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                                                                  EXHIBIT 4.18


                  LEASING COMPANY SECURITY AND PLEDGE AGREEMENT
                             [PLD Capital Limited]


         THIS LEASING COMPANY SECURITY AND PLEDGE AGREEMENT (the "Security
Agreement") is made and entered into as of May 31, 1996 by PLD Capital
Limited, a Cypriot corporation (the "Leasing Company"), in favor of THE BANK OF
NEW YORK, a New York banking corporation, as trustee (in such capacity, the
"Senior Note Trustee") under the Senior Note Indenture (as defined herein) for
the holders of the Senior Notes (as hereinafter defined), THE BANK OF NEW YORK,
a New York banking corporation, as trustee (in such capacity, the "Convertible
Note Trustee") under the Convertible Note Indenture (as defined herein) for the
holders of the Convertible Notes (as hereinafter defined) and THE BANK OF NEW
YORK as collateral agent (in such capacity, the "Collateral Agent").

                              W I T N E S S E T H:

         WHEREAS, Petersburg Long Distance Inc., an Ontario corporation (the
"Company"), as issuer, the Senior Note Trustee, and NWE Capital (Cyprus)
Limited, a Cypriot corporation ("NWE Cyprus"), the Leasing Company, PLD Capital
Limited, a Cypriot corporation ("PLD Capital" and, together with the Leasing
Company, the "Leasing Companies"), Wireless Technology Corporations Limited, a
British Virgin Islands Company ("WTC"), and Baltic Communications Limited, a
Russian joint stock company of the closed type ("BCL"), as guarantors (the
"Senior Note Guarantors"), have entered into an indenture dated as of May 31,
1996 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Senior Note Indenture") pursuant to which the Company is
issuing $123,000,000 in aggregate principal amount at Stated Maturity of its 14%
Senior Discount Notes due 2004 (the "Senior Notes"); and

         WHEREAS, the Company, as issuer, the Convertible Note Trustee, and NWE
Cyprus, the Leasing Companies, WTC and BCL, as guarantors (the "Convertible Note
Guarantors") have entered into an indenture dated as of May 31, 1996 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Convertible Note Indenture") pursuant to which the Company is issuing
$26,500,000 in aggregate principal amount of its 9% Convertible Subordinated
Notes due 2006 (the "Convertible Notes"): and

         WHEREAS, to secure its obligations under the Senior Note Indenture, its
Senior Note Guarantee and the other Collateral Documents (as defined in the
Senior Note Indenture) (together with the Company's obligations under the Senior
Note Indenture and the Senior Note Collateral Documents and the Senior Note
Guarantors' obligations under the Senior Note Indenture, the guarantees
contained therein (the "Senior Note Guarantees") and the Senior Note Collateral
Documents, the " Senior Note Obligations") and to secure its obligations under
the Convertible Note Indenture and the Convertible Notes and the other
Convertible Note Collateral Documents (as defined in the Convertible Note
Indenture) (together with the Convertible Note Guarantors obligations under the
Convertible Note Indenture, the guarantees contained therein (the "Convertible
Note Guarantees") and the Convertible Note Collateral Documents, the
"Convertible
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Note Obligations"), the Leasing Company has agreed (i) to grant to the
Collateral Agent for the benefit of the Senior Note Trustee and the equal and
ratable benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes, Liens and security interests in and to the Collateral (as
defined herein) and (ii) to execute and deliver this Security Agreement in order
to secure the payment and performance by the Leasing Company and the Guarantors
of the Senior Note Obligations and the Convertible Note Obligations
(collectively, the "Obligations"").

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Senior Notes to purchase the Senior Notes and the Holders of
the Convertible Notes to purchase the Convertible Notes, the Leasing Company
hereby agrees with the Collateral Agent, with the Senior Note Trustee for its
benefit and the equal and ratable benefit of the Holders of the Senior Notes and
for the Convertible Note Trustee for its benefit and the equal and ratable
benefit of the Holders of the Convertible Notes as follows:

         SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Senior Note
Indenture. In addition to any other defined terms used herein, the following
terms shall constitute defined terms for the purposes of this Security
Agreement:

                  "Default" means a "Default" as defined in Section 1.1 of the
         Senior Note Indenture until the Senior Notes are no longer outstanding
         and the Senior Note Indenture has been satisfied and discharged, in
         which case a "Default" means a "Default" as defined in Section 1.1 of
         the Convertible Note Indenture.

                  "Permitted Liens" means "Permitted Liens" as defined in
         Section 1.1 of the Senior Note Indenture until the Senior Notes are no
         longer outstanding and the Senior Note Indenture has been satisfied and
         discharged, in which case "Permittee Liens" means "Permitted Liens" as
         defined in Section 1.1 of the Convertible Note Indenture.

                  "Event of Default" means an "Event of Default" as defined in
         Section 1.1 of the Senior Note Indenture until the Senior Notes are no
         longer outstanding and the Senior Note Indenture and the Senior Note
         Collateral Documents have been satisfied, discharged and released, in
         which case "Event of Default" means an "Event of Default" as defined in
         Section 1.1 of the Convertible Note Indenture.

                  "Trustees" means, collectively, the Senior Note Trustee and
         the Convertible Note Trustee.

         SECTION 2. CREATION OF SECURITY INTEREST. The Leasing Company hereby
grants to the Collateral Agent for the benefit of the Senior Note Trustee and
for the equal and ratable benefit of the Holders of the Senior Notes and for the
benefit of the Convertible Note


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Trustee and for the equal and ratable benefit of the Holders of the Convertible
Notes, Liens and a continuing security interest in and to the collateral
described in Section 3 hereof (the "Collateral") in order to secure the payment
and performance of all Obligations.

         SECTION 3. COLLATERAL. The Collateral is:

                  (a) Qualified Investments. All Qualified Investments, whether
now or hereafter acquired by the Leasing Company, including those Qualified
Investments listed on Schedule A attached hereto (or substitutions, replacements
and proceeds thereof) but excluding any Qualified Investments made with the
dividends, distributions, payments and products and proceeds of Technocom
Preferred Stock (as defined in the Company Convertible Note Security Agreement)
and the funds and Eligible Cash Equivalents in the Company Convertible Note
Escrow Account (collectively, the "Excluded Qualified Investments"), and the
certificates, agreements, documents, notes, collateral documents and instruments
representing or relating to such Qualified Investments, all contract rights,
instruments, general intangibles and other obligations or other receivables of
any kind relating to such Qualified Investments, all Liens relating to or
securing such Qualified Investments and the related collateral documents which
grant such Liens and all products and proceeds of the Qualified Investments,
including, without limitation, all dividends, options, warrants, rights,
subscriptions, all interest and principal payments, and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Qualified Investments;

                  (b) Telecommunications Asset Leases. All Telecommunications
Asset Leases of the Leasing Company, whether now existing or hereinafter
acquired and entered into, including those Telecommunications Asset Leases
listed on Schedule B attached hereto, and all proceeds and products relating
thereto or therefrom, including all payments (including all time payments and
rental payments) and all other payments thereunder, all cash, property or
proceeds from time to time received, receivable or otherwise distributed or paid
in connection therewith, and all documents, documents of title, certificates of
title, letters of credit, letters of credit proceeds, collateral and liens
securing or relating to such Telecommunications Asset Leases and all books,
records, ledger sheets and files of the Leasing Company relating to any of the
foregoing;

                  (c) Asset Sale Proceeds of Telecommunications Assets. All
proceeds or products of an Asset Sale of Telecommunications Assets subject to a
Telecommunications Asset Lease, whether now existing or hereafter acquired,
including all Cash Proceeds, Eligible Cash Equivalents, Investments and
Property;

                  (d) Leasing Company Escrow Account. The Leasing Company Escrow
Account and all funds contained therein and all Investments made by the Escrow
Agent (as defined in the Leasing Company Escrow Account Agreement) therewith
(whether or not constituting Eligible Cash Equivalents) and all proceeds thereto
and including income therefrom;

                  (e) Intercompany Notes. All Intercompany Notes, whether
executed on the Issue Date or thereafter, from any Restricted Subsidiary,
excluding, however, any Intercompany


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Notes (or substitutes, replacements and proceeds thereof, including the funds
and Eligible Cash Equivalents in the Company Convertible Note Escrow Account)
evidencing loans or advances made by the Leasing Company with dividends,
distributions, payments and products or proceeds of Technocom Preferred Stock or
otherwise constituting Collateral under the Company Convertible Note Security
Agreement (as defined therein) (collectively, the "Excluded Intercompany
Notes"), all Liens securing such Intercompany Notes and the related collateral
documents, and the instruments representing such Intercompany Notes, and, except
as otherwise provided elsewhere herein, all products and proceeds of such
Intercompany Notes, including, without limitation, all interest and principal
payments, instruments, and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for such Intercompany
Notes; and

                  (f) After-acquired Collateral and Proceeds. All items
described in this Section 3 (other than those items specifically excluded),
whether now owned or hereafter, at any time acquired by the Leasing Company and
wherever located, including (except as otherwise provided herein) all
replacements, additions, accessions, substitutions, repairs, proceeds and
products relating thereto or therefrom, and all documents, ledger sheets, files,
books and records of the Leasing Company relating thereto. Proceeds hereunder
include (i) whatever is now or hereafter received by the Leasing Company upon
the sale, exchange, collection or other disposition of any item of Collateral;
(ii) any property of the type or types described in subsections (a), (b), (c) or
(e) now or hereafter acquired by the Leasing Company with any proceeds of
Collateral hereunder; and (iii) any payments under any insurance or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.

         SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Leasing Company, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Qualified Investments constituting
Collateral for certificates or instruments of smaller or larger denominations.

         SECTION 5. REPRESENTATIONS AND WARRANTIES. The Leasing Company hereby
represents and warrants to the Collateral Agent and the Trustees that, except as
specified in Schedule C attached hereto:


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                  (a) Legal Power. The execution, delivery and performance by
the Leasing Company of this Security Agreement are within the Leasing Company's
legal powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with (except for any filings
provided for hereunder), any governmental authority, require no consent of any
other Person and do not contravene, or constitute a default under, any provision
of applicable law or regulation or of the articles of incorporation or bylaws,
or comparable organizational documents of, the Leasing Company or of any
agreement (after giving effect to the use of proceeds of the issuance of the
Senior Notes), judgment, injunction, order, decree or other instrument binding
upon the Leasing Company or result in the creation or imposition of any Lien on
any asset of the Leasing Company (other than the Liens created by this Security
Agreement, the Leasing Company Escrow Account Agreement and the other Senior
Note Collateral Documents to which the Leasing Company is a party) and the Liens
created by the Convertible Note Indenture and the Convertible Note Collateral
Documents;

                  (b) Title to Collateral. The Leasing Company is the legal,
record and beneficial owner of the Collateral existing on the Issue Date (the
"Existing Collateral"), free and clear of any Lien or claims of any person
except for the Liens listed on Schedule D attached hereto and the Liens created
by this Security Agreement, the Leasing Company Escrow Account Agreement and any
of the other Senior Note Collateral Documents.

                  (c) Enforceability. This Security Agreement has been duly
executed and delivered by the Leasing Company and constitutes a legal, valid and
binding obligation of the Leasing Company, enforceable against the Leasing
Company in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or
general principles of equity and commercial reasonableness.

                  (d) Perfection; Priority. Upon the execution and delivery of
the Leasing Company Escrow Account Agreement, which is being done
contemporaneously with the execution and delivery of this Security Agreement,
the delivery to the Collateral Agent of the Collateral and the filing of the
Senior Note Collateral Documents relating to the Existing Collateral and the
documents listed on Schedule E attached hereto, to the extent such security
interest is created under applicable federal and New York laws, the security
interest and Liens in the Collateral created pursuant to this Security Agreement
and the Leasing Company Escrow Account Agreement create a valid and perfected
first priority security interest, subject to the Liens listed on Schedule D
attached hereto in the Existing Collateral, securing the payment of the
Obligations for the benefit of the Senior Note Trustee and the Holders of the
Senior Notes and the Convertible Note Trustee and the Holders of the Convertible
Notes, and enforceable as such against all creditors of the Leasing Company and
any Persons purporting to purchase any of the Existing Collateral from the
Leasing Company other than as permitted by the Senior Note Indenture; as of the
date hereof (and after giving effect to the use of proceeds of the issuance of
the Senior Notes), there are no other security interests in or Liens on the
Existing Collateral or any portion thereof, and no financing statement, pledge,
notice of Lien, assignment or collateral assignment, mortgage or deed of trust
covering the Existing Collateral or any portion thereof


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("Lien Notice") exists or is on file in any public office, except with respect
to Liens listed on Schedule E attached hereto, the Liens created by this
Security Agreement and the other Senior Note Collateral Documents and any junior
Liens on Telecommunications Asset Leases or Qualified Investments constituting
Collateral securing Intercompany Notes evidencing loans or advances made by the
Company to the Leasing Company.

                  (e) Offices. The Leasing Company's chief executive offices are
located at the address shown as the chief executive office in Schedule F
attached hereto ("Chief Executive Office"), and the Leasing Company has no
places of business other than those set forth in such Schedule F, except as
permitted hereafter by Section 6(c) hereof.

                  (f) Business Names. The Leasing Company has not conducted its
businesses under any corporate, partnership or fictitious name during the five
(5) years preceding the date hereof, other than those names set forth on
Schedule G attached hereto.

                  (g) No Consents. No consent of any other person and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (i) for
the granting of the Liens by the Leasing Company on the Collateral pursuant to
this Security Agreement or for the execution, delivery or performance of this
Security Agreement by the Leasing Company (except for filings listed on Schedule
D attached hereto, the filings and/or other actions necessary to maintain the
perfection of the Liens on the Collateral and perfect Liens on after-acquired
Collateral or the proceeds of the Collateral) or (ii) for the exercise by the
Collateral Agent of the voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except, in each case,as may be required in connection with any such
disposition by laws affecting the offering and sale of the Qualified Investments
constituting Collateral.

                  (h) Litigation. No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or, to the
knowledge of the Leasing Company, threatened by or against the Leasing Company
with respect to this Security Agreement or any of the transactions contemplated
hereby.

                  (i) Accurate Information. As of the date hereof, all
information set forth herein relating to the Collateral is accurate and complete
in all respects.

         SECTION 6. COVENANTS.

                  (a) Lien Notices. The Leasing Company will defend its interest
in the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein and the Leasing Company will not
permit any Lien Notices with respect to the Collateral or any portion thereof to
exist or be on file in any public office for more than 30 days after the Leasing
Company shall have notice thereof, except with respect to Permitted Liens or
Liens otherwise permitted by Section 4.11 of the Senior Note Indenture. The
Leasing Company 


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will advise the Collateral Agent and the Trustees promptly, in reasonable
detail, at the addresses as specified in Section 17(a) of this Agreement, of any
Lien (other than Permitted Liens) on, or claim asserted against, any of the
Collateral.

                  (b) Location of Collateral. The Leasing Company will keep all
of its Collateral now held or subsequently acquired by it at the locations
specified on Schedule H hereto, or at locations hereafter established in
compliance with Section 6(c) hereof (except for Collateral held by the
Collateral Agent, a Trustee or the Escrow Agent), unless the Leasing Company
shall have given the Collateral Agent and the Trustees prior written notice
thereof and shall have in advance executed and caused to be filed and/or
delivered to the Collateral Agent and the Trustees any financing statements or
other documents required by the Trustees or the Collateral Agent in order to
perfect, protect and preserve the Liens and security interest created hereby,
all in form and substance satisfactory to the Collateral Agent and the Trustees.

                  (c) Location of Offices; Corporation Name; Legal Structure.
The Leasing Company will not change the location of its chief executive office
or establish any place of business other than those set forth on Schedule F
attached hereto, or voluntarily or involuntarily change its name, identity or
legal structure, including without limitation any continuance, amalgamation,
merger, consolidation or sale of substantially all of its assets, unless the
Leasing Company shall have given the Collateral Agent and the Trustees at least
30 days prior written notice thereof and shall have in advance executed and
caused to be filed and or delivered to the Collateral Agent and the Trustees any
financing statements or other Senior Note Collateral Documents required by the
Collateral Agent and the Trustees in order to perfect, protect and preserve the
Liens and security interest created hereby, all in form and substance
satisfactory to the Trustees and the Collateral Agent.

                  (d) Additional Collateral; Further Assurances. The Leasing
Company agrees that immediately upon becoming the beneficial owner of any
additional Telecommunications Asset Leases and proceeds of Asset Sales of
Telecommunications Assets subject to a Telecommunications Asset Lease, any
Qualified Investments constituting Collateral or Intercompany Notes constituting
Collateral, it will pledge and deliver to the Collateral Agent for the benefit
of the Senior Note Trustee and the equal and ratable benefit of the Holders of
the Senior Notes and for the benefit of the Convertible Note Trustee and the
equal and ratable benefit of the Holders of the Convertible Notes, the
certificates, instruments and documents representing such proceeds of Asset
Sales of Telecommunications Assets subject to a Telecommunications Asset Lease,
such Qualified Investments and such Intercompany Notes (as well as duly executed
instruments of transfer or assignment in blank), and grant to the Collateral
Agent for the benefit of the Senior Note Trustee and the equal and ratable
benefit of the Holders of the Senior Notes and for the benefit of the
Convertible Note Trustee and for the equal and ratable benefit of the Holders of
the Convertible Notes pursuant to appropriate and necessary Senior Note
Collateral Documents, a continuing first priority security interest in and Liens
on such proceeds of Telecommunications Assets, such Qualified Investments or
such Intercompany Notes, all in form and substance satisfactory to the
Collateral Agent and the Trustees. The Leasing Company shall also promptly (and
in any event within five (5) Business Days after receipt thereof), subject to


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its compliance with the requirements of applicable law, deliver to the
Collateral Agent any other documents of title, promissory notes, certificates or
instruments representing Collateral which it holds. The Leasing Company further
agrees that it will promptly (and in any event within 5 Business Days after such
acquisition) deliver to the Collateral Agent and the Trustees an amendment, duly
executed by the Leasing Company, in substantially the form of Schedule I hereto
(an "Additional Collateral Amendment"), with respect to the additional
Collateral that is to be pledged pursuant to this Security Agreement. The
Leasing Company hereby authorizes the Collateral Agent and the Trustees to
attach each Additional Collateral Amendment to this Security Agreement and
agrees that any stock, notes or other forms of Investment listed on any
Additional Collateral Amendment delivered to the Collateral Agent or the
Trustees shall for all purposes hereunder be considered Collateral. The Leasing
Company will, promptly upon request by the Trustee, (i) execute and deliver,
cause to be executed and filed, or use its best efforts to give any notices, in
all appropriate jurisdictions (including Canada, Cyprus, the Russian Federation
and Kazakstan) or procure any financing statements, assignments, pledges or
other documents, all in form and substance satisfactory to the Collateral Agent
and the Trustee, (ii) mark any chattel paper constituting Collateral, and
deliver any certificates, chattel paper or instruments constituting Collateral
to the Collateral Agent or the Trustees, (iii) execute and deliver or cause to
be executed and delivered all stock powers, proxies, assignments, instruments
and other documents, all in form and substance satisfactory to the Collateral
Agent and the Trustee, and (iv) take any other actions that are necessary or, in
the reasonable opinion of the Collateral Agent and the Trustees, desirable to
perfect or continue the perfection and the priority of the Collateral Agent's
security interest and Liens in the Collateral, to protect the Collateral against
the rights, claims, or interests of third Persons other than holders of
Permitted Liens or Liens otherwise permitted by Section 4.11 of the Senior Note
Indenture or to effect the purposes of this Security Agreement. The Leasing
Company also hereby authorizes the Collateral Agent to file any financing or
continuation statements with respect to the Collateral without the signature of
the Leasing Company to the extent permitted by applicable law.

                  (e) Disposition of Collateral. The Leasing Company will not
sell, transfer, assign, pledge, collaterally assign, exchange or otherwise
dispose of, or grant any option or warrant with respect to, any of the
Collateral or any Telecommunications Assets subject to a Telecommunications
Asset Lease except as permitted by the Senior Note Indenture and the Convertible
Note Indenture. If the proceeds of any sale of any Collateral are notes,
instruments, documents of title, standby letters of credit or chattel paper,
such proceeds shall be promptly delivered to the Collateral Agent to be held as
Collateral hereunder. If the Collateral, or any part thereof, is sold,
transferred, assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest and Liens of the Collateral Agent shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Leasing Company will hold the
proceeds thereof in an separate account for the benefit of the Senior Note
Trustee and for the equal and ratable benefit of the Holders of the Senior Notes
and the benefit of the Convertible Note Trustee and for the equal and ratable
benefit of the Holders of the Convertible Notes and transfer such proceeds to
the Collateral Agent or the applicable Trustee in kind to be held as Collateral
hereunder.


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                  (f) Restrictive Agreements. The Leasing Company agrees that,
except for existing agreements set forth on Schedule J attached hereto, it will
not (i) enter into any agreement or understanding that purports to or may
restrict or inhibit the Collateral Agent's or the Trustees' rights or remedies
hereunder, including, without limitation, the Collateral Agent's or the
Trustees' right to sell or otherwise dispose of the Collateral or amend or
modify in any manner materially adverse to the Trustees the existing agreements
set forth as Schedule J attached hereto, (ii) permit any issuer to continue,
merge, amalgamate or consolidate, unless all outstanding Capital Stock owned by
the Leasing Company of the surviving corporation is, upon such continuation,
merger, amalgamation or consolidation, pledged hereunder to the Collateral Agent
or (iii) fail to pay or discharge any tax, assessment or levy of any nature not
later than five days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with regard to the Collateral.

                  (g) Rights of Collateral Agent and Trustees. Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent and the Trustees shall have the right at any time to make any payments and
do any other acts as the Collateral Agent or either Trustee may deem necessary
to protect the Liens and security interest of the Collateral Agent in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any Lien which, in the judgment of the Collateral Agent or such
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Leasing Company hereby
agrees to reimburse the Collateral Agent and the Trustees for all payments made
and expenses incurred under this Security Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for the Trustees,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Security Agreement, and agrees that it shall be bound by
any payment made or act taken by the Collateral Agent or the Trustees hereunder.
Neither the Collateral Agent nor the Trustees shall have any obligation to make
any of the foregoing payments or perform any of the foregoing acts.

                  (h) Records. The Leasing Company will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral.

                  (i) Access. On reasonable notice to the Leasing Company,
except at any time during the continuation of Default or an Event of Default,
both the Collateral Agent and the Trustees shall at all times have full and free
access during normal business hours to all the books, correspondence and records
of the Leasing Company relating to the Collateral, and the Collateral Agent and
its representatives, and the Trustees and their respective representatives, may
examine the same, take extracts therefrom and make photocopies thereof, and the
Leasing Company agrees to render to the Collateral Agent and/or the applicable
Trustee, at the Leasing Company's cost and expense, such clerical and other
assistance, at all times and in such manner as may be requested with regard
thereto. On reasonable notice to the Leasing Company, except at any time during
the continuation of a Default or an Event of Default, the Collateral Agent and
its representatives, and the Trustees and their respective representatives,
shall at all times also have 


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the right to enter, during normal business hours, into and upon any premises
where any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.

                  (j) Taxes. The Leasing Company shall pay all taxes,
assessments and government charges and all claims as and to the extent required
by Section 4.6 of each of the Senior Note Indenture and the Convertible Note
Indenture; provided that the Leasing Company shall in any event pay such taxes,
assessments or levies not later than five days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with regard to any
Collateral of the Leasing Company entered or filed against the Leasing Company
as a result of the failure to make such payment.

                  (k) Demand Obligations. The Leasing Company agrees that it
will cause each of the Restricted Subsidiaries that is obligated on any
Intercompany Note constituting Collateral that constitutes a demand obligation,
within the meaning of Section 3-108 of the Uniform Commercial Code of the State
of New York, to execute and deliver to the Collateral Agent and/or the Trustees
a new instrument extending, renewing and replacing such demand obligation not
later than the second anniversary of the date of original issue thereon and on
each succeeding second anniversary thereof.

         SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.

                  (a) So long as no Event of Default shall have occurred and be
continuing, the Leasing Company shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral, including amending,
modifying, supplementing or replacing any Telecommunications Asset Lease, or any
part thereof for any purpose not inconsistent with the terms of this Security
Agreement, the Senior Note Indenture or any other Senior Note Collateral
Document or the Convertible Note Indenture or any Convertible Note Collateral
Documents; provided that the Leasing Company shall not exercise or shall refrain
from exercising any such right if such action would be inconsistent with or
violate any provisions of this Security Agreement, the Senior Note Indenture or
any other Senior Note Collateral Document or the Convertible Note Indenture or
any Convertible Note Collateral Documents.

                  (b) All payments made from time to time on, or with respect to
Telecommunications Asset Leases, Intercompany Notes constituting Collateral or,
Qualified Investments (other than Excluded Qualified Investments) constituting
Collateral, whether lease payments and rents, interest or principal payments,
dividends, distributions or otherwise, shall be delivered to the applicable
Trustee for deposit in the Leasing Company Escrow Account or the Convertible
Note Escrow Account if the Company Senior Note Escrow Account Agreement has been
terminated.

                  (c) The Collateral Agent and/or the Senior Note Trustee (or
the Convertible Note Trustee if the Senior Notes are no longer outstanding and
the Senior Note Indenture has been satisfied and discharged) shall execute and
deliver (or cause to be executed and delivered) 


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to the Leasing Company all such proxies and other instruments as the Leasing
Company may reasonably request for the purpose of enabling the Leasing Company
to exercise the voting and other rights that it is entitled to exercise pursuant
to Section 7(a) above.

                  (d) Upon the occurrence and during the continuance of an Event
of Default, (i) all rights of the Leasing Company to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to Section 7(a) shall cease, and all such rights shall thereupon become vested
in the Collateral Agent on behalf of, or if necessary, directly in, the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged),
which shall thereupon have the sole right to exercise such voting and other
consensual rights.

                  (e) Upon the occurrence and during the continuance of an Event
of Default, the Leasing Company shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent and/or the Senior Note Trustee
(or the Convertible Note Trustee if the Senior Notes are no longer outstanding
and the Senior Note Indenture has been satisfied and discharged) all such
proxies and other instruments as the Collateral Agent and/or the applicable
Trustee may reasonably request for the purpose of enabling the Collateral Agent
and/or the applicable Trustee to exercise the voting and other rights that it is
entitled to exercise pursuant to Section 7(c) above.

                  (f) All lease payments and rents, all interest and principal
payments, all dividends and distributions and all other payments that are
received by the Leasing Company contrary to the provisions of this Section 7
shall be received in trust for the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, shall be segregated
from the other property or funds of the Leasing Company and be forthwith
delivered to the Collateral Agent as Collateral in the same form as so received
(with any necessary endorsements or other instruments of transfer or assignment
in blank), and all such payments shall be deposited in the Leasing Company
Escrow Account.

                  (g) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustees shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Leasing Company agrees and undertakes to do at the Leasing Company's
expense; provided that the Collateral Agent and the Trustees shall cooperate
with the Leasing Company and take all such action as the Leasing Company may
reasonably request to permit the Leasing Company to collect, protect or enforce
the Collateral. All reasonable expenses (including, without limitation,
attorneys' fees and legal expenses) actually incurred or paid by the Collateral
Agent and the Trustees in connection with or incident to any such collection or
attempt to collect, protect or enforce the Collateral shall be borne by the
Leasing Company or reimbursed by the Leasing Company to the Collateral Agent or
the applicable Trustee upon demand.


                                       11
<PAGE>   12
                  (h) At the Collateral Agent's or the applicable Trustee's
option, exercisable upon and during the continuance of any Event of Default,
either the Collateral Agent or the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) may notify the lessees and other
obligors under the Telecommunications Asset Leases, the issuers or other
obligors of the Intercompany Notes constituting Collateral, the issuers and the
obligors of the Qualified Investments constituting Collateral that any and all
payments and distributions to be made on such Telecommunications Asset Leases,
such Intercompany Notes and such Qualified Investments shall be made directly to
the Collateral Agent or the applicable Trustee, and the Leasing Company hereby
directs the obligors and lessees of such Telecommunications Asset Leases, the
obligors of such Intercompany Notes, the issuers or other obligors of such
Qualified Investments to pay and deliver over to the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) all payments and distributions to be made on such Intercompany
Notes, and such Qualified Investments, until such obligors or issuers are
notified in writing by the applicable Trustee or the Collateral Agent to
discontinue making such payments to it; and such obligors and issuers shall not
be required to see to the application of said proceeds by the Trustee or the
Collateral Agents. All such payments shall be deposited by such Trustee or the
Collateral Agent into the Leasing Company Escrow Account and held as additional
Collateral for the Obligations. If at any time the Collateral Agent or a Trustee
shall have notified such lessees, issuers and obligors to make all payments
directly to the Collateral Agent and if any at any time thereafter all Events of
Default shall thereafter have been cured or waived in accordance with the terms
of the Senior Note Indenture (or the Convertible Note Indenture if the Senior
Notes are no longer outstanding and the Senior Note Indenture has been satisfied
and discharged), the Collateral Agent or a Trustee may notify such lessees,
issuers and obligors to make all such payments directly to the Leasing Company
or as the Leasing Company may otherwise direct.

         SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted
to the Senior Note Trustee pursuant to Article VI of the Senior Note Indenture
and the Convertible Note Trustee pursuant to Article VI of the Convertible Note
Indenture, the Leasing Company hereby appoints and constitutes the Collateral
Agent and the Trustees, whether acting separately or jointly, as the Leasing
Company's attorneys-in-fact to exercise all of the following powers upon and at
any time after the occurrence and during the continuance of an Event of Default:
(i) collection of proceeds of any Collateral; (ii) conveyance of any item of
Collateral to any purchaser thereof; (iii) giving of any notices or recording of
the security interest and the Liens under Section 6(d) hereof; (iv) making of
any payments or taking any acts under Section 9 hereof and (v) paying or
discharging taxes or Liens levied or placed upon the Collateral, the legality or
validity thereof and the amounts necessary to discharge the same to be
determined by the Collateral Agent in its sole discretion, and such payments
made by the Collateral Agent to become the Obligations of the Leasing Company to
the Collateral Agent, due and payable immediately upon demand. The Collateral
Agent's authority hereunder shall include, without limitation, the authority to
endorse and negotiate any checks or instruments representing proceeds of
Collateral in the name of the Leasing Company, to execute and give receipt for
any certificate 


                                       12
<PAGE>   13
of ownership or any document constituting Collateral, to transfer title to any
item of Collateral, to sign the Leasing Company's name on all financing
statements (to the extent permitted by applicable law) or any other Senior Note
Collateral Documents or other documents deemed necessary or appropriate by the
Collateral Agent to preserve, protect or perfect the Liens in the Collateral and
to file the same, to prepare, file and sign the Leasing Company's name on any
notice of Lien, and to prepare, file and sign the Leasing Company's name on a
proof of claim in bankruptcy or similar document against any customer of, or
person obligated upon any Collateral to, the Leasing Company, and to take any
other actions arising from or incident to the powers granted to the Collateral
Agent in this Security Agreement. This power of attorney is coupled with an
interest in the Trustees and in the Collateral Agent as agent on behalf of the
Trustees and is irrevocable by the Leasing Company.

         SECTION 9.  COLLATERAL AGENT OR TRUSTEES MAY PERFORM. If the Leasing
Company fails to perform any covenant or agreement contained herein, the
Collateral Agent or either Trustee may, but shall not be obligated to, itself
perform, or cause performance of, such covenant or agreement, and the reasonable
expenses of the Collateral Agent or the Trustees incurred in connection
therewith shall be payable by the Leasing Company under Section 17(p) hereof.

         SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustees hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustees in connection therewith. Each of the Collateral Agent and the Trustees
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or such Trustee
accords similar property in similar situations, it being understood that the
Collateral Agent and the Trustees shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or either Trustee has or is deemed to have knowledge of
such matters, (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, or (iii) inquiring into or verifying
that the Leasing Company has complied or will comply with its duty to furnish
additional items of Collateral to the Collateral Agent and/or the Trustees
pursuant to Section 6(d) hereof. Absent knowledge to the contrary, the
Collateral Agent and both Trustees may assume that the items of Collateral
actually delivered to it are all items required to be so delivered and may
assume that no other such items need be so delivered.

         SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Leasing
Company represents to the Collateral Agent, the Senior Note Trustee and the
Holders of the Senior Notes, and the Convertible Note Trustee and the Holders of
the Convertible Notes that the Leasing Company has made its own arrangements for
keeping informed of changes or potential changes affecting the Collateral
(including, but not limited to, compliance with the covenants and the occurrence
of events of default under Telecommunications Asset Leases and the status of the


                                       13
<PAGE>   14
related leased Telecommunications Assets, rights to convert, rights to
subscribe, payment of dividends, payments of interest and/or principal,
reorganization or other exchanges, tender offers and voting rights), and the
Leasing Company agrees that the Collateral Agent, the Senior Note Trustee and
the Holders of the Senior Notes, and the Convertible Note Trustee and the
Holders of the Convertible Notes shall have no responsibility or liability for
informing the Leasing Company of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereof. The
Leasing Company will defend the right, title and interest of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes in and to the
Collateral against the claims and demands of all persons.


         SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.

                  (a) Upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent may, subject to the provisions of the Senior
Note Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), this Security Agreement, and the Collateral Agent's and the
Trustees' compliance with any requirements of law (including, without
limitation, the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario)) applicable to the action to be taken, without notice to
or demand upon the Leasing Company except as required by the Senior Note
Indenture, the Convertible Note Indenture, this Agreement or applicable law, do
any one or more of the following:

                      (i)   exercise any or all of the rights and remedies 
provided for by the applicable Uniform Commercial Code and the Personal Property
Security Act (Ontario), specifically including, without limitation, the right to
recover the reasonable fees and expenses incurred by the Collateral Agent or the
Trustees in the enforcement of this Security Agreement or in connection with the
Leasing Company's redemption of the Collateral, including reasonable fees,
expenses and disbursements of attorneys, paralegals and agents;

                      (ii)  at its option, transfer or register, and the Leasing
Company shall register or cause to be registered upon request therefor by the
Collateral Agent or the Trustees, the Collateral or any part thereof on the
books of the Restricted Subsidiary or Qualified Joint Venture which is a lessee
under a Telecommunications Asset Lease, the Persons in whom Qualified
Investments are made or the Restricted Subsidiaries to which an intercompany
loan evidenced by an Intercompany Note has been made, into the name of the
Collateral Agent or the Collateral Agent's nominee(s);

                      (iii) personally, or by agents or attorneys, immediately 
retake possession of the Collateral or the Telecommunications Assets subject to
a Telecommunications Asset Lease, or any part thereof, from the Leasing Company
or any other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Leasing
Company's premises where any of the Collateral is located and remove the same
and


                                       14
<PAGE>   15
use in connection with such removal any and all services, supplies, aids and
other facilities of the Leasing Company;

                      (iv)   sell, assign or otherwise liquidate, or direct the
Leasing Company to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of any such
sale or liquidation;

                      (v)    require the Leasing Company to assemble the
Collateral or the Telecommunications Assets subject to a Telecommunications
Asset Lease or any part thereof and make it available at one or more places as
the Collateral Agent or the Trustees may designate and to deliver possession of
the Collateral or any part thereof to the Collateral Agent or the Trustees;

                      (vi)   use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by the Leasing
Company;

                      (vii)  sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or for
future delivery, without assumption of any credit; and the purchaser of any or
all Collateral so sold shall thereafter hold the same absolutely, free from any
claim, encumbrance or right of any kind whatsoever;

                      (viii) enforce one or more remedies hereunder,
successively or concurrently, and such action shall not operate to estop or
prevent the Collateral Agent from pursuing any other or further remedy which it
may have, and any repossession or retaking or sale of the Collateral pursuant to
the terms hereof shall not operate to release the Leasing Company until full and
final payment of any deficiency has been made in cash;

                      (ix)   in connection with any public or private sale under
the applicable Uniform Commercial Code, the Personal Property Act (Ontario) or
other applicable legislation, the Collateral Agent shall give the Leasing
Company at least fifteen (15) Business Days' prior written notice of the time
and place of any public sale of its Collateral or of the time after which any
private sale or other intended disposition thereof may be made, which shall be
deemed to be reasonable notice of such sale or other disposition. Such notice
may be given to the Leasing Company in accordance with the provisions of Section
17(a) hereof;

                      (x)    proceed by an action or actions at law or in equity
to recover the Obligations or to foreclose this Security Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction;

                      (xi)   exercise any other rights and remedies provided by
applicable law and the other Senior Note Collateral Documents; and


                                       15
<PAGE>   16
                      (xii) if the Collateral Agent recovers possession of all
or any part of the Collateral pursuant to a writ of possession or other judicial
process, whether prejudgment or otherwise, the Collateral Agent may thereafter
retain, sell or otherwise dispose of such Collateral in accordance with this
Security Agreement or the applicable Uniform Commercial Code, the Personal
Property Act (Ontario) or other applicable legislation, and following such
retention, sale or other disposition, the Collateral Agent may voluntarily
dismiss without prejudice the judicial action in which such writ of possession
or other judicial process was issued. The Leasing Company hereby consents to the
voluntary dismissal by the Collateral Agent of such judicial action, and the
Leasing Company further consents to the exoneration of any bond that the
Collateral Agent files in such action.

                  (b) If the Collateral Agent shall determine, or shall be
directed by the Senior Note Trustee (or the Convertible Note Trustee if the
Senior Notes are no longer outstanding and the Senior Note Indenture has been
satisfied and discharged), to exercise its right to sell any or all of the
Qualified Investments pursuant to Section 12(a) above, and if in the opinion of
counsel for the Collateral Agent it is necessary, or if in the opinion of the
Collateral Agent or such Trustee it is advisable, after such consultation with
investment bank(s), broker-dealer(s) or other experts selected by them, as the
Collateral Agent or such Trustee deems advisable or appropriate, to have the
Qualified Investments constituting Collateral or that portion thereof to be
sold, registered under the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), the Leasing Company will (i) use its best efforts to
cause the issuer or obligor to execute and deliver, and to cause such Person's
directors and officers to execute and deliver, all at the Leasing Company's own
expense, all such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the
Collateral Agent or such Trustee, after such consultation with investment
bank(s), broker-dealer(s) or other experts selected by them, as the Collateral
Agent or such Trustee deems advisable or appropriate, advisable to register such
Qualified Investments constituting Collateral under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of 180
days from the date of the first public offering of such Qualified Investments,
or that portion thereof to be sold and (iii) make all amendments thereto and/or
to the related prospectus that are necessary or, in the opinion of the
Collateral Agent or such Trustee, are advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Leasing Company
agrees to use its best efforts to cause the applicable issuer or obligor to
comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction that the Collateral Agent or the Senior Note Trustee (or the
Convertible Note Trustee if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) shall designate for the
sale of such Qualified Investments and to make available to the security holders
of such issuer or obligor, as the case may be, as soon as practicable, an
earnings statement (which need not be audited) that will satisfy the provisions
of Section 11(a) of the Securities Act. The Leasing Company will cause the
issuer or obligor, as the case may be, to furnish to the Collateral Agent and
the Trustees such number of copies as the Collateral Agent and the Trustees may
reasonably request of each preliminary prospectuses and prospectuses, to notify
promptly the Collateral Agent and the Trustees of the happening of any event as
a result of which any then effective 


                                       16
<PAGE>   17
prospectus includes an untrue statement of any material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of then existing circumstances and cause the
Collateral Agent and the Trustees to be furnished with such number of copies as
the Collateral Agent or the Trustees may request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or supply such omission. The Leasing Company will cause the issuer or obligor,
as the case may be, to the extent permitted by law, to indemnity, defend and
hold harmless the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes from and against all losses, liabilities, expenses or claims
(including reasonable costs of investigation) that the Collateral Agent, the
Senior Note Trustee and the Holders of the Senior Notes, and the Convertible
Note Trustee and the Holders of the Convertible Notes may incur under the
Securities Act or otherwise, insofar as such losses, liabilities, expenses or
claims arise out of or are based upon any alleged untrue statement of a material
fact contained in such registration statement (or any amendment thereto) or in
any preliminary prospectus or prospectus (or any amendment or supplement
thereto), or arise out of or are based upon any alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent that any such losses, liabilities,
expenses or claims arise solely out of or are based solely upon any such alleged
untrue statement made or such alleged omission to state a material fact included
or excluded on the written direction of the Collateral Agent or such Trustee.
The Leasing Company will bear, or will cause the issuer or obligor, as the case
may be, to bear, all costs and expenses of carrying out its or their obligations
hereunder. The provisions of this Section 12(b) shall in no way impose upon
either Trustee or the Collateral Agent any duty to execute any registration
statement under the Securities Act with respect to any Qualified Investment.

                  (c) In view of the fact that federal, state and foreign
securities laws may impose certain restrictions on the method by which a sale of
the Collateral may be effected after an Event of Default, the Leasing Company
agrees that upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, from time to time, attempt to sell all or any
part of the Collateral by means of a private placement, restricting the
prospective purchasers to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, the
Collateral Agent may solicit, or may cause an investment manager to solicit,
offers to buy the Collateral, or any part of it, for cash, from a limited number
of investors who might be interested in purchasing the Collateral. The Leasing
Company acknowledges and agrees that any such private sale may result in prices
and terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Collateral for
the period of time necessary to permit the Leasing Company to cause the issuer
or obligor to register such securities for public sale under the Securities Act,
or under applicable state or foreign securities laws, even if the Leasing
Company could cause the issuer or obligor, as the case may be, to do so.


                                       17
<PAGE>   18
                  (d) The Leasing Company further agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Collateral pursuant to this Section
12 valid and binding and in compliance with any and all other applicable
requirements of applicable law. The Leasing Company further agrees that a breach
of any of the covenants contained in this Section 12 will cause irreparable
injury to the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and that the
Collateral Agent, the Senior Note Trustee and the Holders of the Senior Notes
and the Convertible Note Trustee and the Holders of the Convertible Notes have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 12 shall be specifically
enforceable against the Leasing Company, and the Leasing Company hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and
is continuing.

                  (e) Any cash held by the Collateral Agent as Collateral and
all cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied by the Collateral Agent:

                           First, to the payment of the costs and expenses of
                  such sale, including, without limitation, reasonable expenses
                  of the Collateral Agent and its agents including the fees and
                  expenses of its counsel, and all expenses, liabilities and
                  advances made or incurred by the Collateral Agent in
                  connection therewith or pursuant to Section 17(p) hereof:

                           Next, to the Senior Note Trustee for the payment in
                  full of all amounts due under Section 7.7 of the Senior Note
                  Indenture;

                           Next, to the Senior Note Trustee, for distribution to
                  the Holders of the Senior Notes for the payment in full of the
                  remaining Senior Note Obligations;

                           Next, to the Convertible Note Trustee for the payment
                  in full of all amounts due under Section 7.7 of the
                  Convertible Note Indenture.

                           Next, to the Convertible Note Trustee, for
                  distribution to the Holders of the Convertible Notes, for the
                  payment in full of the remaining Convertible Note Obligations;
                  and

                           Finally, after payment in full of all of the
                  Obligations, to the Company, or its successors or assigns, or
                  to whomsoever may be lawfully entitled to receive the same as
                  a court of competent jurisdiction may direct.

                  (f) If any sale or other disposition of Collateral by the
Collateral Agent or any other action of the Collateral Agent or the Trustees
hereunder results in reduction of the Obligations, such action will not release
the Leasing Company from its liability for any unpaid 


                                       18
<PAGE>   19
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be immediately
due and payable to the Collateral Agent, the Senior Note Trustee and the Holders
of the Senior Notes as provided for in the Senior Note Indenture, or, if
applicable, the Convertible Note Trustee and the Holders of the Convertible
Notes as provided for in the Convertible Note Indenture.

                  (g) The Collateral Agent may enforce its rights hereunder
without prior judicial process or judicial hearing, and to the extent permitted
by law the Leasing Company expressly waives any and all legal rights which might
otherwise require the Collateral Agent to enforce its right by judicial process.

                  (h) The existence and/or exercise of any or all of the rights
and remedies given to the Collateral Agent and/or either Trustee under this
Section 12 shall be subject in all cases to compliance with any mandatory
requirements of applicable law, particularly the laws of jurisdictions other
than the United States.

         SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO THE
APPLICABLE ISSUER. The Leasing Company hereby authorizes and instructs the
lessees, issuers and obligors to comply with any instructions received by a
lessee, issuer or obligor, as the case may be, from the Collateral Agent or the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged) that (i) states that an Event of Default has occurred and (ii) is
otherwise in accordance with the terms of this Security Agreement, without any
other or further instructions from the Leasing Company, and the Leasing Company
agrees that the lessees, issuers and obligors shall be fully protected in so
complying.

         SECTION 14. ESCROW ACCOUNT. All money received by the Leasing Company
and required to be deposited in the Leasing Company Escrow Account, shall be
promptly and without commingling remitted to the Collateral Agent or the Senior
Note Trustee (or the Convertible Note Trustee if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged) for
deposit therein. Amounts held in the Leasing Company Escrow Account shall be
applied or disposed of only in a manner not prohibited by the Senior Note
Indenture or the Convertible Note Indenture if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged.

         SECTION 15. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent, the Senior Note Trustee and the Holders of the Senior Notes, and the
Convertible Note Trustee and the Holders of the Convertible Notes and the Liens
or security interests hereunder, and all obligations of the Leasing Company
hereunder, shall be absolute and unconditional irrespective of:

                  (a) any lack of validity or enforceability of the Senior Note
Indenture, any Senior Note Collateral Document, any Senior Note Guarantee, the
Convertible Note Indenture, 


                                       19
<PAGE>   20
any Convertible Note Collateral Document, any Convertible Note Guarantee or any
other agreement or instrument relating thereto;

                  (b) any change in the time, manner or place of payment 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 Senior Note Indenture or the
Senior Note Collateral Documents or from the Convertible Note Indenture or the
Convertible Note Collateral Documents;

                  (c) any exchange, surrender, release or non-perfection of any
Liens on any other collateral, or any release or amendment or waiver of or
consent to departure from any Senior Note Guarantee, any Convertible Note
Guarantee or other guarantee, for all or any of the Obligations; or

                  (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Leasing Company in respect of the
Obligations or of this Security Agreement.

         SECTION 16. WAIVERS.

                  (a) Except as may be required under the provisions of the
Senior Note Indenture (or of the Convertible Note Indenture if the Senior Notes
are no longer outstanding and the Senior Note Indenture has been satisfied and
discharged) and to the fullest extent permitted under applicable law, neither
the Collateral Agent nor the Senior Note Trustee (or the Convertible Note
Trustee if the Senior Notes are no longer outstanding and the Senior Note
Indenture has been satisfied and discharged) shall be under any duty whatsoever
to make or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Collateral or
the Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor or other Person. The Leasing Company waives to the
fullest extent permitted under applicable law any right of marshalling in
respect of any and all Collateral, and waives to the fullest extent permitted
under applicable law any right to require the Collateral Agent or the applicable
Trustee to proceed against any Obligor or other Person, exhaust any Collateral
or enforce any other remedy which the Collateral Agent or the applicable Trustee
now has or may hereafter have against any Obligor or other Person.

                  (b) The Leasing Company waives to the fullest extent permitted
under applicable law (i) any and all notices of acceptance, creation,
modification, rearrangement, renewal or extension for any period of any
instrument executed by any obligor in connection with the Obligations and (ii)
any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. The Leasing
Company authorizes the Collateral Agent to the fullest extent permitted under
applicable law, without notice or demand and without any reservation of rights
against the Leasing Company and without affecting the Leasing Company's
liability hereunder or on the Obligations, from time to time to (w) take and
hold other Property, other than the Collateral, as security for the Obligations,
and 


                                       20
<PAGE>   21
exchange, enforce, waive and release any or all of the Collateral, (x) after the
occurrence and during the continuance of an Event of Default and the
acceleration of the Senior Notes, apply the Collateral in the manner permitted
by this Security Agreement or the Senior Note Indenture, (y) after the
occurrence and during the continuance of an Event of Default and the
acceleration of the Convertible Notes if the Senior Notes are no longer
outstanding and the Senior Note Indenture has been satisfied and discharged,
apply the Collateral in the manner permitted by this Security Agreement or the
Convertible Note Indenture and (z) after the occurrence and during the
continuance of an Event of Default renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or release the
obligations of any obligor on, or any instrument or agreement of such other
Person with respect to any or all of, the Collateral.


         SECTION 17. MISCELLANEOUS PROVISIONS.

                  (a) Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Leasing Company, at its address as set forth in
Section 13.2 of the Senior Note Indenture, to the Senior Note Trustee at its
address as set forth in Section 13.2 of the Senior Note Indenture, to the
Convertible Note Trustee at its address as set forth in Section 13.2 of the
Convertible Note Indenture and to the Collateral Agent at The Bank of New York,
101 Barclay Street, Floor 21 West, New York, New York 10286.

                  (b) Sales of Collateral. No sales of Collateral may be made in
contravention of the terms of the Senior Note Indenture or the Convertible Note
Indenture and the cash proceeds of the sale of any Collateral shall be promptly
and without commingling remitted to the Collateral Agent or the Senior Note
Trustee for deposit in the Leasing Company Escrow Account.

                  (c) No Adverse Interpretation of Other Agreements. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of the Leasing Company or any Subsidiary of the Leasing Company. No
such pledge, security or debt agreement may be used to interpret this Security
Agreement.

                  (d) Severability. The provisions of this Security Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.

                  (e) Headings. The headings in this Security Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.


                                       21
<PAGE>   22
                  (f) Counterpart Originals. This Security Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.

                  (g) Benefits of Security Agreement. Nothing in this Security
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder and the Holders of the Senior Notes and
the Senior Note Guarantors and the Holders of the Convertible Notes and the
Convertible Note Guarantors, any benefit or any legal or equitable right, remedy
or claim under this Security Agreement.

                  (h) Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Security Agreement and any consent to any departure by
the Leasing Company from any provision of this Security Agreement shall be
effective only if made or given in compliance with all of the terms and
provisions of the Senior Note Indenture and the Convertible Note Indenture and
neither the Collateral Agent or the Senior Note Trustee nor any Holder of any
Senior Note or the Convertible Note Trustee or any Holder of any Convertible
Note shall be deemed, by any act, delay, indulgence, omission or otherwise, to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
Failure of the Collateral Agent or the Trustees to exercise, or delay in
exercising, any right, power or privilege hereunder shall not operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent, the
Senior Note Trustee or any Holder of any Senior Note or the Convertible Note
Trustee or any Holder of any Convertible Note of any right or remedy hereunder
on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent, either Trustee or any such Holder would otherwise have on
any future occasion. The right and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.

                  (i) Interpretation of Security Agreement. All terms not
defined herein or in the Senior Note Indenture shall have the meaning set forth
in the applicable Uniform Commercial Code of the State of New York, except where
the context otherwise requires. To the extent a term or provision of this
Security Agreement conflicts with the Senior Note Indenture, the Senior Note
Indenture shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Security Agreement shall not be relevant in determining the meaning
of this Security Agreement even though the accepting or acquiescing party had
knowledge of the nature of the performance and opportunity for objection.

                  (j) Continuing Security Interest; Transfer of Collateral. This
Security Agreement shall create a continuing Lien and security interest in the
Collateral and shall (i) unless otherwise provided in the Senior Note Indenture,
the Convertible Note Indenture or this Security Agreement, remain in full force
and effect until payment in full of (A) the Senior Notes under the terms of the
Senior Note Indenture, (B) all Obligations then due and owing under the 


                                       22
<PAGE>   23
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents; provided, however, that after receipt from the Leasing Company by the
Collateral Agent of a request for a release of any Collateral permitted under
the Senior Note Indenture and the Convertible Note Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Senior Note Indenture and the Convertible Note Indenture and
upon receipt by the Collateral Agent of all proceeds of such sale, transfer,
assignment, exchange or other disposition required to be remitted to the
Collateral Agent or the Senior Note Trustee (or the Convertible Note Trustee if
the Senior Notes are no longer outstanding and the Senior Note Indenture has
been satisfied and discharged) or the Collateral constituting the proceeds of
such sale, transfer, assignment, exchange or other disposition being made
subject to a Lien and security interest in favor of the Collateral Agent for the
benefit of the Senior Note Trustee and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes, which
Lien has the same priority as had the Lien on the Collateral being sold,
assigned or otherwise disposed of, such Collateral shall be released from the
Lien and security interest created hereunder and no longer constitute
Collateral. Upon the payment in full of (A) the Senior Notes under the terms of
the Senior Note Indenture, (B) all Obligations then due and owing under the
Senior Note Indenture, the Senior Note Guarantees and the Senior Note Collateral
Documents, (C) the Convertible Notes under the terms of the Convertible Note
Indenture and (D) all Obligations then due and owing under the Convertible Note
Indenture, the Convertible Note Guarantees and the Convertible Note Collateral
Documents, the Leasing Company shall be entitled to the return, upon its request
and at its expense, of such of the Collateral pledged by it as shall not have
been sold or otherwise applied pursuant to the terms hereof. This Security
Agreement shall be binding upon the Leasing Company, its successors and assigns,
and inure, together with the rights and remedies of the Trustees hereunder, to
the benefit of the Collateral Agent, the Senior Note Trustee and the Holders of
the Senior Notes, and the Convertible Note Trustee and the Holders of the
Convertible Notes and their respective successors, transferees and assigns.

                  (k) Reinstatement. This Security Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note or the Convertible Note Trustee or any Holder of a Convertible Note
in respect of the Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent, the Senior Note Trustee or any Holder of a
Senior Note, or the Convertible Note Trustee or any Holder of a Convertible Note
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization or
the Leasing Company or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for the Leasing Company or upon the
appointment of any receiver, intervenor, conservator, trustee or similar
official for the Leasing Company or any substantial part of its assets, or
otherwise, all as though such payments had not been made.


                                       23
<PAGE>   24
                  (l) Survival of Provisions. All representations, warranties
and covenants of the Leasing Company contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the full and final payment and performance by the Leasing Company of the
Obligations.

                  (m) Authority of Collateral Agent and Trustees. Both the
Collateral Agent and the Trustees shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent and the
Trustees by the terms hereof, together with such powers as are reasonably
incident thereto. The Collateral Agent and the Trustees may perform any of their
respective duties hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and to act in
reliance upon the advice of counsel concerning all such matters. None of the
Collateral Agent, any director, officer, any attorney or agent of the Collateral
Agent, the Senior Note Trustee, any director, officer, employee, attorney or
agent of the Senior Note Trustee, the Holders of the Senior Notes, the
Convertible Note Trustee, any director, officer, employee, attorney or agent of
the Convertible Note Trustee and the Holders of the Convertible Notes shall be
liable to the Leasing Company for any action taken or omitted to be taken by it
or them hereunder, except for its or their own negligence or willful misconduct,
nor shall the Collateral Agent or the Trustees be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents, the Senior Note Trustee and its directors, officers,
employees, attorneys and agents, the Convertible Note Trustee, any director,
officer, employee, attorney or agent of the Convertible Note Trustee, the
Holders of the Senior Notes and the Holders of the Convertible Notes shall be
entitled to rely on any communication, instrument or document believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. Neither the Collateral Agent nor the Trustees shall be
required to, and shall not, expend or risk any of its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder.

                      The Leasing Company acknowledges that the rights and
responsibilities of the Collateral Agent and the Trustees under this Security
Agreement with respect to any action taken by the Collateral Agent and the
Trustees or the exercise or non-exercise by the Collateral Agent and the
Trustees of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Security Agreement
shall, as among the Collateral Agent, the Senior Note Trustee, the Holders of
the Senior Notes, the Convertible Note Trustee and the Holders of the
Convertible Notes, be governed by the Senior Note Indenture or the Convertible
Note Indenture, as applicable and by such other agreements with respect thereto
as may exist from time to time among them, but, as among the Collateral Agent,
the Trustees and the Leasing Company, the Collateral Agent and the Trustees
shall be conclusively presumed to be acting as agent for the Holders of the
Senior Notes or Holders of the Convertible Notes, as the case may be, with full
and valid authority so to act or refrain from acting, and the Leasing Company
shall not be obligated or entitled to make any inquiry respecting such
authority.

                      In any case in which the Collateral Agent shall be 
required or permitted to make any determination as to the extent to which the
security interest or Liens under this Security 


                                       24
<PAGE>   25
Agreement secures any obligations, the Collateral Agent is authorized, without
any direction from, or requirement for consent of or authorization by, the
Senior Note Trustee (or the Convertible Note Trustee if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged), to institute proceedings in a court of competent jurisdiction for
the obtaining of any authoritative determination of such matter. If the
Collateral Agent institutes any such proceeding, it shall give prompt written
notice thereof to the Trustees and shall afford each of them the opportunity to
participate in such proceeding.

                  (n) Limitation by Law. All rights, remedies and powers
provided herein may be exercised only to the extent that they will not render
this Security Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.

                  (o) Release; Termination of Security Agreement.

                      (i)   Subject to the provisions of Section 17(k) hereof,
this Security Agreement shall terminate upon payment in full of (A) the Senior
Notes under the terms of the Senior Note Indenture and (B) all Obligations then
due and owing under the Senior Note Indenture, the Senior Note Guarantees, and
the Senior Note Collateral Documents, (C) the Convertible Notes under the terms
of the Convertible Note Indenture and (D) all Obligations then due and owing
under the Convertible Note Indenture, the Convertible Note Guarantees and the
Convertible Note Collateral Documents, except that the provisions of Section
17(p) hereof shall survive.

                      (ii)  The Leasing Company agrees that it will not sell or
dispose of any of the Collateral in violation of the Senior Note Indenture or
the Convertible Note Indenture; provided, however, that if the Leasing Company
shall sell or otherwise dispose of any of the Collateral in accordance with the
terms of the Senior Note Indenture and of the Convertible Note Indenture, the
Collateral Agent shall, and the Trustees shall cause, at the request of the
Leasing Company, release or cause to be released the Collateral subject to such
sale or disposition free and clear of the Liens and security interest under this
Security Agreement.

                      (iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Senior Note Indenture (or the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged) the Collateral Agent
and the Trustees will, at the expense of the Leasing Company, execute and
deliver to the Leasing Company such documents and take such other actions as the
Leasing Company shall reasonably request to evidence the termination of this
Security Agreement or the release of such Collateral, as the case may be. Any
such action taken by the Collateral Agent or the Trustees shall be without
warranty by or recourse to the Collateral Agent or the Trustees, except as to
the absence of any prior assignments by the Collateral Agent or the Trustees of
its interests in the Collateral, and shall be at the expense of the Leasing
Company. The Collateral Agent and the Trustees may conclusively rely on any
certificate delivered to it by the Leasing Company stating that the execution of
such documents and release of the Collateral is in accordance with and permitted
by the terms of this Security Agreement and the Senior Note


                                       25
<PAGE>   26
Indenture (or of the Convertible Note Indenture if the Senior Notes are no
longer outstanding and the Senior Note Indenture has been satisfied and
discharged).

                  (p) Payment of Fees and Expenses. The Leasing Company will
upon demand pay to the Collateral Agent and the Trustees, without duplication,
the amount of any and all expenses, including, without duplication, the fees and
disbursements of its counsel and of any experts and agents, that the Collateral
Agent and the Trustees may incur in connection with (i) administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
and the Trustees hereunder or (iv) the failure by the Leasing Company to perform
or observe any of the provisions hereof. The Leasing Company shall be liable for
and shall reimburse and indemnify both Trustees and the Collateral Agent and
hold both Trustees and the Collateral Agent harmless from and against any and
all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") arising from
or in connection with or related to this Agreement or being a Trustee or
Collateral Agent hereunder (including but not limited to Losses incurred by such
Trustee or Collateral Agent in connection with its successful defense, in whole
or in part, of any claim of negligence or willful misconduct in its part),
provided, however, that nothing contained herein shall require the Trustees and
the Collateral Agent to be indemnified for their respective negligence or
willful misconduct.

                  (q) Final Expression. This Security Agreement, together with
the Senior Note Indenture, the Convertible Note Indenture and any other
agreement executed in connection herewith or therewith, is intended by the
parties as a final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions hereof.

                  (r) Leasing Company Remain Liable. Anything herein to the
contrary notwithstanding, (a) the Leasing Company shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Security Agreement had not been executed, (b) the exercise by
the Collateral Agent or the Trustees of any of the rights hereunder shall not
release the Leasing Company from any of its duties or obligations under the
contracts and agreements included in the Collateral and (c) the Collateral Agent
and the Trustees shall not have any obligation or liability under any contracts
and agreements included in the Collateral by reason of this Security Agreement,
nor shall the Collateral Agent or the Trustees be obligated to perform any of
the obligations or duties of the Leasing Company thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.

                  (s) Indentures. This Security Agreement is subject to the
terms, conditions and provisions of the Senior Note Indenture, or of the
Convertible Note Indenture if the Senior Notes are no longer outstanding and the
Senior Note Indenture has been satisfied and discharged.

                  (t) Where there is a conflict between the provisions of this
Security Agreement and the Senior Note Indenture, as the case may be, the
provisions of the Senior Note Indenture


                                       26
<PAGE>   27
or the Convertible Note Indenture shall prevail; and if the Senior Note
Indenture has been satisfied and discharged, where there is a conflict between
the provisions of this Security Agreement and the Convertible Note Indenture,
the provisions of the Convertible Note Indenture shall prevail.

                  (u) Rights of Holders. No Holder of a Senior Note or of a
Convertible Note shall have any independent rights hereunder other than those
rights granted to individual Holders pursuant to Section 6.7 of the Senior Note
Indenture or Section 6.7 of the Convertible Note Indenture, as the case may be;
provided that nothing in this subsection (t) shall limit any rights granted to
the Senior Note Trustee under the Senior Notes, the Senior Note Indenture or the
Senior Note Collateral Documents or the Convertible Note Trustee under the
Convertible Notes, the Convertible Note Indenture or the Convertible Note
Collateral Documents.

                  (v) No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Leasing Company or of any subsidiary of the
Leasing Company, as such, shall have any liability for any obligations of the
Leasing Company under this Security Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation.

                  (w) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.

                      (i)  THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THE LEASING COMPANY, THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE AND
THE HOLDERS OF THE SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE AND THE HOLDERS
OF THE CONVERTIBLE NOTES IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND
DECISIONS OF THE STATE OF NEW YORK.

                      (ii) THE LEASING COMPANY AGREES THAT THE COLLATERAL AGENT
SHALL, IN ITS CAPACITY AS COLLATERAL AGENT OR IN THE NAME AND ON BEHALF OF THE
SENIOR NOTE TRUSTEE AND ANY HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE
TRUSTEE AND ANY HOLDERS OF CONVERTIBLE NOTES, AND THE SENIOR NOTE TRUSTEE SHALL,
IN ITS CAPACITY AS SENIOR NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY
HOLDERS OF SENIOR NOTES AND THE CONVERTIBLE NOTE TRUSTEE SHALL, IN ITS CAPACITY
AS CONVERTIBLE NOTE TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDERS OF
CONVERTIBLE NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE LEASING COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN 


                                       27
<PAGE>   28
GOOD FAITH TO ENABLE THE COLLATERAL AGENT OR THE TRUSTEES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
COLLATERAL AGENT OR EITHER TRUSTEE. THE LEASING COMPANY AGREES THAT IT WILL NOT
ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSS- CLAIMS IN ANY PROCEEDING BROUGHT BY
THE COLLATERAL AGENT OR EITHER TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR SUCH
TRUSTEE. THE LEASING COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH EITHER TRUSTEE HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.

                      (iii) TO, THE EXTENT PERMITTED BY APPLICABLE LAW, THE
LEASING COMPANY, THE COLLATERAL AGENT AND THE TRUSTEES EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS SECURITY
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.

                      (iv)  THE LEASING COMPANY AGREES THAT NONE OF THE
COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE, ANY HOLDER OF A SENIOR NOTE, THE
CONVERTIBLE NOTE TRUSTEE AND ANY HOLDER OF A CONVERTIBLE NOTE SHALL HAVE ANY
LIABILITY TO THE LEASING COMPANY (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) FOR LOSSES SUFFERED BY THE LEASING COMPANY IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE COLLATERAL AGENT, SUCH
TRUSTEE OR SUCH NOTEHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT
OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE OR SUCH HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY
HOLDER OF A CONVERTIBLE NOTE, AS THE CASE MAY BE, CONSTITUTING NEGLIGENCE OR
WILLFUL MISCONDUCT.

                      (v)   THE LEASING COMPANY WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE SENIOR NOTE TRUSTEE OR ANY
HOLDER OF A SENIOR NOTE OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH
OR LEVY UPON THE COLLATERAL


                                       28
<PAGE>   29
OR OTHER SECURITY FOR THE OBLIGATIONS. THE LEASING COMPANY WAIVES THE POSTING OF
ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR
ANY HOLDER OF A SENIOR NOTE OR THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A
CONVERTIBLE NOTE IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE COLLATERAL AGENT, THE SENIOR NOTE TRUSTEE OR ANY HOLDER OF A SENIOR NOTE OR
THE CONVERTIBLE NOTE TRUSTEE OR ANY HOLDER OF A CONVERTIBLE NOTE, OR TO ENFORCE
BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS SECURITY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT AMONG THE
LEASING COMPANY ON THE ONE HAND AND THE COLLATERAL AGENT, THE SENIOR NOTE
TRUSTEE AND/OR THE HOLDERS OF THE SENIOR NOTES ON THE OTHER HAND.

                      (x) Appointment of Collateral Agent. Pursuant to, and
subject to the provisions of, Section 7.12 of the Senior Note Indenture and of
Section 7.12 of the Convertible Note Indenture, the Trustees hereby appoint the
Collateral Agent, and the Collateral Agent accepts appointment, as collateral
agent under the terms of this Security Agreement. The Collateral Agent may
resign at any time by giving written notice thereof to the Trustees and may be
removed at any time with or without cause by the Trustees acting together. Prior
to the effectiveness of any such resignation or removal, the Trustees acting
together shall have the right to appoint a successor Collateral Agent which
shall be a commercial bank organized or chartered under the laws of the United
States of America or any state thereof having combined capital and surplus of at
least $50,000,000. If no successor Collateral Agent shall have been so appointed
by the Trustees acting together, and shall have accepted such appointment within
30 days after the retiring Collateral Agent's giving of notice of resignation or
the Trustee's removal of the retiring Collateral Agent, then the retiring
Collateral Agent shall, prior to the effectiveness of its resignation or
removal, on behalf of the Convertible Note Trustee, the Holders of the
Convertible Notes, the Senior Note Trustee and the Holders of the Senior Notes
appoint a successor Collateral Agent, which shall be a commercial bank organized
under the laws of the United States of America or any state thereof having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor Collateral Agent, such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent, and
the retiring Collateral Agent shall be discharged from its duties and
obligations under this Security Agreement. After any retiring Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of this
Security Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent under this Security Agreement.
Any corporation into which the Collateral Agency may be merged, or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Agent shall be a party, shall be
Collateral Agent under this Security Agreement without the execution or filing
of any paper or any further act on the part of the parties hereto.


                                       29
<PAGE>   30
                            [SIGNATURE PAGE FOLLOWS]






























                                       30
<PAGE>   31
         IN WITNESS WHEREOF, the Leasing Company has caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.

                                    PLD CAPITAL LIMITED


                                    By: /s/ Clayton A. Waite
                                       -----------------------------------------
                                    Name: Clayton A. Waite
                                         ---------------------------------------
                                    Title: Director
                                          --------------------------------------



         By its acceptance hereof, as of the day and year first above written,
the Collateral Agent, the Senior Note Trustee and the Convertible Note Trustee
agree to be bound by the provisions hereof.



                                    THE BANK OF NEW YORK, as Collateral
                                    Agent, Senior Note Trustee and Convertible
                                    Note Trustee


                                    By: /s/ Steven D. Torgeson
                                       -----------------------------------------
                                    Name: Steven D. Torgeson
                                         ---------------------------------------
                                    Title: Assistant Treasurer
                                          --------------------------------------
<PAGE>   32
                                                            SCHEDULE A
                                                            to Leasing Company
                                                            Security and
                                                            Pledge Agreement


                              QUALIFIED INVESTMENTS


                                      None.




















                                       32
<PAGE>   33
                                                              SCHEDULE B
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                         TELECOMMUNICATIONS ASSET LEASES



                                      None.




















                                       33
<PAGE>   34
                                                              SCHEDULE C
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                  EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES



                                      None.




















                                       34
<PAGE>   35
                                                              SCHEDULE D
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                          LIENS ON EXISTING COLLATERAL




                                      None.




















                                       35
<PAGE>   36
                                                              SCHEDULE E
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                                     FILINGS



1.       UCC-1 financing statements filed with the Secretary of State of the
         State of New York.

2.       UCC-1 financing statements filed with the City Registers Office, New
         York County, New York.

3.       Each of the following agreements will, within seven days of the Issue
         Date, be registered with both the Secretary of the Companies of Cyprus
         and the Cyprus Official Register:

         a.       This Security Agreement.

         b.       Leasing Company Escrow Account Agreement of even date herewith
                  among The Bank of New York, as escrow agent, the Senior Note
                  Trustee, the Convertible Note Trustee and PLD Asset Leasing
                  Limited.










                                       36
<PAGE>   37
                                                              SCHEDULE F
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                             CHIEF EXECUTIVE OFFICES



                              IRIS Tower, Off. 602
                          58 Arch. Makarios III Avenue
                                 Nicosia, CYPRUS










                                       37
<PAGE>   38
                                                              SCHEDULE G
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                                 BUSINESS NAMES



                                      None.










                                       38
<PAGE>   39
                                                              SCHEDULE H
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                             LOCATION OF COLLATERAL



The Company's chief executive offices (see Schedule F).










                                       39
<PAGE>   40
                                                              SCHEDULE I
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                     FORM OF ADDITIONAL COLLATERAL AMENDMENT

         This Additional Collateral Amendment, dated _____________, 19__, is
delivered pursuant to Section 6(a) of the Security Agreement referred to below.
The undersigned hereby pledges to the Collateral Agent for the benefit of the
Senior Note Trustee and the equal and ratable benefit of the Holders of the
Senior Notes and for the benefit of the Convertible Note Trustee and the equal
and ratable benefit of the Holders of the Convertible Notes, and grants to the
Senior Note Trustee for its benefit and the equal and ratable benefit of the
Holders of the Senior Notes and for the benefit of the Convertible Note Trustee
and the equal and ratable benefit of the Holders of the Convertible Notes,
continuing Liens and security interest in all of its rights, title and interest
in the Collateral listed below.

         The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Leasing Company Security and Pledge Agreement, dated as
of May 31, 1996, between the undersigned and The Bank of New York, as Senior
Note Trustee, as Convertible Note Trustee and as Collateral Agent (the "Security
Agreement"); capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in the Security Agreement; and the
Collateral listed on this Additional Collateral Amendment shall be deemed to be
part of the Collateral, and shall become part of the Collateral and shall secure
all Obligations.


                                                     PLD ASSET LEASING LIMITED



                                                     By:
                                                     Name:
                                                     Title:





                                       40
<PAGE>   41
INTERCOMPANY NOTES:

<TABLE>
<CAPTION>
         Description  Name of Restricted         Original
 Item        of           Subsidiary            Principal
Number  Indebtedness      (Obligor)       Date    Amount
------  ------------      ---------       ----    ------
<S>     <C>           <C>                 <C>   <C>
-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>


TELECOMMUNICATIONS ASSET LEASES:

<TABLE>
<CAPTION>
                                  General      
           Description of      Description of
         Telecommunications        Leased
Name of        Asset         Telecommunications
 Lessee        Lease               Assets        Date
 ------        -----               ------        ----
<S>      <C>                 <C>                 <C>
-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------

-----------------------------------------------------------
</TABLE>


                                       41
<PAGE>   42
INTERCOMPANY NOTES:

<TABLE>
<CAPTION>
                             Name of Restricted
                                 Subsidiary            
                                  (Obligor)             Original
      Item   Description of       ---------            Principal
     Number   Indebtedness                       Date    Amount
     ------   ------------                       ----    ------
<S>          <C>             <C>                 <C>   <C>
----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------
</TABLE>


OTHER COLLATERAL:

<TABLE>
<CAPTION>
            Description of
         Qualified Investment
          or other Collateral  Evidenced By  Obligor  Date
          -------------------  ------------  -------  ----
<S>                            <C>           <C>      <C>   
----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------

----------------------------------------------------------------
</TABLE>


                                       42
<PAGE>   43
                                                              SCHEDULE J
                                                              to Leasing Company
                                                              Security and
                                                              Pledge Agreement


                             RESTRICTIVE AGREEMENTS


                                      None.










                                       43