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Bassett Press EDGAR Service

Exhibit 10.1

LOAN AGREEMENT

THIS LOAN AGREEMENT (the "Agreement") is entered into as of February 17, 2003, among Phone1, Inc. (the "Borrower"), a Florida corporation, Phone1Globalwide, Inc. ("Global") a Delaware corporation, Globaltron Communications Corporation ("GCC" and together with Global, "Guarantors") a Delaware corporation and GNB Bank Panama S.A. (the "Lender"), a bank organized under the laws of the Republic of Panama.

R E C I T A L S

WHEREAS, the Borrower, Guarantors and the Lender are parties to a Loan Agreement dated September 30, 2002, pursuant to which the Lender was granted the option to loan the Borrower $5 million (the “Option”).

WHEREAS, the Lender is willing to exercise the Option and make available to the Borrower certain loaned money as provided for herein; 

WHEREAS, as an inducement to the Lender, (i) the Guarantors wish to guaranty Borrower's obligations hereunder, including but not limited to the repayment of the Loan and its interest and (ii) Borrower and Guarantors wish to give Lender a security interest in all of their assets pursuant to the terms of the Security Agreement (the "Security Agreement") attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1

Definitions.

(a) As used in this Agreement, the following defined terms shall have the meanings indicated below:

"Agreement" means this Loan Agreement, the Exhibits and any other documents or instruments delivered in accordance herewith, as the same may be amended from time to time in accordance with the terms hereof.

"Borrower" has the meaning ascribed to it in the forepart of this Agreement.

"Business Day" means any day other than a Saturday, Sunday or any day on which State and Federal banking institutions in the State of New York are authorized or obligated by law or executive order to close.

"Event of Default" has the meaning ascribed to it in Article III.

"Exchange Act" shall mean the Securities Exchange Act of 1934 or any successor statute thereof.

"Global SEC Reports" shall have the meaning set forth in Section 4.5.

"Guarantors" has the meaning ascribed to it in the forepart of this Agreement.

"Guaranteed Obligations" shall have the meaning set forth in Section 7.1.

"Indebtedness" shall mean as to any Person (i) all indebtedness (including principal, interest, fees and charges) of such Person (x) evidenced by any notes, bonds, debentures or similar instruments made or issued by such Person, (y) for borrowed money or (z) for the deferred purchase price of property or services, (ii) the face amount of all letters of credit issued for the account of such Person, (iii) all liabilities secured by any lien on any property owned by such Person, whether or not such liabilities have been assumed by such Person (provided, however, if such liability is non-recourse to such Person, the amount of the Indebtedness attributed thereto shall not exceed the greater of the fair market value of such property or the book value of such property), (iv) the aggregate amount required to be capitalized in accordance with GAAP under leases under which such Person is the lessee and (v) all guarantees or other contingent obligations of such Person as to any of the foregoing. 

"Interest Rate" shall mean the Prime rate which Citibank N.A. announces from time to time as its Prime rate, the Interest Rate to change when and as such Interest rate changes. The Interest Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

 

"Lender" has the meaning attributed to it in the forepart of this Agreement.

"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under any recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

"Loan" means the aggregate amount of US$5,000,000 loaned by Lender to Borrower.

"Material Adverse Effect" shall mean (a) any material adverse effect on the condition (financial or otherwise), business, operations, assets, revenues, properties or prospects of the Borrower or the Guarantors, or (b) any material adverse effect on the ability of the Borrower or the Guarantors to perform any of their obligations under this Agreement or under the Note dated as of this date executed among the Borrower, the Lender and the Guarantors.

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"Note" means the convertible Promissory Note due on the Repayment Date of the Borrower issued pursuant to Section 2.2, in the form attached as Exhibit 1 hereto and made a part hereto.

"Notice of Conversion" shall mean the notice by which the Lender notifies the Borrower about its intention to exercise its conversion rights.

 

"Per Share Price" shall mean $.40; provided that if Global, prior to the Repayment Date issues (i) equity at a price per share below $.40 or (ii) any type of debt or equity security convertible into equity of Global at a price per share below $.40, then the Per Share Price shall be such number below $.40; provided, further, that the Per Share Price shall also be subject to appropriate adjustment for stock splits, combinations, recapitalizations, reorganizations and similar events.

 

"Person" or "Persons" shall mean any natural person, corporation, limited liability company, general partnership, limited partnership, limited liability partnership, proprietorship, joint venture, other business organization, trust, union, association or governmental or regulatory authority.

"Repayment Date" shall have the meaning set forth in Section 2.8.

"SEC" shall have the meaning set forth in Section 4.5.

"Securities Act" shall mean the Securities Act of 1933, as amended, or any successor statute thereof.

(b)

Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and derivative or similar words refer to this entire Agreement; (iv) the terms "Article" or "Section" refer to the specified Article or Section of this Agreement; and (v) the phrases "ordinary course of business" and "ordinary course of business consistent with past practice" refer to the business and practice of the Borrower. 

ARTICLE II

THE LOAN

2.1

The Loan. 

Lender does hereby exercise the Option and grant Borrower the Loan.

2.2

Note. 

The Borrower's obligations to pay the principal of, and interest on, the Loan made by the Lender are evidenced by the Note to be duly executed and delivered by the Borrower, substantially in the form of Exhibit 1, and delivered to the Lender

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2.3

Method, Place and date of Payment. 

Except as otherwise specifically provided herein, all payments under this Agreement or the Note shall be made to the Lender not later than 12:00 Noon (New York time) on the Repayment Date or on the date when due, in accordance with the terms of this Agreement and shall be made in lawful money of the United States of America in New York Clearing House funds, at the principal offices of Lender at Calle 50 y Aquilino de la Guardia, Torre Banco Continental, Piso 30, Panama City, Republic of Panama or such other place as may be designated by the Lender in a written notice given to the Borrower. Whenever any payment to be made hereunder or under the Note shall be stated to be due on a day, which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day.

2.4

Prepayment. 

The Note may not be prepaid without the express written consent of the Lender.

2.5

Interest.

(a)

The Borrower shall pay interest in respect of the unpaid principal amount of the Loan from the date hereof until the Repayment Date (whether by acceleration or otherwise) at a rate per annum which shall be equal to the Interest Rate in effect from time to time plus 2%.

(b)

If principal or interest on the Loan is not paid when due, thereafter the Borrower shall pay interest in respect of the unpaid principal amount of the Loan at a rate per annum equal to 5% in excess of the Interest Rate but not in excess of usury laws. 

(c)

Accrued (and theretofore unpaid) interest in respect of the Loan shall be payable (i) monthly in arrears commencing on March 31, 2003; or (ii) on the occurrence of an Event of Default, on demand.

2.6

Net Payments. 

All payments made by the Borrower hereunder or under the Note will be made without setoff, counterclaim or other defense. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein.

2.7

Compensation. 

The Borrower shall compensate the Lender for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or re-employment of deposits or other funds required by the Lender to fund the Loan) which the Lender may sustain as a consequence of any default of the Borrower of its obligation under this Agreement or the Note, including but not limited to the repayment of the Loan.

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2.8

Repayment.

The Loan and the interest shall be paid in full on the Repayment Date which shall occur on the earliest of (i) March 17, 2004; (ii) the occurrence of an Event of Default or (iii) April 30, 2003, if on or prior to such date, neither Borrower nor Guarantors have received a loan from any person other than Lender, for a period of at least 12 months in the principal amount of at least US$5,000,000.

2.9

Conversion.

(a)

By notice in writing to the Borrower and Global, the Lender may elect (either prior to the Repayment Date or after the Repayment Date, if the Loan and the Note have not been fully paid) to convert the Loan and the Note in whole or in part, as elected by the Lender into (i) such number of shares of common stock of Global or (ii) such number of securities of Global into which any other lender with conversion rights elects to convert its debt, equal to the principal and interest accrued thereon under the Note that the Lender elects to convert divided by the Per Share Price. 

(b)

In the event that the Lender exercises its conversion right with respect to only a portion of the outstanding principal amount and/or accrued interest under the Loan and the Note, that portion of the principal amount not so converted shall continue to accrue interest and shall be repayable by the Borrower in accordance with the terms hereof and the Borrower shall issue a new promissory note to the Lender in substantially the form of the surrendered Note, in an aggregate principal amount equal to the remaining unpaid principal balance of the surrendered Note.

2.10

Registration Rights.

In the event that Lender elects to convert the Loan and the Note into shares of Global, Global will file a shelf registration statement covering the sale of the securities issued upon conversion (or the underlying common stock issued upon conversion of such preferred stock) and will use its best efforts to cause such registration statement promptly to be declared effective by the SEC (and in any event within 45 days) thereafter and to remain continuously effective until all shares held by Lender have been sold.

2.11

Expenses.

Borrower will reimburse Lender for its reasonable legal costs relating to this Agreement and any documentation to be prepared in connection with this Agreement up to a maximum of US$50,000.

ARTICLE III

EVENTS OF DEFAULT

It shall be an Event of Default if any of the conditions or events described in Sections 3.1 through 3.8 ("Events of Default") shall occur and be continuing:

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3.1

Failure To Make Payments When Due. 

The Borrower shall (i) default in the payment when due of the principal amount or the interest on the Loan or the Note or (ii) default, and such default shall continue unremedied for two or more Business Days, in the payment when due of any interest on the Loan or the Note or any other amounts owed by Borrower hereunder or under the Note;

3.2

Breach of Agreements. 

Failure of the Borrower to perform or comply with any of its obligations contained in this Agreement or in the Security Agreement;

3.3

Representations, etc. 

Any representation, warranty, covenant or statement made by or on behalf of the Borrower and Guarantors in this Agreement, in the Note, in the Security Agreement or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; 

3.4

Involuntary Bankruptcy. Appointment of Receiver, Etc.  

 (i) A court shall enter a decree or order for relief in respect of the Borrower or any of the Guarantors in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted and remain unstayed under any applicable federal or state law; or (ii) an involuntary case is commenced against the Borrower or any of the Guarantors under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Borrower, any of the Guarantors or over all or a substantial part of any of their respective assets and properties, shall have been entered; or an interim receiver, trustee or other custodian of the Borrower, any of the Guarantors for all or a substantial part of their respective assets and properties is involuntarily appointed; or a warrant of attachment, execution or similar process is issued against any substantial part of the assets and properties of the Borrower or any of the Guarantors and the continuance of any such events in this clause (ii) for thirty (30) days unless dismissed, bonded, stayed, vacated or discharged; or

3.5

Voluntary Bankruptcy; Appointment of Receiver, Etc. 

The Borrower or any of the Guarantors shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or making possession by a receiver, trustee or other custodian for all or a possession by a receiver, trustee or other custodian for all or a substantial part of its assets and properties; the making by the Borrower or any of the Guarantors of any assignment for the benefit of creditors; 

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the admission by the Borrower or any of the Guarantors in writing of their inability to pay their debts as such debts become due; or the board of directors of the Borrower or any of the Guarantors, when applicable, (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the foregoing.

3.6

Default Under Other Agreements. 

If either the Borrower, GCC, Global or any of its subsidiaries shall (i) default in any prepayment of all or any portion of any Indebtedness other than the Note or (ii) default in the observance or performance of any agreement, covenant or condition relating to any Indebtedness other than the Note, or contained in any instrument or agreement evidencing, securing or relating thereto and, in the case of clauses (i) and (ii), and such default shall continue without having been duly cured, waived or consented to, beyond the period of grace, if any, specified in the agreement or instrument relating thereto.

3.7

Judgments or Liens. 

One or more judgments or decrees shall be entered against the Borrower, GCC, Global or any of its subsidiaries involving in the aggregate for them a liability of the equivalent of US$500,000 or more, and all such judgments or decrees shall not have been vacated, discharged or stayed or bounded pending appeal within 30 days after the entry thereof or a Lien is imposed on the assets or properties of the Borrower in an amount of in excess, together with other Liens, of US$500,000 exclusive of Liens to equipment vendors in the ordinary course of business. 

3.8

Change in Condition. 

Any material adverse change in the condition (financial or otherwise), operations, assets, liabilities or prospects of the Borrower or any of its subsidiaries.

 

3.9

Remedies. 

Upon the occurrence of any Event of Default described in this Article III, the unpaid principal amount of and accrued interest on the Loan shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Borrower, and the obligations of the Lender hereunder shall thereupon terminate. 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

In order to induce the Lender to enter into this Agreement and to make the Loan, the Borrower and the Guarantors, when applicable, make the following representations, warranties and agreements as of the date hereof, jointly and severally, which shall survive the execution and delivery of this Agreement and the Note and the making of the Loan:

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4.1 

Legal Status. 

The Borrower, GCC, Global and each of its subsidiaries (i) is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its incorporation, (ii) has the power and authority and possesses all franchises, permits, authorizations and approvals necessary to carry on their business as now being conducted and to own its property and assets, and (iii) has good and marketable title to their respective assets free and clear of any Lien, except for Liens that do not cause a Material Adverse Effect in the condition of the Borrower, GCC, Global and its subsidiaries and except as set forth in the Global SEC Reports (as defined in Section 4.5 below). The Borrower, GCC, Global and each of its subsidiaries are in good standing in each jurisdiction where the ownership, leasing or operation of property or the conduct of its business requires such qualification.

4.2

Subsidiaries. 

The only subsidiaries of Global are set forth in the Global SEC Reports. The Borrower and GCC do not have any subsidiaries.

4.3

Power and Authority. 

(i) The Borrower and each of the Guarantors have the power and authority to execute, deliver and perform the terms and provisions of this Agreement and the Note and have taken, as the case may be, all necessary corporate action to authorize the execution, delivery and performance by it of this Agreement; (ii) the Borrower and each of the Guarantors have duly executed and delivered this Agreement and the Note which constitutes their legal, valid and binding obligation enforceable in accordance with their terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws relating to or limiting creditors' rights generally or by general equity principles. 

4.4 

No Violation. 

Neither the execution, delivery or performance by the Borrower and each of the Guarantors of this Agreement, nor the compliance by them with the terms and provisions thereof, nor the use of the proceeds of the Loan (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality binding on the Borrower or any of its subsidiaries, (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default in respect of the terms of any indenture, mortgage, deed or trust, credit agreement, loan agreement or any other agreement, contract or instrument to which the Borrower or any of its subsidiaries is a party or by which its respective properties or assets is bound or to which it may be subject.

4.5 

Global SEC Reports, Financial Statements. 

Global has filed all reports required to be filed by it with the United States Securities and Exchange Commission ("SEC") since its incorporation (collectively, the "Global

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SEC Reports"). As of the respective dates they became effective, the Global SEC Reports filed pursuant to the Securities Act, and as of the respective dates of filing of the last applicable amendment thereto the Global SEC Reports which were filed pursuant to the Exchange Act, did not contain any untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of Borrower and those of Guarantors included in the Global SEC Reports complied as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted in those reports) and fairly present the consolidated financial position of Borrower and the Guarantors and its consolidated subsidiaries as at the dates thereof and the consolidated results of operations and cash flows for the periods then ended, except that in the case of the unaudited consolidated financial statement included in any form 10-QSB, the presentation and disclosure conform with the applicable rules of the Exchange Act and are subject to year-end adjustments.

4.6

 Litigation. 

Except as set forth in the Global SEC Reports or as set forth in Schedule 4.6 attached hereto, there is no claim, counterclaim, action, suit, order, proceeding or investigation pending or, to the knowledge of the Borrower and each of the Guarantors, threatened against or affecting any of them with respect to or affecting the Borrower, GCC, Global or any of its subsidiaries, or their assets, properties or rights, or relating to the transactions contemplated hereby, before any court, agency, regulatory, administrative or other governmental body or officer of before any arbitrator.

4.7 

Undisclosed Liabilities. 

Except as set forth in the Global SEC Reports, the Borrower, GCC, Global and its subsidiaries have no liabilities or obligations of any nature (whether accrued, absolute, contingent, un-asserted or otherwise), including any liabilities or obligations the Borrower, GCC, Global and its subsidiaries may incur for product liability, misrepresentation, fraud or comparable claims arising out of the conduct of the business of the Borrower, GCC, Global and its subsidiaries prior to the date hereof.

4.8

True and Complete Disclosure. 

All factual information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Borrower and each of the Guarantors in writing to the Lender for purposes of or in connection with this Agreement or any transaction contemplated herein or in the Note is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of the Borrower and each of the Guarantors in writing to any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided. There is no fact or circumstances which has, or is reasonably likely to have, a 

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Material Adverse Effect on the Borrower or any of the Guarantors or taken as a whole which has not been disclosed herein or in such other documents, certified and statements furnished to the Lender for use in connection with the transactions contemplated hereby.

4.9

Tax Returns and Payments. 

 Except as provided in Schedule 4.9, the Borrower and the Guarantors have filed all tax returns required to be filed by them and have paid all taxes payable by them which have become due pursuant to such tax returns and all other taxes and assessments payable by them which have become due, other than those not yet delinquent and except for those contested in good faith and for which adequate reserves have been established. 

4.10 

Capitalization. 

(a) As of the date hereof, the authorized capital stock of the Borrower consists of 1,000 shares of common stock, US$.001 par value per share, of which all are issued and outstanding. All the outstanding shares have been duly and validly issued, are fully paid and non-assessable. 

(b) As of the date hereof, the authorized capital stock of the Global consists of 200,000,000 shares of common stock, US$.001 par value per share, of which 66,128,702 shares are issued and outstanding and 10,000,000 shares of preferred stock, US$.001 par value per share, of which 9,000,000 shares are issued and outstanding. All the outstanding shares have been duly and validly issued, are fully paid and non-assessable. 

(c) As of the date hereof, the authorized capital stock of the GCC consists of 50,000,000 shares of common stock, US$.001 par value per share, of which 15,700,000 shares are issued and outstanding. All the outstanding shares have been duly and validly issued, are fully paid and non-assessable. 

4.11

Compliance with Laws, etc. 

The Borrower, GCC, Global and all of its subsidiaries are in compliance in all material respects with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls).

4.12 

Labor Relations. 

To the Borrower's and the Guarantors’ knowledge there is (i) no significant unfair labor practice complaint pending or threatened against either the Borrower, GCC, Global or any of its subsidiaries, or before any governmental body or agency and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its subsidiaries, threatened against the Borrower, GCC, Global or any of its subsidiaries or, (ii) no significant strike, labor dispute, slowdown or

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stoppage pending against the Borrower, GCC, Global or any of its subsidiaries or, threatened against the Borrower, GCC, Global or any of its subsidiaries, (iii), no union representation question existing with respect to the employees of the Borrower, GCC, Global or any of its subsidiaries.

4.13 

Properties. 

Except as set forth in the Global SEC Reports, the Borrower and each of the Guarantors have good and marketable title, without regard to defects of title, which do not have a Material Adverse Effect, to all properties owned by them, free and clear of all Liens. With respect to any lease or rental agreement to which the Borrower or any of the Guarantors are a party, (i) such lease or rental agreement is in full force and effect, (ii) the Borrower and/or the Guarantors have complied in all material respects with all of the terms of such lease or rental agreement.

4.14 

Assets other than Real Property. 

The Borrower, GCC, Global and its subsidiaries have good title to all tangible assets owned by them, free and clear of all Liens that individually or in the aggregate would not have a Material Adverse Effect on the Borrower, GCC, Global or its subsidiaries. The Borrower, GCC, Global and its subsidiaries own, or lease all the intangible personal property currently used in the conduct of its business as presently conducted. All the intangible personal property owned by the Borrower, GCC, Global or its subsidiaries is in all material respects in good operating condition and repair, ordinary wear and tear excepted, and all personal property leased by the Borrower or the Guarantors is in all material respects in the condition required of such property by the terms of the lease applicable thereto.

4.15 

Patents, Licenses, Franchises and Formulas. 

The Borrower and the Guarantors own all the patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, or rights with respect to the foregoing, and have obtained assignments of all leases and other rights of whatever nature, necessary for the present conduct of their business, without any known conflict with the rights of others which, or the failure to obtain which, as the case may be, would result in a Material Adverse Effect on the Borrower or the Guarantors.

4.16

Intellectual Property.

(a) The Borrower and the Guarantors own and possess all right, title and interest in and to, or have a valid license to use, all of the Proprietary Rights (as defined below) used in the operation of their business as presently conducted and none of such Proprietary Rights have been abandoned;

(b) neither the Borrower nor the Guarantors has received any notice of any reasonable basis for an allegation of, any infringement or misappropriation by, or conflict with, any third party with respect to such Proprietary Rights; and

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(c) neither the Borrower nor the Guarantors or any of Global's subsidiaries has infringed, misappropriated or otherwise violated any material Proprietary Rights of any third parties, and neither the Borrower nor the Guarantors has knowledge of any infringement, misappropriation or conflict which will occur as a result of the continued operation of the Borrower and the Guarantors as presently operated.

As used herein, the term "Proprietary Rights" means all proprietary information of the Borrower and/or Guarantors, including all patents, patent applications, patents rights and inventions, trademarks, service marks, trade names, copyrights and trade secrets. 

4.17 

Insurance. 

The Borrower, GCC, Global and its subsidiaries presently maintain and have maintained in effect since their formation all the insurance policies required by applicable law or reasonably appropriate in connection with the operation of its business as presently conducted. 

4.18 

No Misrepresentation. 

The representations and warranties contained in this Article IV and any Schedules of Exceptions attached hereto, do not contain any untrue statement or a material fact or omit to state any material fact necessary in order to make the statements and information in this Section 4 and Schedules of Exceptions not misleading.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower and the Guarantors covenant and agree that on and after the date hereof and until the Note, together with all accrued interest, fees and all other obligations incurred hereunder and thereunder, are paid in full:

5.1 

Information Covenants. 

The Borrower and the Guarantors will furnish or cause to be furnished to the Lender:

(a) Promptly, copies of all financial information, proxy materials and material filings, reports and information which either of the Borrower and the Guarantors shall file or be required to file with any agency, regulatory authority or instrumentality of the Government.

(b) Other Information. From time to time, such other information or documents (financial or otherwise) as any Lender may reasonably request.

5.2 

Books, Records and Inspections. 

The Borrower, GCC, Global and each of its subsidiaries will keep proper books of record and account in which full, true and correct entries in conformity with generally accepted

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accounting principles in the United States consistently applied in the jurisdiction of each corporation and all requirements of applicable law shall be made of all dealings and transactions in relation to its business and activities. 

5.3 

Maintenance of Property, Insurance. 

The Borrower, GCC, Global and each of its subsidiaries will (i) keep all property useful and necessary in its business in good working order and condition (ordinary wear and tear excepted), (ii) maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks as are customary and in accordance with industry standards for the business in which it is engaged.

5.4 

Corporate Franchises. 

The Borrower, GCC, Global and each of its subsidiaries will do or cause to be done, all things reasonably necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses and other intellectual property.

5.5

Compliance with Statutes, etc. 

The Borrower, GCC, Global and each of its subsidiaries will comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of their respective business and the ownership of their respective property, except where the failure to so comply would not have a Material Adverse Effect on the Borrower, GCC, Global or any of its subsidiaries. Global will timely comply with the filing of all the Global SEC Reports.

5.6

Performance of Obligations. 

 The Borrower, GCC, Global and each of its subsidiaries will: (i) perform all of its obligations under (a) this Agreement, (b) the Security Agreement, and (c) the terms of each other mortgage, indenture, security agreement, and other debt instrument by which it is bound, except where the failure to so perform would not have a Material Adverse Effect on the Borrower, GCC, Global or any of its subsidiaries.

5.7

Taxes. 

The Borrower, GCC, Global and each of its subsidiaries will pay and discharge or cause to be paid and discharged all applicable federal, state, local and other material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any of its property, real, personal or mixed or upon any part thereof, when due, as well as all lawful claims for labor, materials and supplies which, if unpaid might by law become a lien upon such property.

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5.8

Compliance.

The Borrower, GCC, Global and each of its subsidiaries will maintain all material authorizations, qualifications, licenses and permits necessary for the operation of their respective business and the ownership of their respective property.

5.9

Shares.

Global shall maintain sufficient number of authorized shares of its Series A Preferred Stock and common stock for issuance in the event that Lender converts the Loan into Series A Preferred Stock of Global and then desires to convert such Series A Preferred Stock into common stock of Global.

ARTICLE VI

NEGATIVE COVENANTS

The Borrower and the Guarantors, when applicable, covenant and agree that on and after the date hereof and until the Loan and the Note, together with interest, fees and all other obligations incurred hereunder and thereunder, are paid in full:

6.1

Liens. 

The Borrower, GCC, Global and each of its subsidiaries will not, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of each of them, whether now owned or hereafter acquired, without the prior consent of Lender.

6.2 

Consolidation, Merger, Sale of Assets, etc. 

The Borrower, GCC, Global and each of its subsidiaries will not wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing, at any future time) all or any part of its property or assets, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person.

6.3

Dividends and Redemptions. 

(a) The Borrower, GCC, Global and each of its subsidiaries will not declare or pay any dividends, or return any capital, to its stockholders or authorize or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for any consideration, any shares of any class of its capital stock now or hereafter outstanding (or any options or warrants issued by the Borrower or the Guarantors with respect to its capital stock), or set aside any funds for any of

14

the foregoing purposes; and (b) the Borrower or the Guarantors will not redeem any common stock of either the Borrower or the Guarantors.

6.4 

Indebtedness. 

Except to the Lender, the Borrower and the Guarantors will not, and will not permit any of its subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness without Lender's prior consent, at Lender's sole discretion, except (i) certain vendor financing as described in the Global SEC Reports and (ii) obligations incurred in the ordinary course of business.

In the event that Lender consents to any loan by a third party to Borrower or any of the Guarantors which terms and conditions are more favorable to such third party in such loan than the terms and conditions of this Loan to Lender, then such consent may be given upon the condition that the terms of this Loan are amended to reflect the more favorable terms and conditions granted to the third party in the loan to be consented by Lender.

6.5 

Advances, Investments and Loans. 

 The Borrower and the Guarantors will not, and will not permit any of its subsidiaries to, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, except that the following shall be permitted: (i) advances, investments and loans to wholly-owned subsidiaries of the Borrower or upstream advances, investments and loans to Global; (ii) extensions of credit made in the ordinary course of business in accordance with customary trade practices; (iii) capital expenditures and (iv) presently outstanding loans and investments if any, as disclosed in the Global SEC Reports.

6.6 

Transactions with Affiliates. 

Neither the Borrower nor the Guarantors will enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any affiliate other than on terms and conditions substantially as favorable to, as the case may be, the Borrower, the Guarantors or any such subsidiary as would be obtainable by the Borrower or the Guarantors at the time in a comparable arm's-length transaction with a Person other than an affiliate.

6.7 

Limitation on Issuance of Common Stock or other Securities. 

The Borrower and the Guarantors will not, and will not permit any of its subsidiaries to, issue any common stock or other securities (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, common stock, except for (i) transfers and replacements of then outstanding shares of common stock, (ii) stock splits, stock dividends and similar issuances which do not decrease the percentage ownership of the Guarantors in any class of the common stock of the any of the subsidiaries of the Borrower.

15

6.8 

Business. 

Neither the Borrower nor the Guarantors will engage (directly or indirectly) in any business other than the business in which they are engaged on the date hereof.

ARTICLE VII

GUARANTY

7.1

The Guarantors irrevocably and unconditionally, guarantee the full and prompt payment when due of the principal amount of and interest on the Note issued under this Agreement and of all other obligations and liabilities of the Borrower now existing or hereafter incurred under, arising out of or in connection with this Agreement and the Note and the due performance and compliance with the terms of this Agreement and the Note by the Borrower ("Guaranteed Obligations"). The Guarantors understand, agree and confirm that the Lender may enforce this guaranty obligation up to the full amount of the Guaranteed Obligations against any of them without proceeding against the Borrower. The Guarantors irrevocably and unconditionally promise to pay such Guaranteed Obligations to the Lender, or order, on demand, when due, in lawful money of the United States of America. The guaranty provided herein shall constitute a guarantee of payment and not of collection.

7.2

The Guarantors hereby waive notice of acceptance of this guaranty obligation and notice of any liability to which it may apply, and waive presentment, demand of payment, protest, notice of dishonor or nonpayment of any such liability, suit or taking of other action by the Lender against, and any other notice to, any party liable thereon (including the Guarantor).

7.3

The obligations of the Guarantors under this agreement are absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever.

ARTICLE VIII

MISCELLANEOUS

8.1

Notices. All notices, requests and other communications hereunder must be in writing and delivered personally against written receipt, by facsimile transmission with answer back confirmation or mailed by prepaid first class certified mail (air mail, if faster delivery), return receipt requested, or mailed by overnight (or in the case of notices being sent or delivered outside the United States, second day) courier prepaid, to the parties at the following addresses or facsimile numbers:

If to Borrower or Guarantors, to:

100 North Biscayne Blvd, Suite 2500

Miami, Florida, 33132

Attn: Dario Echeverry and Syed Naqvi

16

Fax: (305) 371-6540

With a copy to:

Steven Weinberger, Esq.

c/o Phone 1, Inc.

100 North Biscayne Blvd, Suite 2500

Miami, Florida, 33132

Fax: (305) 371-6540

If to Lender, to:

GNB Bank Panama S.A

Calle 50 y Aquilino de la Guardia, Torre Banco Continental, Piso 30

Ciudad de Panamá, Panamá.

Attn: Camilo Verastegui

Fax: (011-507) 215-7560 

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section 8.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the applicable facsimile number as provided in this Section, be deemed given upon receipt, (iii) if delivered by United States mail in the manner described above to the address as provided in this Section, be deemed given on the earlier of the tenth Business Day following mailing or upon receipt and (iv) if delivered by courier to the address as provided in this Section, be deemed given on the earlier of the first Business Day (second Business Day in the case of notices given or sent outside the United States) following the date sent by such courier or upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto at least ten (10) Business Days prior to the effective date of such notice.

8.2

Entire Agreement. 

This Agreement, the Security Agreement and the Note supersede all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof and contain the sole and entire agreement between the parties hereto with respect to the subject matter hereof and thereof.

8.3

Independence of Representations, Warranties and Covenants. 

 All representations, warranties and covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the

17

limitation of, another representation, warranty or covenant shall not avoid the occurrence of an Event of Default if such action is taken or condition exists.

8.4

No Third Party Beneficiary. 

The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights.

8.5

Assignment; Binding Effect. 

This Agreement, all the rights, interest or obligation hereunder may be assigned by the other party with the prior written consent of the other party. This Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective permitted successors and assigns. 

8.6

Headings. 

The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

8.7

Invalid Provisions. 

If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

8.8

Governing Law. 

This Agreement has been signed in the State of New York and shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. In the event of any claim or dispute in respect to the subject matter hereof or the rights or obligations of the parties hereto, all actions or proceedings must be exclusively brought in the United States District Court for the Southern District of New York of if such Court lacks subject matter jurisdiction, in the Supreme Court of the State of New York, County of New York. Each party waives the right to object to the exclusive jurisdiction of either such Court or the right to object to the venue of either such Court or that either such Court is an inconvenient forum. Nothing in this Agreement shall be deemed to constitute a general consent to service of process or the in personam jurisdiction of the United States District Court for the

18

Southern District of New York, County of New York or the Supreme Court of the State of New York for legal actions or proceedings not related to the transactions contemplated by this Agreement.

8.9

Computations. 

All computations of interest hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.

8.10

Counterparts. 

This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

8.11

Independent Advice. 

Lender confirms that he fully understands his rights and obligations hereunder and that he has had an opportunity to consult with such independent advisors, including counsel, as he deemed necessary or appropriate.

19

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written.

PHONE1, INC.

By:

/s/ DARIO ECHEVERRY

Name:

Dario Echeverry

Title:

Chief Executive Officer

PHONE1GLOBALWIDE, INC.

By:

/s/ DARIO ECHEVERRY

Name:

Dario Echeverry

Title:

Chief Executive Officer

GLOBALTRON COMMUNICATIONS CORPORATION

By:

/s/ DARIO ECHEVERRY

Name:

Dario Echeverry

Title:

Chief Executive Officer

GNB BANK PANAMA S.A.

By:

/s/ CAMILO VERASTEGUI

Name:

Camilo Verastegui

Title:

General Manager

20

Exceptions to Representations, Warranties and Covenants

Under Loan Agreement dated as of February 17, 2003

(the “Loan Agreement”) between Borrower, Global and GCC

The following information qualifies and constitutes exceptions to the representations, warranties and covenants made by Borrower, Global and GCC under the Loan Agreement. Terms not otherwise defined herein shall have the respective meanings assigned to them in the Loan Agreement.

1.

Section 4.2

Borrower has a 51% equity interest in Phone1Smart LLC, a Florida limited liability company.

2.

Section 4.7

See Schedule 4.6 to the Loan Agreement.

3.

Section 4.14

Office equipment, office furniture, computer equipment and similar tangible assets are leased and not owned.

4.

Sections 4.15 and 4.16

FireSign lawsuit described in the Global SEC Reports.

5.

Section 6.1

Qualified by Liens disclosed in the Global SEC Reports as of the date hereof.

6.

Section 6.4

Indebtedness existing on the date hereof and disclosed in the Global SEC Reports.

7.

Section 6.7

Exception for issuance of shares disclosed as being reserved for issuance in Global SEC Reports filed prior to the date hereof.

21

SCHEDULE 4.6

TO LOAN AGREEMENT DATED AS OF FEBRUARY 17, 2002

BETWEEN PHONE1GLOBALWIDE INC. PHONE1, INC. AND GLOBALTRON COMMUNICATIONS CORPORATION

A.

Captivad Lawsuit (advertising commissions).

B.

Lawsuits in the ordinary course of business that are not, individually or in the aggregate, expected to have a material adverse effect on the Borrower, Global and/or GCC.

C.

Threatened Claims:

•

Jacob Gittman – Employment compensation dispute where Gittman is seeking damages for alleged breach of terms of employment.

•

CPQD has claimed $200,000 arising out of a Settlement Agreement disclosed in the Global SEC Reports.

•

Third-party claims arising out of relationship with FireSign Rosen Baker currently believed to be approximately $40,000.

•

Michael Greenfield – Demand for $250K arising out of alleged participation by Globaltron principals in stock transaction between Greenfield and Amouyal.

22

SCHEDULE 4.9

TO LOAN AGREEMENT DATED AS OF FEBRUARY 17, 2003

BETWEEN PHONE1GLOBALWIDE INC. PHONE1, INC. AND GLOBALTRON COMMUNICATIONS CORPORATION

Approximately $450,000 in property taxes has been accrued but remains unpaid to Miami-Dade County.

23Bassett Press EDGAR Service

SECURITY AGREEMENT

SECURITY AGREEMENT, dated as of February 17, 2003 (together with all amendments, if any, from time to time hereto, this "Security Agreement"), among Phone1, Inc., a Florida corporation ("Phone1"), Phone1Globalwide, Inc., a Delaware corporation ("Global") and Globaltron Communication Corporation, a Delaware corporation ("GCC" and collectively with Phone1 and Global, the "Grantors" and individually, a "Grantor"), and GNB Bank Panama S.A., a bank organized under the laws of the Republic of Panama ("Lender").

W I T N E S S T H:

WHEREAS, pursuant to that certain Loan Agreement (which is incorporated herein by reference) dated as of the date hereof (the "Loan Agreement") by and among Lender and the Grantors, Lender has agreed to make the Loan;

WHEREAS, in order to induce Lender to enter into the Loan Agreement, Grantors have agreed to grant a continuing Lien on the Collateral (as hereinafter defined) to secure all of the payment obligations of Phone1 (guaranteed by Global and GCC) under the Loan Agreement, including any additional loans made to Lender pursuant to the terms of the Loan Agreement or otherwise (the "Secured Obligations");

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

1.

DEFINED TERMS. 

All capitalized terms used but not otherwise defined herein (included in the recitals hereof) have the meanings given to them in the Loan Agreement. All other terms contained in this Security Agreement, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein.

(a)

"Accounts" means all "accounts," as such term is defined in the Code, now owned or hereafter acquired by any Grantor, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, or Instruments), (including any such obligations that may be characterized as an account or contract right under the Code), (b) all of each Grantor's rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Grantor's rights to any goods represented by any of the foregoing (including unpaid sellers' rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Grantor for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Grantor or in connection with any other transaction (whether or not yet earned by performance on the part of such Grantor), (e) all health care insurance receivables and (f) all collateral security of any kind, given by any Account Debtor or any other Person with respect to any of the foregoing.

(b)

 "Account Debtor" means any Person who may become obligated to any Grantor under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible).

(c)

"Chattel Paper" means any "chattel paper," as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by any Grantor.

(d)

"Code" means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; provided, that to the extent that the Code is used to define any term herein or in the Loan Agreement and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to Lender's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect from time to time in a jurisdiction other than the State of New York, the term "Code" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

(e)

"Contracts" means all contracts and agreements to which any Grantor is a party, as the same may be amended, supplemented or otherwise modified from time to time, including without limitation, (i) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to damages arising thereunder and (iii) all rights of any Grantor to perform and to exercise all remedies thereunder. 

(f)

"Copyright Licenses" means any and all rights now owned or hereafter acquired by any Grantor under any written agreement granting any right to use any Copyright (as defined below) or Copyright registration.

(g)

"Copyrights" means all of the following now owned or hereafter adopted or acquired by any Grantor: (i) all Copyrights and General Intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof, and (ii) all reissues, extensions or renewals thereof.

(h)

"Deposit Accounts" means all "deposit accounts" as such term is defined in the Code, now or hereafter held in the name of any Grantor.

(i)

"Documents" means all “documents”, as such term is defined in the Code, now owned or hereafter acquired by any Grantor, wherever located.

(j)

"Equipment" means all "equipment," as such term is defined in the Code, now owned or hereafter acquired by any Grantor, wherever located and, in any event, including all such Grantor's machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto.

2

(k)

"Fixtures" means all "fixtures" as such term is defined in the Code, now owned or hereafter acquired by any Grantor.

(l)

"General Intangibles" means all "general intangibles," as such term is defined in the Code, now owned or hereafter acquired by any Grantor, including all right, title and interest that such Grantor may now or hereafter have in or under any contract, all payment intangibles, customer lists, licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, Copyrights, trade secrets, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark license), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash, instruments and other property in respect of or in exchange for pledged stock and investment property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including without limitation all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Grantor or any computer bureau or service company from time to time acting for such Grantor.

(m)

"Global Subsidiaries Stock" means all of Global's right, title and interest in and to any and all of its subsidiaries; the Global Subsidiaries Stock shall include any additional shares of any class or series of capital stock of any subsidiary of Global hereafter acquired by Global from time to time and at any time 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 the Global Subsidiaries Stock.

(n)

"Goods" means all "goods" as defined in the Code, now owned or hereafter acquired by any Grantor, wherever located, including embedded software to the extent included in "goods" as defined in the Code, manufactured homes, standing timber that is cut and removed for sale and unborn young of animals.

(o)

"Instruments" means all "instruments," as such term is defined in the Code, now owned or hereafter acquired by any Grantor, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.

(p)

"Intellectual Property" means any and all Licenses, Patents, Copyrights, Trademarks, service marks, trade dress, trade names, domain names, brand names and certification marks presently owned by any Grantor or (pursuant to license, sublicense, agreement or permission) used by any Grantor in connection with such Grantor’s business. 

(q)

"Inventory" means all "inventory" as such term is defined in the Code, now owned or hereafter acquired by any Grantor, wherever located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of any Grantor for sale or lease or are 

3

furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in the respective Grantor’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including other supplies and embedded software.

(r)

"Investment Property" means all “investment property” as such term is defined in the Code now owned or hereafter acquired by any Grantor, wherever located including (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of any Grantor, including the rights of any Grantor to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account, (iii) all securities accounts of any Grantor; (iv) all commodity contracts of any Grantor and (v) all commodity accounts held by any Grantor.

(s)

"Letter of Credit Rights" means letter of credit rights as such term is defined in the Code, now owned or hereafter acquired by any Grantor, including rights to payment or performance under a letter of credit, whether or not such Grantor, as beneficiary, has demanded or is entitled to demand payment or performance. 

(t)

"License" means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by any Grantor.

(u)

"Lien" means any mortgage, pledge, security interest, lien, claim, encumbrance or other similar restrictions, of any kind or nature whatsoever.

(v)

"Patent Licenses" means rights under any written agreement now owned or hereafter acquired by any Grantor granting any right with respect to any invention on which a Patent (as defined below) is in existence.

(w)

"Patents" means all of the following in which any Grantor now holds or hereafter acquires any interest: (i) all letters patent of the United States or of any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State or any other country, and (ii) all reissues, continuations, continuations-in-part or extensions thereof. 

(x)

"Permitted Encumbrances" means (i) Liens on Equipment leased pursuant to the existing leases and Liens reported on the SEC reports of Global as of the date hereof; (ii) Liens for taxes not yet payable; (iii) Liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations which are not delinquent; and (iv) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by liens of the type described above in clauses (i) or (ii) above, provided that any extension, renewal or replacement Lien is limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase.

(y)

"Proceeds" means "proceeds," as such term is defined in the Code, including (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Grantor from time to 

4

time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable to any Grantor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental authority (or any Person acting under color of governmental authority), (c) any claim of any Grantor against third parties (i) for past, present or future infringement of any Patent or Patent License, or (ii) for past, present or future infringement or dilution of any Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark License, (d) any recoveries by any Grantor against third parties with respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to investment property and pledged stock, and (f) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral.

(z)

"Software" means all "software" as such term is defined in the Code, now owned or hereafter acquired by any Grantor, other than software embedded in any category of goods, including all computer programs and all supporting information provided in connection with a transaction related to any program.

(aa)

"Supporting Obligations" means all supporting obligations as such term is defined in the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property. 

(bb)

"Trademark License" means rights under any written agreement now owned or hereafter acquired by any Grantor granting any right to use any Trademark.

(cc)

"Trademarks" means all of the following now owned or hereafter existing or adopted or acquired by any Grantor: (i) all Trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (ii) all reissues, extensions or renewals thereof; and (iii) all goodwill associated with or symbolized by any of the foregoing.

(dd)

"Uniform Commercial Code Jurisdiction" means any jurisdiction that had adopted all or substantially all of Article 9 as contained in the 2000 Official Text of the Uniform Commercial Code, as recommended by the National Conference of Commissioners on Uniform State Laws and the American Law Institute, together with any subsequent amendments or modifications to the Official Text.

2.

GRANT OF LIEN. To secure the prompt and complete payment, performance and observance of all of the Secured Obligations, each Grantor hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to Lender, subject to the last paragraph of this Section 2, a first priority security interest in, and Lien upon all of its right, title and interest in, to and under all personal property and other assets whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade names, styles or derivations thereof), and whether owned or 

5

consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of which being hereinafter collectively referred to as the "Collateral"), including:

(i)

all Accounts;

(ii)

all Chattel Paper;

(iii)

all Contracts;

(iv)

all Documents;

(v)

all General Intangibles (including payment intangibles and Software);

(vi)

all Goods (including Inventory, Equipment and Fixtures);

(vii)

all Instruments;

(viii)

all Investment Property;

(ix)

all Deposit Accounts, of any Grantor, inclusive all deposit and other bank accounts and all deposits therein;

(x)

all money, cash or cash equivalents of any Grantor;

(xi)

all Inventory;

(xii)

all Global Subsidiaries Stock;

(xiii)

all Supporting Obligations and Letter of Credit Rights of any Grantor;

(xiv)

to the extent not otherwise included, all Proceeds, tort claims, insurance claims and other rights to payments not otherwise included in the foregoing and products of the foregoing and all accessions to, substitutions and replacements for, and rents and profits of, each of the foregoing.

Lender acknowledges that it has previously been granted prior security interests in, and Liens upon, all of the above assets in connection with loan agreements, dated September 30, 2002 and November 26, 2002, by and among the same parties hereto.

3.

LENDER'S RIGHTS. LIMITATIONS. LENDER'S OBLIGATIONS.

(a)

It is expressly agreed by Grantors that, anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of its Contracts and each of its Licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Lender shall have no obligation or liability under any Contract or License by reason of or arising out of this Security Agreement or the granting herein of a Lien thereon or the receipt by Lender of any payment relating to any Contract or License pursuant hereto. Lender shall not be required or obligated in any manner to perform or fulfill any of the obligations of any Grantor under or pursuant to any Contract or License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any Contract or 

6

License, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(b)

Lender may at any time after an Event of Default has occurred and be continuing, without prior notice to any Grantor, notify Account Debtors and other Persons obligated on the Collateral that Lender has a security interest therein, and that payments shall be made directly to Lender. Upon the request of Lender after the occurrence and during the continuance of an Event of Default, each Grantor shall so notify Account Debtors and other Persons obligated on Collateral. Once any such notice has been given to any Account Debtor or other Person obligated on the Collateral, the affected Grantor shall not give any contrary instructions to such Account Debtor or other Person without Lender’s prior written consent.

(c)

Lender may at any time in its own name, in the name of a nominee of Lender or in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with Account Debtors, parties to Contracts, obligors in respect of Instruments and obligors in respect of Chattel Paper and/or payment intangibles to verify with such Persons, to Lender's satisfaction, the existence, amount terms of, and any other matter relating to, any such Accounts, Contracts, Instruments or Chattel Paper and/or payment intangibles. If a Default or Event of Default shall have occurred and be continuing, each Grantor, at its own expense, shall cause the independent certified public accountants then engaged by such Grantor to prepare and deliver to Lender at any time and from time to time promptly upon Lender's request the following reports with respect to each Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as Lender may request. Each Grantor, at its own expense, shall deliver to Lender the results of each physical verification, if any, which such Grantor may in its discretion have made, or caused any other Person to have made on its behalf, of all or any portion of its Inventory.

4.

REPRESENTATIONS AND WARRANTIES. Each Grantor represents and warrants that:

(a)

Each Grantor has rights in and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder free and clear of any and all Liens other than Permitted Encumbrances.

(b)

No effective security agreement, financing statement, equivalent security or Lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in any public office, except such as may have been filed (i) by any Grantor in favor of Lender pursuant to this Security Agreement, and (ii) in connection with any other Permitted Encumbrances.

(c)

This Security Agreement is effective to create a valid and continuing Lien on and, upon the filing of the appropriate financing statements listed on Schedule I hereto, a perfected Lien in favor of Lender on the Collateral with respect to which a Lien may be perfected by filing pursuant to the Code. Such Lien is prior to all other Liens, except Permitted Encumbrances that would be prior to Liens in favor of Lender as a matter of law, and is enforceable as such as against any and all creditors of and purchasers from any Grantor (other than purchasers and lessees of Inventory in the ordinary course of business). All action by any Grantor necessary or desirable to protect and perfect such Lien on each item of the Collateral has been duly taken.

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(d)

Schedule II hereto lists all Instruments, Letter of Credit Rights and Chattel Paper of each Grantor. All actions by any Grantor necessary or desirable to protect and perfect the Lien of Lender on each item set forth on Schedule II (including the delivery of all originals thereof to Lender and the legending of all Chattel Paper as required by Section 5(b) hereof) has been duly taken. The Lien of Lender on the Collateral listed on Schedule II hereto is prior to all other Liens, except Permitted Encumbrances that would be prior to the Liens in favor of Lender as a matter of law, and is enforceable as such against any and all creditors of and purchasers from any Grantor.

(e)

Each Grantor’s name as it appears in official filings in the state of its incorporation or other organization, the type of entity of each Grantor (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by each Grantor’s state of incorporation or organization or a statement that no such number has been issued, each Grantor’s state of organization or incorporation, the location of each Grantor’s chief executive office, principal place of business, offices, all warehouses and premises where Collateral is stored or located, and the locations of its books and records concerning the Collateral are set forth on Schedule III hereto. Each Grantor has only one state of incorporation or organization.

(f)

With respect to the Accounts (i) they represent bona fide sales of Inventory or rendering of services to Account Debtors in the ordinary course of each Grantor's business and are not evidenced by a judgment, Instrument or Chattel Paper; (ii) there are no setoffs, claims or disputes existing or asserted with respect thereto and no Grantor has made any agreement with any Account Debtor for any extension of time for the payment thereof, any compromise or settlement for less than the full amount thereof, any release of any Account Debtor from liability therefor, or any deduction therefrom except a discount or allowance allowed by such Grantor in the ordinary course of its business for prompt payment and disclosed to Lender; (iii) to each Grantor's knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to reduce the amount payable thereunder as shown on any Grantor's books and records and any invoices, statements and Collateral Reports delivered to Lender with respect thereto; (iv) no Grantor has received any notice of proceedings or actions which are threatened or pending against any Account Debtor which might result in any adverse change in such Account Debtor's financial condition; and (v) no Grantor has knowledge that any Account Debtor is unable generally to pay its debts as they become due. Further with respect to the Accounts (x) the amounts shown on all invoices, statements and Collateral Reports which may be delivered to the Lender with respect thereto are actually and absolutely owing to such Grantor as indicated thereon and are not in any way contingent; (y) to each Grantor's knowledge, all Account Debtors have the capacity to contract.

(g)

With respect to any Inventory scheduled or listed on the most recent Collateral Report delivered to Lender pursuant to the terms of this Security Agreement, (i) such Inventory is located at one of the applicable Grantor's locations set forth on Schedule III hereto, (ii) no Inventory is now, or shall at any time or times hereafter be stored at any other location without Lender's prior consent, and if Lender gives such consent, each applicable Grantor will concurrently therewith obtain, to the extent required by Lender, bailee, landlord and mortgagee agreements, (iii) the applicable Grantor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for the Lien granted to Lender and except for Permitted Encumbrances, (iv) except as specifically disclosed in the most recent Collateral Report delivered to Lender, such Inventory is good and merchantable quality, free from any defects, (v) such Inventory is not subject to any licensing, Patent, royalty, Trademark, trade name or Copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that 

8

Inventory or the payment of any monies to any third party as a precondition of such sale or other disposition, and (vi) the completion of manufacture, sale or other disposition of such Inventory by Lender following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which any Grantor is a party or to which such property is subject.

(h)

No Grantor has any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Schedule IV hereto. This Security Agreement is effective to create a valid and continuing Lien on and, upon filing of the appropriate documents with the United States Copyright Office and filing of the appropriate documents with the United States Patent and Trademark Office, perfected Liens in favor of Lender on each Grantor' s Patents, Trademarks and Copyrights and such perfected Liens are enforceable as such as against any and all creditors of and purchasers from any Grantor. Upon filing of the appropriate documents with the United States Copyright Office and filing of the appropriate documents with the United States Patent and Trademark Office and the filing of appropriate financing statements listed on Schedule I hereto, all action necessary or desirable to protect and perfect Lender's Lien on each Grantor's Patents, Trademarks or Copyrights shall have been duly taken.

(i)

All motor vehicles owned by each Grantor are listed on Schedule V hereto, by model, model year and vehicle identification number ("VIN"). Each Grantor shall deliver to Lender motor vehicle title certificates for all motor vehicles from time to time owned by it and shall cause those title certificates to be filed (with Lender's lien noted thereon) in the appropriate state motor vehicle filing office.

5.

COVENANTS. Each Grantor covenants and agrees with Lender, that from and after the date of this Security Agreement and until the Termination Date:

(a)

Further Assurances: Pledge of Instruments; Chattel Paper. 

(i)

At any time and from time to time, upon the written request of Lender and at the sole expense of Grantors, each Grantor shall promptly and duly execute and deliver any and all such further instruments and documents and take such further actions as Lender may deem desirable to obtain the full benefits of this Security Agreement and of the rights and powers herein granted, including (A) using its commercially reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Lender of any License or Contract held by such Grantor and to enforce the security interests granted hereunder; and (B) filing any financing or continuation statements under the Code with respect to the Liens granted hereunder or under the Loan Agreement as to those jurisdictions that are not Uniform Commercial Code Jurisdictions.

(ii)

Unless Lender shall otherwise consent in writing (which consent may be revoked), each Grantor shall deliver to Lender all Collateral consisting of negotiable Documents, certificated securities, Chattel Paper and Instruments (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank) promptly after such Grantor receives the same.

(iii)

Each Grantor shall, if required by Lender, obtain or use its commercially reasonable efforts to obtain waivers or subordinations of Liens from landlords and mortgagees, and each Grantor shall in all instances obtain signed acknowledgements of Lender’s Liens from bailees having possession of any Grantor’s Goods that they hold for the benefit of Lender.

9

(iv)

Each Grantor that is or becomes the beneficiary of a letter of credit shall promptly, and in any event within two (2) Business Days after becoming a beneficiary, notify Lender thereof and enter into a tri-party agreement with Lender and the issuer and/or confirmation bank with respect to Letter of Credit Rights assigning such Letter of Credit Rights to Lender and directing all payments thereunder to Lender, all in form and substance reasonably satisfactory to Lender.

(v)

Each Grantor shall take all steps necessary to grant the Lender control of all electronic chattel paper in accordance with the Code and all "transferable records" as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

(vi)

Each Grantor hereby irrevocably authorizes the Lender at any time and from time to time to file in any filing office in any Uniform Commercial Code Jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Code of such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Each Grantor agrees to furnish any such information to the Lender promptly upon request. Each Grantor also ratifies its authorization for the Lender to have filed in any Uniform Commercial Code Jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

(vii)

Each Grantor shall promptly, and in any event within two (2) Business Days after the same is acquired by it, notify Lender of any commercial tort claim (as defined in the Code) acquired by it and unless otherwise consented by Lender, such Grantor shall enter into a supplement to this Security Agreement, granting to Lender a Lien in such commercial tort claim.

(b)

Maintenance of Records. Grantors shall keep and maintain, at their own cost and expense, satisfactory and complete records of the Collateral, including a record of any and all payments received and any and all credits granted with respect to the Collateral and all other dealings with the Collateral. Grantors shall mark their books and records pertaining to the Collateral to evidence this Security Agreement and the Liens granted hereby. If any Grantor retains possession of any Chattel Paper or Instruments with Lender’s consent, such Chattel Paper and Instruments shall be marked with the following legend: "This writing and the obligations evidenced or secured hereby are subject to the security interest of GNB Bank Panama S.A., as Lender".

(c)

Covenants Regarding Patent, Trademark and Copyright Collateral.

(i)

Grantors shall notify Lender immediately if they know or have reason to know that any application or registration relating to any Patent, Trademark or Copyright (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any 

10

proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding any Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same.

(ii)

In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving Lender prior written notice thereof.

(iii)

Grantors shall take all actions necessary or requested by Lender to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of the Patents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings.

(iv)

In the event that any of the Patent, Trademark or Copyright Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 5(a)(vii) of this Security Agreement. Such Grantor shall, unless such Grantor shall reasonably determine that such Patent, Trademark or Copyright Collateral is in no way material to the conduct of its business or operations, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as Lender shall deem appropriate under the circumstances to protect such Patent, Trademark or Copyright Collateral.

(d)

Indemnification. In any suit, proceeding or action brought by Lender relating to any Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect thereto, each Grantor will save, indemnify and keep Lender harmless from and against all expense (including reasonable attorneys’ fees and expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the Account Debtor or other Person obligated on the Collateral, arising out of a breach by any Grantor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from such Grantor, except to the extent such expense, loss, or damage is attributable solely to the gross negligence or willful misconduct of Lender as finally determined by a court of competent jurisdiction. All such obligations of Grantors shall be and remain enforceable against and only against Grantors and shall not be enforceable against Lender.

(e)

Compliance with Terms of Accounts, etc. In all material respects, each Grantor will perform and comply with all obligations in respect of the Collateral and all other agreements to which it is a party or by which it is bound relating to the Collateral.

(f)

Limitation on Liens on Collateral. No Grantor will create, permit or suffer to exist, and each Grantor will defend the Collateral against, and take such other action as is necessary to remove, any Lien on the Collateral except Permitted Encumbrances, and will defend the right, title and interest of Lender in and to any of such Grantor's rights under the Collateral against the claims and demands of all Persons whomsoever.

(g)

Limitations on Disposition. No Grantor will sell, license, lease, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so except as permitted herein or in the Loan Agreement.

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(h)

Further Identification of Collateral. Grantors will, if so requested by Lender, furnish to Lender, as often as Lender requests, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Lender may reasonably request, all in such detail as Lender may specify.

(i)

Notices. Grantors will advise Lender promptly, in reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim made or asserted against any of the Collateral, and (ii) of the occurrence of any other event which would have a material adverse effect on the aggregate value of the Collateral or on the Liens created hereunder.

(j)

Good Standing Certificates. Not less frequently than once during each calendar semester, unless Lender shall otherwise consent, provide to Lender a certificate of good standing from its state of incorporation or organization.

(k)

No Reincorporation. Without limiting the negative covenants provided under the Loan Agreement, no Grantor shall reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof without the prior written consent of Lender.

(l)

Terminations; Amendments Not Authorized. Each Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of Lender and agrees that it will not do so without the prior written consent of Lender, subject to such Grantor's rights under Section 9-509(d)(2) of the Code.

6.

LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.

On the date hereof each Grantor shall execute and deliver to Lender a power of attorney (the "Power of Attorney") substantially in the form attached hereto as Exhibit A. The power of attorney granted pursuant to the Power of Attorney is a power coupled with an interest and shall be irrevocable until the Secured Obligations have been paid in full. The powers conferred on Lender under the Power of Attorney are solely to protect Lender’s interests in the Collateral and shall not impose any duty upon Lender to exercise any such powers. Lender agrees that (a) except for the powers granted in clause (h) of the Power of Attorney, it shall not exercise any power or authority granted under the Power of Attorney unless an Event of Default has occurred and is continuing, and (b) Lender shall account for any moneys received by Lender in respect of any foreclosure on or disposition of Collateral pursuant to the Power of Attorney provided that Lender shall not have any duty as to any Collateral, and Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers. NEITHER LENDER NOR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

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7.

REMEDIES: RIGHTS UPON DEFAULT.

(a)

In addition to all other rights and remedies granted to it under this Security Agreement and the Loan Agreement and under any other instrument or agreement securing, evidencing or relating to any of the Secured Obligations, if any Event of Default shall have occurred and be continuing, Lender may exercise all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, each Grantor expressly agrees that in any such event Lender, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon such Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code and other applicable law), may forthwith enter upon the premises of such Grantor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving such Grantor or any other Person notice and opportunity for a hearing on Lender’s claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk. Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit Lenders, the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption each Grantor hereby specifically waives and releases. Such sales may be adjourned and continued from time to time with or without notice. Lender shall have the right to conduct such sales on any Grantor’s premises or elsewhere and shall have the right to use any Grantor’s premises without charge for such time or times as Lender deems necessary or advisable.

If any Event of Default shall have occurred and be continued, each Grantor further agrees, at Lender’s request, to assemble the Collateral and make it available to Lender at a place or places designated by Lender which are reasonably convenient to Lender and such Grantor, whether at such Grantor’s premises or elsewhere. Until Lender is able to effect a sale, lease, or other disposition of Collateral, Lender shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by Lender. Lender shall have no obligation to any Grantor to maintain or preserve the rights of such Grantor as against third parties with respect to Collateral while Collateral is in the possession of Lender. Lender may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of Lender’s remedies (for the benefit of Lender), with respect to such appointment without prior notice or hearing as to such appointment. Lender shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Secured Obligations, and only after so paying over such net proceeds, and after the payment by Lender of any other amount required by any provision of law, need Lender account for the surplus, if any, to any Grantor. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against Lender arising out of the repossession, retention or sale of the Collateral except such as arise solely out of the gross negligence or willful misconduct of Lender as finally determined by a court of competent jurisdiction. Each Grantor agrees that ten (10) days prior notice by Lender of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Grantors shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Secured Obligations, including any attorneys’ fees and other expenses incurred by Lender to collect such deficiency.

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(b)

Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral. 

(c)

To the extent that applicable law imposes duties on the Lender to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Lender (i) to fail to incur expenses reasonably deemed significant by the Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as the Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Lender against risks of loss, collection or disposition of Collateral or to provide to the Lender a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Lender in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 7(c) is to provide non-exhaustive indications of what actions or omissions by the Lender would not be commercially unreasonable in the Lender's exercise of remedies against the Collateral and that other actions or omissions by the Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 7(c). Without limitation upon the foregoing, nothing contained in this Section 7(c) shall be construed to grant any rights to any Grantor or to impose any duties on Lender that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 7(c).

(d)

Lender shall not be required to make any demand upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Secured Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof. Lenders shall not be required to marshal the Collateral or any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in any particular order, and all of its and their rights hereunder or under the Loan Agreement shall be cumulative. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise.

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8.

GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. For the purpose of enabling Lender to exercise rights and remedies under Section 7 hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale, sell or otherwise dispose of Collateral) at such time as Lender shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to Lender an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

9.

LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender shall use reasonable care with respect to the Collateral in its possession or under its control. Lender shall not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Lender, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

10.

REINSTATEMENT. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

11.

NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other party any communication with respect to this Security Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner, and deemed received, as provided for in the Loan Agreement.

12.

SEVERABILITY. Whenever possible, each provision of this Security Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Security Agreement. This Security Agreement is to be read, construed and applied together with the Loan Agreement which, taken together, set forth the complete understanding and agreement of Lender and Grantors with respect to the matters referred to herein and therein.

13.

NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Lender and then only to the extent therein set forth. A waiver 

15

by Lender of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Lender would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Lender and Grantors.

14.

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

15.

TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 10 hereof, this Security Agreement shall terminate upon payment in full of the secured Obligations.

16.

SUCCESSORS AND ASSIGNS. This Security Agreement and all obligations of Grantors hereunder shall be binding upon the successors and assigns of each Grantor (including any debtor-in-possession on behalf of such Grantor) and shall, together with the rights and remedies of Lender, hereunder, inure to the benefit of Lender, all future holders of any instrument evidencing any of the Secured Obligations and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Secured Obligations or any portion thereof or interest therein shall in any manner affect the Lien granted to Lender hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any interest in or obligation under this Security Agreement.

17.

COUNTERPARTS. This Security Agreement may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement.

18.

GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER 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 THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, STATE OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTORS AND LENDER PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, 

16

AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR 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, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH ON SECTION 8.1 OF THE LOAN AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

19.

WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO 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 RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG LENDER AND GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR THE LOAN AGREEMENT.

20.

SECTION TITLES. The Section titles contained in this Security Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

21.

NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the negotiation and drafting of this Security Agreement. In the event an ambiguity or question of intent or interpretation arises, this Security Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Security Agreement.

22.

ADVICE OF COUNSEL. Each of the parties represents to each other party hereto that it has discussed this Security Agreement and, specifically, the provisions of Section 18 and Section 19, with its counsel.

17

23.

BENEFIT OF LENDER. All Liens granted or contemplated hereby shall be for the benefit of Lender, and all proceeds or payments realized from Collateral in accordance herewith shall be applied to the Secured Obligations.

18

IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

	 	PHONE1, INC.

	 	By: /s/ Dario Echeverry

	 	Name: Dario Echeverry

	 	Title: Chief Executive Officer

	 	 
	 	PHONE1GLOBALWIDE, INC.

	 	By: /s/ Dario Echeverry

	 	Name: Dario Echeverry

	 	Title: Chief Executive Officer

	 	 
	 	GLOBALTRON COMMUNICATIONS CORPORATION 

	 	By: /s/ Dario Echeverry

	 	Name: Dario Echeverry

	 	Title: Chief Executive Officer

	 	 
	 	GNB BANK PANAMA S.A. 

	 	By: /s/ Dario Echeverry

	 	Name: Camilo Verastegui

	 	Title: General Manager

19

SCHEDULE I

TO

SECURITY AGREEMENT

FILING JURISDICTIONS

Offices and/or switches are located in:

New York

Florida

Costa Rica

Brazil

Headsets, advertising materials and eproms, and in certain cases, circuit boards, are located in or proximate to phones placed by carriers with whom we do business. These headsets, advertising materials and/or eproms are currently placed in:

Arizona

California

Florida

Georgia

Illinois

Kentucky

Maryland

Massachusetts

Michigan

New York

North Carolina

Ohio

Utah

South Carolina

Tennessee

Texas

Virginia

Washington

West Virginia

Wisconsin

SCHEDULE II

TO

SECURITY AGREEMENT

INSTRUMENTS, CHATTEL PAPER AND LETTER OF CREDIT RIGHTS

Instruments

Certificate of Deposit owned by Phone1 in the approximate amount of $13,200, maintained on deposit with Eagle National Bank.

Chattel Paper

None.

Letters of Credit Rights

None.

SCHEDULE III

TO

SECURITY AGREEMENT

SCHEDULE OF OFFICES, LOCATIONSOF COLLATERAL AND RECORDS CONCERNING COLLATERAL

	Official Name of Grantor

	Type of Entity

	Organizational ID Number

	State of Incorpor-ation

	Chief Office and Principal Place of Business

	Corporate Office

	Warehouses

	Other Premises at which Collateral Stored

	Location of Records Concerning Collateral

	 	 	 	 	 	 	 	 	 
	Phone1, Inc.

	Corp.

	Unknown

	Florida

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	None

	*

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	 	 	 	 	 	 	 	 	 
	Phone1Globalwide, Inc.

	Corp.

	Unknown

	Delaware

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	None

	None

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	 	 	 	 	 	 	 	 	 
	Globaltron Communications Corporation

	Corp.

	Unknown

	Delaware

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	None

	60 Hudson Street, New York, NY

Brazil

Costa Rica

	100 N. Biscayne Blvd., Suite 2500, Miami, FL

	 	 	 	 	 	 	 	 	 

*

Switches, headsets, advertising materials and/or eproms, and in certain cases, circuit boards, are located in or proximate to phones placed by carriers with whom we do business. These headsets, advertising materials and eproms are currently placed in:

Arizona

California

Florida

Costa Rica

Kentucky

Maryland 

Massachusetts

Brazil

Michigan

New York

Ohio

Utah 

West Virginia

Washington

Illinois

Virginia

South Carolina

Wisconsin

Georgia

Tennessee

Texas

North Carolina

SCHEDULE IV

TO

SECURITY AGREEMENT

PATENTS, TRADEMARKS AND COPYRIGHTS

Patents

"provisional" U.S. Patent Application Serial No. 60/367,539 that we filed on behalf of Phone1, Inc. on March 25, 2002

Trademarks

1.

Phone 1 Globalwide, Inc.

 

None.

 

2.

Phone1, Inc.

 

  

U.S. Registration No. 2,602,991 for PHONE1

  

U.S. Application No. 76/251,479 for Phone1 & Design

  

U.S. Application No. 78/097,107 for PHONE1SMART

3.

Globaltron Communications Corporation

 

U.S. Registration No. 2,539,103 for GLOBALTRON

  

U.S. Registration No. 2,539,102 for GLOBALTRON COMMUNICATIONS 

CORPORATION & Design

Copyrights

SCHEDULE V

TO

SECURITY AGREEMENT

VEHICLES

None.

EXHIBIT A

POWER OF ATTORNEY

This Power of Attorney is executed and delivered by ______________________, a _____________________ corporation ("Grantor") to GNB Bank Panama S.A., a bank organized under the laws of the Republic of Panama (hereinafter referred to as "Attorney"), as Lender, under a Loan Agreement and a Security Agreement, both dated as of September 30, 2002 (collectively, the "Loan Documents"). No person to whom this Power of Attorney is presented, as authority for Attorney to take any action or actions contemplated hereby, shall be required (including in respect of clauses (d) and (e) in the next succeeding paragraph) to inquire into or seek confirmation from Grantor as to the authority of Attorney to take any action described below, or as to the existence of or fulfillment of any condition to this Power of Attorney, which is intended to grant to Attorney unconditionally the authority to take and perform the actions contemplated herein, and Grantor irrevocable waives any right to commence any suit or action, in law or equity, against any person or entity which acts in reliance upon or acknowledges the authority granted under this Power of Attorney. The power of attorney granted hereby is coupled with an interest, and may not be revoked or canceled by Grantor without Attorney’s written consent.

Grantor hereby irrevocably constitutes and appoints Attorney (and all officers, employees or agents designated by Attorney), with full power of substitution, as Grantor’s true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Grantor and in the name of Grantor or in its own name, from time to time in Attorney’s discretion, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of the Loan Documents and, without limiting the generality of the foregoing, Grantor hereby grants to Attorney the power and right, on behalf of Grantor, without notice to or assent by Grantor, (other than in connection with a change of address as specified in clause (a), as to which Attorney shall use commercially reasonable efforts to give Grantor concurrent notice thereof provided that failure to do so will not affect Attorney's rights hereunder, and at any time, to do the following: (a) change the mailing address of Grantor, open a post office box on behalf of Grantor, open mail for Grantor, and ask, demand, collect, give acquittances and receipts for, take possession of, endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, and notices in connection with any property of Grantor; (b) effect any repairs to any asset of Grantor, or continue or obtain any insurance and pay all or any part of the premiums therefor and costs thereof, and make, settle and adjust all claims under such policies of insurance, and make all determinations and decisions with respect to such policies; (c) pay or discharge any taxes, liens, security interests, or other encumbrances levied or placed on or threatened against Grantor or its property; (d) defend any suit, action or proceeding brought against Grantor if Grantor does not defend such suit, action or proceeding or if Attorney believes that Grantor is not pursuing such defense in a manner that will maximize the recovery to Attorney, and settle, compromise or adjust any suit, action, or proceeding described above and, in connection therewith, give such discharges or releases as Attorney may deem appropriate, provided that in connection with the foregoing Attorney shall act in a manner consistent with the terms of the Loan Documents to the extent explicitly covered thereby; (e) file or prosecute any claim, litigation, suit or proceeding in any court of competent jurisdiction or before any arbitrator, or take any other action otherwise deemed appropriate by Attorney for the purpose of collecting any and all such moneys due to Grantor whenever payable and to enforce any other right in respect of Grantor’s property provided, in the case of any such claim, litigation, suit or proceeding relating to product liability insurance Attorney shall act in a manner consistent with the terms of the Loan Documents to the extent explicitly covered thereby; (f) cause the certified public accountants then engaged by Grantor to prepare and deliver to Attorney at any time and from time to time, promptly upon Attorney’s request, the following reports: (1) a reconciliation of all accounts, (2) an aging of all accounts, (3) trial balances, (4) test verifications of such accounts as Attorney may request, and (5) the results of each physical verification of inventory; (g) communicate in its own name with any party to any Contract with regard to the assignment of the right, title and interest of such Grantor in and under the Contracts and other matters relating thereto; (h) to file such financing statements with respect to the Security Agreement, with or without Grantor's signature, or to file a photocopy of the Security Agreement in substitution for a financing statement, as the Lender may deem appropriate and to execute in Grantor's name such financing statements and amendments thereto and continuation statements which may require the Grantor's signature; and (i) execute, in connection with any sale provided for in any Loan Document, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral and to otherwise direct such sale or resale, all as though Attorney were the absolute owner of the property of Grantor for all purposes, and to do, at Attorney’s option and Grantor’s expense, at any time or from time to time, all acts and other things that Attorney reasonably deems necessary to perfect, preserve, or realize upon Grantor’s property or assets and Attorney’s Liens thereon, all as fully and effectively as Grantor might do. Grantor hereby ratifies, to the extent permitted by law, all that said Attorney shall lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and Grantor has caused its seal to be affixed pursuant to the authority of its board of directors this _____________ day of ______________________.

[

GRANTOR

]

By: 

Name: 

Title: 

NOTARY PUBLIC CERTIFICATE

On this _____ day of ______________, 2002, [officer's name] who is personally known to me appeared before me in his/her capacity as the [title] of [Grantor] ("Grantor") and executed on behalf of Grantor the Power of Attorney in favor of GNB Bank Panama S.A. to which this Certificate is attached.

	 	

	 	Notary Public

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