions of Sections 5 and 22, from time to time (a) invest, or direct the applicable Pledged Account Bank to invest, amounts received with respect to the Cash Collateral Account in such Cash Equivalents credited to the Cash Collateral Account as the Borrower Agent may select and the Agent and each of the Collateral Agents may approve, and (b) invest interest paid on the Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents

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credited in the same manner. Interest and proceeds that are not invested or reinvested in Cash Equivalents as provided above shall be deposited and held in the Cash Collateral Account. In addition, the Agent shall have the right (as the Agent and each Collateral Agent may approve) at any time to exchange, or direct the applicable Pledged Account Bank to exchange, such Cash Equivalents for similar Cash Equivalents of smaller or larger denominations, or for other Cash Equivalents, credited to the Cash Collateral Account.

Section 7. Cash Dominion Period . During a Cash Dominion Period, the Agent may send to each bank or securities intermediary party to any Deposit Account Control Agreement or Securities Account Control Agreement a notice terminating the rights of such Grantor to originate any entitlement orders or instructions directing disposition of funds. In addition, the Agent agrees (i) to send such notices described above only if a Cash Dominion Period is in effect and (ii) to send notices to such banks and securities intermediaries revoking such notices described above if such Cash Dominion Period has terminated.

Section 8. Representations and Warranties . Each Grantor represents and warrants as follows:

(a) As of the date hereof, such Grantor’s exact legal name, chief executive office, type of organization, jurisdiction of organization and organizational identification number is set forth in Schedule VI hereto. Within the five years preceding the date hereof, such Grantor has not changed its name, chief executive office, type of organization, jurisdiction of organization or organizational identification number from those set forth in Schedule VI hereto except as set forth in Schedule VII hereto.

(b) Such Grantor owns or has rights in the Collateral granted by it hereunder free and clear of any Lien except for the security interest created under this Agreement or the Liens permitted under the Loan Agreement (including, without limitation, the Liens held by the Noteholder Collateral Trustee). No effective financing statement or other instrument similar in effect covering all or any part of such Collateral or listing such Grantor as debtor is on file in any recording office, except such as may have been filed in favor of the Agent relating to the Loan Documents or with respect to Liens otherwise permitted under the Loan Agreement (including, without limitation, the Liens held by the Noteholder Collateral Trustee).

(c) All of the Equipment and Inventory (other than Inventory in transit, mobile Equipment and Equipment out for service or repair) of such Grantor are located at the places specified therefor in Schedule VIII hereto or at another location as to which such Grantor has complied with the requirements of Section 10(a). Such Grantor has exclusive possession and control of its Equipment and Inventory, other than (i) Equipment or Inventory stored at any leased premises or warehouse for which such Grantor has made commercially reasonable efforts to obtain a Lien Waiver from the landlord or warehouseman, as applicable, and (ii) Inventory in transit, mobile Equipment and Equipment out for service or repair.

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(d) As of the date hereof, none of the Receivables or Agreement Collateral is evidenced by a promissory note or other instrument that has not been delivered to the Agent (except to the extent the aggregate outstanding principal amount of such promissory notes and instruments owing to such Grantor does not exceed $200,000 and except for any such promissory note or other instrument that is required to be delivered and has been so delivered to the Noteholder Collateral Trustee pursuant to the Intercreditor Agreement).

(e) The Pledged Debt pledged by such Grantor hereunder which is issued by a Subsidiary of such Grantor has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the issuers thereof, is evidenced by one or more promissory notes (which promissory notes if required to be delivered to the Agent under Section 4(a) have been delivered to the Agent (except for such promissory notes that are required to be delivered and have been so delivered to the Noteholder Collateral Trustee pursuant to the Intercreditor Agreement)) and is not in default.

(f) As of the date hereof, the Initial Pledged Debt constitutes all of the outstanding debt for borrowed money owed to such Grantor by the issuers thereof and is outstanding in the principal amount indicated on Schedule I hereto.

(g) As of the date hereof, such Grantor has no investment property, other than Excluded Assets and the investment property listed on Schedule I hereto.

(h) As of the date hereof except as set forth on Schedule III hereto, such Grantor is not a party to any Material Contract extending more than one year after the date hereof under which the total committed consideration payable to such Grantor exceeds $10,000,000 in any Fiscal Year. The Assigned Agreements to which such Grantor is a party, true and complete copies of which have been furnished to or made available to the Agent or its counsel on a confidential basis, have been duly authorized, executed and delivered by such Grantor and, to the knowledge of such Grantor, all other parties thereto, have not been amended, amended and restated, supplemented or otherwise modified as of the date hereof, are in full force and effect and are binding upon and enforceable against such Grantor and, to the knowledge of such Grantor, all other parties thereto in accordance with their terms. There exists no default by such Grantor under any Assigned Agreement to which such Grantor is a party, other than any default that could not reasonably be expected to have a Material Adverse Effect.

(i) Such Grantor has no deposit accounts, other than the Excluded Accounts, the Pledged Deposit Accounts listed on Schedule II hereto and additional Pledged Deposit Accounts as to which such Grantor has complied with the applicable requirements of Section 5.

(j) Such Grantor is not a beneficiary or assignee under any letter of credit, other than the letters of credit described in Schedule IX hereto and additional letters of credit as to which such Grantor has complied with the requirements of Section 16.

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(k) This Agreement creates in favor of the Agent for the benefit of the Secured Parties a valid security interest in the Collateral granted by such Grantor, securing the payment of the Secured Obligations. The security interest in the Collateral created under this Agreement and subject to the UCC (the “ UCC Collateral ”) constitutes, subject only to the filing of appropriate financing statements pursuant to the UCC, the recordation of the Intellectual Property Security Agreement with the U.S. Patent and Trademark Office and the U.S. Copyright Office and the execution of appropriate control agreements, a perfected security interest in the UCC Collateral granted by such Grantor to the extent that a security interest in such UCC Collateral may be perfected by the filing of a financing statement, the recordation of a security agreement with the U.S. Patent and Trademark Office and the U.S. Copyright Office (except to the extent that the recordation of any such security agreement is not required pursuant to this Agreement or the other Loan Documents) or by the execution of a control agreement (except to the extent that the execution of any such control agreement is not required pursuant to the terms of this Agreement or the other Loan Documents), subject only to Permitted Liens. Such security interest is, in the case of a security interest in the ABL First Lien Collateral, first priority and, in the case of a security interest in the Noteholder First Lien Collateral, second priority in accordance with the Intercreditor Agreement, in each case subject only to Permitted Liens.

(l) As of the date hereof, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the security interest created under this Agreement (including the priorities of such security interest described in clause (k) above), except for (x) the filing of financing and continuation statements under the UCC, which financing statements have been delivered or made available to the Agent in proper form for filing, (y) the recordation of the Intellectual Property Security Agreements referred to in Section 13(f) with the U.S. Patent and Trademark Office and the U.S. Copyright Office, which ag