f8k0808ex10iv_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.

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
 

       (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.