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SECURITY AGREEMENT

THIS SECURITY AGREEMENT dated for reference September 30, 2004

BETWEEN:

> > IMAGE INNOVATIONS HOLDINGS INC., a Nevada corporation having an office at
> > 432 Park Avenue, New York, New York 10022
> > 
> > (the "Debtor")

AND:

> > H.E. CAPITAL S.A., a corporation having an office at Casa del Sol, MJ19
> > Paseo Marino, Perla Marina, Sosua, Dominican Republic
> > 
> > (the "Secured Party")

WITNESSES THAT:

1.0      SECURITY INTEREST

1.1      For valuable consideration (the receipt and sufficiency of which is
hereby acknowledged by the Debtor) the Debtor does hereby:

(a)     
mortgage and charge as and by way of a fixed and specific charge in favour of
the Secured Party, and assign and transfer to the Secured Party, and grant to
the Secured Party a security interest in, all the Debtor's and Debtor's
wholly-owned subsidiaries' present and after acquired personal property, assets
and undertakings, of whatever nature or kind and wheresoever situate, and all
proceeds thereof and therefrom including without limitation all of the Debtor's
right, title and interest in and to all:
    (i)     
equipment, including, without limiting the generality of the foregoing,
machinery, tools, fixtures, furniture, furnishings, chattels, motor vehicles and
other tangible personal property that is not Inventory (as hereinafter defined),
and all parts, components, attachments, accessories, accessions, replacements,
substitutions, additions and improvements to any of the foregoing (all of which
is hereinafter collectively called the "Equipment");
    (ii)     
inventory, including, without limiting the generality of the foregoing, goods
acquired or held for sale or lease or furnished or to be furnished under
contracts of rental or service, all raw materials, work in process,
 

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finished goods, returned goods, repossessed goods, and all packaging materials,
supplies and containers relating to or used or consumed in connection with any
of the foregoing (all of which is hereinafter collectively called the
"Inventory");
        (iii)     
debts, accounts, claims, demands, monies and choses in action which now are, or
which may at any time hereafter be, due or owing to or owned by the Debtor and
all books, records, documents, papers and electronically recorded data
recording, evidencing or relating to the said debts, accounts, claims, demands,
monies and choses in action or any part thereof (all of which is hereinafter
collectively called the "Accounts");
    (iv)     
chattel paper;
    (v)     
documents of title including all warehouse receipts;
    (vi)     
securities and instruments including all shares, stock, warrants, bonds,
debentures and debenture stock;
 

  (vii)   money;          (viii)   goods that are not Equipment or Inventory; 

 

  (ix)     
contractual rights, licenses, goodwill, patents, trademarks, designs, trade
names, copyrights and other intellectual properties of the Debtor, all other
choses in action of the Debtor of every kind which now are, or which may at any
time hereafter be, due or owing to or owned by the Debtor, and all other
personal property of the Debtor which are not Accounts, goods, chattel paper,
instruments, documents of title, securities or money;
 

(b)     
charge as and by way of floating charge, and grant to the Secured Party a
security interest in and to, all of the Debtor's and Debtor's wholly-owned
subsidiaries' right, title and interest in and to all presently owned or held
and after acquired or held real, immovable and leasehold property and all
interests therein, and all easements, rights-of-way, privileges, benefits,
licences, improvements and rights whether connected therewith or appurtenant
thereto or separately owned or held, including all structures, plant and other
fixtures (all which is hereinafter collectively called the "Real Property").

1.2      The charges, assignments and transfers and security interests created
pursuant to Clause 1.1 are hereinafter collectively called the "Security
Interests" and the property, assets and undertakings subject to the Security
Interests and all property, assets and undertakings expressed to be charged,
assigned or transferred or secured by any instruments supplemental hereto or in
implementation hereof are hereinafter collectively called the "Collateral".

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1.3      For the purposes of Section 198.1 of the Land Title Act (British
Columbia) the floating charges created pursuant to Clause 1.1(b) shall become a
fixed charge upon the earlier of:

(a)     
the occurrence of an Event of Default (as hereinafter defined); or
  (b)     
the Secured Party taking any action to enforce and/or realize on the security
hereby constituted.

2.0      EXCEPTIONS

2.1      The last ten days of the term created by any lease or agreement
therefor are hereby excepted out of the Security Interests hereby created but
the Debtor shall stand possessed of the reversion thereby remaining upon trust
to assign and dispose thereof to any third party as the Secured Party shall
direct and as set forth on Schedule A.

3.0      ATTACHMENT

3.1      The Debtor acknowledges that the Security Interests hereby created
attach upon the execution of this Security Agreement (or in the case of any
after acquired property, upon the date of acquisition thereof), that value has
been given and that the Debtor has (or in the case of any after acquired
property, will have upon the date of acquisition) rights in the Collateral,
provided that the Secured Party hereby undertakes to file the appropriate UCC-1
Forms in the states which such filing is required, including the States of
Nevada and Delaware. Until such time as the UCC-1 Forms are filed, the Secured
Party understands that the Security Interests hereby created have not been
perfected.

4.0      PROHIBITION

4.1      Without the prior written consent of the Secured Party the Debtor shall
not create or permit to exist any security interest in, charge, encumbrance or
lien over, or claim against any of its property, assets or undertaking which
ranks or could in any event rank in priority to or pari passu with any of the
Security Interests created by this Security Agreement, save only for the
security interests and encumbrances, if any, consented to in writing by the
Secured Party (collectively "Permitted Encumbrances").

5.0      OBLIGATIONS SECURED

5.1 This Security Agreement and the Security Interests hereby created are in
addition to and not in substitution for any other security interest now or
hereafter held by the Secured Party from the Debtor, and shall be general and
continuing security for the payment of all indebtedness and liability of the
Debtor to the Secured Party (including interest), present and future, absolute
or contingent, joint and several, direct or indirect, matured or not, extended
or renewed, wheresoever and howsoever incurred whether alone or with others, and
any ultimate balance

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thereof, including all future advances and re-advances, and for the performance
of all obligations of the Debtor to the Secured Party, whether or not contained
in this Security Agreement, and including without limitation all indebtedness
and liability of the Debtor to the Secured Party under or pursuant to the loan
agreement (the "Loan Agreement") of even date made between the Debtor and the
Secured Party and all promissory notes issued pursuant thereto (all of which
indebtedness, liability and obligations are hereinafter collectively called the
"Obligations").

6.0      REPRESENTATIONS AND WARRANTIES

6.1      The Debtor represents and warrants that the execution, delivery and
performance of this Security Agreement are within the Debtor's corporate powers,
are not in contravention of the law or the terms of the Debtor's charter, bylaws
or other incorporation papers, or any intention, agreement or undertaking to
which the Debtor is a party or by which it is bound.

6.2      The Debtor represents and warrants that the Debtor lawfully owns and
possesses all Collateral presently held by it, and has good title thereto, free
from all security interests, charges, encumbrances, liens and claims, save only
for Permitted Encumbrances, and the Debtor has good right and lawful authority
to grant the Security Interests in the Collateral as provided by this Security
Agreement.

7.0      COVENANTS OF THE DEBTOR

7.1      The Debtor covenants that at all times while this Security Agreement
remains in effect the Debtor will:

(a)     
defend the title to the Collateral for the benefit of the Secured Party against
the claims and demands of all persons;
  (b)     
fully and effectively maintain and keep maintained the Security Interests hereby
created valid and effective;
  (c)     
maintain the Collateral in good order and repair;
  (d)      forthwith pay:     (i)     
all taxes, assessments, rates, duties, levies, government fees, claims and dues
lawfully levied, assessed or imposed upon them, respectively, or the Collateral
when due, unless the Debtor shall in good faith contest its obligation so to pay
and shall furnish such security as the Secured Party may require; and
    (ii)     
all security interests, charges, encumbrances, liens and claims which rank or
could in any event rank in priority to any Security Interest created by this
Security Agreement other than the Permitted Encumbrances;

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(e)     
forthwith pay all costs, charges, expenses and legal fees and disbursements (on
a solicitor and his own client basis) which may be incurred by the Secured Party
in:
    (i)     
taking, recovering and keeping possession of the Collateral;
    (ii)     
all other actions and proceedings taken in connection with the preservation of
the Collateral and the enforcement of this Security Agreement and of any other
security interest held by the Secured Party as security for the Obligations;
    (iii)     
complying with the disclosure requirements under the Act;
  (f)     
at the Secured Party's request at any time and from time to time execute and
deliver such further and other documents and instruments and do all acts and
things as the Secured Party in its absolute discretion requires in order to
confirm and perfect, and maintain perfection of, the Security Interests hereby
created in favour of the Secured Party upon any of the Collateral;
  (g)     
notify the Secured Party promptly of:
    (i)     
any material change in the information contained herein relating to the Debtor
for which notice is required to be filed under the Act, its business or the
Collateral, including without limitation, any change of name or address of the
Debtor, and any change in the present location of any Collateral which is not
Inventory;
    (ii)     
the details of any material acquisition of Collateral which is not Inventory;
    (iii)     
any material loss or damage to Collateral;
    (iv)     
any material default by any account debtor in payment or other performance of
his obligations to the Debtor with respect to any Accounts; and
    (v)     
the return to or repossession by the Debtor of Collateral where such return or
repossession of Collateral is material in relation to the business of the
Debtor;
  (h)     
prevent Collateral, other than Inventory sold, leased or otherwise disposed of
as permitted hereby, from being or becoming an accession to other property not
covered by this Security Agreement;
  (i)     
carry on and conduct its business in a proper and business-like manner,
including maintenance of proper books of account and records;

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(j)     
permit, on 24-hours' notice, the Secured Party and its representatives, at all
reasonable times, access to all its property, assets and undertaking and to all
its books of account and records for the purpose of inspection and render all
assistance necessary for such inspection;
  (k)     
deliver to the Secured Party from time to time within five days of its written
request:
    (i)     
any documents of title, instruments, securities and chattel paper constituting,
representing or relating to Collateral;
    (ii)     
all books of account and all records, ledgers, reports, correspondence,
schedules, documents, statements, lists and other writings relating to
Collateral for the purpose of inspecting, auditing or copying the same;
    (iii)     
all financial statements prepared by or for the Debtor or any of them regarding
the Debtor's business; and
    (iv)     
such information concerning Collateral, the Debtor and the Debtor's business and
affairs as the Secured Party may reasonably require including but not limited to
a complete list of all jurisdictions in which the Debtor carries on business and
a list setting out the jurisdiction of any of the Collateral.

8.0      INSURANCE

8.1      The Debtor covenants that at all times while this Security Agreement is
in effect the Debtor shall:

  (a)     
maintain or cause to be maintained insurance on the Collateral with an insurer,
of kinds, for amounts and payable to such person or persons, all as the Secured
Party may require, and in particular maintain insurance on the Collateral to the
full insurable value against loss or damage by fire including extended coverage
endorsement and in the case of motor vehicles, maintain insurance against theft;
    (b)     
cause the insurance policy or policies required hereunder to be assigned to the
Secured Party as its interests may appear and have as part thereof a standard
mortgage clause or a mortgage endorsement, as appropriate; and
    (c)     
pay any premium in connection with such insurance, and deliver all such policies
to the Secured Party, if it so requires.

8.2      If proceeds of any insurance required hereunder become payable, the
Secured Party may, in its absolute discretion apply such proceeds to such part
or parts of the Obligations as the Secured Party may see fit or the Secured
Party may release any such insurance proceeds to the

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Debtor for the purpose of repairing, replacing or rebuilding, but any release of
insurance proceeds to the Debtor shall not operate as a payment on account of
the Obligations or in any way affect this Security Agreement.

8.3      The Debtor will forthwith, on the happening of loss or damage to the
Collateral, notify the Secured Party thereof and furnish to the Secured Party at
the Debtor's expense any necessary proof and do any necessary act to enable the
Secured Party to obtain payment of the insurance proceeds, but nothing herein
contained shall limit the Secured Party's right to submit to the insurer a proof
of loss on its own behalf.

8.4      The Debtor hereby authorizes and directs the insurer under any policy
of insurance required hereunder to include the name of the Secured Party as a
loss payee on any cheque or draft which may be issued with respect to a claim
under and by virtue of such insurance, and the production by the Secured Party
to any insurer of a certified copy of this Security Agreement shall be its full
and complete authority for so doing.

8.5      If the Debtor fails to maintain insurance as required by Clause 8.1,
the Secured Party may, but shall not be obliged to, maintain or effect such
insurance coverage, or so much thereof as the Secured Party considers necessary
for its protection.

9.0      PERFORMANCE OF OBLIGATIONS

9.1      If the Debtor fails to perform its obligations hereunder, the Secured
Party may, but shall not be obliged to, perform any or all of such obligations
without prejudice to any other rights and remedies of the Secured Party
hereunder, and any payments made and any costs, charges, expenses and legal fees
and disbursements (on a solicitor and his own client basis) incurred in
connection therewith shall be payable by the Debtor to the Secured Party
forthwith with interest until paid at the highest rate borne by any of the
Obligations.

10.0     RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL

10.1     Except as herein provided, without the prior written consent of the
Secured Party, the Debtor will not:

  (a)     
sell, lease or otherwise dispose of the Collateral;
    (b)     
release, surrender or abandon possession of the Collateral; and
    (c)     
move or transfer the Collateral from the jurisdiction in which the Security
Interests hereby created have been perfected.

10.2     Provided that the Debtor is not in default under this Security
Agreement, the Debtor may at any time without the consent of the Secured Party
lease, sell, license, consign or otherwise deal with items of Inventory in the
ordinary course of its business and dispose of other items of Collateral in the
ordinary course of business as they become surplus to the requirements of the
Debtor, provided that Collateral of equal or greater value is acquired by the
Debtor.

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11.0     DEFAULT

11.1     The Debtor shall be in default under this Security Agreement, unless
waived in writing by the Secured Party, in the event (herein called an "Event of
Default") there occurs any default under the Loan Agreement, including without
limitation a default of payment of any portion of the Loan (as defined in the
Loan Agreement) or interest.

12.0     ENFORCEMENT

12.1     Upon the occurrence of an Event of Default, the Secured Party may
declare any or all of the Obligations not payable on demand to become
immediately due and payable and the security hereby constituted will immediately
become enforceable. To enforce and realize on the Security Interests created by
this Security Agreement the Secured Party may take any action permitted by law
or in equity, as it may deem expedient, and in particular and without limiting
the generality of the foregoing, the Secured Party may do any of the following:

  (a)     
appoint by instrument a receiver, receiver and manager or receiver-manager (the
person so appointed being hereinafter called the "Receiver") of the Collateral,
with or without bond as the Secured Party may determine, and from time to time
in its absolute discretion remove such Receiver and appoint another in its
stead;
    (b)     
enter upon any premises of the Debtor and take possession of the Collateral with
power to exclude the Debtor, its agents and its servants therefrom, without
becoming liable as a mortgagee in possession;
    (c)     
preserve, protect and maintain the Collateral and make such replacements thereof
and repairs and additions thereto as the Secured Party may deem advisable;
    (d)     
sell, lease or otherwise dispose of all or any part of the Collateral, whether
by public or private sale or lease or otherwise, in such manner, at such price
as can be reasonably obtained therefor and on such terms as to credit and with
such conditions of sale and stipulations as to title or conveyance or evidence
of title or otherwise as to the Secured Party may seem reasonable, provided that
if any sale, lease or other disposition is on credit the Debtor will not be
entitled to be credited with the proceeds of such sale, lease or other
disposition until the monies therefor are actually received; and
    (e)     
exercise all of the rights and remedies of a secured party under the Act.

12.2     A Receiver appointed pursuant to this Security Agreement shall be the
agent of the Debtor and not of the Secured Party and, to the extent permitted by
law or to such lesser extent permitted by its appointment, shall have all the
powers of the Secured Party hereunder, and in addition shall have power to carry
on the business of the Debtor and for such purpose from time

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to time to borrow money either secured or unsecured, and if secured by a
security interest on any Collateral, such security interest may rank before or
pari passu with or behind any of the Security Interests created by this Security
Agreement, and if it does not so specify such security interest shall rank in
priority to the Security Interests created by this Security Agreement.

12.3     Subject to the claims, if any, of the creditors of the Debtor ranking
in priority to this Security Agreement, all amounts realized from the
disposition of Collateral pursuant to this Security Agreement will be applied as
the Secured Party, in its absolute discretion, may direct, as follows:

  (a)     
in payment of all costs, charges and expenses (including legal fees and
disbursements on a solicitor and his own client basis) incurred by the Secured
Party in connection with or incidental to:
      (i)     
the exercise by the Secured Party of all or any of the powers granted to it
pursuant to this Security Agreement; and
      (ii)     
the appointment of the Receiver and the exercise by the Receiver of all or any
of the powers granted to it pursuant to this Security Agreement, including the
Receiver's reasonable remuneration and all outgoings properly payable by the
Receiver;
    (b)     
in or toward payment to the Secured Party of all principal and other monies
(except interest) due in respect of the Obligations;
    (c)     
in or toward payment to the Secured Party of all interest remaining unpaid in
respect of the Obligations.

Subject to applicable law and the claims, if any, of other creditors of the
Debtor, any surplus will be paid to the Debtor.

13.0     DEFICIENCY

13.1     If the amounts realized from the disposition of the Collateral are not
sufficient to pay the Obligations in full, the Debtor will immediately pay to
the Secured Party the amount of such deficiency.

14.0     LIABILITY OF SECURED PARTY

14.1     The Secured Party shall not be responsible or liable for any debts
contracted by it, for damages to persons or property or for salaries or
non-fulfillment of contracts during any period when the Secured Party shall
manage the Collateral upon entry, as herein provided, nor shall the Secured
Party be liable to account as a mortgagee in possession or for anything except
actual receipts or be liable for any loss on realization or for any default or
omission for which a mortgagee in possession may be liable. The Secured Party
shall not be bound to do, observe or

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perform or to see to the observance or performance by the Debtor of any
obligations or covenants imposed upon the Debtor nor shall the Secured Party, in
the case of securities, instruments or chattel paper, be obliged to preserve
rights against other persons, nor shall the Secured Party be obliged to keep any
of the Collateral identifiable. The Debtor hereby waives any applicable
provision of law permitted to be waived by it which imposes higher or greater
obligations upon the Secured Party than aforesaid.

15.0     APPOINTMENT OF ATTORNEY

15.1     The Debtor hereby irrevocably appoints the Secured Party or the
Receiver, as the case may be, with full power of substitution, to be the
attorney of the Debtor for and in the name of the Debtor to sign, endorse or
execute under seal or otherwise any deeds, documents, transfers, cheques,
instruments, demands, assignments, assurances or consents that the Debtor may be
obliged to sign, endorse or execute, and generally to use the names of the
Debtor and to do all things as may be necessary or incidental to the exercise of
all of the powers conferred on the Secured Party or the Receiver, as the case
may be, pursuant to this Security Agreement.

16.0     ACCOUNTS

16.1     The Secured Party may collect, realize, sell, or otherwise deal with
the Accounts or any part thereof in such manner, upon such terms and conditions
and at such time to times, whether before or after default, as may seem to it
advisable, and without notice to the Debtor. Upon the occurrence of an Event of
Default, all monies or other forms of payment received by the Debtor in payment
of any Account will be received and held by the Debtor in trust for the Secured
Party and paid to the Secured Party on demand.

17.0     APPROPRIATION OF PAYMENTS

17.1     Any and all payments made in respect of the Obligations from time to
time and monies realized from any security interests held therefor (including
monies collected in accordance with or realized on any enforcement of this
Security Agreement) may be applied to such part or parts of the Obligations as
the Secured Party may see fit, and the Secured Party may at all times and from
time to time change any appropriation as the Secured Party may see fit.

18.0     NOTICE

18.1     Any demand, request, notice or consent to be given under this Security
Agreement shall be in writing and shall be given by delivering the same to the
Debtor at the address first set forth above or such other address as may be
given in writing by the Debtor, or by telecopying such notice to the Debtor; and
any such demand, request, notice or consent sent as aforesaid shall be

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deemed to have been received upon delivery, if delivered, and when transmitted,
if sent by telecopier or other like medium of transmission.

19.0     EXTENSIONS

19.1     The Secured Party may grant extensions of time and other indulgences,
take and give up security, accept compositions, compound, compromise, settle,
grant releases and discharges, refrain from perfecting or maintaining perfection
of security interests, and otherwise deal with the Debtor, account debtors of
the Debtor, sureties and others and with Collateral and other security interests
as the Secured Party may see fit without prejudice to the liability of the
Debtor or the Secured Party's right to hold and realize on the Security
Interests created by this Security Agreement.

20.0     NO MERGER

20.1     This Security Agreement shall not operate so as to create any merger or
discharge of any of the Obligations, or of any assignment, transfer guarantee,
lien, contract, promissory note, bill of exchange or security interest of any
form held or which may hereafter be held by the Secured Party from the Debtor or
from any other person whomsoever. The taking of a judgment with respect to any
of the Obligations will not operate as a merger of any of the covenants
contained in this Security Agreement.

21.0     RIGHTS CUMULATIVE

21.1     All rights and remedies of the Secured Party set out in this Security
Agreement, and in any other security agreement held by the Secured Party from
the Debtor or any other person whomsoever to secure payment and performance of
the Obligations, are cumulative and no right or remedy contained herein or
therein is intended to be exclusive but each is in addition to every other right
or remedy contained herein or therein or in any future security agreement, or
now or hereafter existing at law, in equity or by statute, or pursuant to any
other agreement between the Debtor and the Secured Party that may be in effect
from time to time.

22.0     ASSIGNMENT

22.1     The Secured Party may, without further notice to the Debtor, at any
time assign, transfer or grant a security interest in this Security Agreement
and the Security Interests created hereby. The Debtor expressly agrees that the
assignee, transferee or secured party, as the case may be, shall have all of the
Secured Party's rights and remedies under this Security Agreement and the Debtor
will not assert any defense, counterclaim, right of set-off or otherwise any
claim which it now has or may hereafter acquire against the Secured Party in any
action commenced by such assignee, transferee or secured party, as the case may
be, and will pay the Obligations to the assignee, transferee or secured party,
as the case may be, as the Obligations become due.

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23.0     SATISFACTION AND DISCHARGE

23.1     Any partial payment or satisfaction of the Obligations, or any ceasing
by the Debtor to be indebted to the Secured Party shall be deemed not to be a
redemption or discharge of this Security Agreement. The Debtor shall be entitled
to a release and discharge of this Security Agreement upon full payment and
satisfaction of all Obligations, and upon written request by the Borrower and
payment to the Secured Party of a discharge fee to be fixed by the Secured Party
and payment of all costs, charges, expenses and legal fees and disbursements (on
a solicitor and his own client basis) incurred by the Secured Party in
connection with the Obligations and such release and discharge.

24.0     ENUREMENT

24.1     This Security Agreement shall enure to the benefit of the Secured Party
and its successors and assigns, and shall be binding upon the successors and
permitted assigns of the Debtor.

25.0     INTERPRETATION

25.1     In this Security Agreement:

  (a)     
"Collateral" has the meaning set out in Clause 1 hereof and any reference to
Collateral shall, unless the context otherwise requires, be deemed to be a
reference to Collateral as a whole or any part thereof;
    (b)     
"the Act" means the Personal Property Security Act (British Columbia) and all
regulations thereunder, as amended from time to time.

25.2     Words and expressions used herein that have been defined in the Act
shall be interpreted in accordance with their respective meanings given in the
Act unless otherwise defined herein or unless the context otherwise requires.

25.3     The invalidity or unenforceability of the whole or any part of any
clause of this Security Agreement shall not affect the validity or
enforceability of any other clause or the remainder of such clause.

25.4     The headings of the clauses of this Security Agreement have been
inserted for reference only and do not define, limit, alter or enlarge the
meaning of any provision of this Security Agreement.

25.5     This Security Agreement shall be governed by the laws of British
Columbia.

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26.0     COPY OF AGREEMENT AND WAIVER

26.1     The Debtor hereby:

  (a)      acknowledges receiving a copy of this Security Agreement; and    
(b)      waives all rights to receive from the Secured Party a copy of any
financing statement or financing change statement filed, or any verification
statement received, at any time in respect of this Security Agreement.

IN WITNESS WHEREOF the Debtor has executed this Security Agreement effective
September 30, 2004.

IMAGE INNOVATIONS HOLDINGS INC. 
 
\s\ Derick Sinclair 
Derick Sinclair 
Authorized Signatory  H.E. CAPITAL S.A. 
 
\s\ Richard Smith 
Richard Smith 
Authorized Signatory 

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Schedule A

 1.        Debtor's warehouse located at 6093 Main Street, Tannersville, New
    York 12485.
     
 2.        Loan due to Coach Capital LLC on October 27, 2004 in the principal
    amount of $800,000.

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