f8k0808ex10iii_guangzhou.htm


    EXHIBIT
      E

    


    SECURITY
      AGREEMENT

    


                This
      SECURITY AGREEMENT, dated as of July 31, 2007 (this “Agreement”), is
      among Guangzhou Global Telecom, Inc., a Florida corporation (the
“Company”), all of the Subsidiaries of the Company (such subsidiaries,
      the “Guarantors” and together with the Company, the “Debtors”) and
      the holders of the Company’s 8% Senior Secured Convertible Debentures due
      issued on July __, 2007 in the original aggregate principal amount of
      $_________ (collectively, the “Debentures”) signatory hereto,
      their endorsees, transferees and assigns (collectively, the “Secured
      Parties”).

    


    W
      I T N E S S E T H:

    


                WHEREAS,
      pursuant to the Purchase Agreement (as defined in the Debentures), the Secured
      Parties have severally agreed to extend the loans to the Company evidenced
      by
      the Debentures;

    


                WHEREAS,
      pursuant to a certain Subsidiary Guarantee, dated as of the date hereof
      (the “Guarantee”), the Guarantors have jointly and severally
      agreed to guarantee and act as surety for payment of such Debentures;
      and

    


                WHEREAS,
      in order to induce the Secured Parties to extend the loans evidenced by the
      Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
      this Agreement and to grant the Secured
      Parties, pari passu with each other Secured Party and
      through the Agent, a security interest in certain property of such Debtor to
      secure the prompt payment, performance and discharge in full of all of the
      Company’s obligations under the Debentures and the Guarantors’ obligations under
      the Guarantee.

    


                NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

    


                1.                 Certain
      Definitions. As used in this Agreement, the following terms shall have
      the meanings set forth in this Section 1.  Terms used but not
      otherwise defined in this Agreement that are defined in Article 9 of the UCC
      (such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”,
“document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“proceeds” and “supporting obligations”) shall have the respective meanings
      given such terms in Article 9 of the UCC.

    


    (a)           “Collateral”
      means the collateral in which the Secured Parties are granted a security
      interest by this Agreement and which shall include the following personal
      property of the Debtors, whether presently owned or existing or hereafter
      acquired or coming into existence, wherever situated, and all additions and
      accessions thereto and all substitutions and replacements thereof, and all
      proceeds, products and accounts thereof, including, without limitation, all
      proceeds from the sale or transfer of the Collateral and of insurance covering
      the same and of any tort claims in connection therewith, and all dividends,
      interest, cash, notes, securities, equity interest or other property at any
      time
      and from time to time acquired, receivable or otherwise distributed in respect
      of, or in exchange for, any or all of the Pledged Securities (as defined
      below):

     

     

    
      
        
        

      

      
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    (i)   All
      goods, including, without limitation, (A) all machinery, equipment, computers,
      motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
      and
      general tools, fixtures, test and quality control devices and other equipment
      of
      every kind and nature and wherever situated, together with all documents of
      title and documents representing the same, all additions and accessions thereto,
      replacements therefor, all parts therefor, and all substitutes for any of the
      foregoing and all other items used and useful in connection with any Debtor’s
      businesses and all improvements thereto; and (B) all inventory;

    


    (ii)
                 All contract
      rights and other general intangibles, including, without limitation, all
      partnership interests, membership interests, stock or other securities, rights
      under any of the Organizational Documents, agreements related to the Pledged
      Securities, licenses, distribution and other agreements, computer software
      (whether “off-the-shelf”, licensed from any third party or developed by any
      Debtor), computer software development rights, leases, franchises, customer
      lists, quality control procedures, grants and rights, goodwill, trademarks,
      service marks, trade styles, trade names, patents, patent applications,
      copyrights, and income tax refunds;

     

    (iii)           All
      accounts, together with all instruments, all documents of title representing
      any
      of the foregoing, all rights in any merchandising, goods, equipment, motor
      vehicles and trucks which any of the same may represent, and all right, title,
      security and guaranties with respect to each account, including any right of
      stoppage in transit;

    


    (iv)           All
      documents, letter-of-credit rights, instruments and chattel paper;

    


    (v)           
      All commercial tort claims;

    


    (vi)           All
      deposit accounts and all cash (whether or not deposited in such deposit
      accounts);

    


    (vii)          All
      investment property;

    


    (viii)         All
      supporting obligations; and

    


    (ix)           
      All files, records, books of account, business papers, and computer programs;
      and

     

     

    
      
        
        

      

      
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    (x)           the
      products and proceeds of all of the foregoing Collateral set forth in clauses
      (i)-(ix) above.

    


    Without
      limiting the generality of the foregoing, the “Collateral” shall include
      all investment property and general intangibles respecting ownership and/or
      other equity interests in each Guarantor, including, without limitation, the
      shares of capital stock and the other equity interests listed on Schedule
      H hereto (as the same may be modified from time to time pursuant to the
      terms hereof), and any other shares of capital stock and/or other equity
      interests of any other direct or indirect subsidiary of any Debtor obtained
      in
      the future, and, in each case, all certificates representing such shares and/or
      equity interests and, in each case, all rights, options, warrants, stock, other
      securities and/or equity interests that may hereafter be received, receivable
      or
      distributed in respect of, or exchanged for, any of the foregoing and all rights
      arising under or in connection with the Pledged Securities, including, but
      not
      limited to, all dividends, interest and cash.

     

    Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment of
      any
      asset which, in the event of an assignment, becomes void by operation of
      applicable law or the assignment of which is otherwise prohibited by applicable
      law (in each case to the extent that such applicable law is not overridden
      by
      Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
      provided, however, that to the extent permitted by applicable law,
      this Agreement shall create a valid security interest in such asset and, to
      the
      extent permitted by applicable law, this Agreement shall create a valid security
      interest in the proceeds of such asset.

    


    (b)           “Intellectual
      Property” means the collective reference to all rights, priorities and
      privileges relating to intellectual property, whether arising under United
      States, multinational or foreign laws or otherwise, including, without
      limitation, (i) all copyrights arising under the laws of the United States,
      any
      other country or any political subdivision thereof, whether registered or
      unregistered and whether published or unpublished, all registrations and
      recordings thereof, and all applications in connection therewith, including,
      without limitation, all registrations, recordings and applications in the United
      States Copyright Office, (ii) all letters patent of the United States, any
      other
      country or any political subdivision thereof, all reissues and extensions
      thereof, and all applications for letters patent of the United States or any
      other country and all divisions, continuations and continuations-in-part
      thereof, (iii) all trademarks, trade names, corporate names, company names,
      business names, fictitious business names, trade dress, service marks, logos,
      domain names and other source or business identifiers, and all goodwill
      associated therewith, now existing or hereafter adopted or acquired, all
      registrations and recordings thereof, and all applications in connection
      therewith, whether in the United States Patent and Trademark Office or in any
      similar office or agency of the United States, any State thereof or any other
      country or any political subdivision thereof, or otherwise, and all common
      law
      rights related thereto, (iv) all trade secrets arising under the laws of the
      United States, any other country or any political subdivision thereof, (v)
      all
      rights to obtain any reissues, renewals or extensions of the foregoing, (vi)
      all
      licenses for any of the foregoing, and (vii) all causes of action for
      infringement of the foregoing.

     

     

    
      
        
        

      

      
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               (c)           “Majority
      in Interest” means, at any time of determination, the majority in
      interest (based on then-outstanding principal amounts of Debentures at the
      time
      of such determination) of the Secured Parties.

    


               (d)           “Necessary
      Endorsement” means undated stock powers endorsed in blank or other
      proper instruments of assignment duly executed and such other instruments or
      documents as the Agent (as that term is defined below) may reasonably
      request.

     

        (e)           “Obligations”
      means all of the liabilities and obligations (primary, secondary, direct,
      contingent, sole, joint or several) due or to become due, or that are now or
      may
      be hereafter contracted or acquired, or owing to, of any Debtor to the Secured
      Parties, including, without limitation, all obligations under this Agreement,
      the Debentures, the Guarantee and any other instruments, agreements or other
      documents executed and/or delivered in connection herewith or therewith, in
      each
      case, whether now or hereafter existing, voluntary or involuntary, direct or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from any of the
      Secured Parties as a preference, fraudulent transfer or otherwise as such
      obligations may be amended, supplemented, converted, extended or modified from
      time to time.  Without limiting the generality of the foregoing, the
      term “Obligations” shall include, without limitation: (i) principal of, and
      interest on the Debentures and the loans extended pursuant thereto; (ii) any
      and
      all other fees, indemnities, costs, obligations and liabilities of the Debtors
      from time to time under or in connection with this Agreement, the Debentures,
      the Guarantee and any other instruments, agreements or other documents executed
      and/or delivered in connection herewith or therewith; and (iii) all amounts
      (including but not limited to post-petition interest) in respect of the
      foregoing that would be payable but for the fact that the obligations to pay
      such amounts are unenforceable or not allowable due to the existence of a
      bankruptcy, reorganization or similar proceeding involving any
      Debtor.

     

        (f)           
      “Organizational Documents” means with respect to any Debtor, the
      documents by which such Debtor was organized (such as a certificate of
      incorporation, certificate of limited partnership or articles of organization,
      and including, without limitation, any certificates of designation for preferred
      stock or other forms of preferred equity) and which relate to the internal
      governance of such Debtor (such as bylaws, a partnership agreement or an
      operating, limited liability or members agreement).

     

       (g)             “Pledged
      Securities” shall have the meaning ascribed to such term in Section
      4(i).

     

     

    
      
        
        

      

      
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    (h)           “UCC”
      means the Uniform Commercial Code of the State of New York and or any other
      applicable law of any state or states which has jurisdiction with respect to
      all, or any portion of, the Collateral or this Agreement, from time to
      time.  It is the intent of the parties that defined terms in the UCC
      should be construed in their broadest sense so that the term “Collateral” will
      be construed in its broadest sense.  Accordingly if there are, from
      time to time, changes to defined terms in the UCC that broaden the definitions,
      they are incorporated herein and if existing definitions in the UCC are broader
      than the amended definitions, the existing ones shall be
      controlling.

    


               2.           Grant
      of Security Interest in
      Collateral. As an inducement for the Secured Parties to extend the
      loans as evidenced by the Debentures and to secure the complete and timely
      payment, performance and discharge in full, as the case may be, of all of the
      Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants
      and hypothecates to the Secured Parties a security interest in and to, a lien
      upon and a right of set-off against all of their respective right, title and
      interest of whatsoever kind and nature in and to, the Collateral (a “Security
      Interest” and, collectively, the “Security Interests”).

    


               3.           Delivery
      of Certain Collateral.  Contemporaneously or prior to the
      execution of this Agreement, each Debtor shall deliver or cause to be delivered
      to the Agent (a) any and all certificates and other instruments representing
      or
      evidencing the Pledged Securities, and (b) any and all certificates and other
      instruments or documents representing any of the other Collateral, in each
      case, together with all Necessary Endorsements.  The Debtors are,
      contemporaneously with the execution hereof, delivering to Agent, or have
      previously delivered to Agent, a true and correct copy of each Organizational
      Document governing any of the Pledged Securities.

    


                4.          Representations,
      Warranties, Covenants and Agreements of the Debtors. Except as set
      forth under the corresponding section of the disclosure schedules delivered
      to
      the Secured Parties concurrently herewith (the “Disclosure
      Schedules”), which Disclosure Schedules shall be deemed a part hereof, each
      Debtor represents and warrants to, and covenants and agrees with, the Secured
      Parties as follows:

    


    (a)   Each
      Debtor has the requisite corporate, partnership, limited liability company
      or
      other power and authority to enter into this Agreement and otherwise to carry
      out its obligations hereunder. The execution, delivery and performance by each
      Debtor of this Agreement and the filings contemplated therein have been duly
      authorized by all necessary action on the part of such Debtor and no further
      action is required by such Debtor.  This Agreement has been duly
      executed by each Debtor.  This Agreement constitutes the legal, valid
      and binding obligation of each Debtor, enforceable against each Debtor in
      accordance with its terms except as such enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization and similar laws of general
      application relating to or affecting the rights and remedies of creditors and
      by
      general principles of equity.

     

     

    
      
        
        

      

      
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     (b)           The
      Debtors have no place of business or offices where their respective books of
      account and records are kept (other than temporarily at the offices of its
      attorneys or accountants) or places where Collateral is stored or located,
      except as set forth on Schedule A attached hereto.  Except as
      specifically set forth on Schedule A, each Debtor is the record owner of
      the real property where such Collateral is located, and there exist no mortgages
      or other liens on any such real property except for Permitted Liens (as defined
      in the Debentures).  Except as disclosed on Schedule A, none of
      such Collateral is in the possession of any consignee, bailee, warehouseman,
      agent or processor.

    


    (c)           Except
      for Permitted Liens (as defined in the Debentures) and except as set forth
      on
Schedule B attached hereto, the Debtors are the sole owner of the
      Collateral (except for non-exclusive licenses granted by any Debtor in the
      ordinary course of business), free and clear of any liens, security interests,
      encumbrances, rights or claims, and are fully authorized to grant the Security
      Interests.  Except as set forth on Schedule B attached hereto,
      there is not on file in any governmental or regulatory authority, agency or
      recording office an effective financing statement, security agreement, license
      or transfer or any notice of any of the foregoing (other than those that will
      be
      filed in favor of the Secured Parties pursuant to this Agreement) covering
      or
      affecting any of the Collateral.  Except as set forth on Schedule
      B attached hereto and except pursuant to this Agreement, as long as this
      Agreement shall be in effect, the Debtors shall not execute and shall not
      knowingly permit to be on file in any such office or agency any other financing
      statement or other document or instrument (except to the extent filed or
      recorded in favor of the Secured Parties pursuant to the terms of this
      Agreement).

    


    (d)           No
      written claim has been received that any Collateral or Debtor's use of any
      Collateral violates the rights of any third party. There has been no adverse
      decision to any Debtor's claim of ownership rights in or exclusive rights to
      use
      the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding
      involving said rights pending or, to the best knowledge of any Debtor,
      threatened before any court, judicial body, administrative or regulatory agency,
      arbitrator or other governmental authority.

    


    (e)           Each
      Debtor shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule A attached hereto and may not relocate
      such books of account and records or tangible Collateral unless it delivers
      to
      the Secured Parties at least 30 days prior to such relocation (i) written notice
      of such relocation and the new location thereof (which must be within the United
      States) and (ii) evidence that appropriate financing statements under the UCC
      and other necessary documents have been filed and recorded and other steps
      have
      been taken to perfect the Security Interests to create in favor of the Secured
      Parties a valid, perfected and continuing perfected first priority lien in
      the
      Collateral.

    


    (f)           This
      Agreement creates in favor of the Secured Parties a valid security interest
      in the Collateral, subject only to Permitted Liens (as defined in the
      Debentures) securing the payment and performance of the
      Obligations.  Upon making the filings described in the immediately
      following paragraph, all security interests created hereunder in any Collateral
      which may be perfected by filing Uniform Commercial Code financing statements
      shall have been duly perfected.  

     

     

    
      
        
        

      

      
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    Except
      for the filing of the Uniform Commercial Code financing statements referred
      to
      in the immediately following paragraph, the recordation of the Intellectual
      Property Security Agreement (as defined below) with respect to copyrights and
      copyright applications in the United States Copyright Office referred to in
      paragraph (m), the execution and delivery of deposit account control agreements
      satisfying the requirements of Section 9-104(a)(2) of the UCC with respect
      to
      each deposit account of the Debtors, and the delivery of the certificates and
      other instruments provided in Section 3, no action is necessary to create,
      perfect or protect the security interests created hereunder.  Without
      limiting the generality of the foregoing, except for the filing of said
      financing statements, the recordation of said Intellectual Property Security
      Agreement, and the execution and delivery of said deposit account control
      agreements, no consent of any third parties and no authorization, approval
      or
      other action by, and no notice to or filing with, any governmental
      authority or regulatory body is required for (i) the execution, delivery and
      performance of this Agreement, (ii) the creation or perfection of the Security
      Interests created hereunder in the Collateral or (iii) the enforcement of the
      rights of the Agent and the Secured Parties hereunder.

    


     (g)           Each
      Debtor hereby authorizes the Agent to file one or more financing statements
      under the UCC, with respect to the Security Interests, with the proper filing
      and recording agencies in any jurisdiction deemed proper by it.

    


     (h)           The
      execution, delivery and performance of this Agreement by the Debtors does not
      (i) violate any of the provisions of any Organizational Documents of any Debtor
      or any judgment, decree, order or award of any court, governmental body or
      arbitrator or any applicable law, rule or regulation applicable to any Debtor
      or
      (ii) conflict with, or constitute a default (or an event that with notice or
      lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing any Debtor's debt or otherwise) or other understanding
      to
      which any Debtor is a party or by which any property or asset of any Debtor
      is bound or affected. If any, all required consents (including, without
      limitation, from stockholders or creditors of any Debtor) necessary for any
      Debtor to enter into and perform its obligations hereunder have been
      obtained.

    


     (i)             The
      capital stock and other equity interests listed on Schedule H hereto (the
“Pledged Securities”) represent all of the capital stock and other equity
      interests of the Guarantors, and represent all capital stock and other equity
      interests owned, directly or indirectly, by the Company.  All of the
      Pledged Securities are validly issued, fully paid and nonassessable, and the
      Company is the legal and beneficial owner of the Pledged Securities, free and
      clear of any lien, security interest or other encumbrance except for the
      security interests created by this Agreement and other Permitted Liens (as
      defined in the Debentures).  

    


    (j)           The
      ownership and other equity interests in partnerships and limited liability
      companies (if any) included in the Collateral (the “Pledged Interests”)
      by their express terms do not provide that they are securities governed by
      Article 8 of the UCC and are not held in a securities account or by any
      financial intermediary.

     

     

    
      
        
        

      

      
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    (k)           Except
      for Permitted Liens (as defined in the Debentures), each Debtor shall at all
      times maintain the liens and Security Interests provided for hereunder as valid
      and perfected first priority liens and security interests in the Collateral
      in
      favor of the Secured Parties until this Agreement and the Security Interest
      hereunder shall be terminated pursuant to Section 11 hereof.  Each
      Debtor hereby agrees to defend the same against the claims of any and all
      persons and entities. Each Debtor shall safeguard and protect all
      Collateral for the account of the Secured Parties.  At the
      request of the Agent, each Debtor will sign and deliver to the Agent on behalf
      of the Secured Parties at any time or from time to time one or more financing
      statements pursuant to the UCC in form reasonably satisfactory to the Agent
      and
      will pay the cost of filing the same in all public offices wherever filing
      is,
      or is deemed by the Agent to be, necessary or desirable to effect the rights
      and
      obligations provided for herein. Without limiting the generality of the
      foregoing, each Debtor shall pay all fees, taxes and other amounts necessary
      to
      maintain the Collateral and the Security Interests hereunder, and each Debtor
      shall obtain and furnish to the Agent from time to time, upon demand, such
      releases and/or subordinations of claims and liens which may be required to
      maintain the priority of the Security Interests hereunder.

    


    (l)           
      No Debtor will transfer, pledge, hypothecate, encumber, license, sell or
      otherwise dispose of any of the Collateral (except for non-exclusive licenses
      granted by a Debtor in its ordinary course of business and sales of inventory
      by
      a Debtor in its ordinary course of business) without the prior written consent
      of a Majority in Interest.

    


    (m)         
      Each Debtor shall keep and preserve its equipment, inventory and other tangible
      Collateral in good condition, repair and order and shall not operate or locate
      any such Collateral (or cause to be operated or located) in any area excluded
      from insurance coverage.

    


    (n)           Each
      Debtor shall maintain with financially sound and reputable insurers, insurance
      with respect to the Collateral, including Collateral hereafter acquired, against
      loss or damage of the kinds and in the amounts customarily insured against
      by
      entities of established reputation having similar properties similarly situated
      and in such amounts as are customarily carried under similar circumstances
      by
      other such entities and otherwise as is prudent for entities engaged in similar
      businesses but in any event sufficient to cover the full replacement cost
      thereof.  Each Debtor shall cause each insurance policy issued in
      connection herewith to provide, and the insurer issuing such policy to certify
      to the Agent, that (a) the Agent will be named as lender loss payee and
      additional insured under each such insurance policy; (b) if such insurance
      be
      proposed to be cancelled or materially changed for any reason whatsoever, such
      insurer will promptly notify the Agent and such cancellation or change shall
      not
      be effective as to the Agent for at least thirty (30) days after receipt by
      the
      Agent of such notice, unless the effect of such change is to extend or increase
      coverage under the policy; and (c) the Agent will have the right (but no
      obligation) at its election to remedy any default in the payment of premiums
      within thirty (30) days of notice from the insurer of such
      default.  

     

     

    
      
        
        

      

      
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    If
      no
      Event of Default (as defined in the Debentures) exists and if the proceeds
      arising out of any claim or series of related claims do not exceed $100,000,
      loss payments in each instance will be applied by the applicable Debtor to
      the
      repair and/or replacement of property with respect to which the loss was
      incurred to the extent reasonably feasible, and any loss payments or the balance
      thereof remaining, to the extent not so applied, shall be payable to the
      applicable Debtor; provided, however, that payments received
      by any Debtor after an Event of Default occurs and is continuing or in excess
      of
      $100,000 for any occurrence or series of related occurrences shall be paid
      to
      the Agent on behalf of the Secured Parties and, if received by such Debtor,
      shall be held in trust for the Secured Parties and immediately paid over to
      the
      Agent unless otherwise directed in writing by the Agent.   Copies
      of such policies or the related certificates, in each case, naming the Agent
      as
      lender loss payee and additional insured shall be delivered to the Agent at
      least annually and at the time any new policy of insurance is
      issued.

    


    (o)           Each
      Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
      Secured Parties promptly, in sufficient detail, of any material adverse change
      in the Collateral, and of the occurrence of any event which would have a
      material adverse effect on the value of the Collateral or on the Secured
      Parties’ security interest, through the Agent, therein.

    


     (p)          Each
      Debtor shall promptly execute and deliver to the Agent such further deeds,
      mortgages, assignments, security agreements, financing statements or other
      instruments, documents, certificates and assurances and take such further action
      as the Agent may from time to time request and may in its sole discretion deem
      necessary to perfect, protect or enforce the Secured Parties’ security interest
      in the Collateral including, without limitation, if applicable, the execution
      and delivery of a separate security agreement with respect to each Debtor’s
      Intellectual Property (“Intellectual Property Security Agreement”) in
      which the Secured Parties have been granted a security interest hereunder,
      substantially in a form reasonably acceptable to the Agent, which
      Intellectual Property Security Agreement, other than as stated therein, shall
      be
      subject to all of the terms and conditions hereof.

    


    (q)           Each
      Debtor shall permit the Agent and its representatives and agents to inspect
      the
      Collateral during normal business hours and upon reasonable prior notice, and
      to
      make copies of records pertaining to the Collateral as may be reasonably
      requested by the Agent from time to time.

    


    (r)           Each
      Debtor shall take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Collateral.

    


    (s)           Each
      Debtor shall promptly notify the Secured Parties in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by such
      Debtor that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Parties
      hereunder.

     

     

    
      
        
        

      

      
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    (t)           All
      information heretofore, herein or hereafter supplied to the Secured Parties
      by
      or on behalf of any Debtor with respect to the Collateral is accurate and
      complete in all material respects as of the date furnished.

    


    (u)           The
      Debtors shall at all times preserve and keep in full force and effect their
      respective valid existence and good standing and any rights and franchises
      material to its business.

    


    (v)           No
      Debtor will change its name, type of organization, jurisdiction of organization,
      organizational identification number (if it has one), legal or corporate
      structure, or identity, or add any new fictitious name unless it provides at
      least 30 days prior written notice to the Secured Parties of such change and,
      at
      the time of such written notification, such Debtor provides any financing
      statements or fixture filings necessary to perfect and continue the perfection
      of the Security Interests granted and evidenced by this Agreement.

    


    (w)          Except
      in the ordinary course of business, no Debtor may consign any of its inventory
      or sell any of its inventory on bill and hold, sale or return, sale on approval,
      or other conditional terms of sale without the consent of the Agent which shall
      not be unreasonably withheld.

    


    (x)           No
      Debtor may relocate its chief executive office to a new location without
      providing 30 days prior written notification thereof to the Secured Parties
      and
      so long as, at the time of such written notification, such Debtor provides
      any
      financing statements or fixture filings necessary to perfect and continue the
      perfection of the Security Interests granted and evidenced by this
      Agreement.

    


     (y)         Each
      Debtor was organized and remains organized solely under the laws of the state
      set forth next to such Debtor’s name in Schedule D attached hereto, which
Schedule D sets forth each Debtor’s organizational identification number
      or, if any Debtor does not have one, states that one does not
      exist.

    


    (z)           
      (i) The actual name of each Debtor is the name set forth in Schedule
      D attached hereto; (ii) no Debtor has any trade names except as set forth
      on
Schedule E attached hereto; (iii) no Debtor has used any name other than
      that stated in the preamble hereto or as set forth on Schedule E for the
      preceding five years; and (iv) no entity has merged into any Debtor or been
      acquired by any Debtor within the past five years except as set forth on
Schedule E.

    


    (aa)           At
      any time and from time to time that any Collateral consists of instruments,
      certificated securities or other items that require or permit possession by
      the
      secured party to perfect the security interest created hereby, the applicable
      Debtor shall deliver such Collateral to the Agent.

     

     

    
      
        
        

      

      
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               (bb)           Each
      Debtor, in its capacity as issuer, hereby agrees to comply with any and all
      orders and instructions of Agent regarding the Pledged Interests consistent
      with
      the terms of this Agreement without the further consent of any Debtor as
      contemplated by Section 8-106 (or any successor section) of the
      UCC.  Further, each Debtor agrees that it shall not enter into a
      similar agreement (or one that would confer “control” within the meaning of
      Article 8 of the UCC) with any other person or entity.

     

        (cc)           Each
      Debtor shall cause all tangible chattel paper constituting Collateral to be
      delivered to the Agent, or, if such delivery is not possible, then to cause
      such
      tangible chattel paper to contain a legend noting that it is subject to the
      security interest created by this Agreement.  To the extent that any
      Collateral consists of electronic chattel paper, the applicable Debtor shall
      cause the underlying chattel paper to be “marked” within the meaning of Section
      9-105 of the UCC (or successor section thereto).

    


    (dd)       If
      there is any investment property or deposit account included as Collateral
      that
      can be perfected by “control” through an account control agreement, the
      applicable Debtor shall cause such an account control agreement, in form and
      substance in each case satisfactory to the Agent, to be entered into and
      delivered to the Agent for the benefit of the Secured Parties.

    


    (ee)        To
      the extent that any Collateral consists of letter-of-credit rights, the
      applicable Debtor shall cause the issuer of each underlying letter of credit
      to
      consent to an assignment of the proceeds thereof to the Secured
      Parties.

    


    (ff)         To
      the extent that any Collateral is in the possession of any third party, the
      applicable Debtor shall join with the Agent in notifying such third party of
      the
      Secured Parties’ security interest in such Collateral and shall use its best
      efforts to obtain an acknowledgement and agreement from such third party with
      respect to the Collateral, in form and substance reasonably satisfactory to
      the
      Agent.

    


    (gg)        If
      any Debtor shall at any time hold or acquire a commercial tort claim, such
      Debtor shall promptly notify the Secured Parties in a writing signed by such
      Debtor of the particulars thereof and grant to the Secured Parties in such
      writing a security interest therein and in the proceeds thereof, all upon the
      terms of this Agreement, with such writing to be in form and substance
      satisfactory to the Agent.

    


    (hh)        Each
      Debtor shall immediately provide written notice to the Secured Parties of any
      and all accounts which arise out of contracts with any governmental authority
      and, to the extent necessary to perfect or continue the perfected status of
      the
      Security Interests in such accounts and proceeds thereof, shall execute and
      deliver to the Agent an assignment of claims for such accounts and cooperate
      with the Agent in taking any other steps required, in its judgment, under the
      Federal Assignment of Claims Act or any similar federal, state or local statute
      or rule to perfect or continue the perfected status of the Security Interests
      in
      such accounts and proceeds thereof.

     

     

    
      
        
        

      

      
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     (ii)         
      Each Debtor shall cause each subsidiary of such Debtor to immediately become
      a
      party hereto (an “Additional Debtor”), by executing and delivering an
      Additional Debtor Joinder in substantially the form of Annex A attached
      hereto and comply with the provisions hereof applicable to the
      Debtors.  Concurrent therewith, the Additional Debtor shall deliver
      replacement schedules for, or supplements to all other Schedules to (or referred
      to in) this Agreement, as applicable, which replacement schedules shall
      supersede, or supplements shall modify, the Schedules then in
      effect.  The Additional Debtor shall also deliver such opinions of
      counsel, authorizing resolutions, good standing certificates, incumbency
      certificates, organizational documents, financing statements and other
      information and documentation as the Agent may reasonably
      request.  Upon delivery of the foregoing to the Agent, the Additional
      Debtor shall be and become a party to this Agreement with the same rights and
      obligations as the Debtors, for all purposes hereof as fully and to the same
      extent as if it were an original signatory hereto and shall be deemed to have
      made the representations, warranties and covenants set forth herein as of the
      date of execution and delivery of such Additional Debtor Joinder, and all
      references herein to the “Debtors” shall be deemed to include each Additional
      Debtor.

    


    (jj)           Each
      Debtor shall vote the Pledged Securities to comply with the covenants and
      agreements set forth herein and in the Debentures.

    


    (kk)           Each
      Debtor shall register the pledge of the applicable Pledged Securities on the
      books of such Debtor.  Each Debtor shall notify each issuer of Pledged
      Securities to register the pledge of the applicable Pledged Securities in the
      name of the Secured Parties on the books of such issuer.  Further,
      except with respect to certificated securities delivered to the Agent, the
      applicable Debtor shall deliver to Agent an acknowledgement of pledge (which,
      where appropriate, shall comply with the requirements of the relevant UCC with
      respect to perfection by registration) signed by the issuer of the applicable
      Pledged Securities, which acknowledgement shall confirm that: (a) it has
      registered the pledge on its books and records; and (b) at any time directed
      by
      Agent during the continuation of an Event of Default, such issuer will transfer
      the record ownership of such Pledged Securities into the name of any designee
      of
      Agent, will take such steps as may be necessary to effect the transfer, and
      will
      comply with all other instructions of Agent regarding such Pledged Securities
      without the further consent of the applicable Debtor.

    


    (ll)           In
      the event that, upon an occurrence of an Event of Default, Agent shall sell
      all
      or any of the Pledged Securities to another party or parties (herein called
      the
“Transferee”) or shall purchase or retain all or any of the
      Pledged Securities, each Debtor shall, to the extent applicable: (i) deliver
      to
      Agent or the Transferee, as the case may be, the articles of incorporation,
      bylaws, minute books, stock certificate books, corporate seals, deeds, leases,
      indentures, agreements, evidences of indebtedness, books of account, financial
      records and all other Organizational Documents and records of the Debtors and
      their direct and indirect subsidiaries; (ii) use its best efforts to obtain
      resignations of the persons then serving as officers and directors of the
      Debtors and their direct and indirect subsidiaries, if so requested; and (iii)
      use its best efforts to obtain any approvals that are required by any
      governmental or regulatory body in order to permit the sale of the Pledged
      Securities to the Transferee or the purchase or retention of the Pledged
      Securities by Agent and allow the Transferee or Agent to continue the business
      of the Debtors and their direct and indirect subsidiaries.

     

     

    
      
        
        

      

      
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    (mm)                  Without
      limiting the generality of the other obligations of the Debtors hereunder,
      each
      Debtor shall promptly (i) cause to be registered at the United States Copyright
      Office all of its material copyrights, (ii) cause the security interest
      contemplated hereby with respect to all Intellectual Property registered at
      the
      United States Copyright Office or United States Patent and Trademark Office
      to
      be duly recorded at the applicable office, and (iii) give the Agent notice
      whenever it acquires (whether absolutely or by license) or creates any
      additional material Intellectual Property.

    


     (nn)                   Each
      Debtor will from time to time, at the joint and several expense of the Debtors,
      promptly execute and deliver all such further instruments and documents, and
      take all such further action as may be necessary or desirable, or as the Agent
      may reasonably request, in order to perfect and protect any security interest
      granted or purported to be granted hereby or to enable the Secured Parties
      to
      exercise and enforce their rights and remedies hereunder and with respect to
      any
      Collateral or to otherwise carry out the purposes of this
      Agreement.

    


    (oo)                    Schedule
      F attached hereto lists all of the patents, patent applications, trademarks,
      trademark applications, registered copyrights, and domain names owned by any
      of
      the Debtors as of the date hereof.  Schedule F lists all
      material licenses in favor of any Debtor for the use of any patents, trademarks,
      copyrights and domain names as of the date hereof.  All material
      patents and trademarks of the Debtors have been duly recorded at the United
      States Patent and Trademark Office and all material copyrights of the Debtors
      have been duly recorded at the United States Copyright Office.

    


    (pp)                    Except
      as set forth on Schedule G attached hereto, none of the account debtors
      or other persons or entities obligated on any of the Collateral is a
      governmental authority covered by the Federal Assignment of Claims Act or any
      similar federal, state or local statute or rule in respect of such
      Collateral.

    


               5.           Effect
      of Pledge on Certain Rights. If any of the
      Collateral subject to this Agreement consists of nonvoting equity or ownership
      interests (regardless of class, designation, preference or rights) that may
      be
      converted into voting equity or ownership interests upon the occurrence of
      certain events (including, without limitation, upon the transfer of all or
      any
      of the other stock or assets of the issuer), it is agreed that the pledge of
      such equity or ownership interests pursuant to this Agreement or the enforcement
      of any of Agent’s rights hereunder shall not be deemed to be the type of event
      which would trigger such conversion rights notwithstanding any provisions in
      the
      Organizational Documents or agreements to which any Debtor is subject or to
      which any Debtor is party.

    


               6.
                 Defaults.
      The following events shall be “Events of Default”:

     

     

    
      
        
        

      

      
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    (a)   The
      occurrence of an Event of Default (as defined in the Debentures) under the
      Debentures;

    


    (b)   Any
      representation or warranty of any Debtor in this Agreement shall prove to have
      been incorrect in any material respect when made;

    


    (c)   The
      failure by any Debtor to observe or perform any of its obligations hereunder
      for
      five (5) days after delivery to such Debtor of notice of such failure by or
      on
      behalf of a Secured Party unless such default is capable of cure but cannot
      be
      cured within such time frame and such Debtor is using best efforts to cure
      same
      in a timely fashion; or

    


    (d)   If
      any provision of this Agreement 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 Debtor, or a proceeding shall be commenced by any Debtor, or by any
      governmental authority having jurisdiction over any Debtor, seeking to establish
      the invalidity or unenforceability thereof, or any Debtor shall deny that any
      Debtor has any liability or obligation purported to be created under this
      Agreement.

    


                7.              Duty
      To Hold In Trust.

    


    (a)           Upon
      the occurrence of any Event of Default and at any time thereafter, each Debtor
      shall, upon receipt of any revenue, income, dividend, interest or other sums
      subject to the Security Interests, whether payable pursuant to the Debentures
      or
      otherwise, or of any check, draft, note, trade acceptance or other instrument
      evidencing an obligation to pay any such sum, hold the same in trust for the
      Secured Parties and shall forthwith endorse and transfer any such sums or
      instruments, or both, to the Secured Parties, pro-rata in proportion to their
      respective then-currently outstanding principal amount of Debentures for
      application to the satisfaction of the Obligations (and if any Debenture is
      not
      outstanding, pro-rata in proportion to the initial purchases of the remaining
      Debentures).

    


    (b)           If
      any Debtor shall become entitled to receive or shall receive any securities
      or
      other property (including, without limitation, shares of Pledged Securities
      or
      instruments representing Pledged Securities acquired after the date hereof,
      or
      any options, warrants, rights or other similar property or certificates
      representing a dividend, or any distribution in connection with any
      recapitalization, reclassification or increase or reduction of capital, or
      issued in connection with any reorganization of such Debtor or any of its direct
      or indirect subsidiaries) in respect of the Pledged Securities (whether as
      an
      addition to, in substitution of, or in exchange for, such Pledged Securities
      or
      otherwise), such Debtor agrees to (i) accept the same as the agent of the
      Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
      of
      the Secured Parties; and (iii) to deliver any and all certificates or
      instruments evidencing the same to Agent on or before the close of business
      on
      the fifth business day following the receipt thereof by such Debtor, in the
      exact form received together with the Necessary Endorsements, to be held by
      Agent subject to the terms of this Agreement as Collateral.

    
 

    
      
        
        

      

      
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              8.              Rights
      and Remedies Upon Default.

    


               (a)           Upon
      the occurrence of any Event of Default and at any time thereafter, the Secured
      Parties, acting through the Agent, shall have the right to exercise all of
      the
      remedies conferred hereunder and under the Debentures, and the Secured Parties
      shall have all the rights and remedies of a secured party under the
      UCC.  Without limitation, the Agent, for the benefit of the Secured
      Parties, shall have the following rights and powers:

    


    (i)           The
      Agent shall have
      the right to take possession of the Collateral and, for that purpose, enter,
      with the aid and assistance of any person, any premises where the Collateral,
      or
      any part thereof, is or may be placed and remove the same, and each Debtor
      shall
      assemble the Collateral and make it available to the Agent at places which
      the
      Agent shall reasonably select, whether at such Debtor's premises or elsewhere,
      and make available to the Agent, without rent, all of such Debtor’s respective
      premises and facilities for the purpose of the Agent taking possession of,
      removing or putting the Collateral in saleable or disposable form.

    


    (ii)            Upon
      notice to the
      Debtors by Agent, all rights of each Debtor to exercise the voting and other
      consensual rights which it would otherwise be entitled to exercise and all
      rights of each Debtor to receive the dividends and interest which it would
      otherwise be authorized to receive and retain, shall cease.  Upon such
      notice, Agent shall have the right to receive, for the benefit of the Secured
      Parties, any interest, cash dividends or other payments on the Collateral and,
      at the option of Agent, to exercise in such Agent’s discretion all voting rights
      pertaining thereto.  Without limiting the generality of the foregoing,
      Agent shall have the right (but not the obligation) to exercise all rights
      with
      respect to the Collateral as it were the sole and absolute owner thereof,
      including, without limitation, to vote and/or to exchange, at its sole
      discretion, any or all of the Collateral in connection with a merger,
      reorganization, consolidation, recapitalization or other readjustment concerning
      or involving the Collateral or any Debtor or any of its direct or indirect
      subsidiaries.

    


    (iii)           The
      Agent shall have
      the right to operate the business of each Debtor using the Collateral and shall
      have the right to assign, sell, lease or otherwise dispose of and deliver all
      or
      any part of the Collateral, at public or private sale or otherwise, either
      with
      or without special conditions or stipulations, for cash or on credit or for
      future delivery, in such parcel or parcels and at such time or times and at
      such
      place or places, and upon such terms and conditions as the Agent may deem
      commercially reasonable, all without (except as shall be required by applicable
      statute and cannot be waived) advertisement or demand upon or notice to any
      Debtor or right of redemption of a Debtor, which are hereby expressly
      waived.  Upon each such sale, lease, assignment or other transfer of
      Collateral, the Agent, for the benefit of the Secured Parties, may, unless
      prohibited by applicable law which cannot be waived, purchase all or any part
      of
      the Collateral being sold, free from and discharged of all trusts, claims,
      right
      of redemption and equities of any Debtor, which are hereby waived and
      released.

    


    
      
        
        

      

      
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    (iv)                       The
      Agent shall have the right (but not the obligation) to notify any account
      debtors and any obligors under instruments or accounts to make payments directly
      to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’
rights against such account debtors and obligors.

    


    (v)                       The
      Agent, for the benefit of the Secured Parties, may (but is not obligated to)
      direct any financial intermediary or any other person or entity holding any
      investment property to transfer the same to the Agent, on behalf of the Secured
      Parties, or its designee.

    


    (vi)                       The
      Agent may (but is not obligated to) transfer any or all Intellectual Property
      registered in the name of any Debtor at the United States Patent and Trademark
      Office and/or Copyright Office into the name of the Secured Parties or any
      designee or any purchaser of any Collateral.

    


               (b)           The
      Agent shall comply with any applicable law in connection with a disposition
      of
      Collateral and such compliance will not be considered adversely to affect the
      commercial reasonableness of any sale of the Collateral.  The Agent
      may sell the Collateral without giving any warranties and may specifically
      disclaim such warranties.  If the Agent sells any of the Collateral on
      credit, the Debtors will only be credited with payments actually made by the
      purchaser.  In addition, each Debtor waives any and all rights that it
      may have to a judicial hearing in advance of the enforcement of any of the
      Agent’s rights and remedies hereunder, including, without limitation, its right
      following an Event of Default to take immediate possession of the Collateral
      and
      to exercise its rights and remedies with respect thereto.

     

        (c)           For
      the purpose of enabling the Agent to further exercise rights and remedies under
      this Section 8 or elsewhere provided by agreement or applicable law, each Debtor
      hereby grants to the Agent, for the benefit of the Agent and the Secured
      Parties, an irrevocable, nonexclusive license (exercisable without payment
      of
      royalty or other compensation to such Debtor) to use, license or sublicense
      following an Event of Default, any Intellectual Property now owned or hereafter
      acquired by such Debtor, and wherever the same may be located, and including
      in
      such license access to all media in which any of the licensed items may be
      recorded or stored and to all computer software and programs used for the
      compilation or printout thereof.

    


                9.              Applications
      of Proceeds. The proceeds of any such sale, lease or other disposition
      of the Collateral hereunder or from payments made on account of any insurance
      policy insuring any portion of the Collateral shall be applied first, to the
      expenses of retaking, holding, storing, processing and preparing for sale,
      selling, and the like (including, without limitation, any taxes, fees and other
      costs incurred in connection therewith) of the Collateral, to the reasonable
      attorneys’ fees and expenses incurred by the Agent in enforcing the Secured
      Parties’ rights hereunder and in connection with collecting, storing and
      disposing of the Collateral, and then to satisfaction of the Obligations pro
      rata among the Secured Parties (based on then-outstanding principal amounts
      of
      Debentures at the time of any such determination), and to the payment of any
      other amounts required by applicable law, after which the Secured Parties shall
      pay to the applicable Debtor any surplus proceeds. 

     

     

    
      
        
        

      

      
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    If,
      upon
      the sale, license or other disposition of the Collateral, the proceeds thereof
      are insufficient to pay all amounts to which the Secured Parties are legally
      entitled, the Debtors will be liable for the deficiency, together with interest
      thereon, at the rate of 18% per annum or the lesser amount permitted by
      applicable law (the “Default Rate”), and the reasonable fees of any attorneys
      employed by the Secured Parties to collect such deficiency.  To the
      extent permitted by applicable law, each Debtor waives all claims, damages
      and
      demands against the Secured Parties arising out of the repossession, removal,
      retention or sale of the Collateral, unless due solely to the gross negligence
      or willful misconduct of the Secured Parties as determined by a final judgment
      (not subject to further appeal) of a court of competent
      jurisdiction.

    


               10.           Securities
      Law Provision.  Each Debtor recognizes that Agent may be
      limited in its ability to effect a sale to the public of all or part of the
      Pledged Securities by reason of certain prohibitions in the Securities Act
      of
      1933, as amended, or other federal or state securities laws (collectively,
      the
“Securities Laws”), and may be compelled to resort to one or more sales
      to a restricted group of purchasers who may be required to agree to acquire
      the
      Pledged Securities for their own account, for investment and not with a view
      to
      the distribution or resale thereof.  Each Debtor agrees that sales so
      made may be at prices and on terms less favorable than if the Pledged Securities
      were sold to the public, and that Agent has no obligation to delay the sale
      of
      any Pledged Securities for the period of time necessary to register the Pledged
      Securities for sale to the public under the Securities Laws.  Each
      Debtor shall cooperate with Agent in its attempt to satisfy any requirements
      under the Securities Laws (including, without limitation, registration
      thereunder if requested by Agent) applicable to the sale of the Pledged
      Securities by Agent.

     

                11.              Costs
      and Expenses. Each Debtor agrees to pay all reasonable
      out-of-pocket fees, costs and expenses incurred in connection with any filing
      required hereunder, including without limitation, any financing statements
      pursuant to the UCC, continuation statements, partial releases and/or
      termination statements related thereto or any expenses of any searches
      reasonably required by the Agent.  The Debtors shall also pay all
      other claims and charges which in the reasonable opinion of the Agent is
      reasonably likely to prejudice, imperil or otherwise affect the Collateral
      or
      the Security Interests therein.  The Debtors will also, upon demand,
      pay to the Agent the amount of any and all reasonable expenses, including the
      reasonable fees and expenses of its counsel and of any experts and agents,
      which
      the Agent, for the benefit of the Secured Parties, may incur in connection
      with
      (i) the enforcement of this Agreement, (ii) the custody or preservation of,
      or
      the sale of, collection from, or other realization upon, any of the Collateral,
      or (iii) the exercise or enforcement of any of the rights of the Secured Parties
      under the Debentures. Until so paid, any fees payable hereunder shall be added
      to the principal amount of the Debentures and shall bear interest at the Default
      Rate.

    


                12.              Responsibility
      for Collateral. The Debtors assume all liabilities and responsibility
      in connection with all Collateral, and the Obligations shall in no way be
      affected or diminished by reason of the loss, destruction, damage or theft
      of
      any of the Collateral or its unavailability for any reason.  Without
      limiting the generality of the foregoing, (a) neither the Agent nor any Secured
      Party (i) has any duty (either before or after an Event of Default) to collect
      any amounts in respect of the Collateral or to preserve any rights relating
      to
      the Collateral, or (ii) has any obligation to clean-up or otherwise prepare
      the
      Collateral for sale, and (b) each Debtor shall remain obligated and liable
      under
      each contract or agreement included in the Collateral to be observed or
      performed by such Debtor thereunder.  

     

     

    
      
        
        

      

      
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    Neither
      the Agent nor any Secured Party shall have any obligation or liability under
      any
      such contract or agreement by reason of or arising out of this Agreement or
      the
      receipt by the Agent or any Secured Party of any payment relating to any of
      the
      Collateral, nor shall the Agent or any Secured Party be obligated in any manner
      to perform any of the obligations of any Debtor under or pursuant to any such
      contract or agreement, to make inquiry as to the nature or sufficiency of any
      payment received by the Agent or any Secured Party in respect of the Collateral
      or as to the sufficiency of any performance by any party under any such contract
      or agreement, to present or file any claim, to take any action to enforce any
      performance or to collect the payment of any amounts which may have been
      assigned to the Agent or to which the Agent or any Secured Party may be entitled
      at any time or times.

    


               13.           Security
      Interests Absolute. All rights of the
      Secured Parties and all obligations of the Debtors hereunder, shall be absolute
      and unconditional, irrespective of: (a) any lack of validity or enforceability
      of this Agreement, the Debentures or any agreement entered into in connection
      with the foregoing, or any portion hereof or thereof; (b) any change in the
      time, manner or place of payment or performance of, or in any other term of,
      all
      or any of the Obligations, or any other amendment or waiver of or any consent
      to
      any departure from the Debentures or any other agreement entered into in
      connection with the foregoing; (c) any exchange, release or nonperfection of
      any
      of the Collateral, or any release or amendment or waiver of or consent to
      departure from any other collateral for, or any guarantee, or any other
      security, for all or any of the Obligations; (d) any action by the Secured
      Parties to obtain, adjust, settle and cancel in its sole discretion any
      insurance claims or matters made or arising in connection with the Collateral;
      or (e) any other circumstance which might otherwise constitute any legal or
      equitable defense available to a Debtor, or a discharge of all or any part
      of
      the Security Interests granted hereby.  Until the Obligations shall
      have been paid and performed in full, the rights of the Secured Parties shall
      continue even if the Obligations are barred for any reason, including, without
      limitation, the running of the statute of limitations or
      bankruptcy.  Each Debtor expressly waives presentment, protest, notice
      of protest, demand, notice of nonpayment and demand for performance. In the
      event that at any time any transfer of any Collateral or any payment received
      by
      the Secured Parties hereunder shall be deemed by final order of a court of
      competent jurisdiction to have been a voidable preference or fraudulent
      conveyance under the bankruptcy or insolvency laws of the United States, or
      shall be deemed to be otherwise due to any party other than the Secured Parties,
      then, in any such event, each Debtor’s obligations hereunder shall survive
      cancellation of this Agreement, and shall not be discharged or satisfied by
      any
      prior payment thereof and/or cancellation of this Agreement, but shall remain
      a
      valid and binding obligation enforceable in accordance with the terms and
      provisions hereof.  Each Debtor waives all right to require the
      Secured Parties to proceed against any other person or entity or to apply any
      Collateral which the Secured Parties may hold at any time, or to marshal assets,
      or to pursue any other remedy. Each Debtor waives any defense arising by reason
      of the application of the statute of limitations to any obligation secured
      hereby.

     

    
 

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

                

        14.             Term
      of Agreement. This Agreement and the Security Interests shall terminate
      on the date on which all payments under the Debentures have been indefeasibly
      paid in full and all other Obligations have been paid or discharged; provided,
      however, that all indemnities of the Debtors contained in this Agreement
      (including, without limitation, Annex B hereto) shall survive and remain
      operative and in full force and effect regardless of the termination of this
      Agreement.

     

        15.
                 Power
      of Attorney; Further Assurances.

    


     (a)           Each
      Debtor authorizes the Agent, and does hereby make, constitute and appoint the
      Agent and its officers, agents, successors or assigns with full power of
      substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
      the name of the Agent or such Debtor, to, after the occurrence and during the
      continuance of an Event of Default, (i) endorse any note, checks, drafts, money
      orders or other instruments of payment (including payments payable under or
      in
      respect of any policy of insurance) in respect of the Collateral that may come
      into possession of the Agent; (ii) to sign and endorse any financing statement
      pursuant to the UCC or any invoice, freight or express bill, bill of lading,
      storage or warehouse receipts, drafts against debtors, assignments,
      verifications and notices in connection with accounts, and other documents
      relating to the Collateral; (iii) to pay or discharge taxes, liens,
      security interests or other encumbrances at any time levied or placed on or
      threatened against the Collateral; (iv) to demand, collect, receipt for,
      compromise, settle and sue for monies due in respect of the Collateral; (v)
      to
      transfer any Intellectual Property or provide licenses respecting any
      Intellectual Property; and (vi) generally, at the option of the Agent, and
      at
      the expense of the Debtors, at any time, or from time to time, to execute and
      deliver any and all documents and instruments and to do all acts and things
      which the Agent deems necessary to protect, preserve and realize upon the
      Collateral and the Security Interests granted therein in order to effect the
      intent of this Agreement and the Debentures all as fully and effectually as
      the
      Debtors might or could do; and each Debtor hereby ratifies all that said
      attorney shall lawfully do or cause to be done by virtue hereof.  This
      power of attorney is coupled with an interest and shall be irrevocable for
      the
      term of this Agreement and thereafter as long as any of the Obligations shall
      be
      outstanding.  The designation set forth herein shall be deemed to
      amend and supersede any inconsistent provision in the Organizational Documents
      or other documents or agreements to which any Debtor is subject or to which
      any
      Debtor is a party.  Without limiting the generality of the foregoing,
      after the occurrence and during the continuance of an Event of Default, each
      Secured Party is specifically authorized to execute and file any applications
      for or instruments of transfer and assignment of any patents, trademarks,
      copyrights or other Intellectual Property with the United States Patent and
      Trademark Office and the United States Copyright Office.

    


     (b)           On
      a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
      and record, as the case may be, with the proper filing and recording agencies
      in
      any jurisdiction, including, without limitation, the jurisdictions indicated
      on
Schedule C attached hereto, all such instruments, and take all such
      action as may reasonably be deemed necessary or advisable, or as reasonably
      requested by the Agent, to perfect the Security Interests granted hereunder
      and
      otherwise to carry out the intent and purposes of this Agreement, or for
      assuring and confirming to the Agent the grant or perfection of a perfected
      security interest in all the Collateral under the UCC.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    
 

    (c)           Each
      Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact,
      with full authority in the place and instead of such Debtor and in the name
      of
      such Debtor, from time to time in the Agent’s discretion, to take any action and
      to execute any instrument which the Agent may deem necessary or advisable to
      accomplish the purposes of this Agreement, including the filing, in its sole
      discretion, of one or more financing or continuation statements and amendments
      thereto, relative to any of the Collateral without the signature of such Debtor
      where permitted by law, which financing statements may (but need not) describe
      the Collateral as “all assets” or “all personal property” or words of like
      import, and ratifies all such actions taken by the Agent.  This power
      of attorney is coupled with an interest and shall be irrevocable for the term
      of
      this Agreement and thereafter as long as any of the Obligations shall be
      outstanding.

    


                16.              Notices.
      All notices, requests, demands and other communications hereunder shall be
      subject to the notice provision of the Purchase Agreement (as such term is
      defined in the Debentures).

    


                17.              Other
      Security. To the extent that the Obligations are now or
      hereafter  secured by property other than the Collateral or by the
      guarantee, endorsement or property of any other person, firm, corporation or
      other entity, then the Agent shall have the right, in its sole discretion,
      to
      pursue, relinquish, subordinate, modify or take any other action with respect
      thereto, without in any way modifying or affecting any of the Secured Parties’
rights and remedies hereunder.

    


               18.             
      Appointment of Agent. The Secured Parties
      hereby appoint Enable Growth Partners, LP to act as their agent
      (“Enable”or
      “Agent”) for purposes of exercising any and all rights and
      remedies of the Secured Parties hereunder. Such appointment shall continue
      until
      revoked in writing by a Majority in Interest, at which time a Majority in
      Interest shall appoint a new Agent, provided that the existing Agent may not
      be
      removed as Agent unless such Agent shall then hold less than
      $100,000 in principal amount of Debentures;
provided, further, that such removal may occur only if
      each of the other Secured Parties shall then hold not less than an aggregate
      of
      $50,000 in principal amount of Debentures.  The Agent shall have
      the rights, responsibilities and immunities set forth in Annex B
      hereto.

     

                19.              Miscellaneous.

    


    (a)           No
      course of dealing between the Debtors and the Secured Parties, nor any failure
      to exercise, nor any delay in exercising, on the part of the Secured Parties,
      any right, power or privilege hereunder or under the Debentures shall operate
      as
      a waiver thereof; nor shall any single or partial exercise of any right, power
      or privilege hereunder or thereunder preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege.

    


    (b)           All
      of the rights and remedies of the Secured Parties with respect to the
      Collateral, whether established hereby or by the Debentures or by any other
      agreements, instruments or documents or by law shall be cumulative and may
      be
      exercised singly or concurrently.

     

    
 

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    (c)           This
      Agreement, together with the exhibits and schedules hereto, contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior agreements and understandings, oral or written, with respect
      to such matters, which the parties acknowledge have been merged into this
      Agreement and the exhibits and schedules hereto. No provision of this
      Agreement may be waived, modified, supplemented or amended except in a written
      instrument signed, in the case of an amendment, by the Debtors and the Secured
      Parties or, in the case of a waiver, by the party against whom enforcement
      of
      any such waived provision is sought.

    


    (d)           If
      any term, provision, covenant or restriction of this Agreement is held by a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    


    (e)
                 No waiver of
      any default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder in any manner impair the exercise of any such
      right.

    


    (f)
                 This Agreement
      shall be binding upon and inure to the benefit of the parties and their
      successors and permitted assigns.  The Company and the Guarantors may
      not assign this Agreement or any rights or obligations hereunder without the
      prior written consent of each Secured Party (other than by
      merger).  Any Secured Party may assign any or all of its rights under
      this Agreement to any Person to whom such Secured Party assigns or transfers
      any
      Securities, provided such transferee agrees in writing to be bound, with respect
      to the transferred Securities, by the provisions of this Agreement that apply
      to
      the “Secured Parties.”

    


    (g)           Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    
 

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (h)   All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof.  Each Debtor agrees that all
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and the Debentures (whether brought
      against a party hereto or its respective affiliates, directors, officers,
      shareholders, partners, members, employees or agents) shall be commenced
      exclusively in the state and federal courts sitting in the City of New York,
      Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the City of New York,
      Borough of Manhattan for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or discussed
      herein, and hereby irrevocably waives, and agrees not to assert in any
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such proceeding is improper. Each party hereto hereby
      irrevocably waives personal service of process and consents to process being
      served in any such proceeding by mailing a copy thereof via registered or
      certified mail or overnight delivery (with evidence of delivery) to such party
      at the address in effect for notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law.  Each party hereto
      hereby irrevocably waives, to the fullest extent permitted by applicable law,
      any and all right to trial by jury in any legal proceeding arising out of
      or relating to this Agreement or the transactions contemplated hereby. If any
      party shall commence a proceeding to enforce any provisions of this Agreement,
      then the prevailing party in such proceeding shall be reimbursed by the
      other party for its reasonable attorney’s fees and other costs and expenses
      incurred with the investigation, preparation and prosecution of such
      proceeding.

    


    (i)           This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

    


    (j)           All
      Debtors shall jointly and severally be liable for the obligations of each Debtor
      to the Secured Parties hereunder.

    


    (k)           Each
      Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured
      Parties and their respective partners, members, shareholders, officers,
      directors, employees and agents (and any other persons with other titles
      that have similar functions) (collectively, “Indemnitees”) from and
      against any and all losses, claims, liabilities, damages, penalties, suits,
      costs and expenses, of any kind or nature, (including fees relating to the
      cost
      of investigating and defending any of the foregoing) imposed on, incurred by
      or
      asserted against such Indemnitee in any way related to or arising from or
      alleged to arise from this Agreement or the Collateral, except any such losses,
      claims, liabilities, damages, penalties, suits, costs and expenses which result
      from the gross negligence or willful misconduct of the Indemnitee as determined
      by a final, nonappealable decision of a court of competent
      jurisdiction.  

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    This
      indemnification provision is in addition to, and not in limitation of, any
      other indemnification provision in the Debentures, the Purchase Agreement (as
      such term is defined in the Debentures) or any other agreement, instrument
      or
      other document executed or delivered in connection herewith or
      therewith.

    


    (l)           Nothing
      in this Agreement shall be construed to subject Agent or any Secured Party
      to
      liability as a partner in any Debtor or any if its direct or indirect
      subsidiaries that is a partnership or as a member in any Debtor or any of its
      direct or indirect subsidiaries that is a limited liability company, nor shall
      Agent or any Secured Party be deemed to have assumed any obligations under
      any
      partnership agreement or limited liability company agreement, as applicable,
      of
      any such Debtor or any if its direct or indirect subsidiaries or otherwise,
      unless and until any such Secured Party exercises its right to be substituted
      for such Debtor as a partner or member, as applicable, pursuant
      hereto.

    


    (m)           To
      the extent that the grant of the security interest in the Collateral and the
      enforcement of the terms hereof require the consent, approval or action of
      any
      partner or member, as applicable, of any Debtor or any direct or indirect
      subsidiary of any Debtor or compliance with any provisions of any of the
      Organizational Documents, the Debtors hereby grant such consent and approval
      and
      waive any such noncompliance with the terms of said documents.

    


    [SIGNATURE
      PAGES FOLLOW]

     

     

     

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    
 

                IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be duly executed on the day and year first above written.

    


    


    
      	
              GUANGZHOU
                GLOBAL TELECOM, INC.

               

            
	
              By: 
                /s/  Li Yanquan                        

                   Name:
                Li Yanquan

                   Title:
                Chief Executive Officer

               

            
	 
	
              GLOBAL
                TELECOM HOLDING LIMITED

               

               

            
	
              By:/s/ 
                Li Yanquan                        

                   Name:
                Li Yanquan

                   Title:
                Chief Executive Officer

               

            
	 
	
              GUANGZHOU
                GLOBAL TELECOMMUNICATION COMPANY LIMITED

               

               

            
	
              By:/s/ 
                Li Yanquan                        

                   Name:
                Li Yanquan

                   Title:
                Chief Executive Officer

               

            


    

    


    


    


    


    


    


                          [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
      PAGE OF HOLDERS TO GZGT SA]

    


               Name
      of Investing Entity: __________________________

    Signature
      of Authorized Signatory of Investing entity:
      _________________________

    Name
      of
      Authorized Signatory: _________________________

    Title
      of
      Authorized Signatory: __________________________

    


     

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    


    


    


    
 

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    


    SECURITY
      AGREEMENT SCHEDULES

    


    


    SCHEDULE
      A

    


    Principal
      Place of Business of Debtors:

    APT
      29D,
      Block E

    No.11
      Hao
      Jing Street, Zhu Jiang Di Jing Yuan

    YiZhou
      Road, HaiZhu District,

    Guangzhou
      China, 510310

    


    


    Locations
      Where Collateral is Located or Stored:

    APT
      29D,
      Block E

    No.11
      Hao
      Jing Street, Zhu Jiang Di Jing Yuan

    YiZhou
      Road, HaiZhu District,

    Guangzhou
      China, 510310

     

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

     

     

    
 

    SCHEDULE
      B

    PERMITTED
      LIENS

    


    None

     

     

     

    
 

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      C

    JURISDICTIONS
      TO FILE AND RECORD SECURITY INTERESTS

    


    Florida

    


    


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    SCHEDULE
      D

    STATE
      OF ORGANIZATION

    


    Guangzhou
      Global Telecom, Inc. – Florida

    


    Global
      Telecom Holding Limited - British Virgin Islands

    


    Guangzhou
      Global Telecom Limited - 广州寰球通讯有限公司–
      People’s Republic of China

     

     

     

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

     

    SCHEDULE
      E

    TRADE
      NAMES

    


    Guangzhou
      Global Telecom, Inc. was previously known as Avalon Development Enterprises,
      Inc.

    


    


    


    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      F

    INTELLECTUAL
      PROPERTY

    


    None.

     

     

     

     

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      G

    GOVERNMENTAL
      AUTHORITY

    


    None.

    


     

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

     

     

     

    SCHEDULE
      H

    PLEDGED
      SECURITIES

    


    


    Global
      Telecom Holding Limited

    1,000
      shares of common stock

    


    Guangzhou
      Global Telecom Limited

    All
      registered capital of RMB 3,030,000

    


    


    


    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    


    


    


    ANNEX
      A

    to

    SECURITY

    AGREEMENT

    
       

      FORM
        OF ADDITIONAL DEBTOR JOINDER

       

    

     

    Security
      Agreement dated as of [_____ ___, 200__ made by

    Guangzhou
      Global Telecom, Inc

    and
      its
      subsidiaries party thereto from time to time, as Debtors

    to
      and in
      favor of

    the
      Secured Parties identified therein (the “Security
      Agreement”)

    


               Reference
      is made to the Security Agreement as defined above; capitalized terms used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Security Agreement.

    


               The
      undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
      to the Secured Parties referred to above, the undersigned shall (a) be an
      Additional Debtor under the Security Agreement, (b) have all the rights and
      obligations of the Debtors under the Security Agreement as fully and to the
      same
      extent as if the undersigned was an original signatory thereto and (c) be deemed
      to have made the representations and warranties set forth therein as of the
      date
      of execution and delivery of this Additional Debtor Joinder.  WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS
      TO
      THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET
      FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF
      JURY TRIAL PROVISIONS SET FORTH THEREIN.

    


               Attached
      hereto are supplemental and/or replacement Schedules to the Security Agreement,
      as applicable.

    


               An
      executed copy of this Joinder shall be delivered to the Secured Parties, and
      the
      Secured Parties may rely on the matters set forth herein on or after the date
      hereof.  This Joinder shall not be modified, amended or terminated
      without the prior written consent of the Secured Parties.

     

     

          

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

     

     

     IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned.

    


    
      	 	
              [Name
                of Additional Debtor]

            


    

    


    
      	 	
              By:

            


    

    
      	 	
              Name:

            


    

    
      	 	
              Title:

            


    

    


    
      	 	
              Address:

            


    

    


    


    


    


    


    
      	
               

            	
              Dated:

            


    

    


     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    ANNEX
      B

    to

    SECURITY

    AGREEMENT

    


    THE
      AGENT

    


                          1.  Appointment. The
      Secured Parties (all capitalized terms used herein and not otherwise defined
      shall have the respective meanings provided in the Security Agreement to which
      this Annex B is attached (the "Agreement")), by their acceptance of the
      benefits of the Agreement, hereby designate Enable Growth Partners, LP
      (“Enable” or “Agent”) as the Agent to act as specified herein
      and in the Agreement.  Each Secured Party shall be deemed irrevocably
      to authorize the Agent to take such action on its behalf under the provisions
      of
      the Agreement and any other Transaction Document (as such term is defined in
      the
      Debentures) and to exercise such powers and to perform such duties hereunder
      and
      thereunder as are specifically delegated to or required of the Agent by the
      terms hereof and thereof and such other powers as are reasonably incidental
      thereto.  The Agent may perform any of its duties hereunder by or
      through its agents or employees.

    


                          2.
      Nature of Duties.  The Agent shall have no
      duties or responsibilities except those expressly set forth in the
      Agreement.  Neither the Agent nor any of its partners, members,
      shareholders, officers, directors, employees or agents shall be liable for
      any
      action taken or omitted by it as such under the Agreement or hereunder or in
      connection herewith or therewith, be responsible for the consequence of any
      oversight or error of judgment or answerable for any loss, unless caused solely
      by its or their gross negligence or willful misconduct as determined by a final
      judgment (not subject to further appeal) of a court of competent
      jurisdiction.  The duties of the Agent shall be mechanical and
      administrative in nature; the Agent shall not have by reason of the Agreement
      or
      any other Transaction Document a fiduciary relationship in respect of any Debtor
      or any Secured Party; and nothing in the Agreement or any other Transaction
      Document, expressed or implied, is intended to or shall be so construed as
      to
      impose upon the Agent any obligations in respect of the Agreement or any other
      Transaction Document except as expressly set forth herein and
      therein.

    


                          3.
      Lack of Reliance on the
Agent.  Independently and without reliance
      upon the Agent, each Secured Party, to the extent it deems appropriate, has
      made
      and shall continue to make (i) its own independent investigation of the
      financial condition and affairs of the Company and its subsidiaries in
      connection with such Secured Party’s investment in the Debtors, the creation and
      continuance of the Obligations, the transactions contemplated by the Transaction
      Documents, and the taking or not taking of any action in connection therewith,
      and (ii) its own appraisal of the creditworthiness of the Company and its
      subsidiaries, and of the value of the Collateral from time to time, and the
      Agent shall have no duty or responsibility, either initially or on a continuing
      basis, to provide any Secured Party with any credit, market or other
      information with respect thereto, whether coming into its possession before
      any
      Obligations are incurred or at any time or times
      thereafter.  

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    The
      Agent
      shall not be responsible to the Debtors or any Secured Party for any
      recitals, statements, information, representations or warranties herein or
      in
      any document, certificate or other writing delivered in connection herewith,
      or
      for the execution, effectiveness, genuineness, validity, enforceability,
      perfection, collectibility, priority or sufficiency of the Agreement or any
      other Transaction Document, or for the financial condition of the Debtors or
      the
      value of any of the Collateral, or be required to make any inquiry concerning
      either the performance or observance of any of the terms, provisions or
      conditions of the Agreement or any other Transaction Document, or the financial
      condition of the Debtors, or the value of any of the Collateral, or the
      existence or possible existence of any default or Event of Default under the
      Agreement, the Debentures or any of the other Transaction
      Documents.

    


                          4.
      Certain Rights of the Agent.  The Agent shall have
      the right to take any action with respect to the Collateral, on behalf of all
      of
      the Secured Parties.  To the extent practical, the Agent shall request
      instructions from the Secured Parties with respect to any material act or action
      (including failure to act) in connection with the Agreement or any other
      Transaction Document, and shall be entitled to act or refrain from acting in
      accordance with the instructions of Secured Parties holding a majority in
      principal amount of Debentures (based on then-outstanding principal amounts
      of
      Debentures at the time of any such determination); if such instructions are
      not
      provided despite the Agent’s request therefor, the Agent shall be entitled to
      refrain from such act or taking such action, and if such action is taken, shall
      be entitled to appropriate indemnification from the Secured Parties in respect
      of actions to be taken by the Agent; and the Agent shall not incur liability
      to
      any person or entity by reason of so refraining.  Without limiting the
      foregoing, (a) no Secured Party shall have any right of action whatsoever
      against the Agent as a result of the Agent acting or refraining from acting
      hereunder in accordance with the terms of the Agreement or any other Transaction
      Document, and the Debtors shall have no right to question or challenge the
      authority of, or the instructions given to, the Agent pursuant to the foregoing
      and (b) the Agent shall not be required to take any action which the Agent
      believes (i) could reasonably be expected to expose it to personal liability
      or
      (ii) is contrary to this Agreement, the Transaction Documents or applicable
      law.

    


                          5.  Reliance.  The
      Agent shall be entitled to rely, and shall be fully protected in relying, upon
      any writing, resolution, notice, statement, certificate, telex, teletype or
      telecopier message, cablegram, radiogram, order or other document or telephone
      message signed, sent or made by the proper person or entity, and, with respect
      to all legal matters pertaining to the Agreement and the other Transaction
      Documents and its duties thereunder, upon advice of counsel selected by it
      and
      upon all other matters pertaining to this Agreement and the other Transaction
      Documents and its duties thereunder, upon advice of other experts selected
      by
      it. Anything to the contrary notwithstanding, the Agent shall have no
      obligation whatsoever to any Secured Party to assure that the Collateral exists
      or is owned by the Debtors or is cared for, protected or insured or that the
      liens granted pursuant to the Agreement have been properly or sufficiently
      or
      lawfully created, perfected, or enforced or are entitled to any particular
      priority.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

                          6.  Indemnification.  To
      the extent that the Agent is not reimbursed and indemnified by the Debtors,
      the
      Secured Parties will jointly and severally reimburse and indemnify the Agent,
      in
      proportion to their initially purchased respective principal amounts of
      Debentures, from and against any and all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever which may be imposed on, incurred by or
      asserted against the Agent in performing its duties hereunder or under the
      Agreement or any other Transaction Document, or in any way relating to or
      arising out of the Agreement or any other Transaction Document except for those
      determined by a final judgment (not subject to further appeal) of a court of
      competent jurisdiction to have resulted solely from the Agent's own gross
      negligence or willful misconduct.  Prior to taking any action
      hereunder as Agent, the Agent may require each Secured Party to deposit with
      it
      sufficient sums as it determines in good faith is necessary to protect the
      Agent for costs and expenses associated with taking such action.

    


                          7.  Resignation
      by the Agent.

    


    (a)  The
      Agent may resign from the performance of all its functions and duties under
      the
      Agreement and the other Transaction Documents at any time by giving 30 days'
      prior written notice (as provided in the Agreement) to the Debtors and the
      Secured Parties.  Such resignation shall take effect upon the
      appointment of a successor Agent pursuant to clauses (b) and (c)
      below.

    


    (b)  Upon
      any such notice of resignation, the Secured Parties, acting by a Majority
      in Interest, shall appoint a successor Agent hereunder.

    


    (c)
      If a
      successor Agent shall not have been so appointed within said 30-day period,
      the
      Agent shall then appoint a successor Agent who shall serve as Agent until such
      time, if any, as the Secured Parties appoint a successor Agent as provided
      above.  If a successor Agent has not been appointed within such 30-day
      period, the Agent may petition any court of competent jurisdiction or may
      interplead the Debtors and the Secured Parties in a proceeding for the
      appointment of a successor Agent, and all fees, including, but not limited
      to,
      extraordinary fees associated with the filing of interpleader and expenses
      associated therewith, shall be payable by the Debtors on demand.

    


                          8.  Rights
      with respect to Collateral.  Each Secured Party
      agrees with all other Secured Parties and the Agent (i) that it shall not,
      and
      shall not attempt to, exercise any rights with respect to its security interest
      in the Collateral, whether pursuant to any other agreement or otherwise (other
      than pursuant to this Agreement), or take or institute any action against the
      Agent or any of the other Secured Parties in respect of the Collateral or its
      rights hereunder (other than any such action arising from the breach of this
      Agreement) and (ii) that such Secured Party has no other rights with respect
      to
      the Collateral other than as set forth in this Agreement and the other
      Transaction Documents. Upon the acceptance of any appointment as Agent
      hereunder by a successor Agent, such successor Agent shall thereupon succeed
      to
      and become vested with all the rights, powers, privileges and duties of the
      retiring Agent and the retiring Agent shall be discharged from its duties and
      obligations under the Agreement.  After any retiring Agent’s resignation or
      removal hereunder as Agent, the provisions of the Agreement including this
      Annex
      B shall inure to its benefit as to any actions taken or omitted to be taken
      by
      it while it was Agent.