VESTEXCAPITAL  CORPORATION                         SECURITY  AGREEMENT


     1  .  GRANT  OF  SECURITY  INTEREST.  For  valuable  consideration,  the
undersigned  Chancellor  Corporation  ("Debtor"), hereby grants and transfers to
Vestex  Capital  Corporation  ("VCC")  a  security interest in all goods, tools,
machinery,  furnishings,  furniture  and  other  equipment,  now  or at any time
hereafter,  and  prior  to  the termination hereof, owned or acquired by Debtor,
wherever  located,  whether  in the possession of Debtor or any other person and
whether  located  on  Debtor's  property  or  elsewhere,  and  all improvements,
replacements,  accessions  and  additions  thereto  (collectively  called
"Collateral"),  together with whatever is receivable or received when any of the
Collateral  or  proceeds  thereof  are  sold,  leased,  collected,  exchanged or
otherwise  disposed  of,  whether  such disposition is voluntary or involuntary,
including  without limitation, (a) all accounts, contract rights, chattel paper,
instruments,  documents, general intangibles and rights to payment of every kind
now  or  at  any  time  hereafter arising from any such sale, lease, collection,
exchange  or  other  disposition  of  any  of  the  foregoing, (b) all rights to
payment,  including returned premiums, with respect to any insurance relating to
any of the foregoing, and (c) all rights to payment with respect to any cause of
action  affecting  or  relating  to  any  of  the  foregoing (hereinafter called
"Proceeds").

     2.     OBLIGATIONS SECURED.  The obligations secured hereby are the payment
and  performance  of: (a)' all present and future Indebtedness of Debtor to VCC;
(b)  all  obligations  of Debtor and rights of VCC under this Agreement; and (c)
all  present  and  future obligations of Debtor to VCC of other kinds.  The word
"Indebtedness"  is  used herein in its most comprehensive sense and includes any
and  all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore,  now  - or Hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated  or  unliquidated, determined or undetermined, and whether Debtor may
be  liable  individually  or jointly, or whether recovery upon such indebtedness
may  be  or  hereafter  becomes  unenforceable.

     3.     TERMINATION.  This  Agreement will terminate upon the performance of
all  obligations  of Debtor to VCC, including without limitation, the payment of
all Indebtedness of Debtor to VCC, and the termination of all commitments of VCC
to  extend  credit  to  Debtor, existing at the time VCC receives written notice
front  Debtor  of  the  termination  of  this  Agreement.

4.     OBLIGATIONS  OF  VCC.  VCC has no obligation to make any loans hereunder.
Any  money received  by VCC in respect of the Collateral may be deposited, at 
VCC's option, into  a  non-interest  bearing account  over  which  Debtor 
shall leave no control and the same shall, for all purposes,  be  deemed  
Collateral hereunder.

     5.     REPRESENTATIONS  AND WAFIRANTIES.  Debtor represents and warrants to
VCC  that:  (a)  Debtor  is  the  owner  and  has  possession  or control of the
Collateral  and  Proceeds;  b) Debtor has the right to grant a security interest
in  the  Collateral  and  Proceeds; (c) all Collateral and Proceeds are genuine,
free  from  liens,  adverse  claims,  setoffs, default, prepayment, defenses and
conditions precedent of any kind or character, except the lien created hereby or
as  otherwise  agreed  to  by  VCC, or Heretofore disclosed by Debtor to VCC, in
writing;  (d)  all  statements  contained  herein  are  true and complete in all
material  respects; (e) no financing statement covering any of the Collateral or
Proceeds,  and naming any secured party other than VCC, is on file in any public
office;  and  (f)  Debtor  is  not  in the business of selling goods of the kind
included  within  the  Collateral  subject  to  this  Agreement,  and  Debtor
acknowledges  that  no sale of any Collateral, including without limitation, any
Collateral  which  Debtor may deem to be surplus, has been or shall be consented
to  or acquiesced in by VCC, except as specifically set forth in writing by VCC.

6.     COVENANTS  OF  DEBTOR.

     (a)     Debtor  Agrees  in  general: (I) to pay Indebtedness secured hereby
when due; (ii) to indemnify VCC against all losses, claims, demands, liabilities
and  expenses  of every kind caused by property subject Hereto; (iii) to pay all
costs and expenses, including reasonable attorneys' fees, incurred by VCC in the
perfection  and  preservation of the Collateral or VCC's interest therein and/or
the.  realization, enforcement and exercise of VCC's rights, powers and remedies
hereunder; (iv) to permit VCC to exercise its powers; (v) to execute and deliver
such  documents  as  VCC  deems  necessary  to, create, perfect and continue the
security  interests  contemplated hereby; and (vi) not to change its chief place
of  business  (or  personal residence, if applicable) or the places where Debtor
keeps  any  of  the Collateral or Debtor's records concerning the Collateral and
Proceeds  without first giving VCC written notice of the address to which Debtor
is  moving  same.

(b)     Debtor  agrees  with  regard  to the Collateral and Proceeds, unless VCC
agrees  otherwise  in  writing: 
     to  insure  the  Collateral  with VCC as loss payee, it form, substance and
amounts,  under  agreements,  against  risks and liabilities, and with insurance
companies satisfactory to VCC; (ii) to operate the Collateral in accordance with
all  applicable  statutes, rules and regulations relating to the use and control
thereof,  and  not  to use the Collateral for any unlawful purpose or in any way
that  would  void  any insurance required to be carried in connection therewith;
(iii)  not  to  permit  any  security  interest  in or lien on the Collateral or
Proceeds, including without limitation, liens arising from repairs to or storage
of  the  Collateral,  except  in  favor of VCC; (iv) to pay when due all license
fees, registration fees and other charges in connection with any Collateral; (v)
not  to  remove  the  Collateral  from  Debtor's  premises unless the Collateral
consists  of  mobile  goods  as  defined in the-Massachusetts Uniform Commercial
Code,  in  which  case  Debtor agrees not to remove or permit the removal of the
Collateral  from  its  state  of  domicile for a period in excess of 30 calendar
days;  (vi)  not  to  sell,  or otherwise dispose of, nor permit the transfer by
operation  of  law of, any of the Collateral or Proceeds or any interest herein;
(vii)  not  to  rent,  lease  or charter the Collateral; (viii) to permit VCC to
inspect  the  Collateral at any time; (ix) to keep, in accordance with generally
accepted  accounting  principles,  complete  and  accurate records regarding all
Collateral  and  Proceeds, and to permit VCC to inspect the same and make copies
thereof  at  any  reasonable  time;  (x) if requested by VCC, to receive and use
reasonable  diligence  to collect Proceeds, in trust and as the property of VCC,
and to immediately endorse as appropriate and deliver such Proceeds to VCC daily
in  the  exact form in which they are received together with a collection report
in  form  satisfactory  to  VCC;  (xi)  not to commingle Proceeds or collections
thereunder with other property; (xii) to give only normal allowances and credits
and  to  advise VCC thereof immediately in writing if they affect any Collateral
or  Proceeds  in any material respect; (xiii) in the event VCC elects to receive
payments  of  Proceeds  Hereunder,  to  pay  all  expenses  incurred  by  VCC in
connection  therewith,  including  expenses  of  accounting,  correspondence,
collection efforts, reporting to account or contract debtors, filing, recording,
record keeping and expenses incidental thereto; and (xiv) to provide any service
and  do  any other acts which may be necessary to maintain, preserve and protect
all  Collateral  and,  as  appropriate and applicable, to keep the Collateral in
good  and  saleable  condition  and  repair,  to  deal  with  the  Collateral in
accordance  with  the  standards and practices adhered to generally by owners of
like  property,  and  to  keep all Collateral and Proceeds free and clear of all
defenses,  rights  of  offset  and  counterclaims.

     7.     POWERS  OF  VCC.  Debtor  appoints  VCC its true attorney-in-fact to
perform  any  of  the  following powers, which are coupled with an interest, are
irrevocable  until  termination of this Agreement and may be exercised from time
to  time by VCC's officers and employees, or any of them, whether or riot Debtor
is  in  default:  (a)  to perform any obligation of Debtor Hereunder in Debtor's
name  or  otherwise;  (b)  to  give notice to account debtors or others of VCC's
rights  in  the  Collateral and Proceeds, to enforce the sale and make extension
agreements  with  respect thereto; (c) to release persons liable on Proceeds and
to  give  receipts  and  acquittances  and  compromise  disputes  in  connection
therewith;  (d) to release security; (e) to resort to security in any order; (f)
to  prepare,  execute,  file,  record  or deliver notes, assignments, schedules,
designation  statements,  financing  statements,  continuation  statements,
termination  statements, statements of assignment, applications for registration
or  like papers to perfect, preserve or release VCC's interest in the Collateral
and  Proceeds;  (g)  to  receive, open and read mail addressed to Debtor; (h) to
take  cash, instruments for the payment of money and other property to which VCC
is  entitled;  (i)  to  verify  facts  concerning the Collateral and Proceeds by
inquiry of obligors thereon, or otherwise, in its own name or a fictitious name;
(i)  to  endorse, collect, deliver and receive payment under instruments for the
payment  of  money constituting or relating to Proceeds; (k) to prepare, adjust,
execute,  deliver and receive payment under insurance claims, and to collect and
receive  payment  of  and  endorse any instrument in payment of loss or returned
premiums  or  any  otter  insurance  refund or return, and to apply such amounts
received by Batik, at VCC's sole option, toward repayment of the Indebtedness or
replacement  of  the Collateral; (1) to exercise all rights, powers and remedies
which  Debtor would have, but for this Agreement, with respect to all Collateral
and  Proceeds  subject hereto; (m) to enter onto Debtor's premises in inspecting
the  Collateral;  and (n) to do all acts and things and execute all documents in
the  name  of  Debtor  or  otherwise,  deemed  by  VCC  as necessary, proper and
convenient in connection with the preservation, perfection or enforcement of its
rights  hereunder.

     8.     PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AUID ASSESSMENTS.  Debtor
agrees  to  pay,  prior  to delinquency, all insurance premiums, taxes, charges,
liens  and  assessments  against  the  Collateral  and Proceeds, and Lien on the
failure  of Debtor to do so, VCC at its option may pay any of the lien and shall
be  the  sole judge of the legality or validity thereof and the amount necessary
to  discharge  the  said.  Any  such  payments  made  by  Chancellor  shall  be
obligations  of Debtor to VCC, due and payable immediately upon demand, together
with  interest at a rate determined in accordance with the provisions of Section
15  Herein, and shall be secured by tile Collateral and Proceeds, subject to all
terms  and  conditions  of  this  Agreement.

     9.     EVENTS  OF  DEFAULT.  The  occurrence  of any of the following shall
constitute  an  "Event  of Default" under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i)  any  contract  or instrument evidencing any Indebtedness, or (ii) any other
agreement  between  any  Debtor  and  VCC, including without limitation any loan
agreement,  relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by any Debtor Herein shall prove to be incorrect
in  any  material  respect  when  made;  (c) any Debtor shall fail to observe or
perform any obligation or agreement contained herein; (d) any attachment or like
levy  on any property of any Debtor; and (e) VCC, in good faith, believes any or
all  of  the Collateral and/or Proceeds to be in danger of (misuse, dissipation,
loss,  theft, damage or destruction, or otherwise iii jeopardy or unsatisfactory
in  character  or  value.

     10.     REMEDIES.  Upon  the  occurrence of any Event of Default, VCC shall
have  the  right  to declare immediately due and payable all or any Indebtedness
secured  Hereby  and  to  terminate  any  commitments to make loans or otherwise
extend  credit  to  Debtor.  VCC shall have all other rights, powers, privileges
and  remedies  granted  to  a secured party upon default under the Massachusetts
Uniform  Commercial  Code  or  otherwise  provided  by  law,  including  without
limitation,  the  right  to  contact  all  persons  obligated  to  Debtor on any
Collateral  or  Proceeds  and to instruct such persons to deliver all Collateral
and/or Proceeds directly to VCC.  All rights, powers, privileges and remedies of
VCC  shall  be  cumulative.  No  delay,  failure  or  discontinuance  of  VCC in
exercising  any  right,  power,  privilege  or  remedy hereunder shall affect or
operate  as  a  waiver  of such right, power, privilege or remedy; nor shall any
single  or  partial  exercise  of  any  such  right,  power, privilege or remedy
preclude, waive or otherwise affect any other or further exercise thereof or the
exercise  of  any  other right, power, privilege or remedy.  Any waiver, permit,
consent  or  approval  of  any kind by VCC of any default hereunder, or any such
waiver  of  any provisions or conditions Hereof, must be in writing and shall be
effective  only to the extent set forth in writing.  It is agreed that public or
private  sales,  for cash or on credit, to a wholesaler or retailer or investor,
or  user  of property of the types subject to this Agreement, or public auction,
are  all commercially reasonable since differences in the sales prices generally
realized  in  the  different  kinds  of  sales  are  ordinarily  offset  by  the
differences  in  the  costs  and  credit  risks  of  such  sales.

While  an  Event  of Default exists: (a) Debtor will deliver to VCC from time to
time,  as  requested  by  VCC, current lists of all Collateral and Proceeds; (b)
Debtor  will  not  dispose  of any of the Collateral or Proceeds except on terms
approved  by  VCC;  (c)  at  VCC's request, Debtor will assemble and deliver all
Collateral  and  Proceeds, and books and records pertaining thereto, to VCC at a
reasonably  convenient  place designated by VCC; and (d) VCC may, without notice
to  Debtor,  enter onto Debtor's premises and take possession of the Collateral.

     ii.     DISPOSITION  OF  COLLATERAL AND PROCEEDS.  Upon the transfer of all
or  any  part  of  the  Indebtedness,  VCC  may  transfer all or any part of the
Collateral  or  Proceeds  and  shall  be  fully  discharged  thereafter from all
liability  and  responsibility  with  respect  to  any  of  the  foregoing  so
transferred,  and  the  transferee shall be vested with all rights and powers of
VCC  Hereunder  with  respect  to  any of the foregoing so transferred; but with
respect  to  any  Collateral or Proceeds not so transferred VCC shall retain all
rights,  powers,  privileges  and  remedies  herein  given.  Any proceeds of any
disposition  of  any  of the Collateral or Proceeds, or any part thereof, may be
applied  by  VCC to tile payment of expenses incurred by VCC iii connection with
the  foregoing,  including  reasonable  attorneys' fees, and the balance of such
proceeds  may  be  applied by VCC toward the payment of the Indebtedness in such
order  of  application  as  VCC  may from time to time elect.  In the event that
additional capital is infused into the Debtor by a third party, VCC in it's sole
discretion  may  elect  to  place  and  all  of those funds towards repayment of
principal  and  /or  interest  of  it's  outstanding obligation from the debtor.

     1  2.  STATUTE OF LIMITATIONS.  Until all indebtedness shall have been paid
in  full  and  all  commitments  by  VCC  to  extend credit to Debtor leave been
terminated,  the  power  of  sale  and  all other rights, powers, privileges and
remedies  granted  to VCC hereunder shall continue to exist and may be exercised
by  VCC  at  any  time  and  from time to time irrespective of the fact that the
Indebtedness  or  any  part  thereof  may  have  become barred by any statute of
limitations,  or  that  the personal liability of Debtor may have ceased, unless
such  liability shall have ceased due to the payment in full of all Indebtedness
secured  hereunder.

<PAGE>

     1  3.  MISCELLANEOUS.  (a) The obligations of Debtor are joint and several;
(b) Debtor hereby waives any right (i) to require VCC to make any presentment or
demand,  or  give any notice of nonpayment or nonperformance, protest, notice of
protest  or  notice  of  dishonor  Hereunder,  (ii) to direct the application of
payments  or security for Indebtedness of Debtor or indebtedness of customers of
Debtor,  or (iii) to require proceedings against others or to require exhaustion
of  security;  and  (c)  Debtor  Hereby  consents to extensions, forbearances or
alterations  of  the  terms  of  Indebtedness,  the  release  or substitution of
security,  and  the  release  of  any guarantors; provided however, that in each
instance, VCC believes in good faith that the action in question is commercially
reasonable  in  that it does not unreasonably increase the risk of nonpayment of
the  Indebtedness  to  which  the  action applies.  Until all Indebtedness shall
leave  been  paid  in  full, no Debtor shall have any right or contribution, and
each  Debtor  Hereby waives any benefit of or right to participate in any of the
Collateral  or  Proceeds  or  any  other  security now or hereafter held by VCC.

     14.     NOTICES.  All  notices,  requests  and  demands required under this
Agreement  must  be in writing, addressed to VCC at the address specified in any
other  loan  documents  entered into between Debtor and VCC and to Debtor at the
address  party may designate by written notice to each other party, and shall be
deemed  to have been given or made as follows: (a) if personally delivered, upon
delivery; (b) if sent by mail, upon the earlier of the date of receipt or 3 days
after  deposit  in  the  U. S. mail, first class and postage prepaid; and (c) if
sent  by  telecopy,  upon  receipt.

     15.     COSTS,  EXPENSES  AND  ATTORNEYS'  FEES.  Debtor  shall  pay to VCC
immediately  upon  demand  the  full  amount of all payments, advances, charges,
costs  and  expenses,  including  reasonable attorneys' fees (to include outside
counsel  fees  and  all  allocated costs of VCC's in-house counsel), expended or
incurred  by  VCC iii exercising any right, power, privilege or remedy conferred
by  this  Agreement or in the enforcement thereof, whether incurred at the trial
or  appellate  level,  it) an arbitration proceeding or otherwise, and including
any  of  the  foregoing  incurred  in  connection with any bankruptcy proceeding
(including  without  limitation,  any  adversary proceeding, contested matter or
motion  brought  by  VCC  or  any other person) relating to Debtor or in any way
affecting  any  of the Collateral or VCC's ability to exercise any of its rights
or  remedies with respect thereto.  All of the foregoing shall be paid by Debtor
with  interest  from  the  date of demand until paid in full at a rate per annum
equal  to the greater of ten percent (10%) or the Prime Rate in effect from time
to time.  The "Prime Rate" is a base rate that VCC from time to time establishes
and  which  serves  as  the  basis  upon  which  effective rates of interest are
calculated  for  those  loans  making  reference  thereto.

     16.     SUCCESSORS;  ASSIGNS;  AMENDMENT.  This  Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, and legal
representatives,  successors  and  assigns of the parties, and may be amended or
modified  only  in  writing  signed  by  VCC  and  Debtor.

17.  SEVERABILITY  OF  PROVISIONS.  If  any provision of this Agreement shall be
held  to  be prohibited by-or invalid under applicable law, such provision shall
be  ineffective  only  to  the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

<PAGE>

    18.     GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance  with  the  laws  of  the  Commonwealth  of  Massachusetts.

IN  WITNESS  WHEREOF,  this  Agreement  has  been  duly  executed as of December
22,1998.

Chancellor  Corporation

By:     /s/  Jonathan  C.  Ezrin
        ------------------------
     Jonathan  C.  Ezrin
Title:     Treasurer