Document:

Unassociated Document

    
      Exhibit
        10.53

       

      XFONE,
        INC. AND CERTAIN OF ITS SUBSIDIARIES

      MASTER
        SECURITY AGREEMENT

      
         

      

      

        
          	
                  To:

                	
                  Laurus
                    Master Fund, Ltd.

                
	 	
                  c/o
                    M&C Corporate Services Limited

                
	 	
                  P.O.
                    Box 309 GT

                
	 	
                  Ugland
                    House

                
	 	
                  South
                    Church Street

                
	 	
                  George
                    Town

                
	 	
                  Grand
                    Cayman, Cayman Islands

                

        

      

       

      Date:
        September 27, 2005

       

      To
        Whom
        It May Concern:

       

      1.  To
        secure
        the payment of all Obligations (as hereafter defined), XFONE, INC., a Nevada
        corporation (the “Company”), each of the other undersigned parties (other than
        Laurus Master Fund, Ltd., (“Laurus”)), and each other entity that is required to
        enter into this Master Security Agreement (each an “Assignor” and, collectively,
        the “Assignors”) hereby assigns and grants to Laurus a continuing security
        interest in all of the following property now owned or at any time hereafter
        acquired by such Assignor, or in which such Assignor now has or at any time
        in
        the future may acquire any right, title or interest (the “Collateral”): all
        cash, cash equivalents, accounts, accounts receivable, deposit accounts,
        inventory, equipment, goods, fixtures, documents, instruments (including,
        without limitation, promissory notes), contract rights, general intangibles
        (including, without limitation, payment intangibles and an absolute right
        to
        license on terms no less favorable than those current in effect among such
        Assignor’s affiliates), chattel paper, supporting obligations, investment
        property (including, without limitation, all partnership interests, limited
        liability company membership interests and all other equity interests owned
        by
        any Assignor), letter-of-credit rights, trademarks, trademark applications,
        tradestyles, patents, patent applications, copyrights, copyright applications
        and other intellectual property in which such Assignor now has or hereafter
        may
        acquire any right, title or interest, all proceeds and products thereof
        (including, without limitation, proceeds of insurance) and all additions,
        accessions and substitutions thereto or therefor. In the event any Assignor
        wishes to finance the acquisition in the ordinary course of business of any
        hereafter acquired equipment and has obtained a written commitment from an
        unrelated third party financing source to finance such equipment, Laurus
        shall
        release its security interest on such hereafter acquired equipment so financed
        by such third party financing source. Except as otherwise defined herein,
        all
        capitalized terms used herein shall have the meanings provided such terms
        in the
        Securities Purchase Agreement referred to below. Notwithstanding the foregoing
        Section 1, other than those parties who have executed and delivered this
        Agreement on the date hereof, only Subsidiaries (as defined in the Securities
        Purchase Agreement) created, established or acquired after the date hereof,
        shall be required to become joined hereto as additional Assignors.
        Notwithstanding the provisions of this Section 1, solely with respect to
        the
        Company (and not the other undersigned parties hereto), Collateral, as defined
        above, shall be limited to all personal property and assets and the proceeds
        thereof (including, without limitation, any equity interests held by the
        Company
        on the date hereof) in which the Company has any right, title or interest
        on the
        date hereof, and only to the extent such personal property, assets or proceeds
        are located within in the United States or arise under the law of the United
        States or any state thereof. The defined term “Collateral” shall not include any
        equity interests of Story Telecom, Inc. so long as Story Telecom, Inc. is
        not a
        wholly-owned subsidiary of the Company or any of its Subsidiaries.

       

      2.  The
        term
“Obligations” as used herein shall mean and include all debts, liabilities and
        obligations owing by each Assignor to Laurus arising under, out of, or in
        connection with: (i) that certain Securities Purchase Agreement dated as
        of the
        date hereof by and between the Company and Laurus (the “Securities Purchase
        Agreement”) and (ii) the Related Agreements referred to in the Securities
        Purchase Agreement (the Securities Purchase Agreement and each Related
        Agreement, as each may be amended, modified, restated or supplemented from
        time
        to time, collectively, the “Documents”), and in connection with any documents,
        instruments or agreements relating to or executed in connection with the
        Documents or any documents, instruments or agreements referred to therein
        or
        otherwise, and in connection with any other indebtedness, obligations or
        liabilities of each such Assignor to Laurus, whether now existing or hereafter
        arising, direct or indirect, liquidated or unliquidated, absolute or contingent,
        due or not due and whether under, pursuant to or evidenced by a note, agreement,
        guaranty, instrument or otherwise, including, without limitation, obligations
        and liabilities of each Assignor for post-petition interest, fees, costs
        and
        charges that accrue after the commencement of any case by or against such
        Assignor under any bankruptcy, insolvency, reorganization or like proceeding
        (collectively, the “Debtor Relief Laws”) in each case, irrespective of the
        genuineness, validity, regularity or enforceability of such Obligations,
        or of
        any instrument evidencing any of the Obligations or of any collateral therefor
        or of the existence or extent of such collateral, and irrespective of the
        allowability, allowance or disallowance of any or all of the Obligations
        in any
        case commenced by or against any Assignor under any Debtor Relief
        Law.

       

      3.  Each
        Assignor hereby jointly and severally represents, warrants and covenants
        to
        Laurus that:

       

      (a)  it
        is a
        corporation, partnership or limited liability company, as the case may be,
        validly existing, in good standing and formed under the respective laws of
        its
        jurisdiction of formation set forth on Schedule A, and each Assignor will
        provide Laurus thirty (30) days’ prior written notice of any change in any of
        its respective jurisdiction of formation;

       

      (b)  its
        legal
        name is as set forth in its Certificate of Incorporation or other organizational
        document (as applicable) as amended through the date hereof and as set forth
        on
        Schedule A, and it will provide Laurus thirty (30) days’ prior written notice of
        any change in its legal name;

       

      (c)  its
        organizational identification number (if applicable) is as set forth on Schedule
        A hereto, and it will provide Laurus thirty (30) days’ prior written notice of
        any change in its organizational identification number;

       

      (d)  subject
        to regulatory law and rules where the Assignors operate and conduct their
        business, each Assignor is the lawful owner of its Collateral and it has
        the
        sole right to grant a security interest therein and will defend the Collateral
        against all claims and demands of all persons and entities;

       

      (e)  it
        will
        keep its Collateral free and clear of all attachments, levies, taxes, liens,
        security interests and encumbrances of every kind and nature (“Encumbrances”),
        except (i) Encumbrances securing the Obligations and (ii) Encumbrances securing
        indebtedness of each such Assignor not to exceed $100,000 in the aggregate
        for
        all such Assignors so long as all such Encumbrances are removed or otherwise
        released to Laurus’ satisfaction within ten (10) days of the creation
        thereof;

       

      (f)  it
        will,
        at its and the other Assignors’ joint and several cost and expense keep the
        Collateral in good state of repair (ordinary wear and tear excepted) and
        will
        not waste or destroy the same or any part thereof other than ordinary course
        discarding of items no longer used or useful in its or such other Assignors’
        business;

       

      (g)  it
        will
        not, without Laurus’ prior written consent, sell, exchange, lease or otherwise
        dispose of any Collateral, whether by sale, lease or otherwise, except for
        the
        sale of inventory in the ordinary course of business and for the disposition
        or
        transfer in the ordinary course of business during any fiscal year of obsolete
        and worn-out equipment or equipment no longer necessary for its ongoing needs,
        having an aggregate fair market value of not more than $50,000 and only to
        the
        extent that:

       

      (i)  the
        proceeds of each such disposition are used to acquire replacement Collateral
        which is subject to Laurus’ first priority perfected security interest, or are
        used to repay the Obligations or to pay general corporate expenses;
        or

       

      (ii)  following
        the occurrence of an Event of Default which continues to exist the proceeds
        of
        which are remitted to Laurus to be held as cash collateral for the
        Obligations;

       

      (h)  it
        will
        insure or cause the Collateral to be insured in Laurus’ name (as an additional
        insured and loss payee) against loss or damage by fire, theft, burglary,
        pilferage, loss in transit and such other hazards as Laurus shall specify
        in
        amounts and under policies by insurers acceptable to Laurus and all premiums
        thereon shall be paid by such Assignor and the policies delivered to Laurus.
        If
        any such Assignor fails to do so, Laurus may procure such insurance and the
        cost
        thereof shall be promptly reimbursed by the Assignors, jointly and severally,
        and shall constitute Obligations;

       

      (i)  it
        will,
        in accordance with Section 6.6 of the Securities Purchase Agreement at all
        reasonable times allow Laurus or Laurus’ representatives free access to and the
        right of inspection of the Collateral; 

       

      (j)  such
        Assignor (jointly and severally with each other Assignor) hereby indemnifies
        and
        saves Laurus harmless from all loss, costs, damage, liability and/or expense,
        including reasonable attorneys’ fees, that Laurus may sustain or incur to
        enforce payment, performance or fulfillment of any of the Obligations and/or
        in
        the enforcement of this Master Security Agreement or in the prosecution or
        defense of any action or proceeding either against Laurus or any Assignor
        concerning any matter growing out of or in connection with this Master Security
        Agreement, and/or any of the Obligations and/or any of the Collateral except
        to
        the extent caused by Laurus’ own gross negligence or willful misconduct (as
        determined by a court of competent jurisdiction in a final and nonappealable
        decision ; and 

       

      (k)  On
        or
        prior to the Closing Date (or such later date as may be agreed by Laurus
        in
        writing), each Assignor will (x) irrevocably direct all of its present and
        future Account Debtors (as defined below) and other persons or entities
        obligated to make payments constituting Collateral to make such payments
        directly to the lockboxes maintained by such Assignor (the “Lockboxes”) with
        AmSouth Bank or such other financial institution accepted by Laurus in writing
        as may be selected by the Company (the “Lockbox Bank”) (each such direction
        pursuant to this clause (x), a “Direction Notice”) and (y) provide Laurus with
        copies of each Direction Notice, each of which shall be agreed to and
        acknowledged by the respective Account Debtor. The Lockbox Bank shall agree
        to
        deposit the proceeds of such payments immediately upon receipt thereof in
        that
        certain deposit account maintained at the Lockbox Bank and evidenced by the
        account name of Xfone, USA, Inc. and the account number of 000905179, or
        such
        other deposit account accepted by Laurus in writing (the “Lockbox Deposit
        Account”). On or prior to the Closing Date, the Company shall and shall cause
        the Lockbox Bank to enter into all such documentation acceptable to Laurus
        pursuant to which, among other things, the Lockbox Bank agrees to, following
        notification by Laurus (which notification Laurus shall only give following
        the
        occurrence and during the continuance of an Event of Default), comply only
        with
        the instructions or other directions of Laurus concerning the Lockbox and
        the
        Lockbox Deposit Account. All of each Assignor’s invoices, account statements and
        other written or oral communications directing, instructing, demanding or
        requesting payment of any Account (as hereinafter defined) of any such Assignor
        or any other amount constituting Collateral shall conspicuously direct that
        all
        payments be made to the Lockbox or such other address as Laurus may direct
        in
        writing. If, notwithstanding the instructions to Account Debtors, any Assignor
        receives any payments, such Assignor shall immediately remit such payments
        to
        the Lockbox Deposit Account in their original form with all necessary
        endorsements. Until so remitted, the Assignors shall hold all such payments
        in
        trust for and as the property of Laurus and shall not commingle such payments
        with any of its other funds or property. For the purpose of this Master Security
        Agreement, (x) “Accounts” shall mean all “accounts”, as such term is
        defined in the Uniform Commercial Code as in effect in the State of New York
        on
        the date hereof, now owned or hereafter acquired by any Assignor and (y)
        “Account Debtor” shall mean any person or entity who is or may be obligated with
        respect to, or on account of, an Account. 

       

      (l)  No
        account debtor notification letter, substantially in the form and substance
        delivered to Laurus on the date hereof shall be sent to any Account Debtor
        absent an Event of Default that has occurred and is continuing beyond any
        applicable grace period.

       

      

       

      4.  The
        occurrence of any of the following events or conditions shall constitute
        an
“Event of Default” under this Master Security Agreement:

       

      (a)  any
        covenant or any other term or condition of this Master Security Agreement
        is
        breached in any material respect and such breach, to the extent subject to
        cure,
        shall continue without remedy for a period of twenty (20) days after the
        occurrence thereof;

       

      (b)  any
        representation or warranty, or statement made or furnished to Laurus under
        this
        Master Security Agreement by any Assignor or on any Assignor’s behalf should
        prove to any time be false or misleading in any material respect on the date
        as
        of which made or deemed made;

       

      (c)  the
        loss,
        theft, substantial damage, destruction, sale or encumbrance to or of any
        of the
        Collateral or the making of any levy, seizure or attachment thereof or thereon
        except to the extent:

       

      (i)  such
        loss
        is covered by insurance proceeds which are used to replace the item or repay
        Laurus; or

       

      (ii)  said
        levy, seizure or attachment does not secure indebtedness in excess of $100,000
        in the aggregate for all Assignors and such levy, seizure or attachment has
        been
        removed or otherwise released within ten (10) days of the creation or the
        assertion thereof;

       

      (d)  an
        Event
        of Default shall have occurred under and as defined in any Document.

       

      5.  Upon
        the
        occurrence and during the continuance of any Event of Default and at any
        time
        thereafter, Laurus may declare all Obligations immediately due and payable
        and
        Laurus shall have the remedies of a secured party provided in the Uniform
        Commercial Code as in effect in the State of New York, this Agreement and
        other
        applicable law. Upon the occurrence of any Event of Default and at any time
        thereafter, Laurus will have the right to take possession of the Collateral
        and
        to maintain such possession on any Assignor’s premises or to remove the
        Collateral or any part thereof to such other premises as Laurus may desire.
        Upon
        Laurus’ request, each Assignor shall assemble or cause the Collateral to be
        assembled and make it available to Laurus at a place designated by Laurus.
        If
        any notification of intended disposition of any Collateral is required by
        law,
        such notification, if mailed, shall be deemed properly and reasonably given
        if
        mailed at least ten (10) days before such disposition, postage prepaid,
        addressed to the applicable Assignor either at such Assignor’s address shown
        herein or at any address appearing on Laurus’ records for such Assignor. Any
        proceeds of any disposition of any of the Collateral shall be applied by
        Laurus
        to the payment of all expenses in connection with the sale of the Collateral,
        including reasonable attorneys’ fees and other legal expenses and disbursements
        and the reasonable expenses of retaking, holding, preparing for sale, selling,
        and the like, and any balance of such proceeds may be applied by Laurus toward
        the payment of the Obligations in such order of application as Laurus may
        elect,
        and each Assignor shall be liable for any deficiency. For the avoidance of
        doubt, following the occurrence and during the continuance of an Event of
        Default, Laurus shall have the immediate right to withdraw any and all monies
        contained in any deposit account in the name of any Assignor and controlled
        by
        Laurus and apply same to the repayment of the Obligations (in such order
        of
        application as Laurus may elect).

       

      6.  If
        any
        Assignor defaults in the performance or fulfillment of any of the terms,
        conditions, promises, covenants, provisions or warranties on such Assignor’s
        part to be performed or fulfilled under or pursuant to this Master Security
        Agreement, Laurus may, at its option without waiving its right to enforce
        this
        Master Security Agreement according to its terms, immediately or at any time
        thereafter and without notice to any Assignor, perform or fulfill the same
        or
        cause the performance or fulfillment of the same for each Assignor’s joint and
        several account and at each Assignor’s joint and several cost and expense, and
        the cost and expense thereof (including reasonable attorneys’ fees) shall be
        added to the Obligations and shall be payable on demand with interest thereon
        at
        the highest rate permitted by law, or, at Laurus’ option, debited by Laurus from
        any other deposit accounts in the name of any Assignor and controlled by
        Laurus.

       

      7.  Each
        Assignor appoints Laurus, any of Laurus’ officers, employees or any other person
        or entity whom Laurus may designate as such Assignor’s attorney, with power to
        execute such documents in each such Assignor’s behalf and to supply any omitted
        information and correct patent errors in any documents executed by any Assignor
        or on any Assignor’s behalf; to file financing statements against such Assignor
        covering the Collateral (and, in connection with the filing of any such
        financing statements, describe the Collateral as “all assets and all personal
        property, whether now owned and/or hereafter acquired” (or any substantially
        similar variation thereof)); to sign such Assignor’s name on public records; and
        to do all other things Laurus deem necessary to carry out this Master Security
        Agreement. Each Assignor hereby ratifies and approves all acts of the attorney
        and neither Laurus nor the attorney will be liable for any acts of commission
        or
        omission, nor for any error of judgment or mistake of fact or law other than
        gross negligence or willful misconduct (as determined by a court of competent
        jurisdiction in a final and non-appealable decision). This power being coupled
        with an interest, is irrevocable so long as any Obligations remains unpaid.
        

       

      8.  No
        delay
        or failure on Laurus’ part in exercising any right, privilege or option
        hereunder shall operate as a waiver of such or of any other right, privilege,
        remedy or option, and no waiver whatever shall be valid unless in writing,
        signed by Laurus and then only to the extent therein set forth, and no waiver
        by
        Laurus of any default shall operate as a waiver of any other default or of
        the
        same default on a future occasion. Laurus’ books and records containing entries
        with respect to the Obligations shall be admissible in evidence in any action
        or
        proceeding, shall be binding upon each Assignor for the purpose of establishing
        the items therein set forth and shall constitute prima facie proof thereof.
        Laurus shall have the right to enforce any one or more of the remedies available
        to Laurus, successively, alternately or concurrently. Each Assignor agrees
        to
        join with Laurus in executing such documents or other instruments to the
        extent
        required by the Uniform Commercial Code in form satisfactory to Laurus and
        in
        executing such other documents or instruments as may be required or deemed
        necessary by Laurus for purposes of affecting or continuing Laurus’ security
        interest in the Collateral.

       

      9.  THIS
        MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
        IN
        ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
        MADE
        AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
        LAWS.
        All of the rights, remedies, options, privileges and elections given to Laurus
        hereunder shall inure to the benefit of Laurus’ successors and assigns. The term
“Laurus” as herein used shall include Laurus, any parent of Laurus’, any of
        Laurus’ subsidiaries and any co-subsidiaries of Laurus’ parent, whether now
        existing or hereafter created or acquired, and all of the terms, conditions,
        promises, covenants, provisions and warranties of this Agreement shall inure
        to
        the benefit of each of the foregoing, and shall bind the representatives,
        successors and assigns of each Assignor.

       

      10.  Each
        Assignor hereby consents and agrees that the state of federal courts located
        in
        the County of New York, State of New York shall have exclusive jurisdiction
        to
        hear and determine any claims or disputes between Assignor, on the one hand,
        and
        Laurus, on the other hand, pertaining to this Master Security Agreement or
        to
        any matter arising out of or related to this Master Security Agreement,
        provided, that Laurus and each Assignor acknowledges that any appeals from
        those
        courts may have to be heard by a court located outside of the County of New
        York, State of New York, and further provided, that nothing in this Master
        Security Agreement shall be deemed or operate to preclude Laurus from bringing
        suit or taking other legal action in any other jurisdiction to collect, the
        Obligations, to realize on the Collateral or any other security for the
        Obligations, or to enforce a judgment or other court order in favor of Laurus.
        Each Assignor expressly submits and consents in advance to such jurisdiction
        in
        any action or suit commenced in any such court, and each Assignor hereby
        waives
        any objection which it may have based upon lack of personal jurisdiction,
        improper venue or forum non conveniens.
        Each
        Assignor hereby waives personal service of the summons, complaint and other
        process issues in any such action or suit and agrees that service of such
        summons, complaint and other process may be made by registered or certified
        mail
        addressed to such assignor at the address set forth on the signature lines
        hereto and that service so made shall be deemed completed upon the earlier
        of
        such Assignor’s actual receipt thereof or three (3) days after deposit in the
        U.S. mails, proper postage prepaid.

       

      The
        parties desire that their disputes be resolved by a judge applying such
        applicable laws. Therefore, to achieve the best combination of the benefits
        of
        the judicial system and of arbitration, the parties hereto waive all rights
        to
        trial by jury in any action, suite, or proceeding brought to resolve any
        dispute, whether arising in contract, tort, or otherwise between Laurus,
        and/or
        any Assignor arising out of, connected with, related or incidental to the
        relationship established between them in connection with this Master Security
        Agreement or the transactions related hereto.

       

      11.  It
        is
        understood and agreed that any person or entity that desires to become an
        Assignor hereunder, or is required to execute a counterpart of this Master
        Security Agreement after the date hereof pursuant to the requirements of
        any
        Document, shall become an Assignor hereunder by (x) executing a Joinder
        Agreement in form and substance satisfactory to Laurus, (y) delivering
        supplements to such exhibits and annexes to such Documents as Laurus shall
        reasonably request and (z) taking all actions as specified in this Master
        Security Agreement as would have been taken by such Assignor had it been
        an
        original party to this Master Security Agreement, in each case with all
        documents required above to be delivered to Laurus and with all documents
        and
        actions required above to be taken to the reasonable satisfaction of
        Laurus.

       

      12.  All
        notices from Laurus to any Assignor shall be sufficiently given if mailed
        or
        delivered to such Assignor’s address set forth pursuant to the provisions of
        Section 11.8 of the Securities Purchase Agreement. 

       

      13.  This
        Master Security Agreement shall terminate and be of no further force or effect
        and expire upon the irrevocable repayment in full of the Obligations. Without
        prejudice to the generality of the above, if the all of the Obligations have
        been satisfied through the conversion into common stock of Xfone, Inc. and/or
        the Note has been redeemed prior to its Maturity Date (as defined therein)
        then
        Laurus will within seven (7) days of such event remove all liens, interests
        and
        other such legal and financial security interests, including the UCC-1 Filings
        existing in its favor against the Collateral.

       

      

       

      Very
        truly yours,

       

      

       

      XFONE,
        INC.

       

      By:
        ____________________

      Name:
        Guy
        Nissenson

      Title:
        President & CEO

      Address:

       

      XFONE
        USA, INC.

       

      By:
        ____________________

      Name:
        Wade Spooner

      Title:
        President & CEO

      Address:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      EXPETEL
        COMMUNICATIONS, INC.

       

      By:
        ____________________

      Name:
        Wade Spooner

      Title:
        President & CEO

      Address:

       

      GULF
        COAST UTILITIES, INC.

       

      By:
        ____________________

      Name:
        Wade Spooner

      Title:
        President & CEO

      Address:

       

      

       

      

       

      

       

      ACKNOWLEDGED:

       

      LAURUS
        MASTER FUND, LTD.

       

      By:______________________

      Name:

      Title:

       

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

          
          

        

      

       

      SCHEDULE
        A

       

      
        	
                Entity

              	
                Jurisdiction
                  of 

                Formation

              	
                Organization
                  Identification Number

              
	
                XFONE,
                  INC.

              	
                Nevada

              	
                C23688-2000

              
	
                XFONE
                  USA, INC.

              	
                Mississippi

              	
                856153

              
	
                EXPETEL
                  COMMUNICATIONS, INC

              	
                 

                Mississippi

              	
                711539

              
	
                GULF
                  COAST UTILITIES, INC.

              	
                 

                Mississippi

              	
                741008Unassociated Document

    
      Exhibit
        10.54

       

      STOCK
        PLEDGE AGREEMENT

       

       

      This
        Stock Pledge Agreement (this “Agreement”),
        dated
        as of September 27, 2005, among Laurus Master Fund, Ltd. (the “Pledgee”),
        XFONE, INC., a Nevada corporation (the “Company”),
        and
        each of the other undersigned parties (other than the Pledgee) (the Company
        and
        each such other undersigned party, a “Pledgor”
        and
        collectively, the “Pledgors”).

       

      BACKGROUND

       

      The
        Company has entered into a Securities Purchase Agreement, dated as of September
        27, 2005 (as amended, modified, restated or supplemented from time to time,
        the
“Securities
        Purchase Agreement”),
        pursuant to which the Pledgee provides or will provide financial accommodations
        to the Company in the total amount of US $2,000,000.

       

      In
        order
        to induce the Pledgee to provide or continue to provide the financial
        accommodations described in the Securities Purchase Agreement, each Pledgor
        has
        agreed to pledge and grant a security interest in the collateral described
        herein to the Pledgee on the terms and conditions set forth herein.

       

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

       

      1.  Defined
        Terms.
        All
        capitalized terms used herein which are not defined shall have the meanings
        given to them in the Securities Purchase Agreement.

       

      2.  Pledge
        and Grant of Security Interest.
        To
        secure the full and punctual payment and performance of (the following clauses
        (a) and (b), collectively, the “Obligations”)
        (a)
        the obligations under the Securities Purchase Agreement and the Related
        Agreements referred to in the Securities Purchase Agreement (the Securities
        Purchase Agreement and the Related Agreements, as each may be amended, restated,
        modified and/or supplemented from time to time, collectively, the “Documents”)
        and
        (b) all other obligations and liabilities of each Pledgor to the Pledgee
        whether
        now existing or hereafter arising, direct or indirect, liquidated or
        unliquidated, absolute or contingent, due or not due and whether under, pursuant
        to or evidenced by a note, agreement, guaranty, instrument or otherwise (in
        each
        case, irrespective of the genuineness, validity, regularity or enforceability
        of
        such Obligations, or of any instrument evidencing any of the Obligations
        or of
        any collateral therefor or of the existence or extent of such collateral,
        and
        irrespective of the allowability, allowance or disallowance of any or all
        of
        such in any case commenced by or against any Pledgor under Title 11, United
        States Code, including, without limitation, obligations of each Pledgor for
        post-petition interest, fees, costs and charges that would have accrued or
        been
        added to the Obligations but for the commencement of such case), each Pledgor
        hereby pledges, assigns, hypothecates, transfers and grants a security interest
        to Pledgee in all of the following (the “Collateral”):
        

       

      (a)  the
        shares of stock set forth on Schedule
        A
        annexed
        hereto and expressly made a part hereof (the “Pledged
        Stock”),
        the
        certificates representing the Pledged Stock and all dividends, cash, instruments
        and other property or proceeds from time to time received, receivable or
        otherwise distributed in respect of or in exchange for any or all of the
        Pledged
        Stock;

       

      (b)  all
        additional shares of stock of any issuer, as listed in the column entitled
        "Issuer" on Schedule A (each, an “Issuer”)
        of the
        Pledged Stock from time to time acquired by any Pledgor in any manner,
        including, without limitation, stock dividends or a distribution in connection
        with any increase or reduction of capital, reclassification, merger,
        consolidation, sale of assets, combination of shares, stock split, spin-off
        or
        split-off (which shares shall be deemed to be part of the Collateral), and
        the
        certificates representing such additional shares, and all dividends, cash,
        instruments and other property or proceeds from time to time received,
        receivable or otherwise distributed in respect of or in exchange for any
        or all
        of such shares; and

       

      (c)  all
        options and rights, whether as an addition to, in substitution of or in exchange
        for any shares of any Pledged Stock and all dividends, cash, instruments
        and
        other property or proceeds from time to time received, receivable or otherwise
        distributed in respect of or in exchange for any or all such options and
        rights.

       

      3.  Delivery
        of Collateral.
        All
        certificates representing or evidencing the Pledged Stock shall be delivered
        to
        and held by or on behalf of Pledgee pursuant hereto and shall be accompanied
        by
        duly executed instruments of transfer or assignments in blank, all in form
        and
        substance satisfactory to Pledgee (collectively, "the Stock Certificates
        and the
        Stock Powers"). Each Pledgor hereby authorizes the Issuer upon demand by
        the
        Pledgee to deliver any certificates, instruments or other distributions issued
        in connection with the Collateral directly to the Pledgee, in each case to
        be
        held by the Pledgee, subject to the terms hereof and with written notice
        to be
        sent to the Pledgor. Upon an Event of Default (as defined below) that has
        occurred and is continuing beyond any applicable grace period, the Pledgee
        shall
        have the right, during such time in its discretion and with written notice
        to
        the Pledgor, to transfer to or to register in the name of the Pledgee or
        any of
        its nominees any or all of the Pledged Stock. In addition, the Pledgee shall
        have the right at such time to exchange certificates or instruments representing
        or evidencing Pledged Stock for certificates or instruments of smaller or
        larger
        denominations.

       

      4.  Representations
        and Warranties of each Pledgor.
        Except
        for as stated in Schedule 4, each Pledgor jointly and severally represents
        and
        warrants to the Pledgee (which representations and warranties shall be deemed
        to
        continue to be made until all of the Obligations have been paid in full and
        each
        Document and each agreement and instrument entered into in connection therewith
        has been irrevocably terminated) that:

       

      (a)  the
        execution, delivery and performance by each Pledgor of this Agreement and
        the
        pledge of the Collateral hereunder do not and will not result in any violation
        of any agreement, indenture, instrument, license, judgment, decree, order,
        law,
        statute, ordinance or other governmental rule or regulation applicable to
        any
        Pledgor;

       

      (b)  this
        Agreement constitutes the legal, valid, and binding obligation of each Pledgor
        enforceable against each Pledgor in accordance with its terms;

       

      (c)  (i)
        all
        Pledged Stock owned by each Pledgor is set forth on Schedule
        A
        hereto
        and (ii) each Pledgor is the direct and beneficial owner of each share of
        the
        Pledged Stock;

       

      (d)  all
        of
        the shares of the Pledged Stock have been duly authorized, validly issued
        and
        are fully paid and nonassessable;

       

      (e)  no
        consent or approval of any person, corporation, governmental body, regulatory
        authority or other entity, is or will be necessary for (i) the execution,
        delivery and performance of this Agreement, (ii) the exercise by the Pledgee
        of
        any rights with respect to the Collateral or (iii) the pledge and assignment
        of,
        and the grant of a security interest in, the Collateral hereunder;

       

      (f)  there
        are
        no pending or, to the best of Pledgor’s knowledge, threatened actions or
        proceedings before any court, judicial body, administrative agency or arbitrator
        which may materially adversely affect the Collateral;

       

      (g)  each
        Pledgor has the requisite power and authority to enter into this Agreement
        and
        to pledge and assign the Collateral to the Pledgee in accordance with the
        terms
        of this Agreement;

       

      (h)  each
        Pledgor owns each item of the Collateral and, except for the pledge and security
        interest granted to Pledgee hereunder, the Collateral shall be, immediately
        following the closing of the transactions contemplated by the Documents,
        free
        and clear of any other security interest, mortgage, pledge, claim, lien,
        charge,
        hypothecation, assignment, offset or encumbrance whatsoever (collectively,
        “Liens”);

       

      (i)  there
        are
        no restrictions on transfer of the Pledged Stock contained in the certificate
        of
        incorporation or by-laws (or equivalent organizational documents) of the
        Issuer
        or otherwise which have not otherwise been enforceably and legally waived
        by the
        necessary parties;

       

      (j)  none
        of
        the Pledged Stock has been issued or transferred in violation of the securities
        registration, securities disclosure or similar laws of any jurisdiction to
        which
        such issuance or transfer may be subject;

       

      (k)  the
        pledge and assignment of the Collateral and the grant of a security interest
        under this Agreement vest in the Pledgee all rights of each Pledgor in the
        Collateral as contemplated by this Agreement; and

       

      (l)  The
        Pledged Stock constitutes one hundred percent (100%) of the issued and
        outstanding shares of capital stock of each Issuer.

       

      5.  Covenants.
        Each
        Pledgor jointly and severally covenants that, until the Obligations shall
        be
        indefeasibly satisfied in full and each Document and each agreement and
        instrument entered into in connection therewith is irrevocably
        terminated:

       

      (a)  No
        Pledgor will sell, assign, transfer, convey, or otherwise dispose of its
        rights
        in or to the Collateral or any interest therein; nor will any Pledgor create,
        incur or permit to exist any Lien whatsoever with respect to any of the
        Collateral or the proceeds thereof other than that created hereby. 

       

      (b)  Each
        Pledgor will, at its expense, defend Pledgee’s right, title and security
        interest in and to the Collateral against the claims of any other
        party.

       

      (c)  Each
        Pledgor shall at any time, and from time to time, upon the written request
        of
        Pledgee, execute and deliver such further documents and do such further acts
        and
        things as Pledgee may reasonably request in order to effectuate the purposes
        of
        this Agreement including, but without limitation, delivering to Pledgee,
        upon
        the occurrence of an Event of Default, irrevocable proxies in respect of
        the
        Collateral in form satisfactory to Pledgee. Until receipt thereof, upon an
        Event
        of Default that has occurred and is continuing beyond any applicable grace
        period, this Agreement shall constitute Pledgor’s proxy to Pledgee or its
        nominee to vote all shares of Collateral then registered in each Pledgor’s
        name.

       

      (d)  No
        Pledgor will consent to or approve the issuance of (i) any additional shares
        of
        any class of capital stock or other equity interests of the Issuer; or (ii)
        any
        securities convertible either voluntarily by the holder thereof or automatically
        upon the occurrence or nonoccurrence of any event or condition into, or any
        securities exchangeable for, any such shares, unless, in either case, such
        shares are pledged as Collateral pursuant to this Agreement. 

       

      6.  Voting
        Rights and Dividends.
        In
        addition to the Pledgee’s rights and remedies set forth in Section 8 hereof, in
        case an Event of Default shall have occurred and be continuing, beyond any
        applicable cure period, the Pledgee shall (i) be entitled to vote the
        Collateral, (ii) be entitled to give consents, waivers and ratifications
        in
        respect of the Collateral (each Pledgor hereby irrevocably constituting and
        appointing the Pledgee, with full power of substitution, the proxy and
        attorney-in-fact of each Pledgor for such purposes) and (iii) be entitled
        to
        collect and receive for its own use cash dividends paid on the Collateral.
        No
        Pledgor shall be permitted to exercise or refrain from exercising any voting
        rights or other powers if, in the reasonable judgment of the Pledgee, such
        action would have a material adverse effect on the value of the Collateral
        or
        any part thereof; and, provided,
        further,
        that
        each Pledgor shall give at least five (5) days’ written notice of the manner in
        which such Pledgor intends to exercise, or the reasons for refraining from
        exercising, any voting rights or other powers other than with respect to
        any
        election of directors and voting with respect to any incidental matters.
        Following the occurrence of an Event of Default which is continuing beyond
        any
        applicable grace period, all dividends and all other distributions in respect
        of
        any of the Collateral, shall be delivered to the Pledgee to hold as Collateral
        and shall, if received by any Pledgor, be received in trust for the benefit
        of
        the Pledgee, be segregated from the other property or funds of any other
        Pledgor, and be forthwith delivered to the Pledgee as Collateral in the same
        form as so received (with any necessary endorsement).

       

      7.  Event
        of Default.
        An
“Event of Default” under this Agreement shall occur upon the happening of any of
        the following events: 

       

      (a)  An
“Event
        of Default” under any Document or any agreement or note related to any Document
        shall have occurred and be continuing beyond any applicable cure
        period;

       

      (b)  Any
        Pledgor shall default in the performance of any of its obligations under
        any
        Document, including without limitation, this Agreement, and such default
        shall
        not be cured during the cure period applicable thereto;

       

      (c)  Any
        representation or warranty of any Pledgor made herein, in any Document or
        in any
        agreement, statement or certificate given in writing pursuant hereto or thereto
        or in connection herewith or therewith shall be false or misleading in any
        material respect; 

       

      (d)  Any
        portion of the Collateral is subjected to a levy of execution, attachment,
        distraint or other judicial process or any portion of the Collateral is the
        subject of a claim (other than by the Pledgee) of a Lien or other right or
        interest in or to the Collateral and such levy or claim shall not be cured,
        disputed or stayed within a period of fifteen (15) business days after the
        occurrence thereof; or

       

      (e)  Any
        Pledgor shall (i) apply for, consent to, or suffer to exist the appointment
        of,
        or the taking of possession by, a receiver, custodian, trustee, liquidator
        or
        other fiduciary of itself or of all or a substantial part of its property,
        (ii)
        make a general assignment for the benefit of creditors, (iii) commence a
        voluntary case under any state or federal bankruptcy laws (as now or hereafter
        in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
        seeking to take advantage of any other law providing for the relief of debtors,
        (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
        petition filed against it in any involuntary case under such bankruptcy laws,
        or
        (vii) take any action for the purpose of effecting any of the
        foregoing.

       

      8.  Remedies.
        In case
        an Event of Default shall have occurred and is continuing beyond any applicable
        grace period, the Pledgee may, subject to a written notice to Pledgors:

       

      (a)  Transfer
        any or all of the Collateral into its name, or into the name of its nominee
        or
        nominees;

       

      (b)  Exercise
        all corporate rights with respect to the Collateral including, without
        limitation, all rights of conversion, exchange, subscription or any other
        rights, privileges or options pertaining to any shares of the Collateral
        as if
        it were the absolute owner thereof, including, but without limitation, the
        right
        to exchange, at its discretion, any or all of the Collateral upon the merger,
        consolidation, reorganization, recapitalization or other readjustment of
        the
        Issuer thereof, or upon the exercise by the Issuer of any right, privilege
        or
        option pertaining to any of the Collateral, and, in connection therewith,
        to
        deposit and deliver any and all of the Collateral with any committee,
        depository, transfer agent, registrar or other designated agent upon such
        terms
        and conditions as it may determine, all without liability except to account
        for
        property actually received by it; and

       

      (c)  Subject
        to any requirement of applicable law, sell, assign and deliver the whole
        or,
        from time to time, any part of the Collateral at the time held by the Pledgee,
        at any private sale or at public auction, with or without demand, advertisement
        or notice of the time or place of sale or adjournment thereof or otherwise
        (all
        of which are hereby waived, except such notice as is required by applicable
        law
        and cannot be waived), for cash or credit or for other property for immediate
        or
        future delivery, and for such price or prices and on such terms as the Pledgee
        in its sole discretion may determine, or as may be required by applicable
        law.

       

      Each
        Pledgor hereby waives and releases any and all right or equity of redemption,
        whether before or after sale hereunder. At any such sale, unless prohibited
        by
        applicable law, the Pledgee may bid for and purchase the whole or any part
        of
        the Collateral so sold free from any such right or equity of redemption.
        All
        moneys received by the Pledgee hereunder, whether upon sale of the Collateral
        or
        any part thereof or otherwise, shall be held by the Pledgee and applied by
        it as
        provided in Section 10 hereof. No failure or delay on the part of the Pledgee
        in
        exercising any rights hereunder shall operate as a waiver of any such rights
        nor
        shall any single or partial exercise of any such rights preclude any other
        or
        future exercise thereof or the exercise of any other rights hereunder. The
        Pledgee shall have no duty as to the collection or protection of the Collateral
        or any income thereon nor any duty as to preservation of any rights pertaining
        thereto, except to apply the funds in accordance with the requirements of
        Section 10 hereof. The Pledgee may exercise its rights with respect to the
        Collateral without resort to other security for or sources of reimbursement
        for
        the Obligations. In addition to the foregoing, Pledgee shall have all of
        the
        rights, remedies and privileges of a secured party under the Uniform Commercial
        Code of New York (the “UCC”) regardless of the jurisdiction in which enforcement
        hereof is sought.

       

      9.  Private
        Sale.
        Each
        Pledgor recognizes that the Pledgee may be unable to effect (or to do so
        only
        after delay which would adversely affect the value that might be realized
        from
        the Collateral) a public sale of all or part of the Collateral by reason
        of
        certain prohibitions contained in the Securities Act, and may be compelled
        to
        resort to one or more private sales to a restricted group of purchasers who
        will
        be obliged to agree, among other things, to acquire such Collateral for their
        own account, for investment and not with a view to the distribution or resale
        thereof. Each Pledgor agrees that any such private sale may be at prices
        and on
        terms less favorable to the seller than if sold at public sales. Each Pledgor
        agrees that the Pledgee has no obligation to delay sale of any Collateral
        for
        the period of time necessary to permit the Issuer to register the Collateral
        for
        public sale under the Securities Act.

       

      10.  Proceeds
        of Sale.
        The
        proceeds of any collection, recovery, receipt, appropriation, realization
        or
        sale of the Collateral shall be applied by the Pledgee as follows:

       

      (a)  First,
        to
        the payment of all costs, reasonable expenses and charges of the Pledgee
        and to
        the reimbursement of the Pledgee for the prior payment of such costs, reasonable
        expenses and charges incurred in connection with the care and safekeeping
        of the
        Collateral (including, without limitation, the reasonable expenses of any
        sale
        or any other disposition of any of the Collateral), attorneys’ fees and
        reasonable expenses, court costs, any other fees or expenses incurred or
        expenditures or advances made by Pledgee in the protection, enforcement or
        exercise of its rights, powers or remedies hereunder;

       

      (b)  Second,
        to the payment of any due Obligations;

       

      (c)  Third,
        to
        such persons, firms, corporations or other entities as required by applicable
        law including, without limitation, Section 9-615(a)(3) of the UCC;
        and

       

      (d)  Fourth,
        to the extent of any surplus to the Pledgors or as a court of competent
        jurisdiction may direct.

       

      In
        the
        event that the proceeds of any collection, recovery, receipt, appropriation,
        realization or sale are insufficient to satisfy the Obligations, subject
        to the
        terms and provisions of the Subsidiary Guaranty, each Pledgor shall be jointly
        and severally liable for the deficiency plus the costs and fees of any attorneys
        employed by Pledgee to collect such deficiency.

       

      11.  Waiver
        of Marshaling.
        Each
        Pledgor hereby waives any right to compel any marshaling of any of the
        Collateral.

       

      12.  No
        Waiver.
        Any and
        all of the Pledgee’s rights with respect to the Liens granted under this
        Agreement shall continue unimpaired, and Pledgor shall be and remain obligated
        in accordance with the terms hereof, notwithstanding (a) the bankruptcy,
        insolvency or reorganization of any Pledgor, (b) the release or substitution
        of
        any item of the Collateral at any time, or of any rights or interests therein,
        or (c) any delay, extension of time, renewal, compromise or other indulgence
        granted by the Pledgee in reference to any of the Obligations. Each Pledgor
        hereby waives all notice of any such delay, extension, release, substitution,
        renewal, compromise or other indulgence, and hereby consents to be bound
        hereby
        as fully and effectively as if such Pledgor had expressly agreed thereto
        in
        advance. Each Pledgor hereby waives all notice of any such delay, extension,
        release, substitution, renewal, compromise or other indulgence, and hereby
        consents to be bound hereby as fully and effectively as if such Pledgor had
        expressly agreed thereto in advance. No delay or extension of time by the
        Pledgee in exercising any power of sale, option or other right or remedy
        hereunder, and no failure by the Pledgee to give notice or make demand, shall
        constitute a waiver thereof, or limit, impair or prejudice the Pledgee’s right
        to take any action against any Pledgor or to exercise any other power of
        sale,
        option or any other right or remedy.

       

      13.  Expenses.
        The
        Collateral shall secure, and each Pledgor shall pay to Pledgee on demand,
        from
        time to time, all reasonable costs and expenses, (including but not limited
        to,
        reasonable attorneys’ fees and costs, taxes, and all transfer, recording, filing
        and other charges) of, or incidental to, or in any way relating to the
        enforcement, protection or preservation of the rights or remedies of the
        Pledgee
        under this Agreement or with respect to any of the Obligations. 

       

      14.  The
        Pledgee Appointed Attorney-In-Fact and Performance by the
        Pledgee.
        Upon
        the occurrence of an Event of Default which is continuing beyond any applicable
        grace period, each Pledgor hereby irrevocably constitutes and appoints the
        Pledgee as such Pledgor’s true and lawful attorney-in-fact, with full power of
        substitution, to execute, acknowledge and deliver any instruments and to
        do in
        such Pledgor’s name, place and stead, all such acts, things and deeds for and on
        behalf of and in the name of such Pledgor, which such Pledgor could or might
        do
        and which the Pledgee may deem necessary to accomplish the purposes of this
        Agreement, including, without limitation, to execute such instruments of
        assignment or transfer or orders and to register, convey or otherwise transfer
        title to the Collateral into the Pledgee’s name. Each Pledgor hereby ratifies
        and confirms all that said attorney-in-fact may so do and hereby declares
        this
        power of attorney to be coupled with an interest and irrevocable. If any
        Pledgor
        fails to perform any agreement herein contained, the Pledgee may itself perform
        or cause performance thereof, and any costs and reasonable expenses of the
        Pledgee incurred in connection therewith shall be paid by the Pledgors as
        provided in Section 10 hereof.

       

      15.  Waivers.
        THE
        PARTIES HERETO DESIRES THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
        SUCH
        APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
        OF
        THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS
        TO
        TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
        WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO
        ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP
        ESTABLISHED BETWEEN THE PARTIES HERETO IN CONNECTION WITH THIS AGREEMENT,
        ANY
        OTHER DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO. 

       

      16.  Recapture.
        Notwithstanding anything to the contrary in this Agreement, if the Pledgee
        receives any payment or payments on account of the Obligations, which payment
        or
        payments or any part thereof are subsequently invalidated, declared to be
        fraudulent or preferential, set aside and/or required to be repaid to a trustee,
        receiver, or any other party under the United States Bankruptcy Code, as
        amended, or any other federal or state bankruptcy, reorganization, moratorium
        or
        insolvency law relating to or affecting the enforcement of creditors’ rights
        generally, common law or equitable doctrine, then to the extent of any sum
        not
        finally retained by the Pledgee, each Pledgor’s obligations to the Pledgee shall
        be reinstated and this Agreement shall remain in full force and effect (or
        be
        reinstated) until payment shall have been made to Pledgee, which payment
        shall
        be due on demand.

       

      17.  Captions.
        All
        captions in this Agreement are included herein for convenience of reference
        only
        and shall not constitute part of this Agreement for any other
        purpose.

       

      18.  Termination.This
        Stock Pledge Agreement shall terminate and be of no further force or effect
        upon
        the irrevocable repayment in full of the Obligations. Without prejudice to
        the
        generality of the above, if the all of the Obligations have been satisfied,
        including through the conversion of the Note into common stock of the Company
        and/or the redemption of the Note prior to its Maturity Date (as defined
        therein), then Pledgee shall return to the Pledgors
        the
        Stock Certificates and the Stock Powers.

       

      19.  Miscellaneous.

       

      (a)  This
        Agreement constitutes the entire and final agreement among the parties with
        respect to the subject matter hereof and may not be changed, terminated or
        otherwise varied except by a writing duly executed by the parties
        hereto.

       

      (b)  No
        waiver
        of any term or condition of this Agreement, whether by delay, omission or
        otherwise, shall be effective unless in writing and signed by the party sought
        to be charged, and then such waiver shall be effective only in the specific
        instance and for the purpose for which given.

       

      (c)  In
        the
        event that any provision of this Agreement or the application thereof to
        any
        Pledgor or any circumstance in any jurisdiction governing this Agreement
        shall,
        to any extent, be invalid or unenforceable under any applicable statute,
        regulation, or rule of law, such provision shall be deemed inoperative to
        the
        extent that it may conflict therewith and shall be deemed modified to conform
        to
        such statute, regulation or rule of law, and the remainder of this Agreement
        and
        the application of any such invalid or unenforceable provision to parties,
        jurisdictions, or circumstances other than to whom or to which it is held
        invalid or unenforceable shall not be affected thereby, nor shall same affect
        the validity or enforceability of any other provision of this
        Agreement.

       

      (d)  This
        Agreement shall be binding upon each Pledgor, and each Pledgor’s successors and
        assigns, and shall inure to the benefit of the Pledgee and its successors
        and
        assigns.

       

      (e)  Any
        notice or other communication required or permitted pursuant to this Agreement
        shall be given in accordance with the Securities Purchase Agreement.

       

      (f)  THIS
        AGREEMENT AND THE OTHER DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
        ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
        TO
        CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES
        OF
        CONFLICTS OF LAW.

       

      (g)  EACH
        PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
        IN
        THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
        TO
        HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR, ON THE ONE
        HAND,
        AND THE PLEDGEE, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF
        THE
        OTHER DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
        OR
        ANY OF THE OTHER DOCUMENTS, PROVIDED,
        THAT
        EACH PLEDGOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
        BE
        HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW
        YORK;
        AND FURTHER PROVIDED,
        THAT
        NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PLEDGEE
        FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
        TO
        COLLECT THE INDEBTEDNESS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
        FOR
        THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
        OF THE
        PLEDGEE. EACH PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
        JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
        PLEDGOR
        HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
        JURISDICTION, IMPROPER VENUE OR FORUM
        NON CONVENIENS.
        EACH
        PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
        PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
        SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
        MAIL
        ADDRESSED TO SUCH PLEDGOR AT THE ADDRESS SET FORTH IN THE
        SECURITIES PURCHASE AGREEMENT
        AND THAT
        SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE SUCH PLEDGOR’S
        ACTUAL RECEIPT THEREOF OR SEVEN (7) BUSINESS DAYS AFTER DEPOSIT IN THE U.S.
        MAILS, PROPER POSTAGE PREPAID.

       

      (h)  It
        is
        understood and agreed that any person or entity that desires to become a
        Pledgor
        hereunder, or is required to execute a counterpart of this Agreement after
        the
        date hereof pursuant to the requirements of any Document, shall become a
        Pledgor
        hereunder by (x) executing a Joinder Agreement in form and substance
        satisfactory to the Pledgee, (y) delivering supplements to such exhibits
        and annexes to such Documents as the Pledgee shall reasonably request and/or
        set
        forth in such joinder agreement and (z) taking all actions as specified in
        this
        Agreement as would have been taken by such Pledgor had it been an original
        party
        to this Agreement, in each case with all documents required above to be
        delivered to the Pledgee and with all documents and actions required above
        to be
        taken to the reasonable satisfaction of the Pledgee.

       

      (i)  This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed an original and all of which when taken together shall constitute
        one and
        the same agreement. Any signature delivered by a party by facsimile transmission
        shall be deemed an original signature hereto.

       

      [Remainder
        of Page Intentionally Left Blank]

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      IN
        WITNESS WHEREOF, the parties have duly executed this Agreement as of the
        day and
        year first written above.

       

      XFONE,
        INC.

       

      By:                                            
         

      Name:
        Guy
        Nissenson

      Title:
        President & CEO

       

      XFONE
        USA, INC.

       

      By:                                             
        

      Name:
        Wade Spooner

      Title:
        President & CEO

       

      

       

      LAURUS
        MASTER FUND, LTD.

       

      By:                                           
        

      Name:

      Title:

       

       

      
        
           

        

        
           

          
            

          

        

        
           

          
          

        

      

       

      SCHEDULE
        A to the Stock Pledge Agreement

       

      Pledged
        Stock

       

      
        	
                Pledgor

              	
                Issuer

              	
                Class
                  of Stock

              	
                Stock
                  Certificate Number

              	
                Par
                  Value

              	
                Number
                  of 

                Shares

              
	
                 

                XFONE,
                  INC.

              	
                 

                XFONE
                  USA, INC.

              	
                 

                Common

              	
                 

                101

              	 	
                 

                1,000

              
	
                 

                XFONE
                  USA, INC.

              	
                 

                EXPETEL
                  COMMUNICATIONS, INC.

              	
                 

                Common

              	
                 

                101

              	 	
                 

                10,000

              
	
                 

                XFONE
                  USA, INC.

              	
                 

                GULF
                  COAST UTILITIES, INC.

              	
                 

                Common

              	
                 

                101

              	 	
                 

                1,000

              

      

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      SCHEDULE
        4 to the Stock Pledge Agreement

       

      

      With
        respect to Xfone USA, Inc. ("Xfone USA"), the following consents and/or
        approvals and/or notifications will be required:

      

      The
        State of Mississippi:
        The
        pledge of Xfone USA stock would not require approval of the Mississippi
        Public Service Commission. However, under Mississippi law, if the
        triggering conditions arose and the Xfone USA stock were required to be
transferred
        to the Pledgee as new owner, such that "control" of Xfone USA
        were
        placed with the new owner, then the actual transfer would be subject to approval
        by the Mississippi Public Service Commission. In light of the above,
        the Pledgee understands and agrees that any transfer of control of
        Xfone
        USA would be subject to approval by the Mississippi Public Service
        Commission.  

       

      The
        State of Alabama: The
        Alabama Public Service Commission only requires letter notification when
        there
        is an actual transfer of control. Based on the submitted letter the
        Alabama
        PSC may request more information.  Alabama PSC recommends submitting
        a
        letter describing the stock pledge when the stock pledge could result in
        a
        transfer of control (i.e.: greater than 51% of stock transferred). In light
        of
        the above, the Pledgee understands and agrees that any transfer of
        control
        of Xfone USA would be subject to approval by the Alabama Public Service
        Commission. 

       

      The
        State of Louisiana: The
        pledge of Xfone USA stock would not require approval of the Louisiana
        Public Service Commission. However, transfer of stock valued
        in excess
        of one percent of gross assets of the utility (Xfone USA) requires letter
        notification addressing 18 points outlined by the Louisiana PSC, and
        the
        transfer must receive approval of the Louisiana PSC. In light of the
        above,
        the Pledgee understands and agrees that any transfer of control of
        Xfone
        USA would be subject to approval by the Louisiana Public Service
        Commission. 

       

      The
        State of Florida: The
        pledge of Xfone USA stock would not require approval of the Florida
        Public
        Service Commission. The Florida PSC only requires letter notification
        upon
        the transfer of control.

       

      The
        State of Georgia: The
        Georgia Public Service Commission requires letter notification (a general
        outline of the pledge transaction). In addition, a transfer of control shall
        be
        subject to the approval of the Georgia PSC. In light of the above,
        the Pledgee understands and agrees that any transfer of control of
        Xfone
        USA would be subject to approval by the Louisiana Public Service
        Commission. 

      

      It
        is
        hereby understood and agreed that the Plegdee shall be responsible for the
        obtaining of all above mentioned required consents and/or approvals, including
        to provide each applicable Public Service Commission with an appropriate
        notification letter.

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