valcom_8k-ex1003.htm


    EXHIBIT
10.3

     

    EXHIBIT
B

    


    SECURITY
AGREEMENT

    


    SECURITY
AGREEMENT, dated as of January 6, 2009 (this “Agreement”), among
Valcom, Inc., a Delaware corporation (the “Company” or the
“Debtor”) and
the holder of the Company’s 10% Secured Convertible Promissory Note due
January 6, 2010 in the original aggregate principal amount of $100,000 (the
“Note”),
signatory hereto, their endorsees, transferees and assigns (collectively
referred to as, the “Secured
Party”).

    


    W
I T N E S S E T H:

    


    WHEREAS,
pursuant to the Note, the Secured Party has agreed to extend the loans to
the Company evidenced by the Note;

     

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

     

    NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

     

    1.    Certain Definitions. As used
in this Agreement, the following terms shall have the meanings set forth in this
Section 1.  Terms used but not otherwise defined in this Agreement
that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment
property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the
UCC.

     

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

     

    (i)    All goods,
including, without limitations, (A) all machinery, equipment, computers, motor
vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with any Debtor’s
businesses and all improvements thereto; and (B) all inventory;

     

    (ii)    All contract
rights and other general intangibles, including, without limitation, all
partnership interests, membership interests, stock or other securities, rights
under any of the Organizational Documents, agreements related to the Pledged
Securities, licenses, distribution and other agreements, computer software
(whether “off-the-shelf”, licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, and income tax refunds;

     

    
      
        
        

      

      
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    (iii)    All accounts,
together with all instruments, all documents of title representing any of the
foregoing, all rights in any merchandising, goods, equipment, motor vehicles and
trucks which any of the same may represent, and all right, title, security and
guaranties with respect to each account, including any right of stoppage in
transit;

     

    (iv)    All
documents, letter-of-credit rights, instruments and chattel paper;

     

    (v)    All
commercial tort claims;

     

    (vi)    All deposit
accounts and all cash (whether or not deposited in such deposit
accounts);

     

    (vii)    All
investment property;

     

    (viii)   All supporting
obligations; and

     

    (ix)    All files,
records, books of account, business papers, and computer programs;
and

     

    (x)     the products
and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix)
above.

     

    Without
limiting the generality of the foregoing, the “Collateral” shall
include all investment property and general intangibles respecting ownership
and/or other equity interests in each Guarantor, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H hereto (as
the same may be modified from time to time pursuant to the terms hereof), and
any other shares of capital stock and/or other equity interests of any other
direct or indirect subsidiary of any Debtor obtained in the future, and, in each
case, all certificates representing such shares and/or equity interests and, in
each case, all rights, options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing (all of the foregoing being referred
to herein as the “Pledged Securities”)
and all rights arising under or in connection with the Pledged Securities,
including, but not limited to, all dividends, interest and cash.

     

    Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable law, this
Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.

     

    (b)    “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

     

    
      
        
        

      

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

     

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

     

    (e)    “Obligations” means,
without limitation: (i) principal of, and interest on the Notes and the loans
extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under or in
connection with this Agreement, the Notes, the Guaranty and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Debtor.

     

    (f)    “Organizational
Documents” means with respect to any Debtor, the documents by which such
Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of such Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or
members agreement).

     

    (g)    “UCC” means the
Uniform Commercial Code of the State of New York and or any other applicable law
of any state or states which has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time.  It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be construed in its
broadest sense.  Accordingly if there are, from time to time, changes
to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.

    


    2.    Grant of Perfected First Priority Security Interest. As an inducement
for the Secured Party to extend the loans as evidenced by the Notes and to
secure the complete and timely payment, performance and discharge in full, as
the case may be, of all of the Obligations, each Debtor hereby unconditionally
and irrevocably pledges, grants and hypothecates to the Secured Party a
continuing and perfected security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever
kind and nature in and to, the Collateral (the “Security
Interest”).

     

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

     

    4.    Representations, Warranties,
Covenants and Agreements of the Debtors. Each Debtor represents and
warrants to, and covenants and agrees with, the Secured Party as
follows:

     

    
      
        
        

      

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

     

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

     

    (c)    Except for
Permitted Liens (as defined in the Notes) and except as set forth on Schedule B attached
hereto, the Debtors are the sole owner of the Collateral (except for
non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security
Interest.  There is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing (other than
those that will be filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral.  So long as
this Agreement shall be in effect, the Debtors shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this
Agreement).

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (h)    The
execution, delivery and performance of this Agreement by the Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to any Debtor or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing any Debtor's debt or otherwise) or other
understanding to which any Debtor is a party or by which any property or asset
of any Debtor is bound or affected. No consent (including, without limitation,
from stockholders or creditors of any Debtor) is required for any Debtor to
enter into and perform its obligations hereunder.

     

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

     

    (j)    The ownership
and other equity interests in partnerships and limited liability companies (if
any) included in the Collateral (the “Pledged Interests”)
by their express terms do not provide that they are securities governed by
Article 8 of the UCC and are not held in a securities account or by any
financial intermediary.

     

    (k)    Each Debtor
shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected first priority liens and security interests in
the Collateral in favor of the Secured Party until this Agreement and the
Security Interest hereunder shall be terminated pursuant to Section 11
hereof.  Each Debtor hereby agrees to defend the same against the
claims of any and all persons and entities. Each Debtor shall safeguard and
protect all Collateral for the account of the Secured Party.   At
the request of the Secured Party, each Debtor will sign and deliver to the
Secured Party at any time or from time to time one or more financing statements
pursuant to the UCC in form reasonably satisfactory to the Secured Party and
will pay the cost of filing the same in all public offices wherever filing is,
or is deemed by the Secured Party to be, necessary or desirable to effect the
rights and obligations provided for herein. Without limiting the generality of
the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary
to maintain the Collateral and the Security Interest hereunder, and each Debtor
shall obtain and furnish to the Secured Party from time to time, upon demand,
such releases and/or subordinations of claims and liens which may be required to
maintain the priority of the Security Interest hereunder.

     

    (l)    No Debtor
will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose
of any of the Collateral (except for non-exclusive licenses granted by a Debtor
in its ordinary course of business and sales of inventory by a Debtor in its
ordinary course of business) without the prior written consent of a Majority in
Interest.

     

    (m)    Each Debtor
shall keep and preserve its equipment, inventory and other tangible Collateral
in good condition, repair and order and shall not operate or locate any such
Collateral (or cause to be operated or located) in any area excluded from
insurance coverage.

     

    
      
        
        

      

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

    


    (o)           Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’ security
interest therein.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (v)    No Debtor
will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least 30 days prior written notice to the Secured Party of such change and, at
the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this
Agreement.

     

    (w)    No Debtor may
consign any of its Inventory or sell any of its Inventory on bill and hold, sale
or return, sale on approval, or other conditional terms of sale without the
consent of a Majority in Interest which shall not be unreasonably withheld,
except to the extent such consignment or sale does not exceed 15% of the total
value of all of the Company’s finished goods in Inventory.

     

    (x)    No Debtor may
relocate its chief executive office to a new location without providing 30 days
prior written notification thereof to the Secured Party and so long as, at the
time of such written notification, such Debtor provides any financing statements
or fixture filings necessary to perfect and continue perfected the perfected
security Interest granted and evidenced by this Agreement.

     

    (y)    Each Debtor
was organized and remains organized solely under the laws of the state set forth
next to such Debtor’s name in the first paragraph of this
Agreement.  Schedule D attached
hereto sets forth each Debtor’s organizational identification number or, if any
Debtor does not have one, states that one does not exist.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (ff)    To the extent
that any Collateral is in the possession of any third party, the applicable
Debtor shall join with the Secured Party in notifying such third party of the
Secured Party’ security interest in such Collateral and shall use its best
efforts to obtain an acknowledgement and agreement from such third party with
respect to the Collateral, in form and substance satisfactory to the Secured
Party.

     

    (gg)    If any Debtor
shall at any time hold or acquire a commercial tort claim, such Debtor shall
promptly notify the Secured Party in a writing signed by such Debtor of the
particulars thereof and grant to the Secured Party in such writing a security
interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the
Secured Party.

     

    (hh)    Each Debtor
shall immediately provide written notice to the Secured Party of any and all
accounts which arise out of contracts with any governmental authority and, to
the extent necessary to perfect or continue the perfected status of the Security
Interest in such accounts and proceeds thereof, shall execute and deliver to the
Secured Party an assignment of claims for such accounts and cooperate with the
Secured Party in taking any other steps required, in their judgment, under the
Federal Assignment of Claims Act or any similar federal, state or local statute
or rule to perfect or continue the perfected status of the Security Interest in
such accounts and proceeds thereof.

     

    (ii)    Each Debtor
shall cause each subsidiary of such Debtor to immediately become a party hereto
(an “Additional
Debtor”), by executing and delivering an Additional Debtor Joinder in
substantially the form of Annex A attached hereto and comply with the provisions
hereof applicable to the Debtors.  Concurrent therewith, the
Additional Debtor shall deliver replacement schedules for, or supplements to all
other Schedules to (or referred to in) this Agreement, as applicable, which
replacement schedules shall supersede, or supplements shall modify, the
Schedules then in effect.  The Additional Debtor shall also deliver
such opinions of counsel, authorizing resolutions, good standing certificates,
incumbency certificates, organizational documents, financing statements and
other information and documentation as the Secured Party may reasonably
request.  Upon delivery of the foregoing to the Secured Party, the
Additional Debtor shall be and become a party to this Agreement with the same
rights and obligations as the Debtors, for all purposes hereof as fully and to
the same extent as if it were an original signatory hereto and shall be deemed
to have made the representations, warranties and covenants set forth herein as
of the date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the “Debtors” shall be deemed to include each Additional
Debtor.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    (nn)    Each Debtor
will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Secured
Party may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce their rights and remedies hereunder and with
respect to any Collateral or to otherwise carry out the purposes of this
Agreement.

     

    (oo)    Schedule F attached
hereto lists all of the patents, patent applications, trademarks, trademark
applications, registered copyrights, and domain names owned by any of the
Debtors as of the date hereof.  Schedule F lists all
material licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof.  All material
patents and trademarks of the Debtors have been duly recorded at the United
States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.

     

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

    


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

     

    6.    Defaults. The following events
shall be “Events of
Default”:

     

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

     

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

     

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

     

    
      
        
        

      

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

    


    7.    Duty To Hold In
Trust.

     

    (a)    Upon the
occurrence of any Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interest, whether payable pursuant to the Note or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for the
Secured Party and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Party, pro-rata in proportion to their
initial purchases of Notes for application to the satisfaction of the
Obligations (and if any Note is not outstanding, pro-rata in proportion to the
initial purchases of the remaining Notes).

     

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

     

    8.    Rights and Remedies Upon
Default.

     

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

     

    (i)    The Secured
Party shall have the right to take possession of the Collateral and, for that
purpose, enter, with the aid and assistance of any person, any premises where
the Collateral, or any part thereof, is or may be placed and remove the same,
and each Debtor shall assemble the Collateral and make it available to the
Secured Party at places which the Secured Party shall reasonably select, whether
at such Debtor's premises or elsewhere, and make available to the Secured Party,
without rent, all of such Debtor’s respective premises and facilities for the
purpose of the Secured Party taking possession of, removing or putting the
Collateral in saleable or disposable form.

     

    (ii)    Upon notice
to the Debtors by Agent, all rights of each Debtor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise and all
rights of each Debtor to receive the dividends and interest which it would
otherwise be authorized to receive and retain, shall cease.  Upon such
notice, Agent shall have the right to receive any interest, cash dividends or
other payments on the Collateral and, at the option of Agent, to exercise in
such Agent’s discretion all voting rights
pertaining thereto.  Without limiting the generality of the
foregoing, Agent shall have the right (but not the obligation) to exercise all
rights with respect to the Collateral as it were the sole and absolute owners
thereof, including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or
indirect subsidiaries.

     

    
      
        
        

      

      
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    (iii)    The Secured
Party shall have the right to operate the business of each Debtor using the
Collateral and shall have the right to assign, sell, lease or otherwise dispose
of and deliver all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and at such time
or times and at such place or places, and upon such terms and conditions as the
Secured Party may deem commercially reasonable, all without (except as shall be
required by applicable statute and cannot be waived) advertisement or demand
upon or notice to any Debtor or right of redemption of a Debtor, which are
hereby expressly waived.  Upon each such sale, lease, assignment or
other transfer of Collateral, the Secured Party may, unless prohibited by
applicable law which cannot be waived, purchase all or any part of the
Collateral being sold, free from and discharged of all trusts, claims, right of
redemption and equities of any Debtor, which are hereby waived and
released.

    


    (iv)                       The
Secured Party shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party and to enforce the Debtors’ rights against such
account debtors and obligors.

    


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

    


    (vi)                       The
Secured Party may (but are not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Party or
any designee or any purchaser of any Collateral.

     

    (b)    The Agent may
comply with any applicable law in connection with a disposition of Collateral
and such compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.  The Agent may sell the
Collateral without giving any warranties and may specifically disclaim such
warranties.  If the Agent sells any of the Collateral on credit, the
Debtors will only be credited with payments actually made by the
purchaser.  In addition, each Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Agent’s rights and remedies hereunder, including, without limitation, its
right following an Event of Default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect
thereto.

     

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

    


    9.    Applications of Proceeds. The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith) of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by
the Secured Party in enforcing their rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations pro rata among the Secured Party (based on then-outstanding
principal amounts of Notes at the time of any such determination), and to the
payment of any other amounts required by applicable law, after which the Secured
Party shall pay to the applicable Debtor any surplus proceeds. If, upon the
sale, license or other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Party are legally entitled,
the Debtors will be liable for the deficiency, together with interest thereon,
at the rate of 10% per annum or the lesser amount permitted by applicable law
(the “Default Rate”), and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency.  To the extent permitted by
applicable law, each Debtor waives all claims, damages and demands against the
Secured Party arising out of the repossession, removal, retention or sale of the
Collateral, unless due solely to the gross negligence or willful misconduct of
the Secured Party as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction.

     

    
      
        
        

      

      
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    10.    Securities Law
Provision.  Each Debtor recognizes that Agent may be limited in
its ability to effect a sale to the public of all or part of the Pledged
Securities by reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively, the “Securities Laws”),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof.  Each Debtor agrees that sales so made may be at
prices and on terms less favorable than if the Pledged Securities were sold to
the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities
for sale to the public under the Securities Laws.  Each Debtor shall
cooperate with Agent in its attempt to satisfy any requirements under the
Securities Laws (including, without limitation, registration thereunder if
requested by Agent) applicable to the sale of the Pledged Securities by
Agent.

     

    11.    Costs and Expenses. Each
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured
Party.  The Debtors shall also pay all other claims and charges which
in the reasonable opinion of the Secured Party might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein.  The
Debtors will also, upon demand, pay to the Secured Party the amount of any and
all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which the Secured Party may incur in
connection with (i) the enforcement of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Party under the Notes. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Notes and shall bear interest at
the Default Rate.

     

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

     

    13.    Security Interest Absolute.
All rights of the Secured Party and all obligations of the Debtors hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Notes or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change
in the time, manner or place of payment or performance of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Notes or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other security,
for all or any of the Obligations; (d) any action by the Secured Party to
obtain, adjust, settle and cancel in its sole discretion any insurance claims or
matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense
available to a Debtor, or a discharge of all or any part of the Security
Interest granted hereby.  Until the Obligations shall have been paid
and performed in full, the rights of the Secured Party shall continue even if
the Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy.  Each Debtor
expressly waives presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any time any


     

    
      
        
        

      

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

     

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

     

    15.    Power of Attorney; Further
Assurances.

     

    (a)    Each Debtor
authorizes the Secured Party, and does hereby make, constitute and appoint the
Secured Party and their respective officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful attorney-in-fact,
with power, in the name of the various Secured Party or such Debtor, to, after
the occurrence and during the continuance of an Event of Default, (i) endorse
any note, checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Secured Party;
(ii) to sign and endorse any financing statement pursuant to the UCC or any
invoice, freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to demand,
collect, receipt for, compromise, settle and sue for monies due in respect of
the Collateral; (v) to transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and (vi) generally, at the option of the
Secured Party, and at the expense of the Debtors, at any time, or from time to
time, to execute and deliver any and all documents and instruments and to do all
acts and things which the Secured Party deem necessary to protect, preserve
and realize upon the Collateral and the Security Interest granted therein in
order to effect the intent of this Agreement and the Notes all as fully and
effectually as the Debtors might or could do; and each Debtor hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is coupled with an interest and shall
be irrevocable for the term of this Agreement and thereafter as long as any of
the Obligations shall be outstanding.  The designation set forth
herein shall be deemed to amend and supersede any inconsistent provision in the
Organizational Documents or other documents or agreements to which any Debtor is
subject or to which any Debtor is a party.  Without limiting the
generality of the foregoing, after the occurrence and during the continuance of
an Event of Default, each Secured Party is specifically authorized to execute
and file any applications for or instruments of transfer and assignment of any
patents, trademarks, copyrights or other Intellectual Property with the United
States Patent and Trademark Office and the United States Copyright
Office.

     

    (b)    On a
continuing basis, each Debtor will make, execute, acknowledge, deliver, file and
record, as the case may be, with the proper filing and recording agencies in any
jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule C
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by the
Secured Party, to perfect the Security Interest granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a perfected security
interest in all the Collateral under the UCC.

     

    
      
        
        

      

      
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    (c)    Each Debtor
hereby irrevocably appoints the Secured Party as such Debtor’s attorney-in-fact,
with full authority in the place and instead of such Debtor and in the name of
such Debtor, from time to time in the Secured Party’ discretion, to take any
action and to execute any instrument which the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement, including the filing,
in its sole discretion, of one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
such Debtor where permitted by law, which financing statements may (but need
not) describe the Collateral as “all assets” or “all personal property” or words
of like import, and ratifies all such actions taken by the Secured
Party.  This power of attorney is coupled with an interest and shall
be irrevocable for the term of this Agreement and thereafter as long as any of
the Obligations shall be outstanding.

    


    16.    Notices. All notices,
requests, demands and other communications hereunder shall be subject to the
notice provision of the Purchase Agreement (as such term is defined in the
Notes).

     

    17.    Other Security. To the extent
that the Obligations are now or hereafter  secured by property other
than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Secured Party shall
have the right, in its sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Party’ rights and remedies
hereunder.

     

    18.    Appointment of Agent. The Secured
Party hereby appoints Omnireliant Holdings, Inc. to act as its agent
(“Agent”) for
purposes of exercising any and all rights and remedies of the Secured Party
hereunder. The Agent shall have the rights, responsibilities and immunities set
forth in Annex
B hereto.

     

    19.    Miscellaneous.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    (g)    Each party
shall take such further action and execute and deliver such further documents as
may be necessary or appropriate in order to carry out the provisions and
purposes of this Agreement.

     

    (h)    All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof.  Each Debtor agrees that
all proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement and the Note (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. If any party
shall commence a proceeding to enforce any provisions of this Agreement, then
the prevailing party in such proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such proceeding.

     

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

     

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

     

    (k)    Each Debtor
shall indemnify, reimburse and hold harmless the Secured Party and their
respective partners, members, shareholders, officers, directors, employees and
agents (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent
jurisdiction.  This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in the Notes, the
Purchase Agreement (as such term is defined in the Notes) or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.

     

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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

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

    


    [SIGNATURE
PAGES FOLLOW]

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

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

    


    


    
      
        
          
            	
                    VALCOM,
      INC.

                     

                  
	
                    By:__________________________________________

                         
      Name: Vince Vellardita

                         
      Title: Chief Executive
Officer

                  


          

        

      

    

     

     

     

     

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
PAGE OF HOLDERS TO VALCOM, INC. NOTE]

    


    Name of
Investing Entity: Omnireliant Holdings, Inc.

    Signature of Authorized Signatory of
Investing entity: _________________________

    Name of
Authorized Signatory: ___________________________________________

    Title of
Authorized Signatory: ____________________________________________

     

     

     

     

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
A

    


    Principal
Place of Business of Debtor: 2113 A Gulf Boulevard, Indian Rocks Beach, Florida
33785

     

    Locations
Where Collateral is Located or Stored: 2113 A Gulf Boulevard, Indian Rocks
Beach, Florida 33785

    


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
B

     

    Owners
of Collateral

     

    None.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
C

     

    Delaware

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
D

     

    Organizational
Identification Numbers

    


    Federal
ID 581700840

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
E

     

    Names;
Mergers and Acquisitions

    


    None.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
F

    


    Intellectual
Property

    


    
The
Company has no patent rights. It has the following service marks

     

    SATELLITE
BINGO:

     

    International
Class 41 (production and distribution of television game shows) granted
Registration Number 1,473,709 on January 19, 1988 to Satellite Bingo, Inc. 20
years.

     

    "HANGIN
WITH THE BOYZ":

     

    International
Class 25 (Clothing) and 41 (Production and distribution of television game
shows) application filed on March 1, 2000, Serial NO. 75/932,583,

     

    "WHO
CAN YOU TRUST?"

     

    Mark
granted March 9, 1999 for 20 years International Class 41 (production and
distribution of television game shows) serial NO.75/485225,

     

    "FUHGEDABOWDIT":

     

    International
Class 41 (production and distribution of television game shows) Serial NO.
75/784,763 application filed on August 26, 1999.

     

    "ULTIMATE
DRIVER":

     

    The
Company applied for registration of copyright of "Ultimate Driver" in October,
2002.

     

    "FINAL ROUND" FIGHT FILM:
registered under the Writer's Guild of America (WGA). The Company applied for
registration of copyright of "The Final Round-The Gabriel Ruelas Story" on
December 2, 2000.

     

    The
Company obtained an assignment to a copyright for "The Works," copyright
registrations for Globalot Bingo and derivatives: Number PAU 855-931 (June 10,
1986); Number Pau 847-876 (March 11, 1986); Number PAU 788-031 (September 19,
1985); Number PAU 927-410 (November 4, 1986); Number PA 370-721 (February 9,
1988); Number PA 516-494 (January 17, 1991); Number PA 533-697 (January 17,
1991); from Satellite Bingo, Inc. to SBI Communications, Inc., dated September
14, 1993.

     

    The
Company applied for registration of copyright of "The Final Round- The Gabriel
Ruelas Story" on December 2, 2000. The Company obtained an assignment of
copyright of "The Life", Txu 744-678 June 12, 1996. The Company obtained a
copyright by assignment of "PCH" Pau 2-040-426 September 12, 1995.

     

    HEADLIGHTS
AND TAILPIPES

     

    Live
Theater Show Debut and Stardust Casino: Broadcast, merchandise and
food/beverages.

     

    SIN
CITY RECORDS

     

    Record
Studio, Record Label, publishing, music, television, films and
merchandise

     

    MOTOWN
PARTNERS, LLC

     

    Live
Theatre, Production Revenue and Concerts

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
G

    


    Account
Debtors

    


    None.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
H

    


    Pledged
Securities

     

    None.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    ANNEX
A

    to

    SECURITY

    AGREEMENT

     

    FORM
OF ADDITIONAL DEBTOR JOINDER

    


    Security
Agreement dated as of January 6, 2009 made by

    Valcom,
Inc.

    and its
subsidiaries party thereto from time to time, as Debtors

    to and in
favor of

    the
Secured Party identified therein (the “Security
Agreement”)

    


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

     

    The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
to the Secured Party referred to above, the undersigned shall (a) be an
Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth in Section ___ therein
as of the date of execution and delivery of this Additional Debtor
Joinder.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTY A SECURITY INTEREST IN THE
COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES
AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH
THEREIN.

     

    Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement,
as applicable.

     

    An
executed copy of this Joinder shall be delivered to the Secured Party, and the
Secured Party may rely on the matters set forth herein on or after the date
hereof.  This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Party.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    
    

     

    
      	 	

              [Name
      of Additional Debtor]

               

              
                By:

                 

                
                  Name:

                  
                    Title:

                     

                    
                      Address:

                    

                  

                

              

            


    

     

    


    
      Dated:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

ANNEX
B

    to

    SECURITY

    AGREEMENT

    


    THE
AGENT

    


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

     

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

     

    3.    Lack of Reliance on the
Agent.  Independently and without reliance upon the Agent, each
Secured Party, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of the Company and its subsidiaries in connection with such Secured
Party’s investment in the Debtors, the creation and continuance of the
Obligations, the transactions contemplated by the Transaction Documents, and the
taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or
at any time or times thereafter.  The Agent shall not be
responsible to the Debtors or any Secured Party for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Agreement or any other
Transaction Document, or for the financial condition of the Debtors or the value
of any of the Collateral, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
the Agreement or any other Transaction Document, or the financial condition of
the Debtors, or the value of any of the Collateral, or the existence or possible
existence of any default or Event of Default under the Agreement, the Notes or
any of the other Transaction Documents.

     

    4.    Certain Rights of the
Agent.  The Agent shall have the right to take any action with
respect to the Collateral, on behalf of all of the Secured Party.  To
the extent practical, the Agent shall request instructions from the Secured
Party with respect to any material act or action (including failure to act) in
connection with the Agreement or any other Transaction Document, and shall be
entitled to act or refrain from acting in accordance with the instructions of
Secured Party holding a majority in principal amount of Notes (based on
then-outstanding principal amounts of Notes at the time of any such
determination); if such instructions are not provided despite the Agent’s
request therefor, the Agent shall be entitled to refrain from such act or taking
such action, and if such action is taken, shall be entitled to appropriate
indemnification from the Secured Party in respect of actions to be
taken

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    by the
Agent; and the Agent shall not incur liability to any person or entity by reason
of so refraining.  Without limiting the foregoing, (a) no Secured
Party shall have any right of action whatsoever against the Agent as a result of
the Agent acting or refraining from acting hereunder in accordance with the
terms of the Agreement or any other Transaction Document, and the Debtors shall
have no right to question or challenge the authority of, or the instructions
given to, the Agent pursuant to the foregoing and (b) the Agent shall not be
required to take any action which the Agent believes (i) could reasonably be
expected to expose it to personal liability or (ii) is contrary to this
Agreement, the Transaction Documents or applicable law.

     

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

     

    6.    Indemnification.  To the extent
that the Agent is not reimbursed and indemnified by the Debtors, the Secured
Party will jointly and severally reimburse and indemnify the Agent, in
proportion to their initially purchased respective principal amounts of Notes,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder or under the Agreement or
any other Transaction Document, or in any way relating to or arising out of the
Agreement or any other Transaction Document except for those determined by a
final judgment (not subject to further appeal) of a court of competent
jurisdiction to have resulted solely from the Agent's own gross negligence
or willful misconduct.  Prior to taking any action hereunder as Agent,
the Agent may require each Secured Party to deposit with it sufficient sums as
it determines in good faith is necessary to protect the Agent for costs and
expenses associated with taking such action.

     

    7.    Resignation by the Agent.

     

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

     

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

     

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

     

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