Document:

EXHIBIT 4.4

     THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") SHALL HAVE BECOME EFFECTIVE WITH RESPECT
THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE SECURITIES
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH
TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL
BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES
OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT.

                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                               COMDIAL CORPORATION

PW-1B

     This is to Certify That, FOR VALUE RECEIVED, _______________ or assigns
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from Comdial Corporation, a Delaware corporation (the "Company"),
________________________ (_________) fully paid, validly issued and
nonassessable shares of the common stock of the Company ("Common Stock") at a
price of $.01 per share at any time or from time to time during the period from
March 27, 2004 through September 27, 2004 (the "Exercise Period"). The number of
shares of Common Stock to be received upon the exercise of this Warrant and the
price to be paid for each share of Common Stock may be adjusted from time to
time as hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share Common Stock in effect
at any time and as adjusted from time to time is hereinafter sometimes referred
to as the "Exercise Price." This Warrant, together with warrants of like tenor,
constituting in the aggregate warrants (the "Warrants") to purchase up to a
maximum of 14,000,000 shares of Common Stock, is being issued in connection with
a private placement of the Company's securities through Commonwealth Associates,
L.P., as placement agent (the "Placement").

     (a) EXERCISE OF WARRANT; FORFEITURE OF WARRANT

         (1) Subject to the provisions of Subsection (3) below, this Warrant may
be exercised in whole or in part at any time or from time to time during the
Exercise Period; provided, however, that (i) if such day is a day on which
banking institutions in the State of New York are authorized by law to close,
then on the next succeeding day which shall not be such a day, and (ii) in the
event of any merger, consolidation or sale of substantially all the assets of
the Company as an entirety, resulting in any distribution to the Company's
stockholders, prior to termination of the Exercise Period, the Holder shall have
the right to exercise this Warrant commencing at such time through the
termination of the Exercise Period into the kind and amount of shares of stock
and other securities and property (including cash) receivable by a holder of the
number of shares of Common Stock into which this Warrant might have been

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exercisable immediately prior thereto. This Warrant may be exercised by
presentation and surrender hereof to the Company at its principal office with
the Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of this Warrant, following the receipt
of good and available funds, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such exercise,
registered in the name of the Holder or its designee and bearing a restrictive
legend substantially similar to the one set forth on the front page of this
Warrant. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the balance of
the Warrant Shares purchasable thereunder. As of the end of business on the date
of receipt by the Company of this Warrant at its office in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares shall not then be physically delivered to the Holder.

         (2) At any time during the Exercise Period, the Holder may, at its
option, exercise this Warrant on a cashless basis by exchanging this Warrant, in
whole or in part (a "Warrant Exchange"), into the number of Warrant Shares
determined in accordance with this Section (a)(2), by surrendering this Warrant
at the principal office of the Company or at the office of its stock transfer
agent, accompanied by a properly prepared notice stating such Holder's intent to
effect such exchange, the number of Warrant Shares to be exchanged and the date
on which the Holder requests that such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on the date specified in the
Notice of Exchange or, if later, the date the Notice of Exchange is received by
the Company (the "Exchange Date"). Certificates for the shares issuable upon
such Warrant Exchange and, if applicable, a new warrant of like tenor evidencing
the balance of the shares remaining subject to this Warrant, shall be issued as
of the Exchange Date and delivered to the Holder as soon as practicable
following the Exchange Date and, if deemed appropriate by the Company, bearing a
restrictive legend substantially similar to the one set forth on the front page
of this Warrant. In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
equal to (i) the number of Warrant Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares equal to
the quotient obtained by dividing (A) the product of the Total Number and the
existing Exercise Price by (B) the current market value of a share of Common
Stock. Current market value shall have the meaning set forth in Section (c)
below, except that for purposes hereof, it shall mean the highest price for the
five days immediately preceding the date of the Notice of Exchange.

         (3) To the extent that the 7% senior subordinated secured notes issued
by the Company in connection with the Placement are repaid in whole or in part
within 18 months after the initial closing of the Placement, a pro rata portion
of the Warrants will be forfeited by the Holder (the "Forfeited Warrants") and
returned to the Company and the remaining Warrants will be retained by the
Holder. In such event, this Warrant immediately will be deemed null and void
with respect to the Forfeited Warrants.

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     (b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of the Warrants such number of shares of
Common Stock as shall be required for issuance and delivery upon exercise of the
Warrants.

     (c) FRACTIONAL SHARES. No fractional shares or scrips representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:

         (1) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange or listed for trading
on the Nasdaq Stock Market, the current market value shall be the last reported
sale price of the Common Stock on such exchange or market on such trading day or
if no such sale is made on such day, the average closing bid and asked prices
for such day on such exchange or market; or

         (2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, but are traded in the over-the-counter market, the current
market value shall be the mean of the average of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc. for such trading day; or

         (3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
market value shall be an amount, not less than book value thereof as at the end
of the most recent fiscal year of the Company ending prior to such business day,
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company.

     (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed by the Holder and funds
sufficient to pay any transfer tax delivered by the Holder, the Company shall,
without charge, subject to the Holder's compliance with the restrictive legend
set forth on the front page of this Warrant, execute and deliver a new Warrant
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be cancelled. This Warrant may be divided or combined
with other warrants that carry the same rights upon presentation hereof at the
principal office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the denominations in which new
warrants are to be issued to the Holder and signed by the Holder hereof. The
term "Warrants" as used herein includes any warrants into which this Warrant may
be divided or exchanged. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will execute and deliver a new Warrant

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<PAGE>

of like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

     (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.

     (f) ADJUSTMENT PROVISIONS. The Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:

         (1) In case the Company shall hereafter (i) declare a dividend or make
a distribution on its outstanding Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.

         (2) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to Subsection (1), the number of Warrant Shares purchasable
upon exercise of this Warrant shall simultaneously be adjusted to the number of
Warrant Shares resulting from multiplying the number of Warrant Shares initially
issuable upon exercise of this Warrant by the Exercise Price in effect
immediately prior to such adjustment and dividing the product so obtained by the
Exercise Price, as adjusted.

         (3) In the event that at any time, as a result of an adjustment similar
to any adjustment made pursuant to Subsection (1) above, the Holder of this
Warrant thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Subsection (1) above.

         (4) Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon exercise of this Warrant, Warrants
theretofore issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrants initially issuable pursuant to this
Warrant.

     (g) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if any capital

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<PAGE>

reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified mail to the
Holder, at least fifteen days prior the date specified in (x) or (y) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (x) a record is to be taken for the purpose of
such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.

     (h) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding Common
Stock of the Company, or in case of any consolidation or merger of the Company
with or into another corporation (other than a merger with a subsidiary in which
merger the Company is the continuing corporation and which does not result in
any reclassification, capital reorganization or other change of outstanding
Common Stock of the class issuable upon exercise of this Warrant) or in case of
any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction and to the extent reasonably deemed necessary, cause effective
provisions to be made so that the Holder shall have the right thereafter by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock that might have been purchased upon exercise of this
Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (h) shall similarly apply to successive reclassifications, capital
reorganizations and changes of Common Stock and to successive consolidations,
mergers, sales or conveyances. In the event that in connection with any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a security of the
Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of Subsection (1) of Section (f) hereof.

     (i) REGISTRATION UNDER THE SECURITIES ACT OF 1933. The holders of the
Warrants and the Warrant Shares or their transferees (other than a transferee
who acquires shares pursuant to Rule 144 or an effective registration statement)
shall be entitled to the registration rights set forth in the Private Placement
Subscription Agreement (the "Subscription Agreement") dated the date hereof
between the Company and the Holder. The provisions of Article V of the
Subscription Agreement are incorporated herein by reference as if fully set
forth herein.

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<PAGE>

     (j) MODIFICATION OF AGREEMENT. The provisions of this Warrant may from time
to time be amended, modified or waived, if such amendment, modification or
waiver is applicable to all of the Warrants and is in writing and consented to
by the Company and the holders of at least a majority of the outstanding
Warrants and Warrant Shares and such amendment, modification or waiver shall be
binding upon the holder of this Warrant (and any assignee thereof) regardless of
whether the holder consented to such amendment, modification or waiver; provided
that nothing shall prevent the Company and a Registered Holder from consenting
to modifications to this Warrant which affect or are applicable to such
Registered Holder only.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name by its duly authorized officer.

                                     COMDIAL CORPORATION

                                     By:
                                        ----------------------------------------
                                          Nickolas A. Branica, President and
                                          Chief Executive Officer

Dated: September 27, 2002

                                        6

<PAGE>

                                  PURCHASE FORM

                                                      Dated ____________________

(1) The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _______ shares of Common Stock of Comdial Corporation
(or such number of shares of Common Stock or other securities or property to
which the undersigned is entitled in lieu thereof or in addition thereto under
the provisions of the Warrant).

(2) The undersigned elects to exercise the within Warrant on a cashless basis
pursuant to the provisions of Section (a)(2) of the Warrant by checking below:

                 ______ check if cashless exercise; or

(3) The undersigned encloses herewith a bank draft, certified check or money
order payable to the Company in payment of the exercise price determined under,
and on the terms specified in, the Warrant.

(4) The undersigned hereby irrevocably directs that the said shares be issued
and delivered as follows:

Name(s) in Full       Address(es)     Number of Shares             S.S. or IRS #
--------------------------------------------------------------------------------

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

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

-----------------------------
Signature of Subscriber

-----------------------------
Print Name

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<PAGE>

                                 ASSIGNMENT FORM

     FOR VALUE RECEIVED, ___________________ hereby sells, assigns and transfers
unto

Name _________________________________________
(Please typewrite or print in block letters)

Address _______________________________________

the right to purchase Common Stock represented by this Warrant to the extent
____________ of shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ______________ Attorney, to transfer the same
on the books of the Company with full power of substitution in the premises.

Date ___________________________

Signature ______________________

                                       8EXHIBIT 4.5

THE RIGHTS OF THE SECURED PARTY AND THE INVESTORS UNDER THIS SECURITY AGREEMENT
SHALL BE SUBORDINATED TO THE EXTENT AND IN THE MANNER PROVIDED IN THAT CERTAIN
SUBORDINATION AGREEMENT BETWEEN THE SECURED PARTY, THE INVESTORS AND ITS SENIOR
BANK LENDER AND AN INTERCREDITOR AGREEMENT WITH WINFIELD CAPITAL CORP. OR OTHER
SUBORDINATION AGREEMENT IN EFFECT WITH RESPECT TO ANY INDEBTEDNESS FOR BORROWED
MONEY (IN EACH CASE, A "SUBORDINATION AGREEMENT"). THE SECURED PARTY, THE
INVESTORS AND SUBSEQUENT HOLDERS OF THE NOTES (AS DEFINED BELOW), BY ACCEPTANCE
THEREOF, ACKNOWLEDGE AND AGREE TO BE BOUND BY THE SUBORDINATION AGREEMENT.

                           GENERAL SECURITY AGREEMENT

                                 (Floating Lien)

     SECURITY AGREEMENT, dated as of [ ], 2002, between Comdial Corporation, a
Delaware corporation with its principal executive office located at 106
Cattlemen Road, Sarasota, Florida 34232 (the "Debtor"), and Commonwealth
Associates L.P., a Delaware limited partnership with offices at 830 Third
Avenue, New York, New York 10022, as agent (the "Agent") for the investors (the
"Investors") from time to time set forth on Annex I hereto (the Agent, acting in
such capacity, the "Secured Party");

                              W I T N E S S E T H :

     WHEREAS, Debtor has issued to the investors a series of 7% senior
subordinated secured promissory notes in the aggregate principal amount of up to
$16,000,000 issued by Debtor from time to time in a private placement through
the Agent, as placement agent (herein collectively, as at any time amended,
extended, restated, renewed or modified, the "Notes");

     WHEREAS, it is a condition to the willingness of the Investors to make the
loan evidenced by the Notes that Debtor enter into this Agreement and grant to
the Secured Party, for the ratable benefit of the Investors, the security
interest provided for herein;

     WHEREAS, the term "Notes" shall be deemed to include any promissory notes
issued as payment of interest on the Notes; and

     WHEREAS, the Investors have appointed the Agent pursuant to the Agency
Appointment Agreement attached as Exhibit 3 hereto.

     NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:

     Section 1. Terms. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meaning specified therefor in the Notes. As
used herein the following terms shall have the meanings specified and shall
include in the singular number the plural and in the plural number the singular:

          "Assigned Agreements" shall mean all contracts and agreements of
Debtor (other than contracts or agreements which by their terms expressly
prohibit the granting of any Lien (as hereinafter defined) thereon).

<PAGE>

          "Bridge Notes" shall mean the 7% senior subordinated secured
promissory notes issued by the Company in June, July and August 2002.

          "Collateral" means all of Debtor's right, title and interest in and
under or arising out of each and all of the following:

               All personal property and fixtures of Debtor of any type or
          description, wherever located and now existing or hereafter arising or
          acquired, including but not limited to the following:

          (i)  all of Debtor's goods including, without limitation:

               (a)   all inventory, including without limitation, equipment held
                  for lease, whether raw materials, in process or finished, all
                  material or equipment usable in processing the same and all
                  documents of title covering any inventory (as such term is
                  defined in the Uniform Commercial Code, as in effect from time
                  to time in the State of New York (the "NYUCC")) (all of the
                  foregoing, "Inventory"), including without limitation that
                  located at the locations listed on Schedule 1-A annexed
                  hereto;

               (b)   Except for the equipment subject to liens set forth in
                  Schedule 1-B hereto (for so long as such lessors and/or
                  lenders set forth in Schedule 1-B hereto maintain a security
                  interest in such equipment), all equipment (the "Equipment")
                  employed in connection with Debtor's business, together with
                  all present and future additions, attachments and accessions
                  thereto and all substitutions therefor and replacements
                  thereof, including without limitation that located at the
                  locations listed on Schedule 1-A annexed hereto;

          (ii) all of Debtor's present and future accounts, accounts receivable,
          general intangibles, as such terms are defined in the NYUCC, and all
          contracts and contract rights (herein sometimes referred to as
          "Receivables"), including but not limited to Debtor's rights
          (including rights to payment) under all Assigned Agreements, together
          with

               (a)   all claims, rights, powers or privileges and remedies of
                  Debtor relating thereto or arising in connection therewith
                  including, without limitation, all rights of Debtor to make
                  determinations, to exercise any election (including, but not
                  limited to, election of remedies) or option or to give or
                  receive any notice, consent, waiver or approval, together with
                  full power and authority to demand, receive, enforce, collect
                  or receipt for any of the foregoing or any property which is
                  the subject of the Assigned Agreements, to enforce or execute
                  any checks, or other instruments or orders, to file any claims
                  and to take any action which (in the opinion of the Secured
                  Party) may be necessary or advisable in connection with any of
                  the foregoing,

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<PAGE>

               (b)   all liens, security, guaranties, endorsements, warranties
                  and indemnities and all insurance and claims for insurance
                  relating thereto or arising in connection therewith,

               (c)   all rights to property forming the subject matter of the
                  Receivables including, without limitation, rights to stoppage
                  in transit and rights to returned or repossessed property,

               (d)   all writings relating thereto or arising in connection
                  therewith including without limitation, all notes, contracts,
                  security agreements, guaranties, chattel paper and other
                  evidence of indebtedness or security, all powers?of?attorney,
                  all books, records, ledger cards and invoices, all credit
                  information, reports or memoranda and all evidence of filings
                  or registrations relating thereto,

               (e)   all catalogs, computer and automatic machinery software and
                  programs, and the like pertaining to operations by Debtor in,
                  on or about any of its plants or warehouses, all sales data
                  and other information relating to sales or service of products
                  now or hereafter manufactured on or about any of its plants,
                  and all accounting information pertaining to operations in, on
                  or about any of its plants, and all media in which or on which
                  any of the information or knowledge or data is stored or
                  contained, and all computer programs used for the compilation
                  or printout of such information, knowledge, records or data,
                  and

               (f)   all accounts, contract rights, general intangibles and
                  other property rights of any nature whatsoever arising out of
                  or in connection with the foregoing, including without
                  limitation, payments due and to become due, whether as
                  repayments, reimbursements, contractual obligations,
                  indemnities, damages or otherwise;

          (iii)  all other personal property of Debtor of any nature whatsoever,
          including, without limitation, all accounts, bank accounts, deposits,
          credit balances, contract rights, inventory, general intangibles,
          goods, equipment, instruments, chattel paper, machinery, furniture,
          furnishings, fixtures, tools, supplies, appliances, plans and
          drawings, together with all customer and supplier lists and records of
          the business, and all property from time to time described in any
          financing statement signed by Debtor naming the Agent as secured
          party;

          (iv)  all of Debtor's right, title, and interest in and to any shares
          of capital stock of the respective corporations identified on Schedule
          1-C hereto (the "Issuers"), represented by the certificates identified
          on Schedule 1-C, together with the certificates representing any such
          shares, and all other shares of capital stock of whatever class of the
          Issuers, now or hereafter owned by Debtor, in each case together with
          the certificates evidencing the same (collectively, the "Stock
          Collateral");

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<PAGE>

          (v)   All shares, securities, money or property representing a
          dividend on any of the Stock Collateral, or representing a
          distribution of return of capital upon or in respect of the Stock
          Collateral, or resulting from a split-up, revision, reclassification
          and other like change of the Stock Collateral or otherwise received in
          exchange therefor, and any subscription warrants, rights or options
          issued to the holders of, or otherwise in respect of, the Stock
          Collateral;

          (vi)   Without affecting the obligations of Debtor under any provision
          prohibiting such action hereunder or under the Notes, in the event of
          any consolidation or merger in which an Issuer is not the surviving
          corporation, all shares of each class of the capital stock of the
          successor corporation formed by or resulting from such consolidation
          or merger;

          (vii)  any and all of Debtor's right, title and interest in its
          intellectual property, including, without limitation, (a) each of the
          Trademarks (as hereinafter defined) and the goodwill of the business
          symbolized by each of the Trademarks, all customer lists and other
          records of Debtor relating to the distribution of products bearing the
          Trademarks (as hereinafter defined) and each of the registrations
          described in Schedule 1-D hereto; (b) each of the Patents (as
          hereinafter defined) and each of the registrations listed on Schedule
          1-D hereto; (c) each of the tradenames listed on Schedule 1-D hereto
          (the "Tradenames"); (d) each of the Copyrights (as hereinafter
          defined) and each of the applications, registrations and recordings
          thereof listed on Schedule 1-D hereto, and all derivative works,
          extensions or renewals thereof ; (d) any and all proceeds of the
          foregoing, including, without limitation, any claims by Debtor against
          third parties for infringement of the Trademarks, the Patents and/or
          the Copyrights (collectively, the "Intellectual Property");

          (viii)  all additions, accessions, replacements, substitutions or
          improvements and all products and proceeds including, without
          limitation, proceeds of insurance, of any and all of the Collateral
          described in clauses (i) through (vii) above; and

          (ix)  any consideration received from the sale, exchange, lease or
          other disposition of any asset or property which constitutes
          Collateral, any other value received as a consequence of the
          possession of any Collateral and any payment received from any insurer
          or other person or entity as a result of the destruction, loss, theft
          or other involuntary conversion of whatever nature of any asset or
          property that constitutes Collateral.

     "Copyrights" mean all copyrights, copyrighted works or any item which
embodies such copyrighted work of the United States or any other country, all
applications therefor, all right, title and interest therein and thereto, and
all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Copyright Office
or in any similar office or agency of the United States, and State thereof or
any other country or any political subdivision thereof, and all derivative
works, extensions or renewals thereof.

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<PAGE>

     "Indebtedness for Borrowed Money" means all secured payment obligations of
Debtor (whether outstanding on the date hereof or hereinafter) to Bank of
America, N.A. ("BOA") or any other bank, insurance company, finance company or
other institutional lender or other entity regularly engaged in the business of
extending credit in the form of borrowed money, provided such entity is not an
affiliate of Debtor.

     "Instrument" shall have the meaning specified in Article 3 of the NYUCC and
shall also include any other writing which evidences a right to the payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
endorsement or assignment.

     "Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
NYUCC or comparable law of any jurisdiction).

     "Material Adverse Effect" means a material adverse effect on the financial
condition of the Company and its subsidiaries, taken as a whole.

     "Patents" mean (i) all letters patent of the United States or any other
country, all right, title and interest therein and thereto, and all
applications, registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any state or province thereof or any other country or any political
subdivision thereof, all whether now owned or hereafter acquired by Debtor,
including, but not limited to, those described in Schedule 1-D hereto, and (ii)
all reissues, continuations, continuations-in-part, extensions or divisionals
thereof and all licenses thereof.

     "Permitted Liens" means:

               (a) Liens for taxes, assessments or other governmental charges or
                  levies not at the time delinquent or thereafter payable
                  without penalty or being contested in good faith by
                  appropriate proceedings and for which adequate reserves in
                  accordance with generally accepted accounting principles shall
                  have been set aside on its books;

               (b) Liens of carriers, warehousemen, mechanics, materialmen and
                  landlords incurred in the ordinary course of business for sums
                  not overdue or being contested in good faith by appropriate
                  proceedings and for which adequate reserves shall have been
                  set aside on its books;

               (c) Liens (other than Liens arising under the Employee Retirement
                  Income Security Act of 1974, as amended, or Section 412(n) of
                  the Internal Revenue Code of 1986, as amended) incurred in the
                  ordinary course of business in connection with workers'
                  compensation, unemployment insurance or other forms of

                                       5
<PAGE>

                 governmental insurance or benefits, or to secure performance
                  of tenders, statutory obligations, leases and contracts (other
                  than for borrowed money) entered into in the ordinary course
                  of business or to secure obligations on surety or appeal
                  bonds;

               (d) Judgment Liens in existence less than 60 days after the entry
                  thereof or with respect to which execution has been stayed;

               (e) Ground leases in respect of real property on which facilities
                  owned or leased by Debtor or any of its subsidiaries are
                  located;

               (f) Easements, rights-of-way, restrictions, minor defects or
                  irregularities in title and other similar charges or
                  encumbrances not interfering in any material respect with the
                  business of Debtor and its subsidiaries taken as a whole;

               (g) Any interest or title of a lessor secured by a lessor's
                  interest under any lease of real property on which facilities
                  owned or leased by Debtor or any of its subsidiaries are
                  located;

               (h) Leases or subleases granted to others not interfering in any
                  material respect with the business of Debtor and its
                  subsidiaries taken as a whole;

               (i) A Lien on any asset securing indebtedness (including
                  capitalized lease obligations) incurred or assumed for the
                  purpose of financing the purchase price (including capitalized
                  lease payments in the nature thereof) of such asset, provided
                  that such Lien attaches only to the asset acquired with the
                  proceeds of such indebtedness and attaches concurrently with
                  or within ten (10) days following the acquisition thereof;

               (j) Liens existing on the date hereof as disclosed on Schedule
                  1-E hereto; and

               (k) Liens with respect to the Senior Indebtedness.

     "Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint?stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.

     "Receivables" has the meaning specified therefor in clause (ii) of the
definition of Collateral.

     "Secured Obligations" means all obligations of Debtor, whether for fees,
expenses or otherwise, now existing or hereafter arising under this Agreement

                                       6

<PAGE>

and the Notes, including, without limitation, full and prompt payment and
performance of (i) all principal and interest on the Notes when and as due,
whether at maturity, by acceleration, or otherwise and (ii) all obligations of
Debtor at any time and from time to time under this Agreement.

     "Senior Indebtedness" means, collectively, (a) all Indebtedness for
Borrowed Money (and all renewals, deferrals, extensions, refundings, amendments,
modifications and replacements of any such Indebtedness for Borrowed Money), (b)
all payment obligations of Debtor pursuant to any capitalized lease with an
entity that is not an affiliate of Debtor, unless by the terms of the instrument
creating or evidencing any such indebtedness it is expressly provided that such
indebtedness is not superior in right of payment to the Notes and (c) all
secured payment obligations of the Company to Winfield Capital Corp. arising
from a loan in the aggregate principal amount of up to $2,000,000.

     "Termination Date" means the date on which all the Notes have been paid in
full or converted into securities of Debtor.

     "Trademarks" means (i) all trademarks, trade names, trade styles, service
marks, prints and labels on which said trademarks, trade names, trade styles and
service marks have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all right, title and
interest therein and thereto, and all applications, registrations and recordings
thereof, including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or province thereof, or any
other country or any political subdivision thereof, all whether now owned or
hereafter acquired by Debtor, including, but not limited to, those described in
Schedule 1-D annexed hereto and made a part hereof, and (ii) all reissues,
extensions or renewals thereof and all licenses thereof.

     Section 2. Security Interests; Subordination.

     (a)  As security for the payment and performance of all Secured
Obligations, and subject to the last sentence of this Section 2, Debtor
does hereby create, grant and assign to the Secured Party, for its own benefit
and for the ratable benefit of the Investors, a continuing security interest in
all of the Collateral, whether now existing or hereafter arising or acquired and
wherever located, subject to the priority, if any, of Permitted Liens (the
"Security Interest"). Without limiting the foregoing, the Secured Party is
hereby authorized to file one or more financing statements, continuation
statements or such other documents, including, without limitation, the
Assignment of Security (Trademarks) attached hereto as Exhibit 1, for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest. With respect to the Security Interest created hereby the
Notes are pari passu with the Bridge Notes to the extent outstanding.

     The Secured Party hereby acknowledges and agrees that the Security Interest
granted hereunder shall be subordinate and junior to any security interest
granted in connection with any Indebtedness for Borrowed Money, and any
refinancings or replacements thereof. Notwithstanding anything to the contrary
in this Security Agreement and in the Notes, the indebtedness evidenced by the
Notes, and all rights of the Secured Party hereunder, shall be subordinate to
the rights of the Senior Indebtedness. In addition, the Security Interest and

                                       7

<PAGE>

any payment of the principal amount of, accrued interest on, fees and expenses
relating to, and any other indebtedness evidenced by the Notes shall be
subordinated to the extent and in the manner provided in a Subordination
Agreement.

     Section 3. General Representations, Warranties and Covenants. Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

     (a) This Agreement is made with full recourse to Debtor and pursuant to and
upon all the warranties, representations, covenants, and agreements on the part
of Debtor contained herein, in the Notes and otherwise made in writing in
connection herewith or therewith.

     (b) Except for the Security Interest of the Secured Party therein and
Permitted Liens, Debtor is, and as to Collateral acquired from time to time
after the date hereof Debtor will be, the owner of all the Collateral free from
any lien, security interest, encumbrance or other right, title or interest of
any Person (other than Permitted Liens) and Debtor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Secured Party (other than Permitted Liens).

     (c) To the Company's knowledge, there is no financing statement, assignment
of trademark, or assignment of patent (or similar statement or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office covering any interest of any kind in the Collateral, or intended
to cover any such interest, which has not been terminated or released by the
secured party named therein and so long as the Notes remain outstanding or any
of the Secured Obligations of Debtor remain unpaid, Debtor will not execute and
there will not be on file in any public office any financing statement,
assignment of trademark, or assignment of patent (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except (i) financing statements, assignment of
trademark, or assignment of patent filed or to be filed in respect of and
covering the Security Interest of the Secured Party hereby granted and provided
for and (ii) with respect to Permitted Liens.

     (d) The chief executive office and chief place of business of Debtor is
located at the address of Debtor listed on the signature page hereof, and Debtor
will not move its chief executive office and chief place of business except to
such new location as Debtor may establish in accordance with the last sentence
of this Section 3(d). The originals of all Assigned Agreements and all documents
(as well as all duplicates thereof) evidencing all Receivables and all other
contract rights or accounts and other property of Debtor and the only original
books of account and records of Debtor relating thereto are, and will continue
to be, kept at such chief executive office or at such new location as Debtor may
establish in accordance with the last sentence of this Section 3(d). Debtor
shall establish no such new location until (i) it shall have given to the
Secured Party not less than 30 days' prior written notice of its intention to do
so, clearly describing such new location and providing such other information in
connection therewith as the Secured Party may reasonably request, and (ii) with
respect to such new location, it shall have taken such action, satisfactory to
the Secured Party (including, without limitation, all action required by Section
7 hereof), to maintain the Security Interest of the Secured Party in the
Receivables intended to be granted at all times fully perfected and in full
force and effect.

                                       8

<PAGE>

     (e) Debtor has no Collateral located outside of the states identified on
Schedule 1-A or other states in which inventory may be held on consignment.

     (f) The name of Debtor is as set forth on the signature page hereto and
Debtor shall not change such name, conduct its business in any other name or
take title to the Collateral in any other name while this Agreement remains in
effect. Debtor has never had any name, or conducted business under any name in
any jurisdiction, other than its name set forth on the signature page hereto,
during the past six years other than as set forth in Schedule 3(f) annexed
hereto.

     (g) At Debtor's own expense, Debtor will: (i) without limiting the
provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by
fire and other risks, casualties and contingencies and in such manner and to the
same extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep adequate
insurance at all times against liability on account of damage to persons and
properties and under all applicable workers' compensation laws, by financially
sound and reputable insurers and in amounts usually carried by similar
businesses, for the benefit of Debtor and the Secured Party, (ii) upon request
by the Secured Party, promptly deliver the insurance policies or certificates
thereof to the Secured Party, and (iii) keep the Collateral necessary for its
business in good condition at all times (normal wear and tear excepted) and
maintain the same in accordance with all material manufacturer's specifications
and requirements. Upon any failure of Debtor to comply with its obligations
pursuant to this Section 3(g), the Secured Party may at its option and after 20
days' prior notice to Debtor, and without affecting any of its other rights or
remedies provided herein or as a secured party under the NYUCC, procure the
insurance protection it deems necessary and/or cause repairs or modifications to
be made to the Collateral and the cost of either or both of which shall be a
lien against the Collateral added to the amount of the indebtedness secured
hereby and payable on demand with interest at a rate per annum equal to 7%.

     (h) Subject to the Senior Indebtedness, Debtor hereby assigns to the
Secured Party all of Debtor's right, title and interest in and to any and all
moneys which may become due and payable with respect to the Collateral under any
policy insuring the Collateral (except proceeds relating to tangible personal
property which are applied to restoration or replacement), including return of
unearned premium, and, upon the occurrence and continuance of an Event of
Default (as defined in the Notes) and subject to the terms of the Senior
Indebtedness, shall cause any such insurance company to make payment directly to
the Secured Party for application to amounts outstanding under the Notes in
accordance with the terms of the Notes and, to the extent not provided therein,
in such order as the Secured Party shall determine.

     (i) Debtor will not use the Collateral in material violation of any statute
or ordinance of which it has knowledge or applicable insurance policy and will
promptly pay all material taxes and assessments levied against the Collateral;
provided that Debtor shall not be required to pay any such tax or assessment
that is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.

                                       9

<PAGE>

     (j) Debtor will not sell, transfer, change the registration, if any,
dispose of, attempt to dispose of all or substantially all of the Collateral
unless the proceeds from the sale are allocated to repay the Notes.

     (k) Debtor will not assert against the Secured Party any claim or defense
which Debtor may have against any seller of the Collateral or any part thereof
or against any other Person with respect to the Collateral or any part thereof.

     (l) Debtor will indemnify and hold the Secured Party harmless from and
against any loss, liability, damage, costs and expenses whatsoever arising from
Debtor's use, operation, ownership or possession of the Collateral or any part
thereof.

     (m) Debtor will maintain the confidentiality of all customer lists and not
sell or otherwise dispose of such lists except that Debtor shall deliver copies
thereof to the Secured Party upon its request, which may be made at any time and
from time to time after an Event of Default (as such term is defined in the
Notes).

     (n) In addition to, and not in limitation of, the foregoing, with respect
to the Intellectual Property, Debtor hereby represents and warrants:

          (i) Subject to Permitted Liens and except as set forth in Schedule 1-D
          hereto, Debtor has the sole, full and clear title to the Trademarks
          shown on Schedule 1-D hereto for the goods and services covered by the
          registrations thereof and, to Debtor's knowledge, such registrations
          are valid and subsisting.

          (ii) Debtor will perform all acts and execute all documents, to the
          extent reasonable, including, without limitation, assignments for
          security in form suitable for filing with the United States Patent and
          Trademark Office, substantially in the form of Exhibit 1 hereof,
          requested by the Secured Party at any time to evidence, perfect,
          maintain, record and enforce the Secured Party's interest in the
          Patents and Trademarks or otherwise in furtherance of the provisions
          of this Agreement, and Debtor hereby authorizes the Secured Party to
          execute and file one or more financing statements (and similar
          documents) or copies thereof or of this Agreement with respect to the
          Intellectual Property signed only by the Secured Party.

          (iii) Except as set forth on Schedule 1-D, to Debtor's knowledge, none
          of the Trademarks used in the business of Debtor have been abandoned
          or invalidated, and, except to the extent that the Secured Party, upon
          10 days' prior written notice by Debtors, shall consent, and except to
          the extent such Debtor has a valid business purpose for doing
          otherwise (so long as any action on the part of any such Debtor would
          not have a Material Adverse Effect on Debtor's business), Debtor
          (either itself or through licensees) will continue to use the
          Trademarks on each and every trademark class of goods in order to
          maintain the Trademarks in full force free from any claim of
          abandonment for nonuse and Debtor will not (nor will it permit any
          licensee thereof to) do any act or knowingly omit to do any act
          whereby any Trademark may become abandoned or invalidated, and Debtor

                                       10

<PAGE>

          shall notify the Secured Party immediately if it knows of any reason
          or has reason to know that any pending application or issued Trademark
          may become abandoned or invalidated.

          (iv) Subject to Permitted Liens and except as set forth on Schedule
          1-D, Debtor has the sole, full and clear title to each of the Patents
          shown on Schedule 1-D hereto and the issued Patents are subsisting.
          Except as set forth in Schedule 1-D, to Debtor's knowledge, none of
          the Patents used in the business of Debtor has been abandoned or
          dedicated, and, except to the extent that the Secured Party, upon 10
          days' prior written notice by Debtor, shall consent, and except to the
          extent Debtor has a valid business purpose for doing otherwise (so
          long as any action on the part of Debtor would not have a Material
          Adverse Effect on Debtor's business), Debtor will not do any act, or
          omit to do any act, whereby the Patents may become abandoned or
          dedicated and shall notify the Secured Party immediately if it knows
          of any reason or has reason to know that any pending application or
          issued Patent may become abandoned or dedicated.

          (v) Subject to Permitted Liens and except as set forth on Schedule
          1-D, Debtor has the sole, full and clear title to each of the
          Copyrights shown on Schedule 1-D hereto and the issued Copyrights are
          subsisting. Except as set forth in Schedule 1-D, to Debtor's
          knowledge, none of the Copyrights used in the business of Debtor has
          been abandoned or dedicated, and, except to the extent that the
          Secured Party, upon 10 days' prior written notice by Debtor, shall
          consent, and except to the extent Debtor has a valid business purpose
          for doing otherwise (so long as any action on the part of Debtor would
          not have a Material Adverse Effect on Debtor's business), Debtor will
          not do any act, or omit to do any act, whereby the Copyrights may
          become abandoned or dedicated and shall notify the Secured Party
          immediately if it knows of any reason or has reason to know that any
          pending application or issued Copyright may become abandoned or
          dedicated.

          (vi) In no event shall Debtor, either itself or through any agent,
          employee, licensee or designee, (A) file an application for the
          registration of any Patent or Trademark with the United States Patent
          and Trademark Office, and/or an application for the registration of
          any Copyright with the United States Copyright Office, or any similar
          office or agency of the United States, any state or province thereof,
          any other country or any political subdivision thereof, (B) file any
          assignment of any patent, trademark, or copyright which Debtor may
          acquire from a third party, with the United States Patent and
          Trademark Office and/or the United States Copyright Office, any
          similar office or agency of the United States, any state or province
          thereof, any other country or any political subdivision thereof,
          unless Debtor shall promptly notify the Secured Party thereof, and,
          upon request of the Secured Party, execute and deliver any and all
          assignments, agreements, instruments, documents and papers as the
          Secured Party may reasonably request to evidence the Secured Party's
          interest in such Patent, Trademark and/or Copyright and the goodwill
          and general intangibles of Debtor relating thereto or represented
          thereby, and Debtor hereby constitutes the Secured Party its

                                       11

<PAGE>

          attorney-in-fact to execute and file all such writings for the
          foregoing purposes, all acts of such attorney being hereby ratified
          and confirmed, such power being coupled with an interest is
          irrevocable until the Secured Obligations are paid in full.

          (vii) Except to the extent that the Secured Party, upon prior written
          notice from Debtor, shall consent (which consent shall not be
          unreasonably withheld), Debtor will not assign, sell, mortgage, lease,
          transfer, pledge, hypothecate, grant a security interest in or lien
          upon, encumber, grant an exclusive or non-exclusive license (except in
          the ordinary course of business), or otherwise dispose of any of the
          Intellectual Property, and nothing in this Agreement shall be deemed a
          consent by the Secured Party to any such action except as expressly
          permitted herein.

          (viii) As of the date hereof neither Debtor nor any affiliate or
          subsidiary thereof owns any Patents, Trademarks or Copyrights
          registered in, or the subject of pending applications in, the United
          States Patent and Trademark Office and/or the United States Copyright
          Office or any similar office or agency of the United States, any state
          or province thereof, any other country or any political subdivision
          thereof, other than those described in Schedule 1-D hereto.

          (ix) Except to the extent Debtor has a valid business purpose for
          doing otherwise (so long as any action on the part of Debtor would not
          have a Material Adverse Effect on Debtor's business), Debtor will take
          all reasonable and necessary steps in any proceeding before the United
          States Patent and Trademark Office and/or the United States Copyright
          Office, or any similar office or agency of the United States, any
          state or province thereof, any other country or any political
          subdivision thereof, to maintain each application and registration of
          the Trademarks, Patents and Copyrights, including, without limitation,
          filing of renewals, affidavits of use, affidavits of incontestability
          and opposition, interference and cancellation proceedings (except to
          the extent that dedication, abandonment or invalidation is permitted
          under paragraphs (ii) and (iii) hereof); provided, however, that
          Debtor shall not be required to take any such actions with respect to
          the Patents, Trademarks or Copyrights identified on Schedule 3(n)(ix).

          (x) Debtor agrees that the Secured Party does not assume, and shall
          have no responsibility for, the payment of any sums due or to become
          due under any agreement or contract included in the Intellectual
          Property or the performance of any obligations to be performed under
          or with respect to any such agreement or contract by Debtor, and
          Debtor hereby agrees to indemnify and hold the Secured Party harmless
          with respect to any and all claims by any person relating thereto
          other than such that are caused by Secured Party's gross negligence or
          willful misconduct.

          (xi) Debtor agrees that if it, or any affiliate or subsidiary thereof,
          learns of any use by any person of any term or design likely to cause
          confusion with any material Trademark, it shall promptly notify the

                                       12

<PAGE>

          Secured Party of such use and, if requested by the Secured Party,
          shall join with the Secured Party, at its expense, in such action as
          the Secured Party, in its reasonable discretion may deem advisable for
          the protection of the Secured Party's interest in and to such
          Trademarks.

          (xii) All licenses of Trademarks and Patents which Debtor has granted
          to third parties are set forth in Schedule 3(n)(xii) hereto.

          (xiii) Subject to Permitted Liens, if Debtor shall acquire title to
          any new registered Trademarks, Patents and/or Copyrights, the
          provisions of this Agreement shall automatically apply thereto. Debtor
          shall promptly notify the Secured Party in writing of any rights to
          any new registered Trademarks, Patents and/or Copyrights acquired by
          Debtor after the date hereof and of any registrations issued or
          applications for registration made after the date hereof. Concurrently
          with the filing of an application for registration for any Trademarks,
          Patents and/or Copyrights, Debtor shall execute, deliver and record in
          all places where this Agreement is recorded an appropriate agreement,
          substantially in the form hereof, with appropriate insertions, or an
          amendment to this Agreement, in form and substance reasonably
          satisfactory to the Secured Party, pursuant to which Debtor shall
          grant a security interest to the extent of its interest in such
          registration as provided herein to the Secured Party.

     Section 4. Special Provisions Concerning Assigned Agreements. Debtor
represents, warrants and agrees as follows:

     (a) The Assigned Agreements constitute the legal, valid and binding
obligations of Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer, fraudulent conveyance and other similar laws affecting the enforcement
of creditors' rights and remedies generally.

     (b) Debtor will perform and discharge each and every material obligation,
covenant and agreement to be performed or discharged by Debtor under the
Assigned Agreements, except for any such nonperformance resulting from a default
by any other party thereto.

     (c) At the request of the Secured Party, and at the sole cost and expense
of Debtor, Debtor will use its reasonable best efforts to enforce or secure the
performance of each and every material obligation, covenant, condition and
agreement contained in the material Assigned Agreements to be performed by the
other parties thereto.

     (d) Debtor will not modify, amend or agree to vary any of the material
Assigned Agreements in any respect likely to have a Material Adverse Effect
other than in the ordinary course of business, or otherwise act or fail to act
in a manner likely (directly or indirectly) to entitle any party thereto to
claim that Debtor is in default under the terms thereof, except for any such
action or failure to act resulting from a default by any other party thereto.

     (e) Debtor will not terminate or permit the termination of any material
Assigned Agreement, except in accordance with its terms, other than in the
ordinary course of business.

                                       13

<PAGE>

     (f) Without the prior written consent of the Secured Party, Debtor will
not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any material Assigned Agreement from any of
the material obligations, covenants, conditions and agreements to be performed
by it under such Assigned Agreement including, without limitation, the
obligation to make all payments in the manner and at the time and places
specified.

     (g) After the occurrence and during the continuance of an Event of Default
prior to the Maturity Date (as such term is defined in the Notes) and
acceleration of the Notes pursuant to the terms of the Notes ("Acceleration"),
subject to the terms of the Senior Indebtedness, Debtor will hold any payments
received by it which are assigned and set over to the Secured Party by this
Agreement for and on behalf of the Secured Party and turn them promptly over to
the Secured Party forthwith in the same form in which they are received
(together with any necessary endorsement) for application to amounts outstanding
under the Notes in accordance with the terms of the Notes and, to the extent not
provided therein, in such order as the Secured Party shall determine.

     (h) Debtor will appear in and defend every action or proceeding arising
under, growing out of or in any manner connected with the Assigned Agreements or
the obligations, duties or liabilities of Debtor and any assignee thereunder.

     (i) Should Debtor fail to make any payment or to do any act as herein
provided after 30 days' notice by the Secured Party, the Secured Party may (but
without obligation on the Secured Party's part to do so and without notice to or
demand on Debtor and without releasing Debtor from any obligation hereunder)
make or do the same in such manner and to such extent as the Secured Party may
deem necessary to protect the Security Interests provided hereby, including
specifically, without limiting the general powers, the right to appear in and
defend any action or proceeding purporting to affect the Security Interests
provided hereby and Debtor, and the Secured Party may also perform and discharge
each and every obligation, covenant and agreement of Debtor contained in any
Assigned Agreement and, in exercising any such powers, pay necessary costs and
expenses, employ counsel and incur and pay reasonable attorneys' fees.

     (j) Upon the request of the Secured Party, Debtor will send to the Secured
Party copies of all material notices, documents and other papers furnished or
received by it with respect to any of the material Assigned Agreements.

     Section 5. Special Provisions Concerning Receivables.

     (a) As of the time when each Receivable arises, Debtor shall be deemed to
have warranted as to each such Receivable that such Receivable and all papers
and documents relating thereto are genuine and in all respects what they purport
to be, and that all papers and documents relating thereto:

          (ii)  will be signed by the account debtor named therein (or such
          account debtor's duly authorized agent) or otherwise be binding on the
          account debtor;

          (iii)  will represent the genuine, legal, valid and binding obligation
          of the account debtor evidencing indebtedness unpaid and owed by such
          account debtor

                                       14

<PAGE>

          arising out of the performance of labor or services or
          the sale and delivery of merchandise or both;(iv) to the extent
          evidenced by writings, will be the only original writings evidencing
          and embodying such obligation of the account debtor named therein; and

     (b) Debtor will keep and maintain at Debtor's own cost and expense
satisfactory and complete records of the Receivables, including, but not limited
to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and Debtor will make the
same available to the Secured Party, at Debtor's own cost and expense, at any
and all reasonable times during the existence of an Event of Default upon demand
of the Secured Party. Subject to the terms of the Senior Indebtedness, Debtor
shall, at Debtor's own cost and expense, deliver the Receivables (including,
without limitation, all documents evidencing the Receivables) and such books and
records to the Secured Party or to its representatives upon its demand at any
time during the existence of an Event of Default and, if prior to the Maturity
Date, Acceleration. If the Secured Party shall so request during the existence
of an Event of Default, Debtor shall legend, in form and manner satisfactory to
the Secured Party, the Receivables and other books, records and documents of
Debtor evidencing or pertaining to the Receivables with an appropriate reference
to the fact that the Receivables have been assigned to the Secured Party and
that the Secured Party has a security interest therein, subject to the Senior
Indebtedness.

     (c) Except in the ordinary course of business prior to an Event of Default
and, if prior to the Maturity Date, Acceleration, Debtor will not rescind or
cancel any indebtedness evidenced by any Receivable or modify any term thereof
or make any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable or interest therein, without the prior written
consent of the Secured Party, except that, subject to the prior approval of a
majority of the independent directors of Debtor's Board of Directors, Debtor may
grant discounts in connection with the prepayment of any Receivable in an amount
which is customary in the line of business in which Debtor is engaged and
consistent with Debtor's past practices.

     (d) Debtor will duly fulfill all material obligations on its part to be
fulfilled under or in connection with the Receivables and, subject to the terms
of the Senior Indebtedness, will do nothing to impair the rights of the Secured
Party in the Receivables.

     (e) Debtor shall endeavor to collect or cause to be collected from the
account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and credit forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Receivable. The costs and expenses (including attorney's fees) of such
collection shall be borne by Debtor.

     (f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary

                                       15

<PAGE>

course of business), Debtor will notify the Secured Party thereof, and, upon
request by the Secured Party, promptly deliver such Instrument to the Secured
Party appropriately endorsed to the order of the Secured Party as further
security for the satisfaction in full of the Secured Obligations.

     (g) Subject to the terms of the Senior Indebtedness, upon request of the
Secured Party, at any time when an Event of Default and, if prior to the
Maturity Date, Acceleration shall exist, Debtor shall promptly notify (in
manner, form and substance reasonably satisfactory to the Secured Party) all
Persons who are at any time obligated under any Receivable that the Secured
Party possesses a Security Interest in such Receivable and that all payments in
respect thereof are to be made to such account as the Secured Party directs.

     Section 6. Special Provisions Concerning Equipment. Subject to the terms of
the Senior Indebtedness, Debtor will do nothing to impair the rights of the
Secured Party in the Equipment. Debtor shall cause the Equipment to at all times
constitute and remain personal property. Debtor retains all liability and
responsibility in connection with the Equipment and the liability of Debtor to
pay the Secured Obligations shall in no way be affected or diminished by reason
of the fact that such Equipment may be lost, destroyed, stolen, damaged or for
any reason whatsoever unavailable to Debtor.

     Section 7. Financing Statements; Documentary Stamp Taxes.

     (a) Debtor will, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Secured Party from time to time such lists,
descriptions and designations of Inventory, warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral and other property or rights covered by the
Security Interest hereby granted, which the Secured Party reasonably deems
appropriate or advisable to perfect, preserve or protect its Security Interest
in the Collateral. Debtor hereby constitutes the Secured Party its
attorney?in?fact to execute and file in the name and on behalf of Debtor such
additional financing statements as the Secured Party may reasonably request,
such acts of such attorney being hereby ratified and confirmed; such power,
being coupled with an interest, is irrevocable until the Secured Obligations are
paid in full. Further, to the extent permitted by applicable law, Debtor
authorizes the Secured Party to file any such financing statements without the
signature of Debtor. Debtor will pay all applicable filing fees and related
expenses in connection with any such financing statements.

     (b) Debtor agrees to procure, pay for, affix to any and all documents and
cancel any documentary tax stamps required by and in accordance with, applicable
law and Debtor will indemnify and hold the Secured Party harmless against any
liability (including interest and penalties) in respect of such documentary
stamp taxes.

     Section 8. Termination of this Agreement. This Agreement shall terminate
upon the Termination Date and the Agent, at the request and expense of Debtor,
will promptly execute and deliver to Debtor a proper instrument or instruments
(including Uniform Commercial Code termination statements on Form UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to Debtor (without recourse and without

                                      16

<PAGE>

representation and warranty) such of the collateral as may be in the possession
of the Agent and as has not thereto been sold or otherwise applied or released
pursuant to this Agreement.

     Section 9. Special Provisions Concerning Remedies and Sale. Subject to the
terms of the Senior Indebtedness, in addition to any rights and remedies now or
hereafter granted under applicable law and not by way of limitation of any such
rights and remedies, during the existence of an Event of Default and, if prior
to the Maturity Date, Acceleration, the Secured Party shall have all of the
rights and remedies of a secured party under the NYUCC as enacted in any
applicable jurisdiction in addition to the rights and remedies provided herein,
in the Notes and in any other agreement executed in connection with the Notes
whereby Debtor has granted any Lien to the Secured Party. Subject to the terms
of the Senior Indebtedness, without in any way limiting the foregoing, during
the existence of an Event of Default and, if prior to the Maturity Date,
Acceleration, upon the giving of notice to Debtor of Secured Party's intent to
pursue any one or all of the following or any other remedies the Secured Party
shall have the right, in the name of Debtor or in the name of the Secured Party
or otherwise:

          (i) to ask for, demand, collect, receive, compound and give
          acquittance for the Receivables or any part thereof;

          (ii) to extend the time of payment of, compromise or settle for cash,
          credit or otherwise, and upon any terms and conditions, any of the
          Receivables;

          (iii) to endorse the name of Debtor on any checks, drafts or other
          orders or instruments for the payment of moneys payable to Debtor
          which shall be issued in respect of any Receivable;

          (iv) to file any claims, commence, maintain or discontinue any
          actions, suits or other proceedings deemed by the Secured Party
          necessary or advisable for the purpose of collecting or enforcing
          payment of any Receivable;

          (v) to make test verifications of the Receivables or any portion
          thereof;

          (vi) to notify any or all account debtors under any or all of the
          Receivables to make payment thereof directly to the Secured Party for
          the account of the Secured Party and to require Debtor to forthwith
          give similar notice to the account debtors;

          (vii) to require Debtor forthwith to account for and transmit to the
          Secured Party in the same form as received all proceeds (other than
          physical property) of collection of Receivables received by Debtor
          and, until so transmitted, to hold the same in trust for the Secured
          Party and not commingle such proceeds with any other funds of Debtor;

          (viii) to take possession of any or all of the Collateral and, for
          that purpose, to enter, with the aid and assistance of any Person or
          Persons and with or without legal process, any premises where the
          Collateral, or any part thereof, are, or may be, placed or assembled,
          and to remove any of such Collateral;

                                       17

<PAGE>

          (ix) to execute any instrument and do all other things necessary and
          proper to protect and preserve and realize upon the Collateral and the
          other rights contemplated hereby;

          (x) upon notice to such effect, to require Debtor to deliver, at
          Debtor's expense, any or all Collateral to the Secured Party at a
          place designated by the Secured Party;

          (xi) without obligation to resort to other security, at any time and
          from time to time, to sell, re-sell, assign and deliver all or any of
          the Collateral, in one or more parcels at the same or different times,
          and all right, title and interest, claim and demand therein and right
          of redemption thereof, at public or private sale, for cash, upon
          credit or for future delivery, and at such price or prices and on such
          terms as the Secured Party may determine, with the amounts realized
          from any such sale to be applied to the Secured Obligations in the
          manner determined by the Secured Party;

          (xii) to cause Debtor not to make any further use of the Trademarks or
          Patents or any mark similar thereto and/or Copyrights for any purpose;

          (xiii) upon 10 days' prior notice to Debtor, to license, whether
          general, special or otherwise, and whether on an exclusive or
          nonexclusive basis, any of the Patents or Trademarks, throughout the
          world for such term or terms, on such conditions, and in such manner,
          as the Secured Party shall in its sole discretion determine;

          (xiv) to enforce, at any time (without assuming any liability or
          obligation thereunder), against any licensee or sublicensee, all
          rights and remedies of Debtor in, to and under any one or more license
          agreements with respect to the Intellectual Property, and take or
          refrain from taking any action under any thereof, and Debtor hereby
          releases the Secured Party from, and agrees to hold the Secured Party
          free and harmless from and against any claims arising out of, any
          action taken or omitted to be taken with respect to any such license
          agreement;

          (xv) upon 10 days' prior notice to Debtor, to assign, sell, or
          otherwise dispose of, the Intellectual Property or any part thereof,
          either with or without special or other conditions or stipulations,
          with power to buy the Intellectual Property or any part of it, and
          with power also to execute assurances, and do all other acts and
          things for completing the assignment, sale or disposition which the
          Secured party shall, in its sole discretion, deem appropriate or
          proper; and

          (xvi) in addition to the foregoing, in order to implement the
          assignment, sale or other disposal of any of the Intellectual Property
          pursuant to this Agreement, the Secured Party may, at any time,
          pursuant to the authority granted in the Power of Attorney described
          herein (such authority becoming effective on the occurrence or
          continuation as hereinabove provided of an Event of Default), execute
          and deliver on behalf of the applicable Debtor, one or more
          instruments of assignment of the Patents or Trademarks (or any

                                       18

<PAGE>

          application or registration thereof), in form suitable for filing,
          recording or registration in any country. Debtor agrees to pay when
          due all reasonable costs incurred in any such transfer of the Patents
          or Trademarks, including any taxes, fees and reasonable attorneys'
          fees, and all such costs shall be added to the Secured Obligations.

     In the event of any license, assignment, sale or other disposition of the
Intellectual Property, or any of it, after the occurrence or continuation as
hereinabove provided of an Event of Default, Debtor shall supply its know-how
and expertise relating to the manufacture and sale of the products bearing or in
connection with the Trademarks or Patents, and its customer lists and other
records relating to the Trademarks or Patents and to the distribution of said
products, to the Secured Party or its designee.

     The Secured Party shall not be obligated to do any of the acts hereinabove
authorized, but in the event that the Secured Party elects to do any such act,
the Secured Party shall not be responsible to Debtor except for its gross
negligence or willful misconduct.

     (a) The Secured Party may take legal proceedings for the appointment of a
receiver or receivers (to which the Secured Party shall be entitled as a matter
of right) to take possession of the Collateral pending the sale thereof pursuant
either to the powers of sale granted by this Agreement or to a judgment, order
or decree made in any judicial proceeding for the foreclosure or involving the
enforcement of this Agreement. If, after the exercise of any or all of such
rights and remedies, any of the Secured Obligations shall remain unpaid, Debtor
shall remain liable for any deficiency. After the indefeasible payment in full
of the Secured Obligations, any proceeds of the Collateral received or held by
the Secured Party shall be turned over to Debtor and the Collateral shall be
reassigned to Debtor by the Secured Party without recourse to the Secured Party
and without any representations, warranties or agreements of any kind.

     (b) Upon any sale of any of the Collateral, whether made under the power of
sale hereby given or under judgment, order or decree in any judicial proceeding
for the foreclosure or involving the enforcement of this Agreement:

          (i) the Secured Party may, to the extent permitted by law, bid for and
          purchase the property being sold, and upon compliance with the terms
          of sale may hold, retain and possess and dispose of such property in
          its own absolute right without further accountability, and may, in
          paying the purchase money therefor, deliver any Notes or claims for
          interest thereon and any other instruments evidencing the Secured
          Obligations or agree to the satisfaction of all or a portion of the
          Secured Obligations in lieu of cash in payment of the amount which
          shall be payable thereon, and the Notes and such instruments, in case
          the amounts so payable thereon shall be less than the amount due
          thereon, shall be returned to the Secured Party after being
          appropriately stamped to show partial payment;

          (ii) the Secured Party may make and deliver to the purchaser or
          purchasers a good and sufficient deed, bill of sale and instrument of
          assignment and transfer of the property sold;

                                       19

<PAGE>

          (iii) the Secured Party is hereby irrevocably appointed the true and
          lawful attorney?in?fact of Debtor in its name and stead, to make all
          necessary deeds, bills of sale and instruments of assignment and
          transfer of the property thus sold and for such other purposes as are
          necessary or desirable to effectuate the provisions (including,
          without limitation, this Section 9) of this Agreement, and for that
          purpose it may execute and deliver all necessary deeds, bills of sale
          and instruments of assignment and transfer, and may substitute one or
          more Persons with like power, Debtor hereby ratifying and confirming
          all that its said attorney, or such substitute or substitutes, shall
          lawfully do by virtue hereof; but if so requested by the Secured Party
          or by any purchaser, Debtor shall ratify and confirm any such sale or
          transfer by executing and delivering to the Secured Party or to such
          purchaser all property, deeds, bills of sale, instruments or
          assignment and transfer and releases as may be designated in any such
          request;

          (iv) all right, title, interest, claim and demand whatsoever, either
          at law or in equity or otherwise, of Debtor of, in and to the property
          so sold shall be divested; such sale shall be a perpetual bar both at
          law and in equity against Debtor, its successors and assigns, and
          against any and all Persons claiming or who may claim the property
          sold or any part thereof from, through or under Debtor, its successors
          or assigns;

          (v) the receipt of the Secured Party or of the officer thereof making
          such sale shall be a sufficient discharge to the purchaser or
          purchasers at such sale for his or their purchase money, and such
          purchaser or purchasers, and his or their assigns or personal
          representatives, shall not, after paying such purchase money and
          receiving such receipt of the Secured Party or of such officer
          therefor, be obliged to see to the application of such purchase money
          or be in any way answerable for any loss, misapplication or
          non-application thereof; and

          (vi) to the extent that it may lawfully do so, and subject to any
          legal requirement that the Secured Party act in a commercially
          reasonable manner, Debtor agrees that it will not at any time insist
          upon, or plead, or in any manner whatsoever claim or take the benefit
          or advantage of, any appraisement, valuation, stay, extension or
          redemption laws, or any law permitting it to direct the order in which
          the Collateral or any part thereof shall be sold, now or at any time
          hereafter in force, which may delay, prevent or otherwise affect the
          performance or enforcement of this Agreement, the Notes or any other
          agreement executed in connection with the Notes whereby Debtor has
          granted any Lien to the Secured Party, and Debtor hereby expressly
          waives all benefit or advantage of any such laws and covenants that it
          will not hinder, delay or impede the execution of any power granted or
          delegated to the Secured Party in this Agreement, but will suffer and
          permit the execution of every such power as though no such laws were
          in force. In the event of any sale of Collateral pursuant to this
          Section, the Secured Party shall, at least 10 days before such sale,
          give Debtor written, telecopied or telex notice of its intention to
          sell.

                                       20

<PAGE>

     Section 10. Application of Moneys.

     (a) Except as otherwise provided herein or in the Notes, all moneys which
the Secured Party shall receive, in accordance with the provisions hereof, shall
be applied (to the extent thereof) in the following manner: First, to the
payment of all costs and expenses reasonably incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Agreement or any of the reasonable expenses and disbursements of the Secured
Party (including, without limitation, the reasonable fees and disbursements of
its counsel and agents); Second, to the payment of all Secured Obligations
arising out of the Notes in accordance with the terms of the Notes and, if not
therein provided, in such order as the Secured Party may determine; and Third,
to the payment of all other Secured Obligations in such order as the Secured
Party may determine.

     (b) If after applying any amounts which the Secured Party has received in
respect of the Collateral any of the Secured Obligations remain unpaid, Debtor
shall continue to be liable for any deficiency, together with interest.

     (c) If after applying any amounts which the Secured Party has received in
respect of the Collateral, there is a surplus, any such surplus shall be paid to
Debtor, its successors or assigns.

     Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses of
whatever kind or nature, including but not limited to the reasonable attorneys'
fees and legal expenses incurred by the Secured Party in connection with
enforcement of its rights under this Agreement, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting, maintaining,
preserving the Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Collateral, shall be borne and paid
by Debtor on written demand by the Secured Party setting forth in reasonable
detail the nature of such expenses and until so paid shall be added to the
principal amount of the Secured Obligations and shall bear interest at the rate
accruing thereon. In addition, Debtor will pay, and indemnify and hold the
Secured Party harmless from and against, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the Collateral,
including (without limitation) claims of patent or trademark infringement and
any claim of unfair competition or anti?trust violation, other than liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements arising as a result of Secured Party's gross
negligence or willful misconduct.

     Section 12. Power of Attorney.

     Concurrently with the execution and delivery hereof, Debtor is executing
and delivering to the Secured Party, in the form of Exhibit 2 hereto, three
originals of a Power of Attorney for the implementation of the assignment, sale
or other disposal of the Collateral, including the Trademarks and Patents
pursuant to this Agreement and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.

                                       21
<PAGE>

     Section 13. Miscellaneous.

     (a) All notices, communications and distributions hereunder shall be in
writing (including telecopied communication) and mailed by certified mail,
telecopied, personally delivered or delivered by Federal Express or other
reputable overnight courier service, if to Debtor addressed to it at its address
set forth opposite its signature below, if to the Secured Party, addressed to it
at its address set forth opposite its signature below, or as to either party at
such other address as shall be designated by such party in a written notice to
such other party complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective (i) if mailed by
certified mail, three days after the date of deposit thereof with the U.S.
Postal Service, properly addressed with postage prepaid, (ii) if telecopied,
upon receipt by the addressee, (iii) if personally delivered, upon such delivery
and (iv) if delivered by overnight courier service, on the business day
following delivery thereof to such courier service in time for next-business-day
delivery.

     (b) No delay on the part of the Secured Party in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by Debtor and the Secured Party. No
notice to or demand on Debtor in any case shall entitle Debtor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Secured Party to any other or further action
in any circumstances without notice or demand.

     (c) The obligations of Debtor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any exercise or
non?exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of the Notes, this Agreement or any other agreement executed in
connection with the Notes whereby Debtor has granted any Lien to the Secured
Party or any other agreement executed in connection with any of the foregoing,
the Secured Obligations or any security for any of the Secured Obligations; or
(ii) any amendment to or modification of any of the foregoing; whether or not
Debtor shall have notice or knowledge of any of the foregoing. The rights and
remedies of the Secured Party herein provided are cumulative and not exclusive
of any rights or remedies which the Secured Party would otherwise have under all
applicable law.

     (d) This Agreement shall be binding upon Debtor and its successors and
assigns and shall inure to the benefit of the Secured Party and its successors
and assigns, except that Debtor may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent of
the Secured Party and any such purported assignment by Debtor shall be void. All
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.

     (e) The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

     (f) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or non-enforceability without invalidating the remaining

                                       22
<PAGE>

provisions hereof, and any such prohibition or non-enforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     (g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

     (h) This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and be governed by the laws of the State
of New York except to the extent that matters of title, or creation, perfection
and priority of the Security Interests created hereby, or procedural issues of
foreclosure are required to be governed by the laws of the state in which the
Collateral, or part thereof, is located.

     (i) It is expressly agreed, anything herein, in the Notes or in any other
agreement or instrument executed in connection with the Notes to the contrary
notwithstanding, that Debtor shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the
Secured Party shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Secured
Party be required or obligated in any manner to perform or fulfill any of the
obligations of Debtor under or pursuant to any or in respect of any Collateral.

     (j) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.

                                    COMDIAL COPORATION, as Debtor

                                    By: ______________________________________
                                        Name: Paul K. Suijk
                                        Title: Chief Financial Officer

                                    COMMONWEALTH ASSOCIATES, L.P.
                                       Agent, as Secured Party

                                    By: Commonwealth Associates Management
                                          Company, Inc., its general partner

                                    By: ______________________________________
                                        Name:  Joseph Wynne
                                        Title: Secretary and CFO

                                       23

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