Document:

FIRST AMENDMENT TO
                               ------------------
                         SWITCHBOARD SERVICES AGREEMENT
                         ------------------------------

     THIS FIRST AMENDMENT is made and entered into as of the first day of April,
2004  (the "Amendment Effective Date"), by and between Switchboard Incorporated,
a  Delaware  corporation  having its principal place of business at 120 Flanders
Road,  Westboro,  MA  01581  ("Switchboard"), and YP Corp., a Nevada corporation
having  its principal place of business at 4840. E. Jasmine #110, Mesa, Arizona,
85205  f/k/a  YP.Net,  Inc.).

     WHEREAS,  Switchboard  and YP Corp. are parties to that certain Switchboard
Services  Agreement  with  an Effective Date of April 1, 2003 (the "Agreement");
and

     WHEREAS,  the  parties  desire  to  amend  the  Agreement.

     NOW,  THEREFORE,  for  good  and  valuable  consideration,  the receipt and
sufficiency  of  which  are hereby acknowledged, Switchboard and YP Corp. hereby
agree  as  follows:

1.   Terms  not  defined  herein  shall have the meaning ascribed to them in the
Agreement.  As  used  herein  the  term  YP.Net  shall  mean  YP  Corp.

2.   Delete  the  last sentence of the definition of Directory Ad in Section 1.0
of  Schedule  A  and  insert  the  following  in  its  place:

     Directory  Ads shall appear in the form of a business Featured Listing, and
     shall  contain  multiple  clickable  elements,  including  (at  all  times)
     business  name  which links either to a YP.Net Merchant website or a YP.Net
     "More  Info"  page (also referred to as a Mini Web Page). Directory Ads may
     also  include  a  web site address link and or other transactional links or
     information,  such  as one (1) line of promotional text to appear under the
     business  name,  which  shall  pertain  to  the  Merchant's  business  or
     information  and shall consist of no more than 70 text characters, business
     address,  business  telephone number, e-mail address, toll free number, fax
     number,  hours  of  operation,  enhanced  data, and may include a link to a
     small  web  page  hosted by YP.Nct ("Mini Web Page"), with placement in the
     Featured  Listing section of the Yellow Pages results screen, substantially
     as  depicted  in  the  screen  shot  attached  hereto  as  EXHIBIT  "A".

3.   Insert  the following new definitions at the end of Section 1.0 of Schedule
A:

     "Directory  Ad  Click  Through"  shall  mean  a  click  by  a  user  of the
      -----------------------------
     Switchboard  Site  or  a  Switchboard  Affiliated  Site  as  reported  by
     Switchboard during a User Session on a clickable element in a Directory Ad.

     "User Session" shall mean the session of activity that a unique user spends
      ------------
     on the Switchboard Site or a Switchboard Affiliated Site beginning when the
     User  first  uses  the Switchboard Site or returns after a previous session
     and  ending  with  the

<PAGE>
     sooner  of  either  the  occurrence of the User leaving the site or after a
     thirty  (30)  minute  period  of  time.

4.   Delete  Section  4.7  of  Schedule  A  and  insert  the  following:

     4.7 DirectoryAdHosting Fees. Commencing as of the Amendment Effective Date,
     YP.Net  shall  pay  Switchboard  a fee of twenty five cents ($.25) for each
     Directory  Ad  Click Through up to a maximum of fifty five thousand dollars
     ($55,000)  per  month  (the  "Monthly Cap"). Any monthly Directory Ad Click
     Throughs  in excess of two hundred twenty thousand (220,000) shall be at no
     charge  to  YP.Net for such month. YP.net shall in all months commencing as
     of  the Amendment Effective Date guarantee and pay to Switchboard a minimum
     monthly  fee  of  twenty  thousand  dollars  ($20,000)  regardless  of  the
     Directory  Ad  Click-Throughs generated during the month. In no event shall
     the  total  monthly  amount  owed by YP.Net to Switchboard hereunder exceed
     fifty  five  thousand dollars ($55,000). For purposes of billing YP.Net for
     Directory  Ad  Click-Throughs, a click by a user on more than one clickable
     element  of  a  Directory Ad during a User Session shall only be counted as
     one  (1)  Directory Ad Click-Through, subject to the following: Switchboard
     shall  use  commercially  reasonable efforts to implement this User session
     technology  by  June 1, 2004, but in the instance that it is not available,
     only user clicks to a Mini Web Page and/or a web site address link shall be
     countable  as  Directory  Ad  Click-Throughs.

5.   Notwithstanding  anything  contained  in  the  Agreement,  subsequent  to
insertion  and  submission of any Directory Ad by YP.Net pursuant to Section 4.3
of  Schedule  A of the Agreement, Switchboard reserves the right to place and/or
move  any  Directory  Ad  in  a Featured Listing "A", "B" or "C" rotation. In no
event  shall  Switchboard  remove  any  Directory  Ad  from the Switchboard Site
(except  for  breach of the Agreement by YP.Net) or move any Directory Ad to the
"All  Listing"  section  or  to any rotation below Featured Listing "C" rotation
(for example, Featured Listing "D" rotation). Ads within the rotational tiers A,
B  and  C are displayed on a random rotational basis within the respective tier.
The  tiers  will  be  displayed  in  a  sequential basis, with all ads in tier A
showing  before  ads  in  tier  B,  which  shows  before  ads  in  tier  C.

6.   On  a  monthly  basis,  Switchboard  shall  provide  YP.Net  with  a report
identifying  the  number  of  times a Directory Ad was displayed to users of the
Switchboard  Site  and  the  number  of  Directory  Ad  Click  Throughs for each
Directory  Ad;  provided, in no event shall such report include in the number of
Directory Ad Click Throughs fraudulent clicks on any Directory Ad, including but
not  limited  to  clicks generated by the use of robots or other automated query
tools  and/or computer generated search requests. In addition, Switchboard shall
invoice  YP.Net  and  YP.Nct  shall  pay  Switchboard  the  amount  equal to the
aggregate number of billable Directory Ad Click Throughs times twenty five cents
($.25)  up  to  the  Monthly  Cap  but in any event no less than twenty thousand
dollars  ($20,000).  Invoices  shall  be  paid  in accordance with the terms and
conditions  of  the  Agreement. Both parties acknowledge that each party's total
monthly  Click  Through  count  may  be  different  from the other party's total
monthly Click-Through count. To the extent discrepancies exist, YP.Net agrees to
pay  Switchboard  the  undisputed  portion  of  the  amount due for the month in
question  and  the  parties  agree  to  the  following  dispute  resolution

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<PAGE>
process  with  respect  to  the disputed portion of the amount due: In any month
where  the  Switchboard Click-Through count and the YP.Net's Click-Through count
vary  less  than  or  equal  to  10%, Company shall pay Switchboard based on the
Switchboard  Click-Through  count.  In  any  month  where  the  Switchboard
Click-Through  count  and  the YP.Net Click-Through count vary by more than 10%,
the  parties  agree  to expeditiously reconcile the Click-Through counts. In the
event  of such discrepancy, the matter shall first be promptly escalated to each
party's  chief  financial  officer in an attempt to settle such dispute. If such
chief financial officers are unable to resolve the dispute, it shall be promptly
referred  to the Chief Executive Officers or other senior level appointee of the
respective  companies who shall attempt to resolve such dispute. Notwithstanding
the  foregoing,  in  the  event  that  both  parties in good faith are unable to
resolve  such  a  dispute  within thirty (30) days of the calendar month end for
which such dispute results from, the parties shall submit to binding arbitration
by  one arbitrator. The arbitration shall be conducted in Boston, Massachusetts,
in  accordance  with  the  rules,  regulations,  and  procedures of the American
Arbitration  Association,  and the decision of the arbitrator shall be final and
binding  on  both  parties.

7.   Within  30  days  from  the Amendment Effective Date, YP.Net agrees that no
page  on  a YP.Net Site to which a user of the Switchboard Site or a Switchboard
Affiliated  Site  is  referred  via  a clickable element on a Directory Ad shall
contain  a  yellow  pages  search  form  similar  to  the  Switchboard  Site.

8.   The Agreement, as amended by this Amendment, shall have a term of 13 months
from  the  Amendment  Effective  Date through May 1, 2005 and may be extended by
written  mutual  agreement of the parties. Notwithstanding the foregoing, YP.Net
may terminate the Agreement at any time commencing after July 31, 2004, provided
that  YP.Net delivers to Switchboard written notice of such termination election
at  least  forty-five  (45)  days  in  advance  of  the  effective  date of such
termination.

9.   Neither  party  shall  issue  any  press  release  regarding  the terms and
conditions  of this Amendment or the extension of the Agreement or the terms and
conditions  hereof.

10.  Except as amended herein, the Agreement remains in full force and effect as
originally  written.  In  the  event  of  any  conflict  between  the  terms and
conditions  set  forth  herein and the Agreement, this Amendment shall govern in
all  respects.

     IN  WITNESS  WHEREOF,  Switchboard  and  Company  have  caused  this  First
Amendment  to be executed by their duly authorized representative as of the date
first  set  forth  above.

SWITCHBOARD  INCORPORATED                             YP  CORP.

By:______________________                             By:______________________
Name:____________________                             Name:____________________
Title:___________________                             Title:___________________

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<PAGE>[GRAPHIC OMITTED]
Merrill Lynch                                WCMA(R) LOAN AND SECURITY AGREEMENT
================================================================================

WCMA  LOAN  AND  SECURITY AGREEMENT NO. 412-02104 ("Loan Agreement") dated as of
April 13, 2004, between YP.NET, INC., a corporation organized and existing under
the  laws  of the State of Nevada having its principal office at 4840 E. Jasmine
Street,  Suite  105,  Mesa,  AZ  85205  ("Customer"), and MERRILL LYNCH BUSINESS
FINANCIAL  SERVICES INC., a corporation organized and existing under the laws of
the  State  of Delaware having its principal office at 222 North LaSalle Street,
Chicago,  IL  60601  ("MLBFS").

Pursuant  to  that  certain  WORKING CAPITAL MANAGEMENT(R) ACCOUNT AGREEMENT NO.
412-02104  and the accompanying Program Description (as the same may be, or have
been,  amended, modified or supplemented, the "WCMA Agreement") between Customer
and  MLBFS'  affiliate,  MERRILL  LYNCH,  PIERCE,  FENNER  &  SMITH INCORPORATED
("MLPF&S"),  Customer  opened,  or  shall  prior  to the Activation Date open, a
Working  Capital Management Account pursuant to the "WCMA Service" and the "WCMA
Program" described in the WCMA Agreement and any documents incorporated therein.
The  WCMA  Agreement  is  by  this  reference  incorporated as a part hereof. In
conjunction  therewith  and  as part of the WCMA Program, Customer has requested
that  MLBFS  provide,  and  subject to the terms and conditions herein set forth
MLBFS  has  agreed  to  provide,  a  commercial  line  of  credit  for Customer.

Accordingly, and in consideration of the premises and of the mutual covenants of
the  parties  hereto,  Customer  and  MLBFS  hereby  agree  as  follows:

                             ARTICLE I. DEFINITIONS

1.1  SPECIFIC  TERMS.  In  addition  to  terms  defined  elsewhere  in this Loan
Agreement,  when  used  herein  the  following  terms  shall  have the following
meanings:

"Activation Date" shall mean the date upon which MLBFS shall cause the WCMA Line
of  Credit  to  be  fully activated under MLPF&S' computer system as part of the
WCMA  Program.

"Bankruptcy  Event"  shall mean any of the following: (i) a proceeding under any
bankruptcy,  reorganization,  arrangement,  insolvency,  readjustment  of  debt,
liquidation, winding up or receivership law or statute shall be commenced, filed
or  consented to by any Credit Party; or (ii) any such proceeding shall be filed
against  any  Credit  Party and shall not be dismissed or withdrawn within sixty
(60)  days  after  filing;  or  (iii)  any  Credit  Party  shall  make a general
assignment  for  the  benefit  of  creditors;  or  (iv)  any  Credit Party shall
generally fail to pay or admit in writing its inability to pay its debts as they
become  due;  or  (v)  any  Credit  Party  shall  be  adjudicated  a bankrupt or
insolvent;  or  (vi)  any  Credit Party shall take advantage of any other law or
procedure  for the relief of debtors or shall take any action for the purpose of
or  with  a  view  towards  effecting any of the foregoing; or (vii) a receiver,
trustee, custodian, fiscal agent or similar official for any Credit Party or for
any  substantial  part  of  any  of their respective property or assets shall be
sought  by  such  Credit  Party  or  appointed.

"Business Day" shall mean any day other than a Saturday, Sunday, federal holiday
or  other  day  on  which  the  New  York  Stock  Exchange  is regularly closed.

"Business  Guarantor"  shall  mean every Guarantor that is not a natural person.

"Certificate  of  Compliance"  shall  mean,  as  applicable,  that duly executed
certificate,  substantially  the  same  form as Exhibit B attached hereto to the
extent  such  certificate shall be applicable, of the president, chief financial
officer or chief executive officer of Customer, certifying as to the matters set
forth  in  such  certificate.

"Collateral"  shall mean the WCMA Account, all Accounts, Chattel Paper, Contract
Rights,  Inventory,  Equipment, Fixtures, General Intangibles, Deposit Accounts,
Documents,  Instruments,  Investment  Property and Financial Assets of Customer,
howsoever  arising,  whether  now  owned  or  existing  or hereafter acquired or
arising,  and wherever located; together with all parts thereof (including spare
parts), all accessories and accessions thereto, all books and records (including
computer  records)  directly  related  thereto, all proceeds thereof (including,
without  limitation,  proceeds  in the form of Accounts and insurance proceeds),
and  the  additional  collateral  described  in  Section  3.6  (b)  hereof.

"Commitment  Expiration  Date"  shall  mean  May  5,2004.

"Credit  Party"  and  "Credit Parties" shall mean, individually or collectively,
the  Customer,  all  Guarantors  and  all  Pledgors.

"Default"  shall  mean  either  an  "Event of Default" as defined in Section 3.5
hereof,  or  an event which with the giving of notice, passage of time, or both,
would  constitute  such  an  Event  of  Default.

"Default  Rate"  shall  mean an annual interest rate equal to the lesser of: (i)
two  percentage points over the Interest Rate; or (ii) the highest interest rate
allowed  by  applicable  law.

"Event  of  Loss"  shall  mean the occurrence whereby any tangible Collateral is
damaged  beyond  repair,  lost,  totally  destroyed  or  confiscated.

"Excess  Interest"  shall  mean  any  amount  or rate of interest (including the
Default  Rate and, to the extent that they may be deemed to constitute interest,
any  prepayment  fees, late charges and other fees and charges) payable, charged
or  received  in  connection  with  any  of the Loan Documents which exceeds the
maximum  amount  or  rate  of  interest  permitted  under  applicable  law.

"GAAP"  shall mean the generally accepted accounting principles in effect in the
United  States  of  America  from  time  to  time.

                                        1
<PAGE>
"General  Funding Conditions" shall mean each of the following conditions to any
WCMA  Loan by MLBFS hereunder: (i) Customer shall have validly subscribed to and
continued  to  maintain the WCMA Account with MLPF&S, and the WCMA Account shall
then be reflected as an active "commercial" WCMA Account (i.e., one with line of
credit  capabilities)  on MLPF&S' WCMA computer system; (ii) no Default or Event
of Default shall have occurred and be continuing or would result from the making
of  any WCMA Loan hereunder by MLBFS; (iii) there shall not have occurred and be
continuing any material adverse change in the business or financial condition of
any  Credit  Party; (iv) all representations and warranties of all of the Credit
Parties herein or in any of the Loan Documents shall then be true and correct in
all material respects; (v) MLBFS shall have received this Loan Agreement and all
of the other Loan Documents duly executed and fled or recorded where applicable,
all  of  which  shall be in form and substance satisfactory to MLBFS; (vi) MLBFS
shall  have  received  evidence  satisfactory  to  it as to the ownership of the
Collateral  and  the  perfection  and  priority  of  MLBFS'  liens  and security
interests  thereon,  as well as the ownership of and the perfection and priority
of  MLBFS'  liens  and  security  interests  on  any  other  collateral  for the
Obligations  furnished  pursuant to any of the Loan Documents; (vii) MLBFS shall
have received evidence satisfactory to it of the insurance required hereby or by
any of the Loan Documents; and (viii) any additional conditions specified in the
"WCMA  Line  of  Credit  Approval"  letter executed by MLBFS with respect to the
transactions  contemplated  hereby  shall  have  been met to the satisfaction of
MLBFS.

"Guarantor"  shall  mean  each Person obligated under a guaranty, endorsement or
other  undertaking  by which such Person guarantees or assumes responsibility in
any  capacity  for  the  payment  or  performance  of  any  of  the Obligations.

"Initial  Maturity  Date"  shall mean the first date upon which the WCMA Line of
Credit  will expire (subject to renewal in accordance with the terms hereof); to
wit:  April  30,2005.

"Individual  Guarantor"  shall  mean  each  Guarantor  who  is a natural person.

"Interest  Due  Date"  shall  mean the first Business Day of each calendar month
during  the  term  hereof.

"Interest  Rate"  shall  mean a variable per annum rate of interest equal to the
sum  of  3.00% plus the One-Month LIBOR. "One-Month LIBOR" shall mean, as of the
date of any determination, the interest rate then most recently published in the
"Money  Rates"  section  of  The  Wall  Street  Journal  as the one-month London
Interbank  Offered  Rate.  The  Interest  Rate  will  change  as  of the date of
publication  in  The  Wall Street Journal of a One-Month LIBOR that is different
from  that  published  on  the  preceding Business Day, if more than one rate is
published,  then  the  highest  of such rates. In the event that The Wall Street
Journal  shall,  for  any  reason, fail or cease to publish the One-Month LIBOR,
MLBFS  will  choose  a reasonably comparable index or source to use as the basis
for  the  Interest  Rate.

"Line  Fee"  shall  mean a fee of $10,000.00 payable periodically by Customer to
MLBFS  in  accordance  with  the  provisions  of  Section  2.2  hereof.

"Loan  Documents" shall mean this Loan Agreement, any indenture, any guaranty of
any  of  the  Obligations  and  all  other  security  and  other  instruments,
assignments, certificates, certifications and agreements of any kind relating to
any  of  the Obligations, whether obtained, authorized, authenticated, executed,
sent  or  received  concurrently  with  or subsequent to this Loan Agreement, or
which  evidence  the  creation,  guaranty  or  collateralization  of  any of the
Obligations  or  the  granting or perfection of liens or security interests upon
any  Collateral  or  any  other  collateral  for  the Obligations, including any
modifications,  amendments  or  restatements  of  the  foregoing.

"Location  of  Tangible Collateral" shall mean the address of Customer set forth
at  the  beginning  of  this  Loan Agreement, together with any other address or
addresses  set  forth  on  an  exhibit  hereto  as  being a Location of Tangible
Collateral.

"Maturity  Date"  shall  mean the date of expiration of the WCMA Line of Credit.

"Maximum  WCMA  Line  of  Credit"  shall  mean  $1,000,000.00.

"Obligations"  shall mean all liabilities, indebtedness and other obligations of
Customer to MLBFS, howsoever created, arising or evidenced, whether now existing
or  hereafter arising, whether direct or indirect, absdute or contingent, due or
to  become  due, primary or secondary or joint or several, and, without limiting
the  generality  of  the  foregoing,  shall  include principal, accrued interest
(including without limitation interest accruing after the filing of any petition
in  bankruptcy),  all  advances  made  by  or  on behalf of MLBFS under the Loan
Documents,  collection  and other costs and expenses incurred by or on behalf of
MLBFS,  whether  incurred  before  or  after judgment and all present and future
liabilities, indebtedness and obligations of Customer under this Loan Agreement.

"Permitted  Liens"  shall  mean  with  respect  to the Collateral: (i) liens for
current taxes not yet due and payable, other non-consensual liens arising in the
ordinary  course  of  business  for  sums  not due, and, if MLBFS' rights to and
interest  in  the  Collateral are not materially and adversely affected thereby,
any  such  liens for taxes or other non-consensual liens arising in the ordinary
course  of  business  being  contested in good faith by appropriate proceedings;
(ii)  liens  in  favor  of  MLBFS; (iii) liens which will be discharged with the
proceeds  of the initial WCMA Loan; and (iv) any other liens expressly permitted
in  writing  by  MLBFS.

"Person"  shall  mean  any  natural  person  and  any  corporation,  partnership
(general,  limited or otherwise), limited liability company, trust, association,
joint  venture,  governmental body or agency or other entity having legal status
of  any  kind.

"Pledger"  shall  mean  each  Person  who  at  any  time provides collateral, or
otherwise  now  or  hereinafter agrees to grant MLBFS a security interest in any
assets  as  security  for  Customer's  Obligations.

"Renewal Year" shall mean and refer to the 12-month period immediately following
the  Initial  Maturity  Date  and  each  12-month  period  thereafter.

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<PAGE>
"WCMA Account" shall mean and refer to the Working Capital Management Account of
Customer  with  MLPF&S  identified  as  Account  No. 412-02104 and any successor
Working  Capital  Management  Account  of  Customer  with  MLPF&S.

"WCMA  Line  of  Credit' shall mean a line of credit funded by MLBFS through the
WCMA  Account.

"WCMA  Loan'  shall  mean  each  advance  made  by  MLBFS  pursuant to this Loan
Agreement.

"WCMA Loan Balance' shall mean an amount equal to the aggregate unpaid principal
amount  of  all  WCMA  Loans.

"UCC"  shall  mean  the  Uniform  Commercial  Code  of  Illinois as in effect in
Illinois  from  time  to  time.

1.2  OTHER TERMS. Except as otherwise defined herein: (i) all terms used in this
Loan Agreement which are defined in the UCC shall have the meanings set forth in
the  UCC,  and  (ii) capitalized terms used herein which are defined in the WCMA
Agreement  (including,  without  limitation,  "Money  Accounts',  "Minimum Money
Accounts  Balance', and "WCMA Directed Reserve Program') shall have the meanings
set  forth  in the WCMA Agreement, and (iii) accounting terms not defined herein
shall  have  the  meaning  ascribed  to  them  in  GAAP.

1.3 UCC FILING. Customer hereby authorizes MLBFS to file a record or records (as
defined  or  otherwise  specified under the UCC), including, without limitation,
financing  statements, in all jurisdictions and with all filing offices as MLBFS
may determine, in its sole discretion, are necessary or advisable to perfect the
security  interest  granted  to  MLBFS  herein.  Such  financing  statements may
describe the Collateral in the same manner as described herein or may contain an
indication  or  description  of  collateral  that describes such property in any
other  manner  as  MLBFS  may  determine,  in its sole discretion, is necessary,
advisable  or  prudent  to ensure the perfection of the security interest in the
Collateral  granted  to  the  MLBFS  herein.

                       ARTICLE II. THE WCMA LINE OF CREDIT

2.1 WCMA PROMISSORY NOTE. FOR VALUE RECEIVED, Customer hereby promises to pay to
the  order  of  MLBFS,  at  the  times  and in the manner set forth in this Loan
Agreement,  or  in  such  other  manner and at such place as MLBFS may hereafter
designate in writing, the following: (a) on the Maturity Date, or if earlier, on
the  date  of termination of the WCMA Line of Credit, the WCMA Loan Balance; (b)
interest  at  the  Interest Rate (or, if applicable, at the Default Rate) on the
outstanding  WCMA Loan Balance, from and including the date on which the initial
WCMA  Loan  is made until the date of payment of all WCMA Loans in full; and (c)
on  demand,  all  other sums payable pursuant to this Loan Agreement, including,
but  not  limited  to,  the periodic Line Fee. Except as otherwise expressly set
forth  herein,  Customer  hereby waives presentment, demand for payment, protest
and  notice  of  protest,  notice of dishonor, notice of acceleration, notice of
intent  to  accelerate  and all other notices and formalities in connection with
this  WCMA  Promissory  Note  and  this  Loan  Agreement.

2.2 WCMA LOANS
(a) ACTIVATION DATE. Provided that: (i) the Commitment Expiration Date shall not
then  have occurred, and (ii) Customer shall have subscribed to the WCMA Program
and its subscription to the WCMA Program shall then be in effect, the Activation
Date shall occur on or promptly after the date, following the acceptance of this
Loan  Agreement  by MLBFS at its office in Chicago, Illinois, upon which each of
the  General  Funding  Conditions  shall  have  been  met  or  satisfied  to the
reasonable  satisfaction  of  MLBFS.  No activation by MLBFS of the WCMA Line of
Credit  for a nominal amount shall be deemed evidence of the satisfaction of any
of  the  conditions  herein  set  forth,  or  a  waiver  of  any of the terms or
conditions  hereof. Customer hereby authorizes MLBFS to pay out of and charge to
Customer's  WCMA Account on the Activation Date any and all amounts necessary to
fully  pay off any bank or other financial institution having a lien upon any of
the  Collateral  other  than  a  Permitted  Lien.

(b)  WCMA  LOANS.  Subject to the terms and conditions hereof, during the period
from and after the Activation Date to the first to occur of the Maturity Date or
the date of termination of the WCMA Line of Credit pursuant to the terms hereof,
and  in  addition  to  WCMA Loans automatically made to pay accrued interest, as
hereafter  provided:  (i) MLBFS will make WCMA Loans to Customer in such amounts
as  Customer  may from time to time request in accordance with the terms hereof,
up  to  an  aggregate  outstanding amount not to exceed the Maximum WCMA Line of
Credit,  and  (ii)  Customer may repay any WCMA Loans in whole or in part at any
time,  and  request  a  re-borrowing  of  amounts  repaid  on a revolving basis.
Customer  may request such WCMA Loans by use of WCMA Checks, FTS, Visa* charges,
wire  transfers, or such other means of access to the WCMA Line of Credit as may
be permitted by MLBFS from time to time; it being understood that so long as the
WCMA  Line of Credit shall be in effect, any charge or debit to the WCMA Account
which  but  for  the  WCMA  Line  of  Credit  would  under the terms of the WCMA
Agreement  result  in  an overdraft, shall be deemed a request by Customer for a
WCMA  Loan.

(c)  CONDITIONS OF WCMA LOANS. Notwithstanding the foregoing, MLBFS shall not be
obligated to make any WCMA Loan, and may without notice refuse to honor any such
request  by  Customer, if at the time of receipt by MLBFS of Customer's request:
(i)  the making of such WCMA Loan would cause the Maximum WCMA Line of Credit to
be  exceeded; or (ii) the Maturity Date shall have occurred, or the WCMA Line of
Credit shall have otherwise been terminated in accordance with the terms hereof;
or (iii) Customer's subscription to the WCMA Program shall have been terminated;
or  (iv)  an event shall have occurred and be continuing which shall have caused
any  of  the  General  Funding Conditions to not then be met or satisfied to the
reasonable satisfaction of MLBFS. The making by MLBFS of any WCMA Loan at a time
when any one or more of said conditions shall not have been met shall not in any
event  be  construed  as  a  waiver  of  said  condition or conditions or of any
Default,  and shall not prevent MLBFS at any time thereafter while any condition
shall  not  have  been  met from refusing to honor any request by Customer for a
WCMA  Loan.

(d)  LIMITATION  OF LIABILITY. MLBFS shall not be responsible, and shall have no
liability  to  Customer or any other party, for any delay or failure of MLBFS to
honor  any  request  of Customer for a WCMA Loan or any other act or omission of
MLBFS,  MLPF&S  or  any  of their affiliates due to or resulting from any system
failure, error or delay in posting or other clerical error, loss of power, fire,
Act  of God or other cause beyond the reasonable control of MLBFS, MLPF&S or any
of  their  affiliates unless directly arising out of the willful wrongful act or
active  gross negligence of MLBFS. In no event shall MLBFS be liable to Customer
or  any other party for any incidental or consequential damages arising from any
act  or  omission by MLBFS, MLPF&S or any of their affiliates in connection with
the  WCMA  Line  of  Credit  or  this  Loan  Agreement.

                                        3
<PAGE>
(e)  INTEREST,  (i)  An  amount equal to accrued Interest on the dally WCMA Loan
Balance  shall  be  payable  by  Customer  monthly  on  each  Interest Due Date,
commencing  with  the  first Interest Due Date after the Activation Date. Unless
otherwise  hereafter directed in writing by MLBFS on or after the first to occur
of  the  Maturity  Date  or  the  date of termination of the WCMA Line of Credit
pursuant to the terms hereof, such interest will be automatically charged to the
WCMA  Account  on  the applicable Interest Due Date, and, to the extent not paid
with free credit balances or the proceeds of sales of any Money Accounts then in
the  WCMA  Account,  as hereafter provided, paid by a WCMA Loan and added to the
WCMA  Loan Balance. All interest shall be computed for the actual number of days
elapsed  on  the  basis  of  a  year  consisting  of  360  days.

(ii)  Upon the occurrence and during the continuance of any Default, but without
limiting  the  rights  and  remedies  otherwise  available to MLBFS hereunder or
waiving  such  Default,  the interest payable by Customer hereunder shall at the
option  of  MLBFS  accrue  and be payable at the Default Rate. The Default Rate,
once  implemented,  shall  continue  to apply to the Obligations under this Loan
Agreement  and  be payable by Customer until the date MLBFS gives written notice
that  such  Default  has  been  cured  to  the  satisfaction  of  MLBFS.

(iii)  Notwithstanding  any  provision  to  the  contrary  in  any  of  the Loan
Documents,  no  provision of any of the Loan Documents shall require the payment
or  permit the collection of Excess Interest. If any Excess Interest is provided
for,  or  is  adjudicated  as  being provided for, in any of the Loan Documents,
then:  (A)  Customer  shall not be obligated to pay any Excess Interest; and (B)
any  Excess  Interest that MLBFS may have received hereunder or under any of the
Loan  Documents  shall,  at  the  option of MLBFS, be either applied as a credit
against  the  then  unpaid  WCMA  Loan Balance or refunded to the payor thereof.

(f)  PAYMENTS.  All  payments  required or permitted to be made pursuant to this
Loan  Agreement  shall  be  made  in  lawful  money of the United States. Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may be
made  by  the delivery of checks (other than WCMA Checks), or by means of FTS or
wire transfer of funds (other than funds from the WCMA Line of Credit) to MLPF&S
for  credit  to  Customer's  WCMA  Account. Notwithstanding anything in the WCMA
Agreement  to  the  contrary, Customer hereby irrevocably authorizes and directs
MLPF&S  to  apply  available  free  credit  balances  in the WCMA Account to the
repayment  of  the WCMA Loan Balance prior to application for any other purpose.
Payments  to  MLBFS from funds in the WCMA Account shall be deemed to be made by
Customer  upon  the  same  basis  and  schedule  as funds are made available for
investment  in  tie  Money  Accounts  in  accordance  with the terms of the WCMA
Agreement.  All  funds  received  by MLBFS from MLPF&S pursuant to the aforesaid
authorization  shall  be applied by MLBFS to repayment of the WCMA Loan Balance.
The acceptance by or on behalf of MLBFS of a check or other payment for a lesser
amount  than  shall  be  due  from  Customer,  regardless  of any endorsement or
statement  thereon  or  transmitted therewith, shall not be deemed an accord and
satisfaction  or  anything  other than a payment on account, and MLBFS or anyone
acting  on  behalf  of  MLBFS  may  accept  such  check or other payment without
prejudice  to  the  rights  of  MLBFS  to recover the balance actually due or to
pursue  any  other  remedy  under this Loan Agreement or applicable law for such
balance.  All  checks  accepted  by or on behalf of MLBFS in connection with the
WCMA  Line  of  Credit  are  subject  to  final  collection.

(g)  IRREVOCABLE  INSTRUCTIONS  TO  MLPF&S.  In  order to minimize the WCMA Loan
Balance, Customer hereby irrevocably authorizes and directs MLPF&S, effective on
the  Activation  Date  and  continuing thereafter so long as this Loan Agreement
shall  be  in  effect: (i) to immediately and prior to application for any other
purpose  pay  to  MLBFS  to the extent of any WCMA Loan Balance or other amounts
payable  by  Customer  hereunder all available free credit balances from time to
time  in  the  WCMA Account; and (ii) if such available free credit balances are
insufficient  to pay the WCMA Loan Balance and such other amounts, and there are
in  the  WCMA  Account at any time any investments in Money Accounts (other than
any  investments  constituting any Minimum Money Accounts Balance under the WCMA
Directed  Reserve Program), to immediately liquidate such investments and pay to
MLBFS  to  the  extent  of  any  WCMA  Loan  Balance  and such other amounts the
available  proceeds  from  the  liquidation  of  any  such  Money  Accounts.

(h) LATE CHARGE. Any payment or deposit required to be made by Customer pursuant
to  the  Loan  Documents not paid or made within ten (10) days of the applicable
due  date shall be subject to a late charge in an amount equal to the lesser of:
(a)  5% of the overdue amount, or (b) the maximum amount permitted by applicable
law. Such late charge shall be payable on demand, or, without demand, may in the
sole discretion of MLBFS be paid by a Subsequent WCMA Loan and added to the WCMA
Loan  Balance  in  the  same manner as provided herein for accrued interest with
respect  to  the  WCMA  Line  of  Credit.

(i)  STATEMENTS.  MLPF&S  will include in each monthly statement it issues under
the  WCMA  Program  information  with  respect  to  WCMA Loans and the WCMA Loan
Balance.  Any  questions that Customer may have with respect to such information
should  be directed to MLBFS; and any questions with respect to any other matter
in  such statements or about or affecting the WCMA Program should be directed to
MLPF&S.

(j)  USE  OF  WCMA  LOAN  PROCEEDS.  The proceeds of each WCMA Loan initiated by
Customer  shall  be  used by Customer solely for working capital in the ordinary
course  of  its business, or, with the prior written consent of MLBFS, for other
lawful business purposes of Customer not prohibited hereby. CUSTOMER AGREES THAT
UNDER  NO  CIRCUMSTANCES  WILL  THE  PROCEEDS  OF ANY WCMA LOAN BE USED: (I) FOR
PERSONAL,  FAMILY  OR  HOUSEHOLD  PURPOSES  OF ANY PERSON WHATSOEVER, OR (II) TO
PURCHASE,  CARRY  OR  TRADE  IN  SECURITIES, OR REPAY DEBT INCURRED TO PURCHASE,
CARRY OR TRADE IN SECURITIES, WHETHER IN OR IN CONNECTION WITH THE WCMA ACCOUNT,
ANOTHER  ACCOUNT  OF CUSTOMER WITH MLPF&S OR AN ACCOUNT OF CUSTOMER AT ANY OTHER
BROKER  OR  DEALER  IN  SECURITIES,  OR  (III)  UNLESS OTHERWISE CONSENTED TO IN
WRITING BY MLBFS, TO PAY ANY AMOUNT TO MERRILL LYNCH AND CO., INC. OR ANY OF ITS
SUBSIDIARIES,  OTHER THAN MERRILL LYNCH BANK USA, MERRILL LYNCH BANK & TRUST CO.
OR  ANY  SUBSIDIARY  OF EITHER OF THEM (INCLUDING MLBFS AND MERRILL LYNCH CREDIT
CORPORATION).

(k) RENEWAL AT OPTION OF MLBFS; RIGHT OF CUSTOMER TO TERMINATE. MLBFS may at any
time,  in  its  sole  discretion  and at its sole option, renew the WCMA Line of
Credit  for  one  or  more  Renewal  Years or extend the Maturity Date; it being
understood, however, that no such renewal or extension shall be effective unless
set forth in a writing executed by a duly authorized representative of MLBFS and
delivered  to Customer. Unless any such renewal or extension is accompanied by a
proposed  change  in  tine  terms  of  the  WCMA  Line of Credit (other than the
extension  of  the  Maturity  Date),  no  Customer  approval  shall be required.
Customer  shall, however, have the right to terminate the WCMA Line of Credit at
any  time  upon written notice to MLBFS. Concurrently with any such termination,
Customer  shall  pay  to  MLBFS  the  entire  WCMA  Loan  Balance  and all other
Obligations.

                                        4
<PAGE>
(l)  LINE FEES, (i) In consideration of the extension of the WCMA Line of Credit
by  MLBFS  to Customer during the period from the Activation Date to the Initial
Maturity Date, Customer has paid or shall pay the Line Fee to MLBFS. If the Line
Fee  has not heretofore been paid by Customer, Customer hereby authorizes MLBFS,
at  its  option,  to either cause the Line Fee to be paid on the Activation Date
with a WCMA Loan, or invoice Customer for such Line Fee (in which event Customer
shall  pay  said  fee  within 5 Business Days after receipt of such invoice). No
delay  in  the  Activation Date, howsoever caused, shall entitle Customer to any
rebate  or reduction in the Line Fee or to any extension of the Initial Maturity
Date.

(ii)  Customer  shall pay to MLBFS an additional Line Fee for each Renewal Year,
or  an  extension fee for any extension of the Maturity Date (each extension fee
shall  be  equal  to  the  pro  rata amount of the Line Fee corresponding to the
length  of  the  extension  period).  In  connection  therewith, Customer hereby
authorizes MLBFS, at its option, to either cause each such fee to be paid with a
WCMA Loan on or at any time after the first Business Day of such Renewal Year or
extension  period, as applicable, or invoiced to Customer at such time (in which
event  Customer  shall pay such Line Fee within 5 Business Days after receipt of
such  invoice).  Each Line Fee and extension fee shall be deemed fully earned by
MLBFS  on  the  date payable by Customer, and no termination of the WCMA Line of
Credit,  howsoever caused, shall entitle Customer to any rebate or refund of any
portion  of  such  fee;  provided, however, that if Customer shall terminate the
WCMA Line of Credit not later than 5 Business Days after the receipt by Customer
of  notice from MLBFS of a renewal of the WCMA Line of Credit, Customer shall be
entitled  to  a  refund of any Line Fee charged by MLBFS for the ensuing Renewal
Year.

                         ARTICLE III. GENERAL PROVISIONS

3.1 REPRESENTATIONS AND WARRANTIES

Customer represents and warrants to MLBFS that:

(a)  ORGANIZATION  AND  EXISTENCE. Customer is a corporation, duly organized and
validly  existing  in good standing under tie laws of the State of Nevada and is
qualified  to  do  business  and  in good standing in each other state where the
nature  of  its  business  or  the  property owned by it make such qualification
necessary;  and,  where  applicable,  each Business Guarantor is duly organized,
validly  existing  and  in  good  standing  under  the  laws of the state of its
formation  and  is  qualified  to do business and in good standing in each other
state  where  the  nature  of its business or the property owned by it make such
qualification  necessary.

(b)  EXECUTION,  DELIVERY  AND  PERFORMANCE. Each Credit Party has the requisite
power  and  authority to enter into and perform the Loan Documents. The Customer
holds  all  necessary  permits,  licenses,  certificates  of occupancy and other
governmental  authorizations  and approvals required in order to own and operate
the  Customer's business. The execution, delivery and performance by Customer of
this Loan Agreement and by each of the other Credit Parties of such of the other
Loan  Documents  to  which  it  is a party: (i) have been duly authorized by all
requisite  action,  (ii)  do  not and will not violate or conflict with any law,
order  or  other governmental requirement, or any of the agreements, instruments
or  documents which formed or govern any of the Credit Parties, and (iii) do not
and  will not breach or violate any of the provisions of, and will not result in
a default by any of the Credit Parties under, any other agreement, instrument or
document  to  which  it  is  a  party  or  is  subject.

(c)  NOTICES AND APPROVALS. Except as may have been given or obtained, no notice
to  or  consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by any Credit Party of
such  of  this  Loan  Agreement  and  the Loan Documents to which it is a party.

(d)  ENFORCEABILITY. The Loan Documents to which any Credit Party is a party are
the  respective  legal,  valid  and  binding  obligations  of such Credit Party,
enforceable  against  it  or  them, as the case may be, in accordance with their
respective  terms,  except  as  enforceability  may be limited by bankruptcy and
other  similar  laws  affecting  the rights of creditors generally or by general
principles  of  equity.

(e)  COLLATERAL.  Except  for  priorities  afforded  to any Permitted Liens: (i)
Customer  has  good  and  marketable  title  to the Collateral, (ii) none of the
Collateral  is  subject to any lien, encumbrance or security interest, and (iii)
upon  the  filing  of  all  Uniform  Commercial  Code  financing  statements
authenticated or otherwise authorized by Customer with respect to the Collateral
in  the  appropriate  jurisdiction(s)  and/or the completion of any other action
required  by  applicable  law to perfect its liens and security interests, MLBFS
will have valid and perfected first liens and security interests upon all of the
Collateral.

(f)  FINANCIAL  STATEMENTS.  Except  as expressly set forth in Customer's or any
Business  Guarantor's financial statements, all financial statements of Customer
and  each Business Guarantor furnished to MLBFS have been prepared in conformity
with  generally  accepted  accounting principles, consistently applied, are true
and correct in all material respects, and fairly present the financial condition
of  it  as  at such dates and the results of its operations for the periods then
ended (subject, in the case of interim unaudited financial statements, to normal
year-end  adjustments); and since the most recent date covered by such financial
statements,  there  has  been  no  material adverse change in any such financial
condition  or  operation.  All  financial  statements  furnished to MLBFS of any
Guarantor  other  than a Business Guarantor are true and correct in all material
respects  and  fairly  represent  such Guarantor's financial condition as of the
date  of  such  financial  statements,  and  since  the most recent date of such
financial  statements,  there  has  been  no  material  adverse  change  in such
financial  condition.

(g)  LITIGATION;  COMPLIANCE  WITH  ALL  LAWS.  No  litigation,  arbitration,
administrative  or  governmental proceedings are pending or, to the knowledge of
Customer,  threatened  against  any  Credit  Party,  which  would,  if adversely
determined,  materially and adversely affect (i) such Credit Party's interest in
the  Collateral  or the liens and security interests of MLBFS hereunder or under
any  of  the Loan Documents, or (ii) the financial condition of any Credit Party
or  its continued operations. Each Credit Party is in compliance in all material
respects  with  all  laws, regulations, requirements and approvals applicable to
such  Credit  Party.

(h)  TAX  RETURNS.  All  federal,  state  and  local  tax  returns,  reports and
statements  required  to  be  filed by any Credit Party have been filed with the
appropriate  governmental  agencies and all taxes due and pay able by any Credit
Party  have  been  timely  paid  (except  to the extent that any such failure to

                                        5
<PAGE>
file  or  pay  will not materially and adversely affect (i) either the liens and
security  interests  of MLBFS hereunder or under any of the Loan Documents, (ii)
the financial condition of any Credit Party, or (iii) its continued operations).

(i) COLLATERAL LOCATION. All of the tangible Collateral is located at a Location
of  Tangible  Collateral.

(j) NO DEFAULT. No "Default" or "Event of Default" (each as defined in this Loan
Agreement  or  any  of the other Loan Documents) has occurred and is continuing.

(k)  NO  OUTSIDE  BROKER.  Except for employees of MLBFS, MLPF&S or one of their
affiliates,  Customer  has  not in connection with the transactions contemplated
hereby  directly  or indirectly engaged or dealt with, and was not introduced or
referred  to  MLBFS  by,  any  broker  or  other  loan  arranger.

Each  of  the foregoing representations and warranties: (i) has been and will be
relied  upon  as  an inducement to MLBFS to provide the WCMA Line of Credit, and
(ii) is continuing and shall be deemed remade by Customer concurrently with each
request  for  a  WCMA  Loan.

3.2  FINANCIAL  AND  OTHER  INFORMATION

(a)  Customer shall furnish or cause to be furnished to MLBFS during the term of
this  Loan  Agreement  a1!  of  the  following:

(i)  CERTIFICATE  OF  COMPLIANCE.  Within 45 days after the close of each fiscal
quarter of Customer, a Certificate of Compliance, duly executed by an authorized
officer  of  Customer,  in  the form of Exhibit B attached hereto, or such other
form  as  reasonably  required  by  MLBFS  from  time  to  time;

(ii)  A/R  AGINGS.  Within  45  days  after  the close of each fiscal quarter of
Customer,  a  copy of the Accounts Receivable Aging of Customer as of the end of
such  fiscal  quarter;

(iii)  SEC REPORTS. Customer shall furnish or cause to be furnished to MLBFS not
later  than  10  days  after the date of filing with the Securities and Exchange
Commission  ("SEC"),  a  copy of each 10-K, 10-Q and other report required to be
filed  with  the  SEC  during  the  term  hereof  by  Customer;  and

(iv)  OTHER  INFORMATION.  Such other information as MLBFS may from time to time
reasonably  request  relating  to  Customer, any Credit Party or the Collateral.

(b)  GENERAL  AGREEMENTS  WITH RESPECT TO FINANCIAL INFORMATION. Customer agrees
that  except  as otherwise specified herein or otherwise agreed to in writing by
MLBFS:  (i) all annual financial statements required to be furnished by Customer
to  MLBFS  hereunder  will  be  prepared  by  either  the  current  independent
accountants  for Customer or other independent accountants reasonably acceptable
to  MLBFS,  and (ii) all other financial information required to be furnished by
Customer  to  MLBFS  hereunder  will  be  certified  as  correct in all material
respects  by  the  party  who has prepared such information, and, in the case of
internally  prepared  information  with  respect  to  Customer  or  any Business
Guarantor,  certified  as  correct  by their respective chief financial officer.

3.3 OTHER COVENANTS

Customer further covenants and agrees during the term of this Loan Agreement
that:

(a)  FINANCIAL RECORDS; INSPECTION. Each Credit Party (other than any Individual
Guarantor)  will:  (i)  maintain at its principal place of business complete and
accurate  books  and  records,  and  maintain  all of its financial records in a
manner  consistent  with the financial statements heretofore furnished to MLBFS,
or prepared on such other basis as may be approved in writing by MLBFS; and (ii)
permit  MLBFS or its duly authorized representatives, upon reasonable notice and
at  reasonable  times,  to  inspect  its  properties  (both  real and personal),
operations,  books  and  records.

(b)  TAXES.  Each  Credit  Party  will pay when due all of its respective taxes,
assessments  and other governmental charges, howsoever designated, and all other
liabilities  and obligations, except to the extent that any such failure to file
or  pay  will  not materially and adversely affect either the liens and security
interests  of  MLBFS hereunder or under any of the Loan Documents, the financial
condition  of  any  Credit  Party  or  its  continued  operations.

(c)  COMPLIANCE  WITH  LAWS AND AGREEMENTS. No Credit Party will violate (i) any
law,  regulation or other governmental requirement, any judgment or order of any
court  or  governmental  agency  or authority; (ii) any agreement, instrument or
document  which  is material to its operations or to the operation or use of any
Collateral,  in  each  case  as contemplated by the Loan Documents; or (iii) any
agreement,  instrument  or  document  to  which  it is a party or by which it is
bound,  if  any  such  violation will materially and adversely affect either the
liens  and  security  interests  of  MLBFS  hereunder  or  under any of the Loan
Documents,  the  financial  condition  of  any  Credit  Party,  or its continued
operations.

(d)  NO  USE  OF MERRILL LYNCH NAME. No Credit Party will directly or indirectly
publish,  disclose  or otherwise use in any advertising or promotional material,
or press release or interview, the name, logo or any trademark of MLBFS, MLPF&S,
Merrill  Lynch  and  Co.,  Incorporated  or  any  of  their  affiliates.

(e)  NOTIFICATION  BY CUSTOMER. Customer shall provide MLBFS with prompt written
notification  of:  (i)  any  Default;  (ii)  any  material adverse change in the
business,  financial  condition  or  operations  of  any Credit Party; (iii) any
information  which  indicates  that any financial statements of any Credit Party
fail  in  any  material  respect  to  present fairly the financial condition and
results  of  operations  purported  to be presented in such statements; (iv) any
threatened  or  pending  litigation involving any Credit Party; (v) any casualty
loss,  attachment,  lien,  judicial  process,  encumbrance or claim affecting or
involving  $25,000  or more of any Collateral; and (vi) any change in Customer's
outside accountants. Each notification by Customer pursuant hereto shall specify
the  event  or  information  causing  such  notification,  and,  to  the  extent
applicable,  shall specify the steps being taken to rectify or remedy such event
or  information.

                                        6
<PAGE>
(f)  ENTITY  ORGANIZATION.  Each Credit Party which is an entity will (i) remain
(A)  validly  existing and in good standing in the state of its organization and
(B)  qualified to do business and in good standing in each other state where the
nature  of  its  business  or  the  property owned by it make such qualification
necessary,  and  (ii)  maintain  all  governmental  permits,  licenses  and
authorizations.  Customer  shall  give MLBFS not less than 30 days prior written
notice  of any change in name (including any fictitious name) or chief executive
office,  place  of  business,  or  as applicable, the principal residence of any
Credit  Party.

(g)  MERGER,  CHANGE IN BUSINESS. Except upon the prior written consent of MLBFS
Customer  shall  not  cause or permit any Credit Party to: (i) be a party to any
merger  or  consolidation  with,  or  purchase  or  otherwise  acquire  all  or
substantially  all  of  the assets of, or any material stock, partnership, joint
venture  or other equity interest in, any Person, or sell, transfer or lease all
or  any  substantial  part  of  its assets^ (ii) engage in any material business
substantially  different  from  its  business  in  effect  as  of  the  date  of
application  by  Customer  for  credit  from  MLBFS, or cease operating any such
material  business;  or  (ill)  cause  or  permit  any other Person to assume or
succeed  to  any  material  business  or  operations  of  such  Credit  Party.

(h)  TOTAL  LIABILITIES TO TANGIBLE NET WORTH. Customer's "Leverage Ratio" shall
not at any time exceed 1.50 to 1.00. For purposes hereof, "Leverage Ratio" shall
mean the ratio of Customer's total liabilities to Customer's Tangible Net Worth.
The  term  "Tangible  Net  Worth"  shall  mean  Customer's ret worth as shown on
Customer's  regular  financial  statements prepared in accordance with GAAP, but
excluding  an  amount  equal to: (i) any Intangible Assets, and (ii) any amounts
now  or  hereafter  directly  or  indirectly  owing  to  Customer  by  officers,
shareholders or affiliates of Customer. "Intangible Assets" shall mean the total
amount  of  goodwill,  patents, trade names, trade or service marks, copyrights,
experimental  expense,  organization  expense,  unamortized  debt  discount  and
expense,  the  excess  of  cost  of  shares  acquired over book value of related
assets,  and such other assets as are properly classified as "intangible assets"
of  the  Customer  determined  in  accordance  with  GAAP.

(i) FIXED CHARGE COVERAGE. Customer's "Fixed Charge Coverage Ratio" shall at all
times  exceed  1.50  to 1.00. For purposes hereof, "Fixed Charge Coverage Ratio"
shall  mean  the ratio of: (a) income before interest (including payments in the
nature of interest under capital leases), taxes, depreciation, amortization, and
other  similar  non-cash  charges,  minus  any  internally  financed  capital
expenditures,  to  (b) the sum of (i) any dividends and other distributions paid
or  payable  to  shareholders,  any taxes paid in cash, and interest expense, as
determined  on  a  trailing  12-month  basis,  plus (ii) the aggregate principal
scheduled  to be paid or accrued over the next 12 month period and the aggregate
rental  under  capital  leases  schedule  to be paid or accrued over the next 12
month  period;  all  as  set  forth  in  Customer's  regular quarterly financial
statements  prepared  in  accordance  with  GAAP.

3.4 COLLATERAL

(a)  PLEDGE OF COLLATERAL. To secure payment and performance of the Obligations,
Customer  hereby  pledges, assigns, transfers and sets over to MLBFS, and grants
to  MLBFS  first liens and security interests in and upon all of the Collateral,
subject  only  to  priorities  afforded  to  Permitted  Liens.

(b)  LIENS.  Except  upon the prior written consent of MLBFS, Customer shall not
create  or  permit  to  exist any lien, encumbrance or security interest upon or
with  respect  to  any  Collateral  now  owned  or hereafter acquired other than
Permitted  Liens.

(c)  PERFORMANCE  OF  OBLIGATIONS. Customer shall perform all of its obligations
owing  on account of or with respect to the Collateral; it being understood that
nothing herein, and no action or inaction by MLBFS, under this Loan Agreement or
otherwise,  shall  be  deemed  an  assumption by MLBFS of any of Customer's said
obligations.

(d)  SALES  AND  COLLECTIONS.  Customer  shall  not  sell, transfer or otherwise
dispose of any Collateral, except that so long as no Event of Default shall have
occurred and be continuing, Customer may in the ordinary course of its business:
(i)  sell  any Inventory normally held by Customer for sale, (ii) use or consume
any materials and supplies normally held by Customer for use or consumption, and
(ill)  collect  all  of  its  Accounts.

(e) ACCOUNT SCHEDULES. Upon the request of MLBFS, which may be made from time to
time,  Customer  shall  deliver  to  MLBFS, in addition to the other information
required  hereunder,  a  schedule  identifying, for each Account and all Chattel
Paper  subject  to  MLBFS'  security interests hereunder, each account debtor by
name and address and amount, invoice or contract number and date of each invoice
or  contract.  Customer  shall furnish to MLBFS such additional information with
respect  to  the Collateral, and amounts received by Customer as proceeds of any
of  the  Collateral,  as  MLBFS  may  from  time  to  time  reasonably  request.

(f) ALTERATIONS AND MAINTENANCE. Except upon the prior written consent of MLBFS,
Customer  shall  not  make  or  permit  any material alterations to any tangible
Collateral  which might materially reduce or impair its market value or utility.
Customer  shall  at all times (i) keep the tangible Collateral in good condition
and  repair,  reasonable  wear  and  tear  excepted, (ii) protect the Collateral
against  loss,  damage  or  destruction  and  (ill)  pay or cause to be paid all
obligations  arising from the repair and maintenance of such Collateral, as well
as  all  obligations  with respect to any Location of Tangible Collateral (e.g.,
all obligations under any lease, mortgage or bailment agreement), except for any
such  obligations  being  contested  by  Customer  in  good faith by appropriate
proceedings.

(g) LOCATION. Except for movements required in the ordinary course of Customer's
business, Customer shall give MLBFS 30 days' prior written notice of the placing
at  or movement of any tangible Collateral to any location other than a Location
of  Tangible Collateral. In no event shall Customer cause or permit any material
tangible  Collateral  to  be  removed from the United States without the express
prior  written consent of MLBFS. Customer will keep its books and records at its
principal  office  address  specified  in  the  first  paragraph  of  this  Loan
Agreement.  Customer  will  not  change  the address where books and records are
kept,  or change its name or taxpayer identification number. Customer will place
a  legend  acceptable  to  MLBFS  on all Chattel Paper that is Collateral in the
possession  or control of Customer from time to time indicating that MLBFS has a
security  interest  therein.

(h)  INSURANCE.  Customer  shall  insure  all of the tangible Collateral under a
policy  or  policies of physical damage insurance for the full replacement value
thereof against such perils as MLBFS shall reasonably require and also providing
that  losses  will be payable to MLBFS as its interests may appear pursuant to a
lender's  or  mortgagee's long form loss payable endorsement and containing such
other  provisions as may be reasonably required by MLBFS. Customer shall further
provide  and  maintain  a  policy  or  policies  of commercial general liability
insurance  naming  MLBFS  as  an  additional  party  insured.  Customer and each
Business Guarantor shall maintain such other insurance as may be required by law
or  is  customarily  maintained  by  companies  in  a  similar  business  or

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<PAGE>
otherwise  reasonably  required  by  MLBFS.  All  such  insurance policies shall
provide  that  MLBFS  will receive not less than 10 days prior written notice of
any  cancellation, and shall otherwise be in form and amount and with an insurer
or  insurers reasonably acceptable to MLBFS. Customer shall furnish MLBFS with a
copy or certificate of each such policy or policies and, prior to any expiration
or  cancellation,  each  renewal  or  replacement  thereof.

(i)  EVENT OF LOSS. Customer shall at its expense promptly repair all repairable
damage  to  any tangible Collateral. In the event that there is an Event of Loss
and  the  affected  Collateral  had  a  value  prior  to  such  Event of Loss of
$25,000.00  or  more, then, on or before the first to occur of (i) 90 days after
the occurrence of such Event of Loss, or (ii) 10 Business Days after the date on
which  either  Customer  or  MLBFS  shall  receive  any proceeds of insurance on
account  of  such  Event  of  Loss,  or  any  underwriter  of  insurance on such
Collateral  shall advise either Customer or MLBFS that it disclaims liability in
respect  of  such  Event  of  Loss, Customer shall, at Customer's option, either
replace  the Collateral subject to such Event of Loss with comparable Collateral
free  of  all liens other than Permitted Liens (in which event Customer shall be
entitled  to  utilize the proceeds of insurance on account of such Event of Loss
for  such  purpose,  and  may  retain any excess proceeds of such insurance), or
permanently  prepay  the Obligations by an amount equal to the actual cash value
of such Collateral as determined by either the insurance company's payment (plus
any  applicable  deductible)  or,  in  absence  of insurance company payment, as
reasonably  determined  by  MLBFS;  it  being  further  understood that any such
permanent prepayment shall cause an immediate permanent reduction in the Maximum
WCMA  Line  of  Credit in the amount of such prepayment and shall not reduce the
amount  of  any future reductions in the Maximum WCMA Line of Credit that may be
required  hereunder. Notwithstanding the foregoing, if at the time of occurrence
of  such  Event  of  Loss  or  any  time thereafter prior to replacement or line
reduction,  as  aforesaid,  an  Event  of  Default  shall  have  occurred and be
continuing hereunder, then MLBFS may at its sole option, exercisable at any time
while  such  Event  of  Default  shall be continuing, require Customer to either
replace  such  Collateral  or prepay the Obligations and reduce the Maximum WCMA
Line  of  Credit,  as  aforesaid.

(j)  NOTICE OF CERTAIN EVENTS. Customer shall give MLBFS immediate notice of any
attachment,  lien, judicial process, encumbrance or claim affecting or involving
$25,000.00  or  more  of  the  Collateral.

(k)  INDEMNIFICATION.  Customer  shall indemnify, defend and save MLBFS harmless
from  and  against  any  and all claims, liabilities, losses, costs and expenses
(including,  without limitation, reasonable attorneys' fees and expenses) of any
nature whatsoever which may be asserted against or incurred by MLBFS arising out
of or in any manner occasioned by (i) the ownership, collection, possession, use
or  operation  of any Collateral, or (ii) any failure by Customer to perform any
of  its  obligations hereunder; excluding, however, from said indemnity any such
claims,  liabilities,  etc.  arising directly out of the willful wrongful act or
active gross negligence of MLBFS. This indemnity shall survive the expiration or
termination  of  this Loan Agreement as to all matters arising or accruing prior
to  such  expiration  or  termination.

3.5 EVENTS OF DEFAULT

The  occurrence  of  any  of  the following events shall constitute an "Event of
Default"  under  this  Loan  Agreement:

(a) EXCEEDING THE MAXIMUM WCMA LINE OF CREDIT. If the WCMA Loan Balance shall at
any  time  exceed  the  Maximum  WCMA  Line of Credit and Customer shall fail to
deposit  sufficient  funds into the WCMA Account to reduce the WCMA Loan Balance
below  the  Maximum  WCMA  Line  of  Credit  within five (5) Business Days after
written  notice  thereof  shall  have  been  given  by  MLBFS  to  Customer.

(b)  OTHER  FAILURE  TO PAY. Customer shall fail to pay to MLBFS or deposit into
the  WCMA  Account  when  due  any  other amount owing or required to be paid or
deposited by Customer under this Loan Agreement or any of the Loan Documents, or
shall  fail  to  pay  when due any other Obligations, and any such failure shall
continue for more than five (5) Business Days after written notice thereof shall
have  been  given  by  MLBFS  to  Customer.

(c)  FAILURE  TO  PERFORM.  Any Credit Party shall default in the performance or
observance  of any covenant or agreement on its part to be performed or observed
under  any of the Loan Documents (not constituting an Event of Default under any
other  clause  of  this Section), and such default shall continue unremedied for
ten (10) Business Days (i) after written notice thereof shall have been given by
MLBFS to Customer, or (ii) from Customer's receipt of any notice or knowledge of
such  default  from  any  other  source.

(d)  BREACH OF WARRANTY. Any representation or warranty made by any Credit Party
contained  in this Loan Agreement or any of the Loan Documents shall at any time
prove  to  have  been  incorrect  in  any  material  respect  when  made.

(e)  DEFAULT  UNDER  OTHER  ML  AGREEMENT.  A default or event of default by any
Credit  Party  shall occur under the terms of any other agreement, instrument or
document  with  or  intended  for  the  benefit of MLBFS, MLPF&S or any of their
affiliates,  and  any required notice shall have been given and required passage
of  time  shall  have elapsed, or the WCMA Agreement shall be terminated for any
reason.

(f) BANKRUPTCY EVENT. Any Bankruptcy Event shall occur.

(g)  MATERIAL  IMPAIRMENT.  Any  event  shall occur which shall reasonably cause
MLBFS  to in good faith believe that the prospect of full payment or performance
by  the  Credit  Parties  of  any of their respective liabilities or obligations
under  any  of the Loan Documents has been materially impaired. The existence of
such  a  material impairment shall be determined in a manner consistent with the
intent  of  Section  1-208  of  the  UCC.

(h)  DEFAULT  UNDER OTHER AGREEMENTS. Any event shall occur which results in any
default  of  any  material agreement involving any Credit Party or any agreement
evidencing  any  indebtedness  of  any  Credit  Party  of  $100,000.00  or more.

(i) COLLATERAL IMPAIRMENT. The loss, theft or destruction of any Collateral, the
occurrence  of any material deterioration or impairment of any Collateral or any
material  decline  or depreciation in the value or market price thereof (whether
actual  or  reasonably  anticipated),  which  causes any Collateral, in the sole
opinion  of  MLBFS,  to  become  unsatisfactory as to value or character; or any
levy,  attachment,  seizure  or  confiscation  of  the  Collateral  which is not
released  within  ten  (10)  Business  Days.

                                        8
<PAGE>
(j)  CONTESTED  OBLIGATION.  (i)  Any of the Loan Documents shall for any reason
cease  to  be,  or are asserted by any Credit Party not to be a legal, valid and
binding  obligations  of  any Credit Party, enforceable in accordance with their
terms;  or  (ii)  the  validity, perfection or priority of MLBFS' first lien and
security  interest on any of the Collateral is contested by any Person; or (iii)
any  Credit  Party  shall  or  shall  attempt  to  repudiate, revoke, contest or
dispute,  in  whole  or  in part, such Credit Party's obligations under any Loan
Document.

(k) JUDGMENTS. A judgment shall be entered against any Credit Party in excess of
$25,000  and  the  judgment  is  not  paid in full and discharged, or stayed and
bonded  to  the  satisfaction  of  MLBFS.

(I)  CHANGE  IN  CONTROL/CHANGE  IN MANAGEMENT. (i) Any direct or indirect sale,
conveyance,  assignment  or other transfer of or grant of a security interest in
any  ownership  interest  of  any  Credit  Party which results, or if any rights
related  thereto  were  exercised would result, in any change in the identity of
the individuals or entities in control of any Credit Party; or (ii) the owner(s)
of  the controlling equity interest of any Credit Party on the date hereof shall
cease  to  own  and  control  such  Credit  Party;  or  (iii)  the  Person (or a
replacement  who  is  satisfactory  to  MLBFS in its sole discretion) who is the
chief executive officer or holds such similar position, or any senior manager of
such  Credit Party on the date hereof shall for any reason cease to be the chief
executive  officer  or  senior  manager  of  such  Credit  Party.

(m)  WITHDRAWAL,  DEATH, ETC. The incapacity, death, withdrawal, dissolution, or
the  filing  for  dissolution  of: (i) any Credit Party; or (ii) any controlling
shareholder,  partner,  or  member  of  any  Credit  Party.

3.6 REMEDIES

(a) REMEDIES UPON DEFAULT. Upon the occurrence and during the continuance of any
Event  of Default, MLBFS may at its sole option do any one or more or all of the
following,  at  such  time and in such order as MLBFS may in its sole discretion
choose:

(i)  TERMINATION. MLBFS may without notice terminate the WCMA Line of Credit and
all obligations to extend any credit to or for the benefit of Customer (it being
understood,  however,  that upon the occurrence of any Bankruptcy Event all such
obligations  shall  automatically  terminate  without  any action on the part of
MLBFS).

(ii)  ACCELERATION.  MLBFS may declare the principal of and interest on the WCMA
Loan  Balance,  and  all  other  Obligations  to  be  forthwith due and payable,
whereupon  all  such  amounts  shall  be  immediately  due  and payable, without
presentment,  demand  for  payment,  protest  and  notice  of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate or other notice
or  formality  of  any kind, all of which are hereby expressly waived; provided,
however,  that  upon  the occurrence of any Bankruptcy Event all such principal,
interest  and  other  Obligations  shall  automatically  become  due and payable
without  any  action  on  the  part  of  MLBFS.

(iii)  EXERCISE OTHER RIGHTS. MLBFS may exercise any or all of the remedies of a
secured party under applicable law and in equity, including, but not limited to,
the  UCC,  and  any  or  all  of  its  other  rights and remedies under the Loan
Documents.

(iv)  POSSESSION.  MLBFS  may  require  Customer  to make the Collateral and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS  which is reasonably convenient to Customer, or may take possession of the
Collateral  and  the records pertaining to the Collateral without the use of any
judicial  process  and  without  any  prior  notice  to  Customer.

(v)  SALE. MLBFS may sell any or all of the Collateral at public or private sale
upon  such terms and conditions as MLBFS may reasonably deem proper, whether for
cash,  on credit, or for future delivery, in bulk or in lots. MLBFS may purchase
any  Collateral at any such sale free of Customer's right of redemption, if any,
which  Customer expressly waives to the extent not prohibited by applicable law.
The  net  proceeds  of  any  such  public  or private sale and all other amounts
actually  collected  or  received  by MLBFS pursuant hereto, after deducting all
costs and expenses incurred at any time in the collection of the Obligations and
in the protection, collection and sale of the Collateral, will be applied to the
payment  of  the  Obligations,  with  any remaining proceeds paid to Customer or
whoever  else  may  be  entitled  thereto,  and with Customer and each Guarantor
remaining  jointly  and  severally  liable for any amount remaining unpaid after
such  application.

(vi) DELIVERY OF CASH, CHECKS, ETC. MLBFS may require Customer to forthwith upon
receipt,  transmit  and deliver to MLBFS in the form received, all cash, checks,
drafts  and other instruments for the payment of money (properly endorsed, where
required, so that such items may be collected by MLBFS) which may be received by
Customer  at  any  time in full or partial payment d any Collateral, and require
that  Customer not commingle any such items which may be so received by Customer
with any other of its funds or property but instead hold them separate and apart
and  in  trust  for  MLBFS  until  delivery  is  made  to  MLBFS.

(vii)  NOTIFICATION OF ACCOUNT DEBTORS. MLBFS may notify any account debtor that
its  Account or Chattel Paper has been assigned to MLBFS and direct such account
debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect  to  such  Account  or  Chattel Paper; and MLBFS may enforce payment and
collect,  by  legal  proceedings  or  otherwise,  such Account or Chattel Paper.

(viii)  CONTROL  OF  COLLATERAL.  MLBFS may otherwise take control in any lawful
manner of any cash or non-cash items of payment or proceeds of Collateral and of
any  rejected, returned, stopped in transit or repossessed goods included in the
Collateral  and endorse Customer's name on any item of payment on or proceeds of
the  Collateral.

(b)  SET-OFF.  MLBFS shall have the further right upon the occurrence and during
the  continuance  of an Event of Default to setoff, appropriate and apply toward
payment  of  any  of  the Obligations, in such order of application as MLBFS may
from  time  to  time  and  at  any  time  elect,  any  cash,  credit,  deposits,

                                        9
<PAGE>
accounts,  financial  assets,  investment  property,  securities  and  any other
property  of  Customer  which  is in transit to or in the possession, custody or
control  of MLBFS, MLPF&S or any agent, bailee, or affiliate of MLBFS or MLPF&S.
Customer  hereby  collaterally assigns and grants to MLBFS a continuing security
interest  in  all such property as Collateral and as additional security for the
Obligations.  Upon  the  occurrence  and  during  the continuance of an Event of
Default,  MLBFS  shall  have all rights in such property available to collateral
assignees  and  secured  parties  under  all applicable laws, including, without
limitation,  the  UCC.

(c)  POWER OF ATTORNEY. Effective upon the occurrence and during the continuance
of  an  Event  of  Default,  Customer  hereby  irrevocably appoints MLBFS as its
attorney-in-fact, with full power of substitution, in its place and stead and in
its name or in the name of MLBFS, to from time to time in MLBFS' sole discretion
take  any action and to execute any instrument which MLBFS may deem necessary or
advisable  to  accomplish the purposes of this Loan Agreement and the other Loan
Documents,  including,  but  not limited to, to receive, endorse and collect all
checks,  drafts  and  other instruments for the payment of money made payable to
Customer  included in the Collateral. The powers of attorney granted to MLBFS in
this  Loan  Agreement are coupled with an interest and are irrevocable until the
Obligations  have  been  indefeasibly  paid  in full and fully satisfied and all
obligations  of  MLBFS  under  this  Loan  Agreement  have  been  terminated

(d)  REMEDIES  ARE  SEVERABLE  AND  CUMULATIVE. All rights and remedies of MLBFS
herein  are  severable  and  cumulative  and in addition to all other rights and
remedies  available  in  the Loan Documents, at law or in equity, and any one or
more  of  such  rights  and  remedies  may  be  exercised  simultaneously  or
successively.

(e)  NO MARSHALLING. MLBFS shall be under no duty or obligation to (i) preserve,
protect  or  marshall the Collateral; (ii) preserve or protect the rights of any
Credit  Party  or any other Person claiming an interest in the Collateral; (ill)
realize  upon  the  Collateral  in  any  particular  order  or manner, (iv) seek
repayment  of  any  Obligations  from  any particular source; (v) proceed or not
proceed  against any Credit Party pursuant to any guaranty or security agreement
or  against  any  Credit  Party  under  the Loan Documents, with or without also
realizing  on the Collateral; (vi) permit any substitution or exchange of all or
any part of the Collateral; or (vii) release any part of the Collateral from the
Loan  Agreement  or  any  of  the  other  Loan  Documents,  whether  or not such
substitution  or  release  would  leave  MLBFS  adequately  secured.

(f)  NOTICES. To the fullest extent permitted by applicable law, Customer hereby
irrevocably  waives  and  releases MLBFS of and from any and all liabilities and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed  upon MLBFS relating to notices of sale, holding of sale or reporting of
any sale, and Customer waives all rights of redemption or reinstatement from any
such  sale.  Any  notices  required under applicable law shall be reasonably and
properly  given  to  Customer  if given by any of the methods provided herein at
least  5  Business  Days  prior  to taking action. MLBFS shall have the right to
postpone  or  adjourn  any  sale  or other disposition of Collateral at any time
without  giving  notice  of  any  such postponed or adjourned date. In the event
MLBFS seeks to take possession of any or all of the Collateral by court process,
Customer  further  irrevocably waives to the fullest extent permitted by law any
bonds and any surety or security relating thereto required by any statute, court
rule  or  otherwise  as  an  incident  to  such  possession,  and any demand for
possession  prior  to  the  commencement  of  any  suit  or  action.

3.7 MISCELLANEOUS

(a)  NON-WAIVER.  No  failure  or  delay  on the part of MLBFS in exercising any
right,  power or remedy pursuant to this Loan Agreement or any of the other Loan
Documents  shall  operate as a waiver thereof, and no single or partial exercise
of  any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. Neither any waiver
of  any provision of any of the Loan Documents, nor any consent to any departure
by  Customer  therefrom,  shall be effective unless the same shall be in writing
and  signed  by MLBFS. Any waiver of any provision of this Loan Agreement or any
of  the  other  Loan Documents and any consent to any departure by Customer from
the  terms  of  this  Loan Agreement or any of the other Loan Documents shall be
effective  only  in the specific instance and for the specific purpose for which
given.  Except as otherwise expressly provided herein, no notice to or demand on
Customer  shall  in  any case entitle Customer to any other or further notice or
demand  in  similar  or  other  circumstances.

(b)  DISCLOSURE.  Customer  hereby  irrevocably authorizes MLBFS and each of its
affiliates,  including without limitation MLPF&S, to at any time (whether or not
an Event of Default shall have occurred) obtain from and disclose to each other,
and  to  any  third party in connection with Section 3.7 (g) herein, any and all
financial  and  other  information  about  Customer.  In  connection  with  said
authorization,  the  parties  recognize  that in order to provide a WCMA Line of
Credit  certain information about Customer is required to be made available on a
computer  network  accessible  by certain affiliates of MLBFS, including MLPF&S.
Customer  further  irrevocably authorizes MLBFS to contact, investigate, inquire
and  obtain  consumer reports, references and other information on Customer from
consumer  reporting  agencies  and  other  credit  reporting services, former or
current creditors, and other persons and sources (including, without limitation,
any  Affiliate  of  MLBFS)  and to provide to any references, consumer reporting
agencies,  credit  reporting  services,  creditors and other persons and sources
(including,  without  limitation, affiliates of MLBFS) all financial, credit and
other  information  obtained  by  MLBFS  relating  to  the  Customer.

(c)  COMMUNICATIONS. Delivery of an agreement, instrument or other document may,
at the discretion of MLBFS, be by electronic transmission. Except as required by
law  or  otherwise  provided  herein or in a writing executed by the party to be
bound, all notices demands, requests, accountings, listings, statements, advices
or other communications to be given under the Loan Documents shall be in writing
and  shall  be  served  either personally, by deposit with a reputable overnight
courier  with  charges  prepaid,  or  by  deposit  in  the United States mail by
certified mail, return receipt required. Notices may be addressed to Customer as
set forth at its address shown in the preamble hereto, or to any office to which
billing  or  account  statements  are sent; to MLBFS at its address shown in the
preamble  hereto,  or  at such other address designated in writing by MLBFS. Any
such  communication  shall  be  deemed  to  have been given upon, in the case of
personal  delivery  the date of delivery, one Business Day after deposit with an
overnight  courier,  two (2) Business Days after deposit in the United States by
certified  mail (return receipt required), or receipt of electronic transmission
(which shall be presumed to be three hours after the time of transmission unless
an error message is received by the sender), except that any notice of change of
address  shall  not  be  effective  until  actually  received.

                                       10
<PAGE>
(d) FEES, EXPENSES AND TAXES. Customer shall pay or reimburse MLBFS for: (I) all
UCC,  real  property  or  other  filing, recording, and search fees and expenses
incurred  by  MLBFS  in  connection  with  the  verification,  perfection  or
preservation  of  MLBFS'  rights  hereunder  or  in  any Collateral or any other
collateral  for  the  Obligations;  (i)  any  and all stamp, transfer, mortgage,
intangible,  document,  filing,  recording  and  other taxes and fees payable or
determined  to  be  payable  in  connection with the borrowings hereunder or the
execution, delivery, filing and/or recording of the Loan Documents and any other
instruments  or  documents  provided  for herein or delivered or to be delivered
hereunder  or  in  connection  herewith;  and  (iii)  all fees and out-of-pocket
expenses  (including,  attorneys'  fees and legal expenses) incurred by MLBFS in
connection  with  the  preparation,  execution,  administration,  collection,
enforcement,  protection,  waiver or amendment of this Loan Agreement, the other
Loan  Documents  and  such  other  instruments  or documents, and the rights and
remedies  of  MLBFS  thereunder  and  all other matters in connection therewith.
Customer  hereby  authorizes  MLBFS,  at its option, to either cause any and all
such  fees,  expenses and taxes to be paid with a WCMA Loan, or invoice Customer
therefore  (in  which event Customer shall pay all such fees, expenses and taxes
within  5  Business  Days  after  receipt  of  such invoice). The obligations of
Customer  under  this  paragraph  shall survive the expiration or termination of
this  Loan  Agreement  and  the  discharge  of  the  other  Obligations.

(e)  RIGHT TO PERFORM OBLIGATIONS. If Customer shall fail to do any act or thing
which  it  has  covenanted  to  do  under  any  of  the  Loan  Documents  or any
representation  or  warranty  on  the  part  of  Customer  contained in the Loan
Documents shall be breached, MLBFS may, in its sole discretion, after 5 Business
Days  written  notice  is  sent to Customer (or such lesser notice, including no
notice, as is reasonable under the circumstances), do the same or cause it to be
done  or  remedy any such breach, and may expend its funds for such purpose. Any
and  all  reasonable amounts so expended by MLBFS shall be repayable to MLBFS by
Customer  upon demand, with interest at the Interest Rate during the period from
and  including the date funds are so expended by MLBFS to the date of repayment,
and all such amounts shall be additional Obligations. The payment or performance
by  MLBFS  of any of Customer's obligations hereunder shall not relieve Customer
of  said  obligations  or of the consequences of having failed to pay or perform
the  same,  and  shall  not  waive  or  be  deemed  a  cure  of  any  Default.

(f)  FURTHER  ASSURANCES. Customer agrees to do such further acts and things and
to  execute  and  deliver  to  MLBFS such additional agreements, instruments and
documents  as  MLBFS  may reasonably require or deem advisable to effectuate the
purposes  of  the  Loan  Documents,  to  confirm  the  WCMA  Loan Balance, or to
establish,  perfect  and  maintain  MLBFS' security interests and liens upon the
Collateral, including, but not limited to: (i) executing financing statements or
amendments thereto when and as reasonably requested by MLBFS; and (ii) if in the
reasonable  judgment  of  MLBFS  it is required by local law, causing the owners
and/or mortgagees of the real property on which any Collateral may be located to
execute  and  deliver to MLBFS waivers or subordinations reasonably satisfactory
to  MLBFS  with  respect  to  any  rights  in  such  Collateral.

(g)  BINDING EFFECT. This Loan Agreement and the Loan Documents shall be binding
upon,  and  shall  inure  to the benefit of MLBFS, Customer and their respective
successors  and  assigns.  MLBFS  reserves  the  right,  at  any  time while the
Obligations remain outstanding, to sell, assign, syndicate or otherwise transfer
or  dispose  of  any  or  all  of  MLBFS'  rights  and  interests under the Loan
Documents.  MLBFS also reserves the right at any time to pool the WCMA Loan with
one  or  more  other  loans  originated  by  MLBFS  or  any other Person, and to
securitize  or  offer  interests  in  such pool on whatever terms and conditions
MLBFS  shall determine. Customer consents to MLBFS releasing financial and other
information  regarding  Credit  Parties,  the  Collateral  and  the WCMA Loan in
connection  with  any  such  sale,  pooling,  securitization  or other offering.
Customer  shall  not assign any of its rights or delegate any of its obligations
under this Loan Agreement or any of the Loan Documents without the prior written
consent  of  MLBFS.  Unless otherwise expressly agreed to in a writing signed by
MLBFS,  no  such  consent  shall  in  any  event  relieve Customer of any of its
obligations  under  this  Loan  Agreement  or  the  Loan  Documents.

(h)  INTERPRETATION;  CONSTRUCTION.  (i)  Captions  and  section  and  paragraph
headings  in  this  Loan Agreement are inserted only as a matter of convenience,
and  shall  not affect the interpretation hereof; (ii) no provision of this Loan
Agreement  shall be construed against a particular Person or in favor of another
Person  merely  because  of  which  Person  (or  its  representative) drafted or
supplied  the  wording for such provision; and (iii) where the context requires:
(a)  use  of the singular or plural incorporates the other, and (b) pronouns and
modifiers  in  the masculine, feminine or neuter gender shall be deemed to refer
to  or  include  the  other  genders.

(i) GOVERNING LAW. This Loan Agreement, and, unless otherwise expressly provided
therein,  each  of  the Loan Documents, shall be governed in all respects by the
laws  of  the  State  of Illinois, not including its conflict of law provisions.

(j)  SEVERABILITY  OF PROVISIONS. Whenever possible, each provision of this Loan
Agreement and the other Loan Documents shall be interpreted in such manner as to
be  effective  and  valid  under  applicable  law.  Any  provision  of this Loan
Agreement  or  any of the Loan Documents which is prohibited or unenforceable in
any  jurisdiction  shall,  as  to  such jurisdiction, be ineffective only to the
extent  of  such  prohibition  or  unenforceability  without  invalidating  the
remaining  provisions of this Loan Agreement and the Loan Documents or affecting
the  validity  or  enforceability  of  such provision in any other jurisdiction.

(k)  TERM.  This  Loan  Agreement shall become effective on the date accepted by
MLBFS  at  its  office  in  Chicago, Illinois, and, subject to the terms hereof,
shall  continue in effect so long thereafter as the WCMA Line of Credit shall be
in  effect or there shall be any Obligations outstanding. Customer hereby waives
notice  of  acceptance  of  this  Loan  Agreement  by  MLBFS.

(l)  EXHIBITS.  The  exhibits to this Loan Agreement are hereby incorporated and
made  a  part  hereof  and  are  an  integral  part  of  this  Loan  Agreement

(m)  COUNTERPARTS.  This  Loan  Agreement  may  be  executed  in  one  or  more
counterparts  which, when taken together, constitute one and the same agreement.

(n)  JURISDICTION;  WAIVER.  CUSTOMER  ACKNOWLEDGES  THAT THIS LOAN AGREEMENT IS
BEING  ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS  SOLE  DISCRETION,  TO  ENFORCE  THIS  LOAN  AGREEMENT  AND  ALL OF THE LOAN
DOCUMENTS  IN  EITHER  THE  STATE OF ILLINOIS OR IN ANY OTHER JURISDICTION WHERE
CUSTOMER  OR  ANY COLLATERAL MAY BE LOCATED. CUSTOMER IRREVOCABLY SUBMITS ITSELF
TO JURISDICTION IN THE STATE OF ILLINOIS AND VENUE IN ANY STATE OR FEDERAL COURT
IN  THE COUNTY OF COOK FOR SUCH PURPOSES, AND CUSTOMER WAIVES ANY AND ALL RIGHTS
TO  CONTEST  SAID  JURISDICTION AND VENUE AND THE CONVENIENCE OF ANY SUCH FORUM,
AND  ANY  AND  ALL  RIGHTS  TO  REMOVE  SUCH ACTION FROM STATE TO FEDERAL COURT.
CUSTOMER  FURTHER  WAIVES

                                       11
<PAGE>
ANY  RIGHTS  TO  COMMENCE ANY ACTION AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN
THE  COUNTY OF COOK AND STATE OF ILLINOIS. CUSTOMER AGREES THAT ALL SUCH SERVICE
OF  PROCESS SHALL BE MADE BY MAIL OR MESSENGER DIRECTED TO IT IN THE SAME MANNER
AS  PROVIDED  FOR NOTICES TO CUSTOMER IN THIS LOAN AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE
(3)  DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO CUSTOMER OR CUSTOMER'S AGENT.
NOTHING  CONTAINED HEREIN SHALL AFFECT THE RIGHT OF MLBFS TO SERVE LEGAL PROCESS
IN  ANY  OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF MLBFS TO BRING ANY
ACTION OR PROCEEDING AGAINST CUSTOMER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.  CUSTOMER  WAIVES,  TO  THE  EXTENT  PERMITTED BY LAW, ANY BOND OR
SURETY  OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED
OF  MLBFS.  CUSTOMER  FURTHER  WAIVES  THE  RIGHT  TO  BRING  ANY NON-COMPULSORY
COUNTERCLAIMS.

(o)  JURY  WAIVER.  MLBFS  AND  CUSTOMER HEREBY EACH EXPRESSLY WAIVE ANY AND ALL
RIGHTS  TO  A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER  OF  THE  PARTIES  AGAINST  THE  OTHER  PARTY  WITH RESPECT TO ANY MATTER
RELATING  TO,  ARISING  OUT  OF  OR  IN  ANY WAY CONNECTED WITH THE WCMA LINE OF
CREDIT,  THE  OBLIGATIONS, THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS AND/OR
ANY  OF  THE  TRANSACTIONS  WHICH ARE THE SUBJECT MATTER OF THIS LOAN AGREEMENT.

(p)  INTEGRATION.  THIS  LOAN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS THE FULL AND FINAL AGREEMENT
BETWEEN  THE  PARTIES  WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONTRADICTED  BY  EVIDENCE OF PRIOR WRITTEN AGREEMENTS OR PRIOR, CONTEMPORANEOUS
OR  SUBSEQUENT  ORAL  AGREEMENTS  OF  THE  PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS OF THE PARTIES. WITHOUT LIMITING THE FOREGOING, CUSTOMER ACKNOWLEDGES
THAT:  (I)  NO PROMISE OR COMMITMENT HAS BEEN MADE TO IT BY MLBFS, MLPF&S OR ANY
OF  THEIR  RESPECTIVE  EMPLOYEES,  AGENTS  OR  REPRESENTATIVES  TO  EXTEND  THE
AVAILABILITY OF THE WCMA LINE OF CREDIT OR THE MATURITY DATE, OR TO INCREASE THE
MAXIMUM WCMA LINE OF CREDIT, OR TO MAKE ANY WCMA LOAN ON ANY TERMS OTHER THAN AS
EXPRESSLY  SET  FORTH HEREIN OR TO OTHERWISE EXTEND ANY OTHER CREDIT TO CUSTOMER
OR  ANY  OTHER PARTY; (II) NO PURPORTED EXTENSION OF THE MATURITY DATE, INCREASE
IN  THE  MAXIMUM  WCMA  LINE OF CREDIT OR OTHER EXTENSION OR AGREEMENT TO EXTEND
CREDIT  SHALL  BE  VALID  OR  BINDING  UNLESS  EXPRESSLY  SET FORTH IN A WRITTEN
INSTRUMENT  SIGNED  BY  MLBFS;  AND  (III)  THIS  LOAN  AGREEMENT SUPERSEDES AND
REPLACES  ANY  AND  ALL PROPOSALS, LETTERS OF INTENT AND APPROVAL AND COMMITMENT
LETTERS  FROM  MLBFS  TO  CUSTOMER,  RONE  OF  WHICH  SHALL BE CONSIDERED A LOAN
DOCUMENT.  NO  AMENDMENT  OR  MODIFICATION OF ANY OF THE LOAN DOCUMENTS TO WHICH
CUSTOMER  IS A PARTY SHALL BE EFFECTIVE UNLESS IN A WRITING SIGNED BY BOTH MLBFS
AND  CUSTOMER.

(q)  SURVIVAL.  All  representations,  warranties,  agreements  and  covenants
contained  in  the  Loan Documents shall survive the signing and delivery of the
Loan  Documents,  and  all  of  the waivers made and indemnification obligations
undertaken  by Customer shall survive the termination, discharge or cancellation
of  the  Loan  Documents.

(r) CUSTOMER'S ACKNOWLEDGMENTS. The Customer acknowledges that the Customer: (i)
has  had  ample  opportunity  to  consult with counsel and such other parties as
deemed  advisable  prior  to  signing and delivering this Loan Agreement and the
other Loan Documents; (ii) understands the provisions of this Loan Agreement and
the  other  Loan  Documents,  including all waivers contained therein; and (iii)
signs  and  delivers this Loan Agreement and the other Loan Documents freely and
voluntarily,  without  duress  or  coercion.

THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS ARE EXECUTED UNDER SEAL AND ARE
INTENDED  TO  TAKE  EFFECT  AS  SEALED  INSTRUMENTS.

IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and year
first  above  written.

YP.NET, INC.

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.

By:______________________________________________

                                       12
<PAGE>
                                    EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF WCMA LOAN AND SECURITY AGREEMENT NO.
412-02104 BETWEEN MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND YP.NET,
INC.
================================================================================

ADDITIONAL LOCATIONS OF TANGIBLE COLLATERAL:

<PAGE>
PLEASE  FURNISH THIS FORM TO YOUR INSURANCE AGENT, OR FILL IN YOUR AGENT'S NAME,
ADDRESS AND PHONE NUMBER, SIGN AND RETURN THE FORM, AND WE WILL DIRECTLY REQUEST
THE  REQUIRED  CERTIFICATE  OF  INSURANCE.

CUSTOMER'S INSURANCE AGENT:
---------------------------
(Name, address & phone #)

     _______________________________

     _______________________________

     _______________________________

     _______________________________

     _______________________________

In  connection  with  one  or more credit facilities from MERRILL LYNCH BUSINESS
FINANCIAL  SERVICES  INC.  ("MLBFS")  to  or  for  the  benefit  of YP.NET, INC.
("Customer"),  you are hereby authorized and directed by Customer to provide and
maintain  the  following  policies  of insurance for the benefit of MLBFS at the
expense  of  Customer,  and  to FURNISH TO MLBFS A CERTIFICATE OF EACH POLICY of
insurance and, not later than 10 days prior to expiration, a certificate of EACH
RENEWAL  POLICY,  as  follows:

PROPERTY DAMAGE INSURANCE
-------------------------

(a)  PROPERTY  DAMAGE INSURANCE with all risk clauses on the contents located at
4840  E.  Jasmine Street, Suite 105, Mesa, AZ 85205 and all Additional Locations
of  Tangible  Collateral  (the  "Business  Personal  Property").

(b)  MLBFS  should  be named as Loss Payee on the Business Personal Property and
the  policy  must include a LENDER'S LOSS PAYABLE ENDORSEMENT in favor of MLBFS.

(c)  MLBFS  must  receive  NOT  LESS  THAN  30  DAYS PRIOR WRITTEN NOTICE OF ANY
CANCELLATION  or  material  modification.

Each  certificate  should  be  mailed  to  MLBFS  as  follows:

     MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
     222 NORTH LASALLE STREET, 17TH FLOOR
     CHICAGO, IL 60601

Very truly yours,

YP.NET, INC.

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

<PAGE>
[GRAPHIC OMITTED]
Merrill Lynch                                            SECRETARY'S CERTIFICATE
================================================================================

THE  UNDERSIGNED  HEREBY  CERTIFIES TO MERRILL LYNCH BUSINESS FINANCIAL SERVICES
INC.  that  the  undersigned  is  the  duly  appointed  and acting Secretary (or
Assistant  Secretary)  of  YP.NET,  INC.,  a corporation duly organized, validly
existing  and  in  good standing under the laws of the State of Nevada; and that
the  following  is a true, accurate and compared transcript of resolutions duly,
validly and lawfully adopted on the _______ day of ____________________, 2004 by
the Board of Directors of said Corporation acting in accordance with the laws of
the  state  of  incorporation  and  the charter and by-laws of said Corporation:

"RESOLVED,  that this Corporation is authorized and empowered, now and from time
to  time hereafter, to borrow and/or obtain credit from, and/or enter into other
financial  arrangements  with,  MERRILL  LYNCH  BUSINESS FINANCIAL SERVICES INC.
("MLBFS"),  and  in  connection  therewith  to grant to MLBFS liens and security
interests  on  any  or  all  property  belonging  to  this Corporation; all such
transactions  to  be on such terms and conditions as may be mutually agreed from
time  to  time  between  this  Corporation  and  MLBFS;  and

"FURTHER  RESOLVED, that the President, any Vice President, Treasurer, Secretary
or other officer of this Corporation, or any one or more of them, be and each of
them  hereby is authorized and empowered to: (a) execute and deliver to MLBFS on
behalf  of  this  Corporation  any  and  all  loan agreements, promissory notes,
security  agreements,  pledge agreements, financing statements, mortgages, deeds
of trust, leases and/or all other agreements, instruments and documents required
by  MLBFS  in  connection  therewith,  and  any  present  or  future extensions,
amendments,  supplements,  modifications  and  restatements thereof; all in such
form  as any such officer shall approve, as conclusively evidenced by his or her
signature thereon, and (b) do and perform all such acts and things deemed by any
such  officer  to  be  necessary  or  advisable  to  carry  out  and perform the
undertakings and agreements of this Corporation in connection therewith; and any
and  all  prior  acts  of  each  of  said  officers in these premises are hereby
ratified  and  confirmed  in  all  respects;  and

"FURTHER  RESOLVED,  that  MLBFS  is  authorized  to  rely  upon  the  foregoing
resolutions until it receives written notice of any change or revocation from an
authorized  officer of this Corporation, which change or revocation shall not in
any  event  affect  the  obligations  of  this  Corporation  with respect to any
transaction  conditionally  agreed  or  committed  to  by  MLBFS  or  having its
inception  prior  to  the  receipt  of  such  notice  by  MLBFS."

THE  UNDERSIGNED  FURTHER CERTIFIES that: (a) the foregoing resolutions have not
been rescinded, modified or repealed in any manner, are not in conflict with any
agreement of said Corporation and are in full force and effect as of the date of
this Certificate, and (b) the following individuals are now the duly elected and
acting  officers  of said Corporation and THE SIGNATURES SET FORTH BELOW ARE THE
TRUE  SIGNATURES  OF  SAID  OFFICERS:

     President: ___________________________________________

     Vice President: ______________________________________

     Treasurer: ___________________________________________

     Secretary: ___________________________________________

     ________________; ____________________________________
     Additional Tide

IN  WITNESS  WHEREOF,  the  undersigned  has  executed  this Certificate and has
affixed  the seal of said Corporation hereto, pursuant to due authorization, all
as  of  this  ________  day  of_________________,  2004.

(CORPORATE SEAL)
                                             ___________________________________
                                                         Secretary

                             Printed Name:   ___________________________________

<PAGE>
[GRAPHIC OMITTED]
Merrill Lynch                                             UNCONDITIONAL GUARANTY
================================================================================

FOR  VALUE  RECEIVED,  and  in  order to induce MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC. ("MLBFS") to advance moneys or extend or continue to extend credit
or  lease  property  to or for the benefit of, or modify its credit relationship
with,  or  enter  into  any  other financial accommodations with YP.NET, INC., a
corporation  organized  and existing under the laws of the State of Nevada (with
any  successor  in  interest,  including,  without  limitation, any successor by
merger  or  by  operation  of law, herein collectively referred to as "Customer)
under:  (a)  that certain WCMA LOAN AND SECURITY AGREEMENT NO. 412-02104 between
MLBFS  and  Customer  (the  "Loan Agreement"), (b) any "Loan Documents", as that
term  is  defined  in  the  Loan  Agreement,  including, without limitation, the
NOTE(S) incorporated by reference in the Loan Agreement, and (c) all present and
future  amendments,  restatements,  supplements  and  other  evidences  of  any
extensions,  increases,  renewals,  modifications and other changes of or to the
Loan Agreement or any Loan Documents (collectively, the 'Guaranteed Documents"),
and  for  other  good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, THE UNDERSIGNED, TELCO BILLING INC., a corporation
organized  and  existing  under  the  laws  of the State of Nevada ("Guarantor),
HEREBY UNCONDITIONALLY GUARANTEES TO MLBFS: (i) the prompt and full payment when
due,  by  acceleration  or  otherwise, of all sums now or any time hereafter due
from Customer to MLBFS under the Guaranteed Documents, (ii) the prompt, full and
faithful  performance and discharge by Customer of each and every other covenant
and  warranty  of  Customer set forth in the Guaranteed Documents, and (iii) the
prompt  and  full payment and performance of all other indebtedness, liabilities
and  obligations  of  Customer  to  MLBFS,  howsoever  created or evidenced, and
whether  now  existing  or  hereafter arising (collectively, the "Obligations").
Guarantor  further  agrees  to pay all reasonable costs and expenses (including,
but not limited to, court costs and reasonable attorneys' fees) paid or incurred
by  MLBFS  in  endeavoring  to  collect  or  enforce  performance  of any of the
Obligations, or in enforcing this Guaranty. Guarantor acknowledges that MLBFS is
relying on the execution and delivery of this Guaranty in advancing moneys to or
extending  or  continuing  to  extend  credit to or for the benefit of Customer.

This  Guaranty  is  absolute,  unconditional  and continuing and shall remain in
effect until all of the Obligations shall have been fully and indefeasibly paid,
performed  and discharged. Upon the occurrence and during the continuance of any
default or Event of Default under any of the Guaranteed Documents, any or all of
the  indebtedness hereby guaranteed then existing shall, at the option of MLBFS,
become immediately due and payable from Guarantor (it being understood, however,
that  upon  the  occurrence  of  any  "Bankruptcy Event", as defined in the Loan
Agreement,  all  such  indebtedness  shall  automatically become due and payable
without action on the part of MLBFS). Notwithstanding the occurrence of any such
event,  this Guaranty shall continue and remain in full force and effect. To the
extent  MLBFS  receives  payment with respect to the Obligations, and all or any
part  of  such payment is subsequently invalidated, declared to be fraudulent or
preferential,  set  aside,  required to be repaid by MLBFS or is repaid by MLBFS
pursuant  to  a settlement agreement, to a trustee, receiver or any other person
or entity, whether under any Bankruptcy law or otherwise (a "Returned Payment"),
this Guaranty shall continue to be effective or shall be reinstated, as the case
may  be,  to  the  extent  of  such  payment  or  repayment  by  MLBFS,  and the
indebtedness  or  part thereof intended to be satisfied by such Returned Payment
shall  be  revived  and  continued  in full force and effect as if said Returned
Payment  had  not  been  made.

The  liability  of Guarantor hereunder shall in no event be affected or impaired
by  any of the following, any of which may be done or omitted by MLBFS from time
to  time,  without  notice  to  or  the  consent of Guarantor: (a) any renewals,
amendments,  restatements,  modifications  or  supplements  of  or to any of the
Guaranteed  Documents,  or any extensions, forbearances, compromises or releases
of  any  of  the Obligations or any of MLBFS' rights under any of the Guaranteed
Documents;  (b)  any  acceptance  by MLBFS of any collateral or security for, or
other  guarantees  of,  any  of  the  Obligations;  (c)  any failure, neglect or
omission on the part of MLBFS to realize upon or protect any of the Obligations,
or any collateral or security therefor, or to exercise any lien upon or right of
appropriation  of  any  moneys,  credits  or  property  of Customer or any other
guarantor,  possessed by or under the control of MLBFS or any of its affiliates,
toward  the  liquidation  or  reduction  of the Obligations; (d) any invalidity,
irregularity  or  unenforceability of all or any part of the Obligations, of any
collateral  security  for  the Obligations, or the Guaranteed Documents; (e) any
application  of  payments  or  credits by MLBFS; (f) the granting of credit from
time  to  time  by  MLBFS  to  Customer in excess of the amount set forth in the
Guaranteed Documents; or (g) any other act of commission or omission of any kind
or  at  any time upon the part of MLBFS or any of its affiliates or any of their
respective  employees  or  agents  with  respect to any matter whatsoever. MLBFS
shall  not  be  required  at any time, as a condition of Guarantor's obligations
hereunder,  to  resort  to  payment  from  Customer or other persons or entities
whatsoever,  or  any of their properties or estates, or resort to any collateral
or  pursue  or  exhaust  any  other  rights  or  remedies  whatsoever.

No  release  or  discharge  in  whole  or  in part of any other guarantor of the
Obligations  shall  release  or  discharge Guarantor unless and until all of the
Obligations  shall  have  been indefeasibly fully paid and discharged. Guarantor
expressly  waives  presentment,  protest, demand, notice of dishonor or default,
notice  of acceptance of this Guaranty, notice of advancement of funds under the
Guaranteed  Documents and all other notices and formalities to which Customer or
Guarantor  might be entitled, by statute or otherwise, and, so long as there are
any  Obligations  or MLBFS is committed to extend credit to Customer, waives any
right  to  revoke or terminate this Guaranty without the express written consent
of  MLBFS.

So long as there are any Obligations, Guarantor shall not have any claim, remedy
or  right  of  subrogation,  reimbursement,  exoneration,  contribution,
indemnification,  or  participation  in  any  claim,  right,  or remedy of MLBFS
against  Customer  or  any  security  which MLBFS now has or hereafter acquires,
whether  or not such claim, right or remedy arises in equity, under contract, by
statute,  under  common  law,  or  otherwise.

MLBFS  is  hereby  irrevocably  authorized  by  Guarantor at any time during the
continuance  of an Event of Default under the Loan Agreement or any other of the
Guaranteed  Documents  or  in  respect  of  any  of the Obligations, in its sole
discretion  and  without demand or notice of any kind, to appropriate, hold, set
off  and  apply toward the payment of any amount due hereunder, in such order of
application as MLBFS may elect, all cash, credits, deposits, accounts, financial
assets,  investment  property,  securities  and  any other property of Guarantor
which  is  in  transit  to  or in the possession, custody or control of MLBFS or
Merrill  Lynch,  Pierce, Fenner & Smith Incorporated ("MLPF&S"), or any of their
respective  agents, bailees or affiliates. Guarantor hereby collaterally assigns
and  grants  to  MLBFS  a  continuing  security interest in all such property as
additional  security  for  the  Obligations.  Upon the occurrence and during the
continuance of an Event of Default, MLBFS shall have all rights in such property
available to collateral assignees and secured parties under all applicable laws,
including,  without  limitation,  the  Uniform  Commercial  Code.

<PAGE>
Guarantor  agrees  to  furnish  to  MLBFS  such financial information concerning
Guarantor  as may be required by any of the Guaranteed Documents or as MLBFS may
otherwise  from  time  to  time  reasonably  request.  Guarantor  further hereby
irrevocably  authorizes  MLBFS  and  each  of  its affiliates, including without
limitation MLPF&S, to at any time (whether or not an Event of Default shall have
occurred) obtain from and disclose to each other any and all financial and other
information  about  Guarantor.

No  delay  on the part of MLBFS in the exercise of any right or remedy under any
of  the Guaranteed Documents, this Guaranty or any other agreement shall operate
as  a  waiver  thereof,  and,  without  limiting  the foregoing, no delay in the
enforcement of any security interest, and no single or partial exercise by MLBFS
of  any  right or remedy shall preclude any other or further exercise thereof or
the  exercise of any other right or remedy. This Guaranty may be executed in any
number  of  counterparts, each of which counterparts, once they are executed and
delivered,  shall  be  deemed  to  be an original and all of which counterparts,
taken  together,  shall  constitute but one and the same Guaranty. This Guaranty
shall  be binding upon Guarantor and its successors and assigns, and shall inure
to  the  benefit of MLBFS and its successors and assigns. If there are more than
one  guarantor  of  the  Obligations,  all  of the obligations and agreements of
Guarantor  are  joint  and  several  with  such  other  guarantors.

This  Guaranty  shall  be governed by the laws of the State of Illinois. WITHOUT
LIMITING  THE  RIGHT  OF  MLBFS TO ENFORCE THIS GUARANTY IN ANY JURISDICTION AND
VENUE  PERMITTED  BY APPLICABLE LAW: (I) GUARANTOR AGREES THAT THIS GUARANTY MAY
AT  THE  OPTION OF MLBFS BE ENFORCED BY MLBFS IN EITHER THE STATE OF ILLINOIS OR
IN  ANY  OTHER  JURISDICTION WHERE GUARANTOR, CUSTOMER OR ANY COLLATERAL FOR THE
OBLIGATIONS  OF  CUSTOMER  MAY  BE  LOCATED,  (II) GUARANTOR IRREVOCABLY SUBMITS
ITSELF  TO  JURISDICTION  IN  THE  STATE  OF  ILLINOIS AND VENUE IN ANY STATE OR
FEDERAL  COURT  IN  THE  COUNTY  OF  COOK FOR SUCH PURPOSES, AND (III) GUARANTOR
WAIVES  ANY  AND  ALL  RIGHTS  TO  CONTEST  SAID  JURISDICTION AND VENUE AND THE
CONVENIENCE  OF ANY SUCH FORUM AND ANY AND ALL RIGHTS TO REMOVE SUCH ACTION FROM
STATE  TO  FEDERAL  COURT.  GUARANTOR  FURTHER WAIVES ANY RIGHTS TO COMMENCE ANY
ACTION  AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN THE COUNTY OF COOK AND STATE
OF  ILLINOIS. MLBFS AND GUARANTOR HEREBY EACH EXPRESSLY WAIVE ANY AND ALL RIGHTS
TO  A  TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
OF  THE  PARTIES AGAINST THE OTHER PARTY WITH RESPECT TO ANY MATTER RELATING TO,
ARISING  OUT  OF  OR  IN  ANY WAY CONNECTED WITH THIS GUARANTY AND/OR ANY OF THE
TRANSACTIONS  WHICH  ARE  THE SUBJECT MATTER OF THIS GUARANTY. GUARANTOR FURTHER
WAIVES  THE  RIGHT  TO BRING ANY NON-COMPULSORY COUNTERCLAIMS. Wherever possible
each  provision  of  this  Guaranty shall be interpreted in such manner as to be
effective  and valid under applicable law, but if any provision of this Guaranty
shall  be  prohibited  by  or  invalid  under  such law, such provision shall be
ineffective  only  to  the  extent  of  such  prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Guaranty.  No  modification  or waiver of any of the provisions of this Guaranty
shall be effective unless in writing and signed by both Guarantor and an officer
of  MLBFS.  Each  signatory  on  behalf of Guarantor warrants that he or she has
authority  to  sign on behalf of Guarantor, and by so signing, to bind Guarantor
hereunder.

Dated as of April 13,2004.

TELCO BILLING INC.

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

Address of Guarantor:
     4840 E. JASMINE STREET
     SUITE 105
     MESA, ARIZONA 85205

                                      -2-
<PAGE>
[GRAPHIC OMITTED]
Merrill Lynch                                            SECRETARY'S CERTIFICATE
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                            (Guaranty by Corporation)

THE  UNDERSIGNED  HEREBY  CERTIFIES TO MERRILL LYNCH BUSINESS FINANCIAL SERVICES
INC.  that  the  undersigned  is  the  duly  appointed  and acting Secretary (or
Assistant  Secretary)  of  TELCO  BILLING  INC.,  a  corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada; and
that  the  following  is a true, accurate and compared transcript of resolutions
duly,  validly  and lawfully adopted on the _______ day of ____________________,
2004 by the Board of Directors of said Corporation acting in accordance with the
laws  of  the  state  of  incorporation  and  the  charter  and  by-laws of said
Corporation:

"RESOLVED,  that it is advisable and in the best interests and to the benefit of
this  Corporation  to  guaranty  the obligations of YP.NET, INC. ("Customer") to
MERRILL  LYNCH  BUSINESS  FINANCIAL  SERVICES  INC.  ("MLBFS");  and

"FURTHER  RESOLVED, that the President, any Vice President, Treasurer, Secretary
or other officer of this Corporation, or any one or more of them, be and each of
them  hereby  is  authorized and empowered for and on behalf of this Corporation
to:  (a)  execute  and  deliver  to  MLBFS: (i) an Unconditional Guaranty of the
obligations  of  Customer,  (ii) any other agreements, instruments and documents
required  by  MLBFS  in connection therewith, including, without limitation, any
agreements,  instruments and documents evidencing liens or security interests on
any  of  the  property  of this Corporation as collateral for said Unconditional
Guaranty  and/or  fie obligations of Customer to MLBFS, and (iii) any present or
future  amendments  to  any  of  the foregoing; all in such form as such officer
shall  approve, as evidenced by his signature thereon; and (b) to do and perform
all such acts and things deemed by any such officer to be necessary or advisable
to carry out and perform the undertakings and agreements of this Corporation set
forth therein; and all prior acts of each of said officers in these premises are
hereby  ratified  and  confirmed;  and

"FURTHER  RESOLVED,  that  MLBFS  is  authorized  to  rely  upon  the  foregoing
resolutions until it receives written notice of any change or revocation from an
authorized  officer of this Corporation, which change or revocation shall not in
any  event  affect  the  obligations  of  this  Corporation  with respect to any
transaction  conditionally  agreed  or  committed  to  by  MLBFS  or  having its
inception  prior  to  the  receipt  of  such  notice  by  MLBFS."

THE  UNDERSIGNED  FURTHER CERTIFIES that: (a) the foregoing resolutions have not
been rescinded, modified or repealed in any manner, are not in conflict with any
agreement of said Corporation and are in full force and effect as of the date of
this Certificate, and (b) the following individuals are now the duly elected and
acting  officers  of said Corporation and THE SIGNATURES SET FORTH BELOW ARE THE
TRUE  SIGNATURES  OF  SAID  OFFICERS:

     President: _____________________________________________________

     Vice President: ________________________________________________

     Treasurer: _____________________________________________________

     Secretary: _____________________________________________________

     ________________;  _____________________________________________
     Additional Tide

IN  WITNESS  WHEREOF,  the  undersigned  has  executed  this Certificate and has
affixed  the seal of said corporation hereto, pursuant to due authorization, all
as  of  this ________ day  of_________________,  2004.

(CORPORATE SEAL)
                                             ___________________________________
                                                         Secretary

                             Printed Name:   ___________________________________

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Merrill Lynch                                                 SECURITY AGREEMENT
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SECURITY  AGREEMENT  ("Agreement")  dated  as  of  April  13,2004, between TELCO
BILLING  INC.,  a corporation organized and existing under the laws of the State
of NEVADA having its principal office at 4840 E Jasmine Street, Suite 105, Mesa,
Arizona  ("Grantor"),  and  MERRILL  LYNCH  BUSINESS  FINANCIAL SERVICES INC., a
corporation  organized  and  existing  under  the  laws of the State of Delaware
having  its  principal  office  at  222  North LaSalle Street, Chicago, IL 60601
("MLBFS").

In  order to induce MLBFS to extend or continue to extend credit to YP.NET, INC.
("Customer)  under  the  Loan Agreement (as defined below) or otherwise, and for
other  good  and valuable consideration, the receipt and sufficiency of which is
hereby  acknowledged,  Grantor  hereby  agrees  with  MLBFS  as  follows:

1.  DEFINITIONS

(a)  SPECIFIC  TERMS.  In addition to terms defined elsewhere in this Agreement,
when  used  herein  the  following  terms  shall  have  the  following meanings:

(i)  "Account  Debtor'  shall mean any party who is or may become obligated with
respect  to  an  Account  or  Chattel  Paper.

(ii)  "Bankruptcy Event" shall mean any of the following: (A) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt or
receivership  law  or  statute  shall  be  filed  or  consented to by Grantor or
Customer;  or (B) any such proceeding shall be filed against Grantor or Customer
and  shall not be dismissed or withdrawn within sixty (60) days after filing; or
(C)  Grantor  or  Customer  shall  make  a general assignment for the benefit of
creditors;  or  (D)  Grantor or Customer shall generally fail to pay or admit in
writing  its  inability  to  pay its debts as they become due; or (E) Grantor or
Customer  shall  be  adjudicated  a  bankrupt  or  insolvent.

(iii)  "Business  Day" shall mean any day other than a Saturday, Sunday, federal
holiday  or  other day on which the New York Stock Exchange is regularly closed.

(iv)  "Collateral"  shall  mean  all  Accounts,  Chattel Paper, Contract Rights,
Inventory,  Equipment,  Fixtures,  General  Intangibles,  Deposit  Accounts,
Documents,  Instruments,  Financial  Assets  and Investment Property of Grantor,
howsoever  arising,  whether  now  owned  or  existing  or hereafter acquired or
arising,  and  wherever located; together with all parts thereof (inducing spare
parts), all accessories and accessions thereto, all books and records (including
computer  records)  directly  related  thereto, all proceeds thereof (including,
without  limitation,  proceeds  in the form of Accounts and insurance proceeds),
and  the  additional  collateral  described  in  Section  7  (b)  hereof.

(v)  "Default" shall mean an "Event of Default", as defined in Section 6 hereof,
or  any  event  which with the giving of notice, passage of time, or both, would
constitute  such  an  Event  of  Default.

(vi)  "Loan  Agreement" shall mean that certain WCMA LOAN AND SECURITY AGREEMENT
NO.  412-02104  between  MLBFS  and  Customer,  together  with  all  agreements,
instruments  and  documents executed pursuant thereto, as any or all of the same
may  from  time  to  time  be  or  have  been  amended,  restated,  extended  or
supplemented.

(vii)  "Location  of  Tangible Collateral" shall mean the address of Grantor set
forth  at  the  beginning  of this Agreement, together with any other address or
addresses  set  forth  on  any  exhibit  hereto  as being a Location of Tangible
Collateral.

(viii)  "Obligations"  shall  mean  all  liabilities,  indebtedness  and  other
obligations  of  Customer  or  Grantor  to  MLBFS, howsoever created, arising or
evidenced,  whether  now  existing  or  hereafter  arising,  whether  direct  or
indirect,  absolute or contingent, due or to become due, primary or secondary or
joint  or  several,  and, without limiting the foregoing, shall include interest
accruing  after  the  filing  of any petition in bankruptcy, and all present and
future  liabilities,  indebtedness  and  obligations  of Customer under the Loan
Agreement  and  the  agreements,  instruments  and  documents  executed pursuant
thereto,  and  of  Grantor  under  this  Agreement.

(ix)  "Permitted Liens" shall mean with respect to the Collateral: (A) liens for
current taxes not delinquent; other non-consensual liens arising in the ordinary
course  of  business  for sums not due, and, if MLBFS' rights to and interest in
the Collateral are not materially and adversely affected thereby, any such liens
for  taxes  or  other  non-consensual  liens  arising  in the ordinary course of
business  being contested in good faith by appropriate proceedings; (B) liens in
favor of MLBFS; and (C) any other liens expressly permitted in writing by MLBFS.

(b)  OTHER  TERMS.  Except  as  otherwise defined herein, all terms used in this
Agreement  which  are defined in the Uniform Commercial Code of Illinois ("UCC")
shall  have  the  meanings  set  forth  in  the  UCC.

2. COLLATERAL

(a)  PLEDGE OF COLLATERAL. To secure payment and performance of the Obligations,
Grantor hereby pledges, assigns, transfers and sets over to MLBFS, and grants to
MLBFS  a  first  lien  and  security interest in and upon all of the Collateral,
subject  only  to  Permitted  Liens.

(b)  LIENS.  Except  upon  the prior written consent of MLBFS, Grantor shall not
create  or  permit  to  exist any lien, encumbrance or security interest upon or
with  respect  to  any  Collateral  now  owned  or hereafter acquired other than
Permitted  Liens.

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(c)  PERFORMANCE  OF  OBLIGATIONS.  Grantor shall perform all of its obligations
owing  on account of or with respect to the Collateral; it being understood that
nothing  herein,  and  no  action  or inaction by MLBFS, under this Agreement or
otherwise,  shall  be  deemed  an  assumption  by MLBFS of any of Grantor's said
obligations.

(d)  NOTICE  OF CERTAIN EVENTS. Grantor shall give MLBFS immediate notice of any
attachment,  lien, judicial process, encumbrance or claim affecting or involving
$25,000.00  or  more  of  the  Collateral.

(e) INDEMNIFICATION Grantor shall indemnify, defend and save MLBFS harmless from
and  against  any  and  all  claims, losses, costs, expenses (including, without
limitation,  reasonable  attorneys'  fees  and  expenses), demands, liabilities,
penalties,  fines and forfeitures of any nature whatsoever which may be asserted
against  or  incurred by MLBFS arising out of or in any manner occasioned by (i)
the  ownership,  use,  operation, condition or maintenance of any Collateral, or
(ii)  any  failure  by  Grantor  to  perform  any  of its obligations hereunder;
excluding,  however,  from  said indemnity any such claims, losses, etc. arising
out  of  the  willful  wrongful  act  or  active gross negligence of MLBFS. This
indemnity  shall  survive  the expiration or termination of this Agreement as to
all  matters  arising  or  accruing  prior  to  such  expiration or termination.

(f)  INSURANCE.  Grantor  shall  insure  all  of the tangible Collateral with an
insurer  or  insurers reasonably acceptable to MLBFS, under a policy or policies
of  physical  damage insurance reasonably acceptable to MLBFS providing that (i)
losses  will  be  payable  to  MLBFS  as  its interests may appear pursuant to a
Lender's  Loss Payable endorsement, and (ii) MLBFS will receive not less than 10
days  prior  written  notice  of  any  cancellation;  and  containing such other
provisions  as  may be reasonably required by MLBFS. Grantor shall maintain such
other  insurance  as  may be required by law or otherwise reasonably required by
MLBFS.  Grantor  shall  furnish  MLBFS  with  a copy or certificate of each such
policy or policies and, prior to any expiration or cancellation, each renewal or
replacement  thereof.

(g)  EVENT  OF LOSS. Grantor shall at its expense promptly repair all repairable
damage  to any tangible Collateral. In the event that any tangible Collateral is
damaged  beyond  repair,  lost,  totally  destroyed or confiscated (an "Event of
Loss") and such Collateral had a value prior to such Event of Loss of $25,000.00
or  more,  then,  on  or  before  the  first  to  occur of (i) 90 days after the
occurrence  of  such  Event  of Loss, or (ii) 10 Business Days after the date on
which either Grantor or MLBFS shall receive any proceeds of insurance on account
of  such  Event  of  Loss,  or  any  underwriter  of  insurance on such tangible
Collateral  shall  advise either Grantor or MLBFS that it disclaims liability in
respect  of  such  Event  of  Loss,  Grantor  shall, at Grantor's option, either
replace  the Collateral subject to such Event of Loss with comparable Collateral
free  of  all  liens other than Permitted Liens (in which event Grantor shall be
entitled  to  utilize the proceeds of insurance on account of such Event of Loss
for  such purpose, and may retain any excess proceeds of such insurance), or pay
to  MLBFS on account of the Obligations an amount equal to the actual cash value
of  such  Collateral  as determined by either the applicable insurance company's
payment  (plus  any  applicable  deductible) or, in absence of insurance company
payment, as reasonably determined by MLBFS. Notwithstanding the foregoing, if at
the  time  of  occurrence  of such Event of Loss or any time thereafter prior to
replacement  or  payment,  as aforesaid, an Event of Default shall have occurred
and  be  continuing hereunder, then MLBFS may at its sole option, exercisable at
any  time  while  such  Event of Default shall be continuing, require Grantor to
either  replace such Collateral or make a payment on account of the Obligations,
as  aforesaid.

(h)  SALES  AND  COLLECTIONS. So long as no Event of Default shall have occurred
and  be continuing, Grantor may in the ordinary course of its business: (i) sell
any  Inventory  normally  held  by  Grantor  for  sale,  (ii) use or consume any
materials  and  supplies  normally  held  by Grantor for use or consumption, and
(ill)  collect  all of its Accounts. Grantor shall take such action with respect
to  protection  of  its Inventory and the other Collateral and the collection of
its  Accounts  as  MLBFS  may  from  time  to  time  reasonably  request.

(i)  ACCOUNT  SCHEDULES.  Upon  the request of MLBFS, made now or at any time or
times  hereafter,  Grantor  shall  deliver  to  MLBFS,  in addition to the other
information required hereunder, a schedule identifying, for each Account and all
Chattel  Paper  subject  to  MLBFS'  security  interests hereunder, each Account
Debtor  by name and address and amount, invoice number and date of each invoice.
Grantor  shall  furnish to MLBFS such additional information with respect to the
Collateral,  and  amounts  received  by  Grantor  as  proceeds  of  any  of  the
Collateral,  as  MLBFS  may  from  time  to  time  reasonably  request.

(j)  LOCATION.  Except  for  movements  in  the ordinary course of its business,
Grantor  shall  give  MLBFS  30  days' prior written notice of the placing at or
movement  of  any  tangible  Collateral to any location other than a Location of
Tangible  Collateral.  In  no  event  shall Grantor cause or permit any tangible
Collateral  to  be  removed  from  the  United  States without the express prior
written  consent  of  MLBFS.

(k) ALTERATIONS AND MAINTENANCE. Except upon the prior written consent of MLBFS,
Grantor  shall  not  make  or  permit  any  material alterations to any tangible
Collateral  which might materially reduce or impair its market value or utility.
Grantor  shall  at  all times keep the tangible Collateral in good condition and
repair and shall pay or cause to be paid all obligations arising from the repair
and  maintenance  of such Collateral, as well as all obligations with respect to
each  Location  of  Tangible  Collateral,  except for any such obligations being
contested  by  Grantor  in  good  faith  by  appropriate  proceedings.

3. REPRESENTATIONS AND WARRANTIES

Grantor represents and warrants to MLBFS that:

(a)  ORGANIZATION.  Grantor is a corporation duly organized and validly existing
in  good  standing under the laws of the State of Nevada, and is qualified to do
business  and  in  good  standing  in  each  other state where the nature of its
business  or  the  property  owned  by  it  make  such  qualification necessary.

(b) EXECUTION, DELIVERY AND PERFORMANCE. The execution, delivery and performance
by  Grantor of this Agreement have been duly authorized by all requisite action,
do  not  and  will  not  violate  or conflict with any law or other governmental
requirement,  or any of the agreements, instruments or documents which formed or
governed  Grantor,  and  do  not  and  will  not  breach  or  violate any of the
provisions  of,  and  will  not  result in a default by Grantor under, any other
agreement,  instrument  or document to which it is a party or by which it or its
properties  are  bound.

                                      -2-
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(c)  NOTICE  OR CONSENT. Except as may have been given or obtained, no notice to
or  consent  or  approval  of  any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in  connection  with  the  execution, delivery or performance by Grantor of this
Agreement.

(d) VALID AND BINDING. This Agreement is the legal, valid and binding obligation
of  Grantor,  enforceable  against  it  in  accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights  of  creditors  generally  or  by  general  principles  of  equity.

(e)  FINANCIAL  STATEMENTS. Except as expressly set forth in Grantor's financial
statements,  all  financial  statements  of Grantor furnished to MLBFS have been
prepared  in  conformity  with  generally  accepted  accounting  principles,
consistently  applied,  are  true  and correct, and fairly present the financial
condition  of  it  as  at  such  dates and the results of its operations for the
periods  then  ended;  and  since the most recent date covered by such financial
statements,  there  has  been  no  material adverse change in any such financial
condition  or  operation.

(f)  LITIGATION, ETC. No litigation, arbitration, administrative or governmental
proceedings are pending or threatened against Grantor, which would, if adversely
determined, materially and adversely affect the financial condition or continued
operations  of  Grantor, or the liens and security interests of MLBFS hereunder.

(g)  TAXES.  All  federal,  state  and local tax returns, reports and statements
required  to  be  filed  by  Grantor  have  been  filed  with  the  appropriate
governmental  agencies and all taxes due and payable by Grantor have been timely
paid  (except  to  the  extent  that  any  such  failure to file or pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder  or  the  financial  condition  or  continued  operations of Grantor).

(h)  COLLATERAL.  Grantor  has good and marketable title to the Collateral, and,
except  for  any  Permitted  Liens: (i) none of the Collateral is subject to any
lien,  encumbrance or security interest, and (ii) upon the filing of all Uniform
Commercial  Code  financing  statements  executed by Grantor with respect to the
Collateral or a copy of this Agreement in the appropriate jurisdiction(s) and/or
the completion of any other action required by applicable law to perfect is lien
and  security  interests,  MLBFS  will  have valid and perfected first liens and
security  interests  upon  all  of  the  Collateral.

Each of the foregoing representations and warranties has been and will be relied
upon  as an inducement to MLBFS to advance funds or extend or continue to extend
credit  to  Customer,  and  is  continuing and shall be deemed remade by Grantor
concurrently with each such advance or extension of credit by MLBFS to Customer.

4. FINANCIAL AND OTHER INFORMATION

Grantor  covenants and agrees that Grantor will furnish or cause to be furnished
to  MLBFS during the term of this Agreement such financial and other information
as  may  be  required by the Loan Agreement or any other document evidencing the
Obligations  or  as  MLBFS  may from time to time reasonably request relating to
Grantor  or  the  Collateral.

5. OTHER COVENANTS

Grantor further agrees during the term of this Agreement that:

(a)  FINANCIAL  RECORDS;  INSPECTION.  Grantor  will:  (i) maintain complete and
accurate  books and records at its principal place of business, and maintain all
of  its  financial  records in a manner consistent with the financial statements
heretofore  furnished  to  MLBFS,  or  prepared  on  such  other basis as may be
approved  in  writing  by  MLBFS;  and  (ii) permit MLBFS or its duly authorized
representatives,  upon reasonable notice and at reasonable times, to inspect its
properties  (both  real  and  personal),  operations,  books  and  records.

(b)  TAXES.  Grantor  will  pay  when  due  all  taxes,  assessments  and  other
governmental  charges,  howsoever  designated,  and  all  other  liabilities and
obligations,  except  to  the  extent  that  any  such  failure  to pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder,  or  the  financial  condition  or  continued  operations of Grantor.

(c)  COMPLIANCE  WITH  LAWS  AND  AGREEMENTS.  Grantor will not violate any law,
regulation or other governmental requirement, any judgment or order of any court
or governmental agency or authority, or any agreement, instrument or document to
which  it  is  a  party  or  by  which  it  is bound, if any such violation will
materially and adversely affect either the liens and security interests of MLBFS
hereunder,  or  the  financial  condition  or  continued  operations of Grantor.

(d)  NOTIFICATION  BY  GRANTOR.  Grantor shall provide MLBFS with prompt written
notification  of:  (i)  any  Default;  (ii) any materially adverse change in the
business,  financial  condition  or operations of Customer or Grantor; and (ill)
any  information  which  indicates  that any financial statements of Customer or
Grantor  fail  in any material respect to present fairly the financial condition
and  results  of  operations  purported to be presented in such statements. Each
notification  by  Grantor pursuant hereto shall specify the event or information
causing  such  notification,  and,  to  the extent applicable, shall specify the
steps  being  taken  to  rectify  or  remedy  such  event  or  information.

(e)  NOTICE  OF  CHANGE  Grantor  shall  give  MLBFS not less than 30 days prior
written  notice  of  any  change  in the name (including any fictitious name) or
principal  place  of  business  of  Grantor.

(f)  CONTINUITY.  Except  upon the prior written consent of MLBFS, which consent
will  not  be  unreasonably  withheld:  (i)  Grantor shall not be a party to any
merger  or  consolidation  with,  or  purchase  or  otherwise  acquire  all  or
substantially  all  of  the assets of, or any material stock, partnership, joint
venture  or other equity interest in, any person or entity, or sell, transfer or
lease all or any substantial part of its assets, if any such action would result
in either: (A) a material change in the principal business, ownership or control
of  Grantor,  or  (B)  a  material  adverse change in the financial condition or
operations  of  Grantor;  (ii)  Grantor  shall  preserve  its existence and good
standing  in  the  jurisdiction(s) of establishment and operation; (iii) Grantor
shall  not  engage  in  any  material

                                      -3-
<PAGE>
business  substantially  different from its business in effect as of the date of
application  by  Customer  for  credit  from  MLBFS, or cease operating any such
material  business;  (iv)  Grantor shall not cause or permit any other person or
entity  to  assume or succeed to any material business or operations of Grantor;
and  (iv)  Grantor  shall  not  cause  or  permit  any  material  change  in its
controlling  ownership.

6. EVENTS OF DEFAULT

The  occurrence  of  any  of  the following events shall constitute an "Event of
Default"  under  this  Agreement:

(a)  EVENT  OF DEFAULT UNDER ANY LOAN AGREEMENT. An Event of Default shall occur
under  the  terms  of  the  Loan  Agreement.

(b)  FAILURE  TO PERFORM. Grantor shall default in the performance or observance
of  any covenant or agreement on its part to be performed or observed under this
Agreement  (not  constituting an Event of Default under any other clause of this
Section),  and such default shall continue unremedied for 10 Business Days after
written  notice  thereof  shall  have  been  given  by  MLBFS  to  Grantor.

(c) BREACH OF WARRANTY. Any representation or warranty made by Grantor contained
in this Agreement shall at any time prove to have been incorrect in any material
respect  when  made.

(d)  DEFAULT  UNDER  OTHER  AGREEMENT.  A default or Event of Default by Grantor
shall  occur under the terms of any other agreement, instrument or document with
or  intended  for  the  benefit  of MLBFS, Merrill Lynch, Pierce, Fenner & Smith
Incorporated  ("MLPF&S")  or  any  of  their affiliates, and any required notice
shall  have  been  given  and  required  passage  of  time  shall  have elapsed.

(e)  SEIZURE  OR  ABUSE  OF  COLLATERAL.  The  Collateral,  or any material part
thereof,  shall  be  or  become  subject  to  any  levy,  attachment, seizure or
confiscation  which  is  not  released  within  10  Business  Days.

(f)  BANKRUPTCY  EVENT.  Any  Bankruptcy  Event  shall  occur.

(g)  MATERIAL  IMPAIRMENT.  Any  event  shall occur which shall reasonably cause
MLBFS  to  in  good faith believe that the prospect of payment or performance by
Grantor  has  been  materially  impaired.  The  existence  of  such  a  material
impairment shall be determined in a manner consistent with the intent of Section
1-208  of  the  UCC.

(h) ACCELERATION OF DEBT TO OTHER CREDITORS. Any event shall occur which results
in  the  acceleration of the maturity of any indebtedness of $100,000.00 or more
of  Grantor  to another creditor under any indenture, agreement, undertaking, or
otherwise.

7. REMEDIES

(a)  REMEDIES UPON DEFAULT Upon the occurrence and during the continuance of any
Event  of Default, MLBFS may at its sole option do any one or more or all of the
following,  at  such  time and in such order as MLBFS may in its sole discretion
choose:

(i)  ACCELERATION.  MLBFS  may  declare  all Obligations to be forthwith due and
payable,  whereupon  all  such  amounts  shall  be  immediately due and payable,
without  presentment,  demand for payment, protest and notice of protest, notice
of  dishonor,  notice  of  acceleration, notice of intent to accelerate or other
notice  or  formality  of  any  kind,  all of which are hereby expressly waived;
provided,  however,  that  upon  the  occurrence  of  any  Bankruptcy  Event all
Obligations shall automatically become due and payable without any action on the
part  of  MLBFS.

(ii)  EXERCISE  RIGHTS  OF  SECURED  PARTY. MLBFS may exercise any or all of the
remedies of a secured party under applicable law, including, but not limited to,
the  UCC,  and any or all of its other rights and remedies under this Agreement.

(iii)  POSSESSION.  MLBFS  may  require  Grantor  to make the Collateral and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS  which  is reasonably convenient to Grantor, or may take possession of the
Collateral  and  the records pertaining to the Collateral without the use of any
judicial  process  and  without  any  prior  notice  to  Grantor.

(iv) SALE. MLBFS may sell any or all of the Collateral at public or private sale
upon  such  terms  and conditions as MLBFS may reasonably deem proper, and MLBFS
may purchase any Collateral at any such public sale; and the net proceeds of any
such public or private sale and all other amounts actually collected or received
by MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time  in the collection of the Obligations and in the protection, collection and
sale  of the Collateral, will be applied to the payment of the Obligations, with
any  remaining proceeds paid to Grantor or whoever else may be entitled thereto,
and with Customer and each guarantor of Customer's obligations remaining jointly
and  severally  liable  for  any amount remaining unpaid after such application.

(v)  DELIVERY  OF CASH, CHECKS, ETC. MLBFS may require Grantor to forthwith upon
receipt,  transmit  and deliver to MLBFS in the form received, all cash, checks,
drafts  and other instruments for the payment of money (properly endorsed, where
required, so that such items may be collected by MLBFS) which may be received by
Grantor  at  any  time in full or partial payment of any Collateral, and require
that  Grantor  not  commingle any such items which may be so received by Grantor
with any other of its funds or property but instead hold them separate and apart
and  in  trust  for  MLBFS  until  delivery  is  made  to  MLBFS.

(vi)  NOTIFICATION  OF ACCOUNT DEBTORS. MLBFS may notify any Account Debtor that
its  Account or Chattel Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect  to  such  Account  or  Chattel Paper; and MLBFS may enforce payment and
collect,  by  legal  proceedings  or  otherwise,  such Account or Chattel Paper.

                                      -4-
<PAGE>
(vii)  CONTROL  OF  COLLATERAL.  MLBFS  may otherwise take control in any lawful
manner of any cash or non-cash Items of payment or proceeds of Collateral and of
any  rejected, returned, stopped in transit or repossessed goods included in the
Collateral and endorse Grantor name on any item of payment on or proceeds of the
Collateral,  and,  in  connection  therewith,  MLBFS  may  notify  the  postal
authorities  to  change the address for delivery of mail addressed to Grantor to
such  address  as  MLBFS  may  designate.

(b)  SET-OFF.  MLBFS shall have the further right upon the occurrence and during
the  continuance  of an Event of Default to setoff, appropriate and apply toward
payment  of  any  of  the Obligations, in such order of application as MLBFS may
from  time to time and at any time elect, any cash, credits, deposits, accounts,
financial  assets,  investment  property,  securities  and any other property of
Grantor  which  is  in  transit  to  or in the possession, custody or control of
MLBFS,  MLPF&S  or  any  agent, bailee, or affiliate of MLBFS or MLPF&S. Grantor
hereby  collaterally assigns and grants to MLBFS a security interest in all such
property  as  additional  Collateral.

(c)  POWER OF ATTORNEY. Effective upon the occurrence and during the continuance
of  an  Event  of  Default,  Grantor  hereby  irrevocably  appoints MLBFS as its
attorney-in-fact, with full power of substitution, in its place and stead and in
its name or in the name of MLBFS, to from time to time in MLBFS' sole discretion
take  any action and to execute any instrument which MLBFS may deem necessary or
advisable  to  accomplish  the  purposes  of  this Agreement, including, but not
limited  to,  to  receive,  endorse  and  collect  all  checks, drafts and other
instruments  for  the  payment  of money made payable to Grantor included in the
Collateral.

(d)  REMEDIES  ARE  SEVERABLE  AND  CUMULATIVE. All rights and remedies of MLBFS
herein  are  severable  and  cumulative  and in addition to all other rights and
remedies  available  at law or in equity, and any one or more of such rights and
remedies  may  be  exercised simultaneously or successively. Any notice required
under  this  Agreement  or  under  applicable law shall be deemed reasonably and
properly  given  to Grantor if given at the address and by any of the methods of
giving notice set forth in this Agreement at least 5 Business Days before taking
any  action  specified  in  such  notice.

(e)  NOTICES.  To the fullest extent permitted by applicable law, Grantor hereby
irrevocably  waives  and  releases MLBFS of and from any and all liabilities and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed  upon MLBFS relating to notices of sale, holding of sale or reporting of
any  sale, and Grantor waives all rights of redemption or reinstatement from any
such  sale.  MLBFS shall have the right to postpone or adjourn any sale or other
disposition  of  Collateral  at  any  time  without  giving  notice  of any such
postponed  or adjourned date. In the event MLBFS seeks to take possession of any
or all of the Collateral by court process, Grantor further irrevocably waives to
the  fullest  extent  permitted  by  law  any  bonds  and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to  such  possession, and any demand for possession prior to the commencement of
any  suit  or  action.

8. MISCELLANEOUS

(a)  NON-WAIVER.  No  failure  or  delay  on the part of MLBFS in exercising any
right,  power  or  remedy  pursuant  to this Agreement shall operate as a waiver
thereof,  and  no  single or partial exercise of any such right, power or remedy
shall  preclude  any  other  or further exercise thereof, or the exercise of any
other  right,  power  or  remedy.  Neither  any  waiver of any provision of this
Agreement,  nor  any  consent  to  any  departure by Grantor therefrom, shall be
effective unless the same shall be in writing and signed by MLBFS. Any waiver of
any provision of this Agreement and any consent to any departure by Grantor from
the terms of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. Except as otherwise expressly provided
herein,  no  notice to or demand on Grantor shall in any case entitle Grantor to
any  other  or  further  notice  or  demand  in  similar or other circumstances.

(b)  COMMUNICATIONS.  All notices and other communications required or permitted
hereunder  shall be in writing, and shall be either delivered personally, mailed
by  postage  prepaid  certified  mail or sent by express overnight courier or by
facsimile.  Such  notices  and communications shall be deemed to be given on the
date  of  personal  delivery,  facsimile  transmission  or  actual  delivery  of
certified  mail,  or  one  Business  Day  after delivery to an express overnight
courier.  Unless otherwise specified in a notice sent or delivered in accordance
with  the  terms  hereof,  notices  and other communications in writing shall be
given  to  the  parties  hereto  at  their respective addresses set forth at the
beginning  of this Agreement, and, in the case of facsimile transmission, to the
parties  at  their  respective  regular  facsimile  telephone  number.

(c)  COSTS, EXPENSES AND TAXES. Grantor shall pay or reimburse MLBFS upon demand
for:  (i)  all  Uniform  Commercial  Code  filing  and  search fees and expenses
incurred  by  MLBFS  in  connection  with  the  verification,  perfection  or
preservation  of  MLBFS' rights hereunder or in the Collateral; (ii) any and all
stamp,  transfer and other taxes and fees payable or determined to be payable in
connection  with the execution, delivery and/or recording of this Agreement; and
(iii) all reasonable fees and out-of-pocket expenses (including, but not limited
to,  reasonable  fees  and  expenses  of  outside  counsel) incurred by MLBFS in
connection  with  the  enforcement of this Agreement or the protection of MLBFS'
rights hereunder, excluding, however, salaries and expenses of MLBFS' employees.
The  obligations of Grantor under this paragraph shall survive the expiration or
termination  of  this  Agreement  and  the  discharge  of the other Obligations.

(d)  RIGHT  TO PERFORM OBLIGATIONS. If Grantor shall fail to do any act or thing
which  it  has  covenanted  to  do under this Agreement or any representation or
warranty  on  the part of Grantor contained in this Agreement shall be breached,
MLBFS  may, in its sole discretion, after 5 Business Days written notice is sent
to  Grantor  (or such lesser notice, including no notice, as is reasonable under
the  circumstances),  do  the  same  or  cause  it to be done or remedy any such
breach,  and  may  expend  its  funds  for  such purpose. Any and all reasonable
amounts so expended by MLBFS shall be repayable to MLBFS by Grantor upon demand,
with  interest at the highest "Interest Rate" under the Loan Agreement under the
Loan  Agreement,  or  the  highest  interest rate permitted by law, whichever is
less,  during  the  period  from and including the date funds are so expended by
MLBFS  to  the date of repayment, and any such amounts due and owing MLBFS shall
be  additional  Obligations.  The  payment  or  performance  by  MLBFS of any of
Grantor's obligations hereunder shall not relieve Grantor of said obligations or
of  the  consequences of having failed to pay or perform the same, and shall not
waive  or  be  deemed  a  cure  of  any  Default.

                                      -5-
<PAGE>
(e) FURTHER ASSURANCES. Grantor agrees to do such further acts and things and to
execute  and  deliver  to  MLBFS  such  additional  agreements,  instruments and
documents  as  MLBFS  may reasonably require or deem advisable to effectuate the
purposes  of  this  Agreement,  or  to  establish,  perfect  and maintain MLBFS'
security interests and liens upon the Collateral, including, but not limited to:
(i)  executing financing statements or amendments thereto when and as reasonably
requested  by  MLBFS;  and  (ii)  if  in  the reasonable judgment of MLBFS it is
required by local law, causing the owners and/or mortgagees of the real property
on  which  any Collateral may be located to execute and deliver to MLBFS waivers
or subordinations reasonably satisfactory to MLBFS with respect to any rights in
such  Collateral.

(f)  BINDING  EFFECT.  This  Agreement  shall  be  binding  upon Grantor and its
successors  and  assigns,  and  shall  inure  to  the  benefit  of MLBFS and its
successors  and  assigns.

(g)  HEADINGS. Captions and section and paragraph headings in this Agreement are
inserted  only  as  a  matter  of  convenience,  and  shall  not  affect  the
interpretation  hereof.

(h)  GOVERNING LAW. This Agreement shall be governed in all respects by the laws
of  the  State  of  Illinois.

(i)  SEVERABILITY  OF  PROVISIONS.  Whenever  possible,  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law.  Any  provision  of  this  Agreement  which  is  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only  to the extent of such prohibition or unenforceability without invalidating
the  remaining  provisions  of  this  Agreement  or  affecting  the  validity or
enforceability  of  such  provision  in  any  other  jurisdiction.

(j)  TERM.  This Agreement shall become effective upon acceptance by MLBFS, and,
subject  to  the  terms  hereof,  shall continue in effect so long thereafter as
either MLBFS shall be committed to advance funds or extend credit to Customer or
there  shall  be  any  Obligations  outstanding.

(k)  COUNTERPARTS.  This  Agreement  may be executed in one or more counterparts
which,  when  taken  together,  constitute  one  and  the  same  agreement.

(l)  JURISDICTION;  WAIVER.  GRANTOR  ACKNOWLEDGES  THAT THIS AGREEMENT IS BEING
ACCEPTED  BY  MLBFS  IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN ITS
SOLE DISCRETION, TO ENFORCE THIS AGREEMENT IN EITHER THE STATE OF ILLINOIS OR IN
ANY  OTHER  JURISDICTION WHERE GRANTOR OR ANY COLLATERAL FOR THE OBLIGATIONS MAY
BE  LOCATED.  GRANTOR IRREVOCABLY SUBMITS ITSELF TO JURISDICTION IN THE STATE OF
ILLINOIS  AND VENUE IN ANY STATE OR FEDERAL COURT IN THE COUNTY OF COOK FOR SUCH
PURPOSES, AID GRANTOR WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND
VENUE  AND  THE  CONVENIENCE OF ANY SUCH FORUM, AND ANY AND ALL RIGHTS TO REMOVE
SUCH  ACTION  FROM  STATE TO FEDERAL COURT. GRANTOR FURTHER WAIVES ANY RIGHTS TO
COMMENCE  ANY  ACTION  AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN THE COUNTY OF
COOK  AND  STATE  OF ILLINOIS. MLBFS AND GRANTOR HEREBY EACH EXPRESSLY WAIVE ANY
AND  ALL  RIGHTS  TO  A  TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT  BY  EITHER  OF  THE PARTIES AGAINST THE OTHER PARTY WITH RESPECT TO ANY
MATTER  RELATING  TO,  ARISING  OUT  OF  OR  IN  ANY WAY CONNECTED WITH THE LOAN
AGREEMENT,  THIS  AGREEMENT AND/OR ANY OF THE TRANSACTIONS WHICH ARE THE SUBJECT
MATTER OF THE LOAN AGREEMENT OR THIS AGREEMENT. GRANTOR FURTHER WAIVES THE RIGHT
TO  BRING  ANY  NON-COMPULSORY  COUNTERCLAIMS.

(m) INTEGRATION. THIS WRITTEN AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING AND
REPRESENTS  THE FULL AND FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE
SUBJECT  MATTER HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN
AGREEMENTS  OR  PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. NO AMENDMENT OR
MODIFICATION  OF THIS AGREEMENT SHALL BE EFFECTIVE UNLESS IN A WRITING SIGNED BY
BOTH  MLBFS  AND  GRANTOR.

IN  WITNESS  WHEREOF,  this  Agreement  has been executed as of the day and year
first  above  written.

TELCO BILLING INC.

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

                                      -6-
<PAGE>
Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.

By: _________________________________

                                      -7-
<PAGE>
                                    EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF SECURITY AGREEMENT NO. 412-02104 BETWEEN
MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND TELCO BILLING INC.
================================================================================

LOCATIONS OF TANGIBLE COLLATERAL:

<PAGE>
[GRAPHIC OMITED]
Merrill Lynch                                 LANDLORD'S SUBORDINATION AGREEMENT
================================================================================

The  undersigned  LANDLORD  is the record owner and lessor to TELCO BILLING INC.
("Tenant")  of the real property commonly known as 4840 E. JASMINE STREET, SUITE
105,  MESA,  ARIZONA  85205  (the  "Premises").

Landlord  has  been  advised that MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
("MLBFS") has or is about to lend moneys to, extend or continue to extend credit
to  or  for  the benefit of, or enter into another financial accommodation with,
Tenant,  or  for  the  benefit  of  a  third  party based upon the credit and/or
collateral  of Tenant, and in connection therewith that Tenant has granted or is
about  to  grant  to  MLBFS  a security interest in, among other collateral, tie
following  property  of  Tenant;  to  wit:

     all accounts receivable, equipment, inventory, removable trade fixtures and
     other  tangible  and intangible personal property now or hereafter owned by
     Tenant  ("MLBFS'  Collateral").

Among  other  conditions  thereof,  MLBFS has required that Landlord execute and
deliver  this  Agreement.

Accordingly,  and  for  valuable  consideration,  the receipt and sufficiency of
which  is  hereby  acknowledged,  Landlord  hereby  agrees  as  follows:

1.  Landlord  hereby  subordinates for the benefit of MLBFS, and with respect to
all  present  and future obligations of or secured by Tenant to MLBFS, any right
or  interest  in MLBFS' Collateral which, but for this Agreement, would or might
be  prior  to the security interests of MLBFS, as aforesaid; and Landlord agrees
so  long  as  Tenant shall be obligated to MLBFS, it will not, without the prior
consent  of  MLBFS,  exercise any right under local law to levy or distrain upon
any  of  MLBFS'  Collateral.

2.  Landlord  further agrees that in the event that MLBFS shall at any time seek
to  take  possession  of or remove all or any part of MLBFS' Collateral from the
Premises,  Landlord will not hinder the same or interfere or object thereto, and
Landlord  hereby  consents  to MLBFS' entry upon the Premises for such purposes;
provided,  however,  that:  (i) any such removal shall be made during reasonable
business  hours;  (ii)  MLBFS  shall  not,  without the prior written consent of
Landlord,  conduct  any  public or auction sale on the Premises; and (iii) MLBFS
shall  promptly at its expense repair any damage to the Premises directly caused
by  any  such  removal  by  MLBFS  or  its  agents of MLBFS' Collateral from the
Premises.

This  Agreement shall be binding upon and shall inure to the benefit of Landlord
and  it  successors,  assigns,  heirs  and/or  personal  representatives,  as
applicable,  and  MLBFS  and  its  successors  and  assigns.

Dated as of April 13,2004.

LANDLORD: ____________________________________________________

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

<PAGE>
[GRAPHIC OMITED]
Merrill Lynch                                             COMPLIANCE CERTIFICATE
================================================================================

To:  Merrill Lynch Business Financial Services Inc. ("MLBFS")
     222 North LaSalle Street
     17* Floor
     Chicago, IL 60601

The  undersigned,  on  behalf  of YP.NET, INC. ("Customer"), hereby certifies to
MLBFS  that:  (i)  he/she  is  an officer authorized to execute and deliver this
certificate  on  behalf  of  Customer,  and  is  familiar  with the business and
financial  condition  of  tine Customer; (ii) the financial statements delivered
with  this  Certificate  fairly  present in all material respects the results of
operations  and  financial  condition  of  Customer; and (ill) to the best of my
knowledge  and  belief,  after  reasonable  investigation, each of the following
statements  is  true and correct as of the date hereof: (a) no Event of Default,
or  event  which  with  the  giving  of  notice, passage of time, or both, would
constitute  and Event of Default, has occurred or is continuing, (b) no material
adverse  change  in  the  financial  condition  of  Customer  has occurred or is
continuing,  and  (c)  the  attached  annexations, which are hereby incorporated
herein  by  reference,  are accurate, true and correct, and do not fail to state
any material fact known (or should have been known) to Customer which would, but
for  the  lapse  of  time,  make  any such statement or calculation false in any
respect.

DATE: _________________________

YP.NET, INC.

By:___________________________________________________________

         Signature (1)                  Signature (2)

______________________________________________________________
         Printed Name                   Printed Name

______________________________________________________________
            Title                           Title

================================================================================
INSTRUCTIONS: IN ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT (TO WHICH THIS
ORIGINAL FORM OF COMPLIANCE CERTIFICATE IS ATTACHED AS EXHIBIT B), THIS
COMPLIANCE CERTIFICATE AND THE ATTACHED ANNEXATIONS MUST BE COMPLETED BY YOU
WITHIN 45 DAYS AFTER THE CLOSE OF EACH FISCAL QUARTER MLBFS EXPECTS YOU TO MAKE
COPIES OF THIS ORIGINAL FORM OF COMPLIANCE CERTIFICATE AND SEND THEM TO MLBFS
WITHOUT NOTIFICATION OR REMINDER. ADDITIONAL COPIES WILL BE PROVIDED TO YOU UPON
REQUEST.
================================================================================

<PAGE>
                        FIXED CHARGE COVERAGE RATIO ANNEX
             TO COMPLIANCE CERTIFICATE (EXHIBIT B TO LOAN AGREEMENT)

     Customer's  "Fixed Charge Coverage Ratio" shall at all times exceed 1.50 to
     1.00.  For  purposes  hereof,  "Fixed Charge Coverage Ratio" shall mean the
     ratio  of:  (a) income before interest (including payments in the nature of
     interest  under  capital  leases),  taxes,  depreciation, amortization, and
     other  similar  non-cash  charges,  minus  any  internally financed capital
     expenditures,  to  (b) the sum of (i) any dividends and other distributions
     paid  or  payable  to  shareholders,  any  taxes paid in cash, and interest
     expense,  as  determined  on  a  trailing  12-month  basis,  plus  (ii) the
     aggregate  principal scheduled to be paid or accrued over the next 12 month
     period and the aggregate rental under capital leases schedule to be paid or
     accrued  over  the  next  12  month  period; all as set forth in Customer's
     regular  quarterly  financial  statements prepared in accordance with GAAP.

     As  of_________________(insert  quarter-end  date)  for  the prior trailing
     12-month  period:

     Net after-tax income                           $___________________________
     taxes (+)                                      $___________________________
     interest (+)                                   $___________________________
     depreciation (+)                               $___________________________
     amortization (+)                               $___________________________
     other non-cash charges (+)                     $___________________________
     internally financed capital expenditures (-)   $___________________________
(a)  Total EBITDA(=)                                $___________________________

     div./distr. to owners (+)                      $___________________________
     taxes paid in cash (+)                         $___________________________
     interest expense (+)                           $___________________________
     scheduled principal next 12 months (+)         $___________________________
     rents under capital leases next 12 months (+)  $___________________________
(b)  Total fixed charges (=)                        $___________________________

     Fixed Charge Coverage Ratio (alb) __________to 1.00

                                                     In Compliance?  Yes / No

<PAGE>
                              LEVERAGE RATIO ANNEX
             TO COMPLIANCE CERTIFICATE (EXHIBIT B TO LOAN AGREEMENT)

     Customer's  "Leverage Ratio" shall not at any time exceed 1.50 to 1.00. For
     purposes  hereof, "Leverage Ratio" shall mean the ratio of Customer's total
     liabilities to Customer's Tangible Net Worth. The term 'Tangible Net Worth"
     shall  mean  Customer's  net worth as shown on Customer's regular financial
     statements  prepared in accordance with GAAP, but excluding an amount equal
     to:  (i)  any  Intangible  Assets,  and  (ii)  any amounts now or hereafter
     directly  or  indirectly  owing  to  Customer  by officers, shareholders or
     affiliates  of Customer. "Intangible Assets" shall mean the total amount of
     goodwill,  patents,  trade  names,  trade  or  service  marks,  copyrights,
     experimental  expense,  organization expense, unamortized debt discount and
     expense,  the  excess of cost of shares acquired over book value of related
     assets,  and  such  other  assets as are properly classified as "intangible
     assets"  of  the  Customer  determined  in  accordance  with  GAAP.

     As of_________________(insert quarter-end date):

(a) Total Liabilities                             $__________________

    Beginning Total Net Worth                     $__________________

    Distributions/advances/loans to
    Shareholders, officers and affiliates (-)     $__________________

    Intangible Assets (-)                         $__________________

(b) Tangible Net Worth (=)                        $__________________

    Leverage Ratio (a/b)__________to 1.00

                                                         In Compliance? Yes / No

<PAGE>

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