Exhibit 10.3

                                                                       EXHIBIT E

                               SECURITY AGREEMENT

         SECURITY  AGREEMENT,  dated as of February __, 2006 (this "AGREEMENT"),
among Secured Services,  Inc., a Delaware corporation (the "COMPANY") and all of
the  Subsidiaries  of the Company (such  subsidiaries,  the  "GUARANTORS")  (the
Company and  Guarantors are  collectively  referred to as the "DEBTORS") and the
holder or  holders  of the  Company's  7%  Secured  Convertible  Debentures  due
February ___,  2009 in the original  aggregate  principal  amount of $_____ (the
"DEBENTURE"),   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  Purchase  Agreement  (as  defined  in  the
Debentures),  the Secured  Parties have severally  agreed to extend the loans to
the Company evidenced by the Debentures;

         WHEREAS,  pursuant to a certain  Subsidiary  Guarantee  dated as of the
date hereof (the  "GUARANTY"),  the Guarantors have jointly and severally 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  Debentures,  each Debtor has agreed to execute and deliver to
the Secured Parties this Agreement and to grant the Secured Parties,  PARI PASSU
with each other Secured Party, a perfected security interest in certain property
of such Debtor to secure the prompt  payment,  performance and discharge in full
of all of the Company's  obligations  under the Debenture and the other Debtor's
obligations under the Guaranty.

         WHEREAS,  since the Company has previously  granted a security interest
in the Collateral to VASCO Data Security  International  ("PRIOR SECURED PARTY")
pursuant to a security agreement, the Company and the Secured Parties agree that
the  terms of this  Security  Agreement  and the grant of a  perfected  security
interest  herein are subject,  to the extent required by law, to the prior grant
of a security interest to the Prior Secured Party.

         WHEREAS,  the  Debtors  and the  Secured  Parties  executed  a security
agreement on December 7, 2005 and this  Agreement is intended to be an extension
of such security agreement.

         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

                                       1
<PAGE>

claim",  "deposit  account",  "document",   "equipment",   "fixtures",  "general
intangibles",  "goods",  "instruments",   "inventory",   "investment  property",
"letter-of-credit  rights",  "proceeds" and "supporting obligations") shall have
the respective meanings given such terms in Article 9 of the UCC.

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

                           (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,  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;

                                       2
<PAGE>

                           (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 each Guarantor,  including,  without limitation, the shares
                  of  capital  stock and the other  equity  interests  listed on
                  SCHEDULE  H hereto (as the same may be  modified  from time to
                  time  pursuant to the terms  hereof),  and any other shares of
                  capital  stock  and/or  other  equity  interests  of any other
                  direct or indirect  subsidiary  of any Debtor  obtained in the
                  future, and, in each case, all certificates  representing such
                  shares and/or equity  interests and, in each case, all rights,
                  options,  warrants,  stock,  other  securities  and/or  equity
                  interests  that  may  hereafter  be  received,  receivable  or
                  distributed  in  respect  of,  or  exchanged  for,  any of the
                  foregoing  (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.

                           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.

                           Notwithstanding  anything  herein  to  the  contrary,
                  until  the Note  dated  July 7,  2003  issued  to  VASCO  Data
                  Security   International,   Inc.   ("VASCO")   is  no   longer
                  outstanding,  Collateral shall not include the following:  (i)
                  the  IDENTIPRISE   SECUREDUSER   software  plus  any  and  all
                  enhancements,  improvements or modifications  made to it, (ii)
                  the customer  contract with Integic  Corporation  and accounts
                  receivable from the Integic  contract,  (iii) the fixed assets
                  acquired  by the  Company  from  VASCO  and  (iv)  any and all
                  proceeds and products  which the Company  receives or which it
                  may become entitled to receive on account of any

                                       3
<PAGE>

                  sale, exchange,  collection or other disposition of all of the
                  above, or any part thereof.

                  (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 Debentures at the time of such  determination) of
         the Secured Parties.

                  (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 Agent (as that
         term is defined below) may reasonably request.

                  (e)      "OBLIGATIONS"   means  all  of  the  liabilities  and
         obligations (primary,  secondary,  direct,  contingent,  sole, joint or
         several)  due or to  become  due,  or that are now or may be  hereafter
         contracted  or  acquired,  or owing  to, of any  Debtor to the  Secured
         Parties,  including,  without  limitation,  all obligations  under this
         Agreement,  the  Debentures,  the 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

                                       4
<PAGE>

         part of such  payment is avoided or  recovered  directly or  indirectly
         from any of the Secured Parties as a preference, fraudulent transfer or
         otherwise as such obligations may be amended, supplemented,  converted,
         extended or modified from time to time. Without limiting the generality
         of  the  foregoing,  the  term  "Obligations"  shall  include,  without
         limitation:  (i) principal of, and interest on the  Debentures  and the
         loans  extended  pursuant  thereto;   (ii)  any  and  all  other  fees,
         indemnities,  costs,  obligations  and  liabilities of the Debtors from
         time  to  time  under  or  in  connection  with  this  Agreement,   the
         Debentures, the 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 with respect to any
         Debtor,  the  documents by which such Debtor was  organized  (such as a
         certificate of  incorporation,  certificate  of limited  partnership or
         articles  of  organization,  and  including,  without  limitation,  any
         certificates  of  designation  for  preferred  stock or other  forms of
         preferred  equity) and which relate to the internal  governance of such
         Debtor  (such as  bylaws,  a  partnership  agreement  or an  operating,
         limited liability or members agreement).

                  (g)      "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  FIRST PRIORITY  SECURITY  INTEREST.  As an
inducement  for the  Secured  Parties  to extend the loans as  evidenced  by the
Debentures  and to secure the  complete  and  timely  payment,  performance  and
discharge in full,  as the case may be, of all of the  Obligations,  each Debtor
hereby  unconditionally and irrevocably pledges,  grants and hypothecates to the
Secured Parties a 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").

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

                                       5
<PAGE>

         4.       REPRESENTATIONS,  WARRANTIES,  COVENANTS AND AGREEMENTS OF THE
DEBTORS.  Each Debtor represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:

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

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

                  (c)      Except  for  Permitted   Liens  (as  defined  in  the
         Debentures) and except as set forth on SCHEDULE B attached hereto,  the
         Debtors are the sole owner of the Collateral  (except for non-exclusive
         licenses  granted by any Debtor in the  ordinary  course of  business),
         free and clear of any liens, security interests,  encumbrances,  rights
         or claims,  and are fully  authorized  to grant the Security  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 Debtors
         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).

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

                                       6
<PAGE>

         of  any   Debtor,   threatened   before  any  court,   judicial   body,
         administrative or regulatory  agency,  arbitrator or other governmental
         authority.

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

                  (f)      This  Agreement  creates  in  favor  of  the  Secured
         Parties a valid,  security interest in the Collateral,  subject only to
         Permitted Liens (as defined in the Debentures) securing the payment and
         performance of the  Obligations.  Upon making the filings  described in
         the immediately  following  paragraph,  all security  interests created
         hereunder in any  Collateral  which may be perfected by filing  Uniform
         Commercial  Code financing  statements  shall have been duly perfected.
         Except  for  the  filing  of  the  Uniform  Commercial  Code  financing
         statements  referred to in the  immediately  following  paragraph,  the
         recordation of the Intellectual Property Security Agreement (as defined
         below) with respect to  copyrights  and copyright  applications  in the
         United  States  Copyright  Office  referred to in  paragraph  (m),  the
         execution and delivery of deposit account control agreements satisfying
         the requirements of Section 9-104(a)(2) of the UCC with respect to each
         deposit  account of the Debtors,  and the delivery of the  certificates
         and other instruments  provided in Section 3, no action is necessary to
         create,  perfect or protect the security  interests created  hereunder.
         Without limiting the generality of the foregoing, except for the filing
         of said financing  statements,  the  recordation  of said  Intellectual
         Property  Security  Agreement,  and the  execution and delivery of said
         deposit account control agreements, no consent of any third parties and
         no  authorization,  approval  or other  action  by, and no notice to or
         filing with, any governmental  authority or regulatory body is required
         for (i) the execution, delivery and performance of this Agreement, (ii)
         the creation or perfection of the Security  Interests created hereunder
         in the Collateral or (iii) the enforcement of the rights of the Secured
         Parties hereunder.

                  (g)      Each 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 Debtors does not (i) violate any of the  provisions of
         any  Organizational  Documents of any Debtor or any  judgment,  decree,
         order or award of any court,  governmental  body or  arbitrator  or any
         applicable  law,  rule or  regulation  applicable to any Debtor or (ii)
         conflict with, or constitute a default (or an event that with notice or
         lapse of time or both would

                                       7
<PAGE>

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

                  (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)      Each Debtor shall at all times maintain the liens and
         Security  Interest  provided for hereunder as valid and perfected first
         priority liens and security interests in the Collateral in favor of the
         Secured  Parties  until  this  Agreement  and  the  Security   Interest
         hereunder  shall be  terminated  pursuant  to Section  14 hereof.  Each
         Debtor  hereby  agrees to defend the same against the claims of any and
         all persons and entities.  Each Debtor shall  safeguard and protect all
         Collateral  for the account of the Secured  Parties.  At the request of
         the Secured  Parties,  each 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,  each
         Debtor  shall  pay all  fees,  taxes and  other  amounts  necessary  to
         maintain the Collateral and the Security Interest  hereunder,  and each
         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.

                  (m)      Each Debtor shall keep and  preserve  its  equipment,
         inventory and other tangible  Collateral in good condition,  repair and
         order and shall not operate or locate any

                                       8
<PAGE>

         such  Collateral  (or  cause to be  operated  or  located)  in any area
         excluded from insurance coverage.

                  (n)      Each Debtor shall maintain with financially sound and
         reputable  insurers,  insurance with respect to the Collateral  against
         loss or  damage of the kinds  and in the  amounts  customarily  insured
         against by entities of established reputation having similar properties
         similarly situated and in such amounts as are customarily carried under
         similar  circumstances  by other  such  entities  and  otherwise  as is
         prudent for  entities  engaged in similar  businesses  but in any event
         sufficient  to cover the full  replacement  cost  thereof.  Each Debtor
         shall cause each  insurance  policy  issued in  connection  herewith to
         provide,  and the insurer  issuing  such policy to certify to the Agent
         that (a) the Agent will be named as lender  loss  payee and  additional
         insured  under each such  insurance  policy;  (b) if such  insurance be
         proposed  to  be  cancelled  or  materially   changed  for  any  reason
         whatsoever,  such  insurer  will  promptly  notify  the  Agent and such
         cancellation  or change  shall not be  effective as to the Agent for at
         least  thirty  (30) days  after  receipt  by the Agent of such  notice,
         unless  the  effect of such  change is to extend or  increase  coverage
         under  the  policy;  and (c) the  Agent  will  have the  right  (but no
         obligation)  at its  election  to remedy any  default in the payment of
         premiums  within  thirty  (30) days of notice  from the insurer of such
         default.  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  $100,000,  loss payments in each instance will be
         applied by the  applicable  Debtor to the repair and/or  replacement of
         property  with  respect  to which the loss was  incurred  to the extent
         reasonably  feasible,  and any loss  payments  or the  balance  thereof
         remaining,  to the  extent  not so  applied,  shall be  payable  to the
         applicable  Debtor,  provided,  however,  that payments received by any
         Debtor after an Event of Default  occurs and is continuing or in excess
         of $100,000 for any occurrence or series of related  occurrences  shall
         be paid to the Agent and, if received by such Debtor,  shall be held in
         trust  for and  immediately  paid over to the  Agent  unless  otherwise
         directed  in  writing  by the  Agent.  Copies of such  policies  or the
         related  certificates,  in each case,  naming the Agent as lender  loss
         payee and  additional  insured shall be delivered to the Agent at least
         annually and at the time any new policy of insurance is issued.

                  (o)      Each Debtor shall,  within ten (10) days of obtaining
         knowledge thereof,  advise the Secured Parties promptly,  in sufficient
         detail,  of  any  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)      Each 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
         each Debtor's  Intellectual Property  ("INTELLECTUAL  PROPERTY SECURITY
         AGREEMENT")  in which the Secured  Parties have been granted a security
         interest

                                       9
<PAGE>

         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.

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

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

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

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

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

                  (v)      No Debtor will change its name, type of organization,
         jurisdiction of organization,  organizational identification number (if
         it has one), legal or corporate structure,  or identity, or add any new
         fictitious  name  unless it  provides  at least 30 days  prior  written
         notice to the  Secured  Parties of such change and, at the time of such
         written notification,  such Debtor provides any financing statements or
         fixture  filings  necessary  to  perfect  and  continue  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 Company's finished goods in Inventory.

                  (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.

                                       10
<PAGE>

                  (y)      Each  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 each Debtor's  organizational  identification  number or, if
         any Debtor does not have one, states that one does not exist.

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

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

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

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

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

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

                  (ff)     To  the  extent  that  any   Collateral   is  in  the
         possession of any third party,  the  applicable  Debtor shall join with
         the  Secured  Parties  in  notifying  such third  party of the  Secured
         Parties'  security  interest in such  Collateral and shall use its best
         efforts to obtain

                                       11
<PAGE>

         an acknowledgement  and agreement from such third party with respect to
         the  Collateral,  in form and  substance  satisfactory  to the  Secured
         Parties.

                  (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)     Each Debtor shall immediately  provide written notice
         to the  Secured  Parties  of any and all  accounts  which  arise out of
         contracts with any governmental  authority and, to the extent necessary
         to perfect or continue the perfected status of the Security 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)     Each  Debtor  shall  cause  each  subsidiary  of such
         Debtor to immediately  become a party hereto (an "ADDITIONAL  DEBTOR"),
         by  executing  and   delivering  an   Additional   Debtor   Joinder  in
         substantially  the form of Annex A attached  hereto and comply with the
         provisions hereof applicable to the Debtors.  Concurrent therewith, the
         Additional   Debtor  shall  deliver   replacement   schedules  for,  or
         supplements  to all  other  Schedules  to  (or  referred  to  in)  this
         Agreement, as applicable,  which replacement schedules shall supersede,
         or  supplements  shall  modify,  the  Schedules  then  in  effect.  The
         Additional   Debtor  shall  also  deliver  such  opinions  of  counsel,
         authorizing   resolutions,   good  standing  certificates,   incumbency
         certificates,  organizational documents, financing statements and other
         information  and  documentation  as the 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 Debtors, for all purposes hereof
         as fully  and to the same  extent as if it were an  original  signatory
         hereto and shall be deemed to have made the representations, warranties
         and covenants set forth herein as of the date of execution and delivery
         of such  Additional  Debtor Joinder,  and all references  herein to the
         "Debtors" shall be deemed to include each Additional Debtor.

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

                  (kk)     Each  Debtor   shall   register  the  pledge  of  the
         applicable Pledged Securities on the books of such Debtor.  Each Debtor
         shall notify each issuer of Pledged  Securities  to register the pledge
         of the applicable Pledged Securities in the name of the Secured Parties
         on  the  books  of  such  issuer.   Further,  except  with  respect  to
         certificated  securities  delivered to the Agent, the applicable Debtor
         shall deliver to Agent an acknowledgement

                                       12
<PAGE>

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

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

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

                  (nn)     Each Debtor will from time to time,  at the joint and
         several expense of the Debtors,  promptly  execute and deliver all such
         further instruments and documents,  and take all such further action as
         may be necessary or desirable, or as the 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
         have been duly recorded

                                       13
<PAGE>

         at the United  States  Patent  and  Trademark  Office and all  material
         copyrights  of the Debtors have been duly recorded at the United States
         Copyright Office.

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

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

         6.       DEFAULTS. The following events shall be "EVENTS OF DEFAULT":

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

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

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

                  (d)      If any provision of this Agreement  shall at any time
         for any reason be  declared  to be null and void,  or the  validity  or
         enforceability   thereof  shall  be  contested  by  any  Debtor,  or  a
         proceeding  shall be  commenced by any Debtor,  or by any  governmental
         authority having jurisdiction over any Debtor, seeking to establish the
         invalidity or  unenforceability  thereof, or any Debtor shall deny that
         any Debtor has any  liability  or  obligation  purported  to be created
         under this Agreement.

         7.       DUTY TO HOLD IN TRUST.

                  (a)      Upon the  occurrence  of any Event of Default  and at
         any time  thereafter,  each Debtor shall,  upon receipt of any revenue,
         income,  dividend,  interest  or other  sums  subject  to the  Security
         Interest, whether payable pursuant to the Debenture or otherwise, or of
         any check, draft, note, trade acceptance or other instrument evidencing
         an obligation

                                       14
<PAGE>

         to pay any such sum, hold the same in trust for the Secured Parties and
         shall forthwith  endorse and transfer any such sums or instruments,  or
         both, to the Secured  Parties,  pro-rata in proportion to their initial
         purchases of Debentures  for  application  to the  satisfaction  of the
         Obligations  (and if any  Debenture  is not  outstanding,  pro-rata  in
         proportion to the initial purchases of the remaining Debentures).

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

         8.       RIGHTS AND REMEDIES UPON DEFAULT.

                  (a)      Upon the  occurrence  of any Event of Default  and at
         any time  thereafter,  the Secured  Parties,  acting  through any agent
         appointed  by them for such  purpose,  shall have the right to exercise
         all of the remedies conferred  hereunder and under the Debentures,  and
         the Secured Parties shall have all the rights and remedies of a secured
         party under the UCC. Without limitation, the 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 each  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 Agent,  all
                  rights  of each  Debtor  to  exercise  the  voting  and  other
                  consensual  rights  which it would  otherwise  be  entitled to
                  exercise  and  all  rights  of  each  Debtor  to  receive  the
                  dividends and interest which it would  otherwise be authorized
                  to receive and retain,  shall cease.  Upon such notice,  Agent
                  shall have the right to receive any interest, cash

                                       15
<PAGE>

                  dividends  or other  payments  on the  Collateral  and, at the
                  option of Agent,  to exercise in such Agent's  discretion  all
                  voting  rights  pertaining   thereto.   Without  limiting  the
                  generality of the  foregoing,  Agent shall have the right (but
                  not the obligation) to exercise all rights with respect to the
                  Collateral  as it were the sole and absolute  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.

                           (iii)    The Secured  Parties shall have the right to
                  operate the business of each Debtor using the  Collateral  and
                  shall  have the  right to  assign,  sell,  lease or  otherwise
                  dispose of and deliver all or any part of the  Collateral,  at
                  public or private  sale or  otherwise,  either with or without
                  special  conditions or stipulations,  for cash or on credit or
                  for future  delivery,  in such  parcel or parcels  and at such
                  time or times and at such place or places, and upon such terms
                  and  conditions as the 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  Agent  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 Agent may sell the Collateral  without
         giving any warranties and may specifically disclaim such warranties. If
         the Agent sells any of the Collateral on credit,  the Debtors will only
         be credited with payments actually made by the purchaser.  In addition,
         each Debtor waives any and all

                                       16
<PAGE>

         rights  that it may  have  to a  judicial  hearing  in  advance  of the
         enforcement  of any of  the  Agent's  rights  and  remedies  hereunder,
         including,  without limitation, its right following an Event of Default
         to take  immediate  possession  of the  Collateral  and to exercise its
         rights and remedies with respect thereto.

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

         9.       APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease
or other disposition of the Collateral  hereunder 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 Debentures at
the time of any such  determination),  and to the  payment of any other  amounts
required by  applicable  law,  after which the Secured  Parties shall pay to the
applicable  Debtor any surplus  proceeds.  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 10%
per annum or the lesser amount permitted by applicable law (the "Default Rate"),
and the  reasonable  fees of any  attorneys  employed by the Secured  Parties to
collect such deficiency.  To the extent permitted by applicable law, each Debtor
waives all claims,  damages and demands  against the Secured Parties arising out
of the repossession,  removal,  retention or sale of the Collateral,  unless due
solely to the gross  negligence or willful  misconduct of the Secured Parties as
determined  by a final  judgment  (not subject to further  appeal) of a court of
competent jurisdiction.

         10.      SECURITIES LAW PROVISION.  Each Debtor  recognizes  that Agent
may be limited  in its  ability to effect a sale to the public of all or part of
the Pledged  Securities by reason of certain  prohibitions in the Securities Act
of 1933, as amended,  or other federal or state  securities laws  (collectively,
the "SECURITIES Laws"), and may be compelled to resort to one or more sales to a
restricted  group of  purchasers  who may be  required  to agree to acquire  the
Pledged Securities for their own account,  for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged  Securities  were sold
to the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time  necessary to register the Pledged  Securities
for sale to the public under the Securities  Laws.  Each Debtor shall  cooperate
with Agent in its attempt to

                                       17
<PAGE>

satisfy  any  requirements   under  the  Securities  Laws  (including,   without
limitation,  registration  thereunder  if requested by Agent)  applicable to the
sale of the Pledged Securities by Agent.

         11.      COSTS AND EXPENSES.  Each Debtor agrees to pay all  reasonable
out-of-pocket  fees,  costs and expenses  incurred in connection with any filing
required  hereunder,  including  without  limitation,  any financing  statements
pursuant  to  the  UCC,   continuation   statements,   partial  releases  and/or
termination   statements  related  thereto  or  any  expenses  of  any  searches
reasonably required by the 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  Debentures.  Until so paid,
any  fees  payable  hereunder  shall be added  to the  principal  amount  of the
Debentures and shall bear interest at the Default Rate.

         12.      RESPONSIBILITY   FOR   COLLATERAL.   The  Debtors  assume  all
liabilities  and  responsibility  in  connection  with all  Collateral,  and the
Obligations  shall in no way be  affected or  diminished  by reason of the loss,
destruction,  damage or theft of any of the Collateral or its unavailability for
any reason.  Without  limiting the generality of the foregoing,  (a) neither the
Agent nor any Secured Party (i) has any duty (either before or after an Event of
Default) to collect any amounts in respect of the  Collateral or to preserve any
rights  relating to the  Collateral,  or (ii) has any  obligation to clean-up or
otherwise  prepare the  Collateral  for sale,  and (b) each Debtor  shall remain
obligated and liable under each contract or agreement included in the Collateral
to be observed or performed by such Debtor thereunder. Neither the Agent nor any
Secured Party shall have any obligation or liability  under any such contract or
agreement  by reason of or arising out of this  Agreement  or the receipt by the
Agent or any Secured Party of any payment relating to any of the Collateral, nor
shall the Agent or any Secured  Party be  obligated in any manner to perform any
of the  obligations  of any Debtor  under or  pursuant  to any such  contract or
agreement,  to make  inquiry  as to the  nature or  sufficiency  of any  payment
received by the Agent or any Secured Party in respect of the Collateral or as to
the  sufficiency  of any  performance  by any party  under any such  contract or
agreement,  to  present or file any  claim,  to take any  action to enforce  any
performance  or to  collect  the  payment  of any  amounts  which  may have been
assigned to the Agent or to which the Agent or any Secured Party may be entitled
at any time or times.

         13.      SECURITY 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 Debentures or any agreement entered into in connection with
the  foregoing,  or any portion  hereof or thereof;  (b) any change in the time,
manner or place of  payment or  performance  of, or in any other term of, all or
any of the  Obligations,  or any other  amendment or waiver of or any consent to
any  departure  from the  Debentures  or any  other  agreement  entered  into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or

                                       18
<PAGE>

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. Each Debtor
expressly waives  presentment,  protest,  notice of protest,  demand,  notice of
nonpayment  and  demand  for  performance.  In the  event  that at any  time any
transfer  of any  Collateral  or any payment  received  by the  Secured  Parties
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency laws of the United States,  or shall be deemed to be otherwise due to
any party other than the Secured Parties, then, in any such event, each Debtor's
obligations  hereunder shall survive  cancellation of this Agreement,  and shall
not be discharged or satisfied by any prior payment thereof and/or  cancellation
of this Agreement,  but shall remain a valid and binding obligation  enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured  Parties to proceed against any other person or entity or
to apply any  Collateral  which the Secured  Parties may hold at any time, or to
marshal  assets,  or to pursue any other remedy.  Each Debtor waives any defense
arising  by reason of the  application  of the  statute  of  limitations  to any
obligation secured hereby.

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

         15.      POWER OF ATTORNEY; FURTHER ASSURANCES.

                  (a)      Each Debtor authorizes the 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-in-fact,  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

                                       19
<PAGE>

         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  Debentures  all as  fully  and  effectually  as the
         Debtors  might or could do; and each Debtor  hereby  ratifies  all that
         said attorney  shall  lawfully do or cause to be done by virtue hereof.
         This  power of  attorney  is  coupled  with an  interest  and  shall be
         irrevocable  for the term of this  Agreement and  thereafter as long as
         any of the Obligations shall be outstanding.  The designation set forth
         herein  shall  be  deemed  to  amend  and  supersede  any  inconsistent
         provision  in  the  Organizational  Documents  or  other  documents  or
         agreements  to which any  Debtor is subject or to which any Debtor is a
         party.  Without  limiting the  generality of the  foregoing,  after the
         occurrence  and during the  continuance  of an Event of  Default,  each
         Secured  Party  is  specifically  authorized  to  execute  and file any
         applications  for or  instruments  of transfer  and  assignment  of any
         patents, trademarks, copyrights or other Intellectual Property with the
         United  States  Patent  and  Trademark  Office  and the  United  States
         Copyright Office.

                  (b)      On  a  continuing   basis,  each  Debtor  will  make,
         execute,  acknowledge,  deliver,  file and record,  as the case may be,
         with the proper  filing and  recording  agencies  in any  jurisdiction,
         including,  without limitation, the jurisdictions indicated on SCHEDULE
         C attached hereto,  all such  instruments,  and take all such action as
         may  reasonably  be deemed  necessary or  advisable,  or as  reasonably
         requested  by the 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)      Each 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 Debentures).

                                       20
<PAGE>

         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.      APPOINTMENT  OF AGENT.  The  Secured  Parties  hereby  appoint
Midsummer  Investment,  Ltd. to act as their agent  ("MIDSUMMER" or "AGENT") for
purposes of  exercising  any and all rights and remedies of the Secured  Parties
hereunder.  Such  appointment  shall  continue  until  revoked  in  writing by a
Majority in Interest,  at which time a Majority in Interest  shall appoint a new
Agent;  provided,  that  Midsummer may not be removed as Agent unless  Midsummer
shall then hold less than  $10,000  principal  amount of  Debentures;  PROVIDED,
FURTHER,  that such removal may occur only if each of the other Secured  Parties
shall then hold not less than $1,000 principal  amount of Debentures.  The Agent
shall have the  rights,  responsibilities  and  immunities  set forth in ANNEX B
hereto.

         19.      MISCELLANEOUS.

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

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

                  (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

                                       21
<PAGE>

         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.  Each  Debtor  agrees  that  all  proceedings  concerning  the
         interpretations,   enforcement   and   defense   of  the   transactions
         contemplated  by this  Agreement  and the  Debenture  (whether  brought
         against  a  party  hereto  or  its  respective  affiliates,  directors,
         officers,  shareholders,  partners, members, employees or agents) shall
         be commenced exclusively in the state and federal courts sitting in the
         City of New York, Borough of Manhattan.  Each Debtor hereby irrevocably
         submits to the exclusive  jurisdiction  of the state and federal courts
         sitting  in  the  City  of New  York,  Borough  of  Manhattan  for  the
         adjudication of any dispute hereunder or in connection herewith or with
         any transaction  contemplated  hereby or discussed  herein,  and hereby
         irrevocably  waives,  and agrees not to assert in any  proceeding,  any
         claim that it is not personally subject to the jurisdiction of any such
         court,  that such  proceeding  is improper.  Each party  hereto  hereby
         irrevocably  waives personal service of process and consents to process
         being  served in any such  proceeding  by  mailing a copy  thereof  via
         registered or certified  mail or overnight  delivery  (with evidence of
         delivery)  to such party at the  address  in effect  for  notices to it
         under this Agreement and agrees that such service shall constitute good
         and sufficient service of process and notice thereof. Nothing contained
         herein  shall be deemed to limit in any way any right to serve  process
         in any manner  permitted by law. Each party hereto  hereby  irrevocably
         waives,  to the fullest extent permitted by applicable law, any and all
         right  to  trial  by jury in any  legal  proceeding  arising  out of or
         relating to this Agreement or the transactions  contemplated hereby. If
         any party shall commence a proceeding to enforce any provisions of this
         Agreement,  then  the  prevailing  party  in such  proceeding  shall be
         reimbursed by the other party for its  reasonable  attorney's  fees and
         other costs and expenses incurred with the  investigation,  preparation
         and prosecution of such proceeding.

                                       22
<PAGE>

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

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

                  (k)      Each  Debtor  shall  indemnify,  reimburse  and  hold
         harmless the 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  Debentures,  the Purchase  Agreement (as such term is
         defined in the Debentures) or any other agreement,  instrument or other
         document executed or delivered in connection herewith or therewith.

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

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

                            [SIGNATURE PAGES FOLLOW]

                                       23
<PAGE>

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

SECURED SERVICES, INC.


By:__________________________________________
   Name:
   Title:


SSI OPERATING CORP.


By:__________________________________________
   Name:
   Title:


SECURED MOBILE, INC.


By:__________________________________________
   Name:
   Title:


SSI MINNESOTA CORP.


By:__________________________________________
   Name:
   Title:


SECURED SERVICES CANADA INC.


By:__________________________________________
   Name:
   Title:


                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


                                       24
<PAGE>


                     [SIGNATURE PAGE OF HOLDERS TO SSVC SA]

  Name of Investing Entity: __________________________

  SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _______________________

  Name of Authorized Signatory: _________________________

  Title of Authorized Signatory: __________________________


                             [SIGNATURE PAGE OF HOLDERS FOLLOWS]




                                       25
<PAGE>

                                   SCHEDULE A


Principal Place of Business of Debtors:



Locations Where Collateral is Located or Stored:







                                       26
<PAGE>


                                   SCHEDULE B







                                       27
<PAGE>


                                   SCHEDULE C








                                       28
<PAGE>


                                   SCHEDULE D

                      Organizational Identification Numbers






                                       29
<PAGE>


                                   SCHEDULE E

                         Names; Mergers and Acquisitions








                                       30
<PAGE>


                                   SCHEDULE F

                              Intellectual Property








                                       31
<PAGE>


                                   SCHEDULE G

                                 Account Debtors







                                       32
<PAGE>


                                   SCHEDULE H

                               Pledged Securities







                                       33
<PAGE>

                                     ANNEX A
                                       TO
                                    SECURITY
                                    AGREEMENT

                        FORM OF ADDITIONAL DEBTOR JOINDER

            Security Agreement dated as of February ___, 2006 made by
                             Secured Services, Inc.

        and its subsidiaries party thereto from time to time, as Debtors
                               to and in favor of
        the Secured Parties identified therein (the "SECURITY AGREEMENT")

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

         The  undersigned  hereby agrees that upon  delivery of this  Additional
Debtor Joinder to the Secured Parties referred to above,  the undersigned  shall
(a) be an  Additional  Debtor  under the  Security  Agreement,  (b) have all the
rights and obligations of the Debtors under the Security  Agreement as fully and
to the same extent as if the undersigned was an original  signatory  thereto and
(c) be deemed  to have  made the  representations  and  warranties  set forth 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.



<PAGE>


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

                                    [Name of Additional Debtor]

                                    By:
                                    Name:
                                    Title:

                                    Address:





Dated:


<PAGE>


                                    [ANNEX B
                                       TO
                                    SECURITY
                                    AGREEMENT

                                    THE AGENT

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

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

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

<PAGE>

Secured  Party for any recitals,  statements,  information,  representations  or
warranties herein or in any document,  certificate or other writing delivered in
connection herewith, or for the execution, effectiveness, genuineness, validity,
enforceability,  perfection,  collectibility,  priority  or  sufficiency  of the
Agreement or any other Transaction  Document,  or for the financial condition of
the  Debtors or the value of any of the  Collateral,  or be required to make any
inquiry  concerning  either the  performance  or observance of any of the terms,
provisions or conditions of the Agreement or any other Transaction  Document, or
the financial  condition of the Debtors,  or the value of any of the Collateral,
or the existence or possible  existence of any default or Event of Default under
the Agreement, the Debentures or any of the other Transaction Documents.

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

                  5. RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying,  upon any writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message, cablegram, radiogram, order
or other document or telephone message signed, sent or made by the proper person
or entity,  and, with respect to all legal  matters  pertaining to the Agreement
and the other Transaction  Documents and its duties  thereunder,  upon advice of
counsel  selected by it and upon all other matters  pertaining to this Agreement
and the other Transaction  Documents and its duties  thereunder,  upon advice of
other experts selected by it.

                  6.  INDEMNIFICATION.  To the  extent  that  the  Agent  is not
reimbursed and indemnified by the Debtors,  the Secured Parties will jointly and
severally  reimburse and indemnify the Agent,  in proportion to their  initially
purchased respective  principal amounts of Debentures,  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits, costs, expenses or disbursements of any

<PAGE>

kind or nature  whatsoever  which may be imposed  on,  incurred  by or  asserted
against the Agent in performing  its duties  hereunder or under the Agreement or
any other Transaction  Document, or in any way relating to or arising out of the
Agreement or any other  Transaction  Document  except for those  determined by a
final  judgment  (not  subject  to  further  appeal)  of a  court  of  competent
jurisdiction  to have resulted  solely from the Agent's own gross  negligence or
willful misconduct. Prior to taking any action hereunder as Agent, the Agent may
require each Secured Party to deposit with it  sufficient  sums as it determines
in good  faith is  necessary  to  protect  the  Agent  for  costs  and  expenses
associated with taking such action.

                  7. RESIGNATION BY THE AGENT.

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

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

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

                  8. RIGHTS  WITH  RESPECT TO  COLLATERAL.  Each  Secured  Party
agrees with all other  Secured  Parties and the Agent (i) that it shall not, and
shall not attempt to, exercise any rights with respect to its security  interest
in the Collateral,  whether  pursuant to any other agreement or otherwise (other
than pursuant to this  Agreement),  or take or institute any action  against the
Agent or any of the other  Secured  Parties in respect of the  Collateral or its
rights  hereunder  (other than any such action  arising  from the breach of this
Agreement)  and (ii) that such Secured Party has no other rights with respect to
the  Collateral  other  than as set  forth  in  this  Agreement  and  the  other
Transaction Documents.