Exhibit
10.45




SECURITY
AGREEMENT





SECURITY
AGREEMENT, dated as of October 31, 2007 (this “Agreement”), among D.L. Claire
Capital, Inc. (“D.L. Claire”) and Marshall Holdings International, Inc. (the
“Debtor”) and the holder or holders of the 12% Notes due May 1, 2008 in the
original aggregate principal amount of $650,000 (the “Notes”), signatory hereto,
their endorsees, transferees and assigns (collectively referred to as, the
“Secured Parties”).





W
I T N E S S E T H:





WHEREAS,
pursuant to the Notes, the Secured Parties have severally agreed to extend the
loans to D.L. Claire evidenced by the Notes;





WHEREAS,
pursuant to a certain Guarantee dated as of the date hereof (the “Guaranty”),
the Debtor has agreed to guaranty and act as surety for payment of such loans;
and





WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the
Notes, the Debtor has agreed to execute and deliver to the Secured Parties this
Agreement and to grant the Secured Parties, a perfected security interest in
certain property of such Debtor to secure the prompt payment, performance and
discharge in full of all of D.L. Claire’s obligations under the Notes and the
Debtor’s obligations under the Guaranty.





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 Debtor, 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):











(i)         
  All goods, including, without limitations, (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, Intellectual Property, 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





(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 Debtor, including, without limitation, the shares of capital
stock and the other equity interests of the Debtor, 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 (all of the foregoing being referred to
herein as the “Pledged Securities”) and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all
dividends, interest and cash.





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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.





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





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(d)        
   “Necessary Endorsement” shall mean undated stock powers
endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Secured Parties may reasonably
request.





(e)        
   “Obligations” means all of the Debtor’s obligations under this
Agreement, the Notes, the Guaranty 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 Notes and the loans extended pursuant thereto; (ii) any and all
other fees, indemnities, costs, obligations and liabilities of the Debtor from
time to time under or in connection with this Agreement, the Notes, the Guaranty
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 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)     
      “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 Perfected Security Interest. As an inducement for the Secured Parties
to extend the loans as evidenced by the Notes and to secure the complete and
timely payment, performance and discharge in full, as the case may be, of all of
the Obligations, the Debtor hereby unconditionally and irrevocably pledges,
grants and hypothecates to the Secured Parties a continuing and perfected
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 (the “Security Interest”).





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3.         
   Delivery of
Certain Collateral. Contemporaneously or prior to the execution of this
Agreement, the Debtor shall deliver or cause to be delivered to the Secured
Parties (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 requested by the Secured Parties. The
Debtor is, contemporaneously with the execution hereof, delivering to the
Secured Parties, or have previously delivered to the Secured Parties, a true and
correct copy of each Organizational Document governing any of the Pledged
Securities.





4.       
     Representations, Warranties,
Covenants and Agreements of the Debtor. The Debtor represents and
warrants to, and covenants and agrees with, the Secured Parties, except as
otherwise provided in the Disclosure Annex to the Purchase Agreement of even
date herewith, as follows:





(a)        
   The 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 the 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 the Debtor.  This Agreement constitutes the legal, valid
and binding obligation of the Debtor, enforceable against the 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.





(b)       
    The Debtor has 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, the 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 as disclosed on Schedule A,
none of such Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor.





(c)      
     Except as set forth on Schedule B attached hereto,
the Debtor is 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 Interest.  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.  So long as this Agreement shall be in effect, the Debtor
shall not execute and shall not knowingly permit to be on file in any such
office or agency any such 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).





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(d)      
     Except as set forth on Schedule I attached hereto,
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)     
      The 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 Interest to create in favor of the Secured Parties a valid, perfected
and continuing perfected second priority lien in the Collateral.





(f)       
     This Agreement creates in favor of the Secured
Parties a valid, security interest in the Collateral, 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. 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 (p), 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, 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 Secured Parties hereunder.





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(g)        
   The Debtor hereby authorizes the Secured Parties, or any of
them, to file one or more financing statements under the UCC, with respect to
the Security Interest with the proper filing and recording agencies in any
jurisdiction deemed proper by them.





(h)      
     The execution, delivery and performance of this
Agreement by the Debtor 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. No
consent (including, without limitation, from stockholders or creditors of any
Debtor) is required for any Debtor to enter into and perform its obligations
hereunder.





(i)       
     The capital stock and other equity interests
listed on Schedule H hereto represent all of the capital stock and other equity
interests of the Debtor, and represent all capital stock and other equity
interests owned, directly or indirectly, by the Debtor.





(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.





(k)      
     The Debtor shall at all times maintain the liens
and Security Interest provided for hereunder as valid and perfected second
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 14 hereof.  The Debtor hereby agrees to
defend the same against the claims of any and all persons and entities. The
Debtor shall safeguard and protect all Collateral for the account of the Secured
Parties.   At the request of the Secured Parties, the Debtor will
sign and deliver to 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 Secured Parties and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Secured Parties to be, necessary
or desirable to effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, the Debtor shall pay all fees, taxes
and other amounts necessary to maintain the Collateral and the Security Interest
hereunder, and the Debtor shall obtain and furnish to the Secured Parties 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 Interest
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.





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(m)           The
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)       
    The Debtor shall maintain with financially sound and
reputable insurers, insurance with respect to the Collateral owned by them
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.  The Debtor shall cause each insurance
policy issued in connection herewith to provide, and the insurer issuing such
policy to certify to the Secured Parties that (a) the Secured Parties 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 Secured Parties
and such cancellation or change shall not be effective as to the Secured Parties
for at least thirty (30) days after receipt by the Secured Parties of such
notice, unless the effect of such change is to extend or increase coverage under
the policy; and (c) the Secured Parties 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. If no Event of Default (as
defined in the Debenture) exists and if the proceeds arising out of any claim or
series of related claims do not exceed $50,000, 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 $50,000 for any occurrence or series of related
occurrences shall be paid to the Secured Parties and, if received by such
Debtor, shall be held in trust for and immediately paid over to the Secured
Parties unless otherwise directed in writing by the Secured Parties. Copies of
such policies or the related certificates, in each case, naming the Secured
Parties as lender loss payee and additional insured shall be delivered to the
Secured Parties at least annually and at the time any new policy of insurance is
issued.





(o)       
    The Debtor shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Parties promptly, in sufficient detail, of
any substantial 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 therein.





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





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(q)      
     The Debtor shall permit the Secured Parties and
their representatives and agents to inspect the Collateral at any time, and to
make copies of records pertaining to the Collateral as may be requested by a
Secured Party from time to time.





(r)         
   The 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)       
    The 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.





(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 Debtor 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 20 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 perfected the perfected security Interest granted and
evidenced by this Agreement.





(w)           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 a Majority in Interest which shall not be unreasonably
withheld, except to the extent such consignment or sale does not exceed 15% of
the total value of all of the Debtor’s finished goods in Inventory.





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(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 perfected the perfected security Interest granted and evidenced by this
Agreement.





(y)        
   The Debtor was organized and remains organized solely under
the laws of the state set forth next to such Debtor’s name in the first
paragraph of this Agreement. Schedule D attached hereto sets forth the 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 the Debtor is the name set forth
in the preamble above; (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 Secured Parties.





(bb)         The
Debtor, in its capacity as issuer, hereby agrees to comply with any and all
orders and instructions of the Secured Parties 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, the 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)          The
Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Parties, 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)         Reserved.





(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 Secured Parties 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 satisfactory to the
Secured Parties.





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(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 Secured Parties.





(hh)         The
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 Interest in such accounts and proceeds thereof, shall execute and
deliver to the Secured Parties an assignment of claims for such accounts and
cooperate with the Secured Parties in taking any other steps required, in their
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 Interest in such accounts and proceeds thereof.





(ii)       
    The 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
Debtor.  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 Secured Parties may reasonably request.
Upon delivery of the foregoing to the Secured Parties, the Additional Debtor
shall be and become a party to this Agreement with the same rights and
obligations as the Debtor, 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 “Debtor” shall be deemed to include each Additional
Debtor.





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





(kk)          The
Debtor shall register the pledge of the applicable Pledged Securities on the
books of such Debtor. Further, except with respect to certificated securities
delivered to the Secured Parties, the applicable Debtor shall deliver to the
Secured Parties 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 the Secured Parties 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 the
Secured Parties and will take such steps as may be necessary to effect the
transfer, and will comply with all other instructions of the Secured Parties
regarding such Pledged Securities without the further consent of the applicable
Debtor.





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(ll)        
   In the event that, upon an occurrence of an Event of Default,
the Secured Parties 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, the Debtor shall, to the extent
applicable: (i) deliver to the Secured Parties 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 Debtor and its direct and indirect subsidiaries;
(ii) use its best efforts to obtain resignations of the persons then serving as
officers and directors of the Debtor 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 the Secured Parties and allow the Transferee or the
Secured Parties to continue the business of the Debtor and its direct and
indirect subsidiaries.





(mm)        Without
limiting the generality of the other obligations of the Debtor hereunder, the
Debtor shall, upon request, 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 Secured Parties notice whenever it acquires (whether absolutely or by
license) or creates any additional material Intellectual Property.





(nn)         The
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 Secured
Parties 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, if any, 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.





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(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 the Secured
Parties’ 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”:





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





(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, the Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest, whether
payable pursuant to the Notes 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 extent permitted by law
and in accordance with the Visa and MasterCard Association Rules), to the
Secured Parties, pro-rata in proportion to their initial purchases of Notes 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
Notes).





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(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 the
Secured Parties 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 the Secured Parties
subject to the terms of this Agreement as Collateral.





8.           
  Rights and Remedies
Upon Default.





(a)           
Upon the occurrence of any Event of Default and at any time thereafter provided
the same is then continuing, the Secured Parties, acting through any agent
appointed by them for such purpose, shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the Secured Parties shall
have all the rights and remedies of a secured party under the
UCC.  Without limitation, the Secured Parties shall have the following
rights and powers:





(i)            
The Secured Parties 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 the Debtor shall assemble the Collateral and make it
available to the Secured Parties at places which the Secured Parties shall
reasonably select, whether at such Debtor's premises or elsewhere, and make
available to the Secured Parties, without rent, all of such Debtor’s respective
premises and facilities for the purpose of the Secured Parties taking possession
of, removing or putting the Collateral in saleable or disposable
form.





(ii)           
Upon notice to the Debtors by the Secured Parties, all rights of the Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of the Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease.  Upon such notice, the Secured Parties shall have the right to
receive any interest, cash dividends or other payments on the Collateral and, at
the option oft, to exercise in such the Secured Parties’ discretion all voting
rights pertaining thereto. Without limiting the generality of the foregoing, the
Secured Parties shall have the right (but not the obligation) to exercise all
rights with respect to the Collateral as it were the sole and absolute owners
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.





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(iii)           The
Secured Parties shall have the right to operate the business of the 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 Secured Parties 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 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.





(iv)       
   The Secured Parties 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 Secured Parties and to enforce the
Debtors’ rights against such account debtors and obligors.





(v)         
  The Secured Parties may (but are not obligated to) direct any
financial intermediary or any other person or entity holding any investment
property to transfer the same to the Secured Parties or their
designee.





(vi)           The
Secured Parties may (but are 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 Secured Parties may 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 Secured Parties may
sell the Collateral without giving any warranties and may specifically disclaim
such warranties.  If the Secured Parties sells any of the Collateral
on credit, the Debtors will only be credited with payments actually made by the
purchaser.  In addition, the Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Secured Parties’ 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.





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(c)          
 For the purpose of enabling the Secured Parties to further exercise rights
and remedies under this Section 8 or elsewhere provided by agreement or
applicable law, the Debtor hereby grants to 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 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
Secured Parties in enforcing their 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 Notes 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. 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 20% 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, the 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. The Debtor recognizes that the Secured Parties 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.  The 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 the Secured Parties 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.  The Debtor shall cooperate with the Secured Parties in its
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by the Secured Parties)
applicable to the sale of the Pledged Securities by the Secured
Parties.





11.       
    Costs
and Expenses. The 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 Secured
Parties. The Debtors shall also pay all other claims and charges which in the
reasonable opinion of the Secured Parties might prejudice, imperil or otherwise
affect the Collateral or the Security Interest therein. The Debtors will also,
upon demand, pay to the Secured Parties 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 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 Notes. Until so paid, any fees payable hereunder shall be added to the
principal amount of the Notes and shall bear interest at the Default
Rate.





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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. The Secured Party agrees to act in accordance
with commercially reasonable standards and the UCC.  Without limiting
the generality of the foregoing, (a) no 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) the
Debtor shall remain obligated and liable under each contract or agreement
included in the Collateral to be observed or performed by such Debtor
thereunder.  No 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 any Secured Party of any payment relating to any of
the Collateral, nor shall 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 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 any Secured Party or to which it may be entitled at any time or
times.





13.           Security Interest 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 Notes 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 Notes 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 guaranty, 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
Interest 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.  The 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, the 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.  The 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. The Debtor waives any
defense arising by reason of the application of the statute of limitations to
any obligation secured hereby.





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14.         
  Term of
Agreement. This Agreement and the Security Interest shall terminate on
the date on which all payments under the Notes 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 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)       
    The Debtor authorizes the Secured Parties, and does
hereby make, constitute and appoint the Secured Parties and their respective
officers, agents, successors or assigns with full power of substitution, as such
Debtor’s true and lawful attorney-infact, with power, in the name of the various
Secured Parties 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 Secured Parties; (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 Secured Parties, 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 Secured
Parties deem necessary to protect, preserve and realize upon the Collateral and
the Security Interest granted therein in order to effect the intent of this
Agreement and the Notes all as fully and effectually as the Debtors might or
could do; and the 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.





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(b)       
    On a continuing basis, the 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 Secured Parties, to perfect the
Security Interest granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Secured
Parties the grant or perfection of a perfected security interest in all the
Collateral under the UCC.





(c)       
    The Debtor hereby irrevocably appoints the Secured
Parties 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
Secured Parties’ discretion, to take any action and to execute any instrument
which the Secured Parties 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 Secured Parties. 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
Notes).





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
Secured Parties 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.        
   Intentionally
Omitted.





19.       
    Miscellaneous.





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19





(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
Notes 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 Notes or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.





(c)       
    This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement specifically
referring to this Agreement and signed by the parties hereto.





(d)       
    In the event any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable.  If, notwithstanding the foregoing, any
provision of this Agreement is held to be invalid, prohibited or unenforceable
in any jurisdiction, such provision, as to such jurisdiction, shall be
ineffective to the extent of such invalidity, prohibition or unenforceability
without invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this Agreement in
any other jurisdiction.





(e)       
    No waiver of any breach or default or any right under
this Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.





(f)          
  This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.





(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.





(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.  The Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Notes (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. The 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.





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20





(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 the Debtor to the Secured Parties hereunder.





(k)      
     The Debtor shall indemnify, reimburse and hold
harmless the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (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.  This indemnification provision is in addition
to, and not in limitation of, any other indemnification provision in the Notes,
the Purchase Agreement (as such term is defined in the Notes) or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.





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21





(l)         
   Nothing in this Agreement shall be construed to subject 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
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.





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22





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








D.
      L. CLAIRE CAPITAL, INC.
            MARSHALL
      HOLDINGS INTERNATIONAL, INC./s/David
    Fuselier
            
            /s/Rick
    BaileyName:
      David Fuselier
            Name:
      Rick BaileyTitle:    President
            Title:   President/CEO





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23





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








D.
      L. CLAIRE CAPITAL, INC.
            MARSHALL
      HOLDINGS INTERNATIONAL, INC./s/Rick
    BaileyName:
      David Fuselier
            Name:
      Rick BaileyTitle:    President
            Title:   President/CEO





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23





[SIGNATURE
PAGE OF HOLDERS TO MHII]





Name of
Investing Entity:________________________


Signature of Authorized Signatory of
Investing entity:________________________


Name of
Authorized Signatory: ________________________


Title of
Authorized Signatory: ________________________





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24





SCHEDULE
A





LOCATION
OF COLLATERAL





Principal
Place of Business of Debtors:





Principle
Office:


Marshall
Holdings International, Inc.


2555 East
Washburn Road


North Las
Vegas, Nevada 89081








Locations
Where Collateral is Located or Stored:





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25





SCHEDULE
B





EXISTING
LIENS ON COLLATERAL





Page
26





SCHEDULE
C





JURISDICTIONS
IN WHICH COLLATERAL LOCATED





Page
27





SCHEDULE
D





ORGANIZATIONAL
IDENTIFICATION NUMBERS





Page
28





SCHEDULE
E





NAMES;
MERGERS AND ACQUISITIONS





Page
29





SCHEDULE
F





INTELLECTUAL
PROPERTY





Page
30





SCHEDULE
G





ACCOUNT
DEBTORS





Page
31





SCHEDULE
H





EQUITY
INTERESTS





Page
32





SCHEDULE
I





CLAIMS





Page
33





ANNEX
A


to


SECURITY


AGREEMENT





FORM
OF ADDITIONAL DEBTOR JOINDER





Security
Agreement dated as of ________ ___, 2007 made by


_________________________


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 in Section ___ 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.











[SIGNATURE
PAGE OF HOLDERS TO MHII]





Name of
Investing Entity:________________________


Signature of Authorized Signatory of
Investing entity:________________________


Name of
Authorized Signatory: ________________________


Title of
Authorized Signatory: ________________________






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24