Exhibit 10.2

                               SECURITY AGREEMENT

     SECURITY AGREEMENT, dated as of January 11, 2006 (this "Agreement"),  among
Electronic Control Security,  Inc., a New Jersey corporation (the "Company") and
all of the  Subsidiaries  of the Company that own or use  material  assets (such
subsidiaries,  the  "Guarantors")  (the Company and Guarantors are  collectively
referred to as the "Debtors") and the holder or holders of the Company's  Senior
Secured  Debenture  due January 11, 2009 in the  aggregate  principal  amount of
$1,000,000 (the "Debenture"), signatory hereto, their endorsees, transferees and
assigns (collectively referred to as the "Secured Parties").

                              W I T N E S S E T H:

     WHEREAS,  pursuant to the  Debenture,  the Secured  Parties have  severally
agreed to extend the loans to the Company evidenced by the Debenture;

     WHEREAS,  pursuant to a certain  Subsidiary  Guarantee dated as of the date
hereof (the  "Guaranty"),  the Guarantors  have jointly and severally  agreed to
guaranty and act as surety for payment of such loans; and

     WHEREAS,  in order to  induce  the  Secured  Parties  to  extend  the loans
evidenced  by the  Debentures,  each Debtor has agreed to execute and deliver to
the Secured Parties this Agreement and to grant the Secured Parties,  pari passu
with each other Secured Party, a perfected security interest in certain property
of such Debtor to secure the prompt  payment,  performance and discharge in full
of all of the Company's  obligations  under the Debenture and the other Debtor's
obligations under the Guaranty.

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

     1.   Certain  Definitions.  As used in this Agreement,  the following terms
shall  have  the  meanings  set  forth in this  Section  1.  Terms  used but not
otherwise  defined in this  Agreement  that are  defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document",    "equipment",    "fixtures",   "general   intangibles",   "goods",
"instruments",  "inventory",  "investment property",  "letter-of-credit rights",
"proceeds" and  "supporting  obligations")  shall have the  respective  meanings
given such terms in Article 9 of the UCC.

          (a)  "Collateral"  means the  collateral in which the Secured  Parties
     are granted a security  interest by this  Agreement and which shall include
     the following personal property of the Debtors,  whether presently owned or
     existing or hereafter acquired or coming into existence, wherever situated,
     and  all  additions  and  accessions  thereto  and  all  substitutions  and
     replacements  thereof,  and all  proceeds,  products and accounts  thereof,
     including,  without  limitation,  all proceeds from the sale or transfer of
     the Collateral and of insurance covering the same and of any tort claims in
     connection therewith, and all dividends, interest, cash, notes, securities,
     equity  interest  or other  property  at any  time  and  from  time to time
     acquired, receivable or otherwise distributed in respect of, or in exchange
     for, any or all of the Pledged Securities (as defined below):

               (i)  All  goods,   including,   without   limitations,   (A)  all
          machinery, equipment, computers, motor vehicles, trucks, tanks, boats,
          ships,  appliances,  furniture,  special and general tools,  fixtures,
          test and quality control devices and other equipment of every kind and
          nature and wherever situated, together with all documents of title and
          documents representing the same, all additions and accessions thereto,
          replacements therefor, all parts therefor, and all substitutes for any
          of the  foregoing  and all other  items used and useful in  connection
          with any Debtor's businesses and all improvements thereto; and (B) all
          inventory;


<PAGE>


               (ii) All   contract   rights  and  other   general   intangibles,
          including,  without limitation, all partnership interests,  membership
          interests,  stock  or  other  securities,  rights  under  any  of  the
          Organizational   Documents,   agreements   related   to  the   Pledged
          Securities,  licenses,  distribution  and other  agreements,  computer
          software  (whether  "off-the-shelf",  licensed from any third party or
          developed  by  any  Debtor),  computer  software  development  rights,
          leases, franchises, customer lists, quality control procedures, grants
          and rights, goodwill,  trademarks,  service marks, trade styles, trade
          names,  patents,  patent  applications,  copyrights,  and  income  tax
          refunds;

               (iii) All accounts, together with all instruments,  all documents
          of  title  representing  any  of  the  foregoing,  all  rights  in any
          merchandising,  goods, equipment,  motor vehicles and trucks which any
          of the  same  may  represent,  and  all  right,  title,  security  and
          guaranties  with  respect  to each  account,  including  any  right of
          stoppage in transit;

               (iv) All  documents,  letter-of-credit  rights,  instruments  and
          chattel paper;

               (v)  All commercial tort claims;

               (vi) All deposit  accounts and all cash (whether or not deposited
          in such deposit accounts);

               (vii) All investment property;

               (viii) All supporting obligations; and

               (ix) All files, records,  books of account,  business papers, and
          computer programs; and

               (x)  the products and proceeds of all of the foregoing Collateral
          set forth in clauses (i)-(ix) above.

               Without   limiting  the   generality   of  the   foregoing,   the
          "Collateral"  shall  include  all  investment   property  and  general
          intangibles respecting ownership and/or other equity interests in each
          Guarantor,  including, without limitation, the shares of capital stock
          and the other  equity  interests  listed on  Schedule H hereto (as the
          same may be modified from time to time pursuant to the terms  hereof),
          and any other shares of capital stock and/or other equity interests of
          any other direct or indirect  subsidiary  (which owns or uses material
          assets) of any Debtor  obtained in the future,  and, in each case, all
          certificates  representing such shares and/or equity interests and, in
          each case, all rights,  options,  warrants,  stock,  other  securities
          and/or equity interests that may hereafter be received,  receivable or
          distributed in respect of, or exchanged for, any of the foregoing (all
          of the foregoing being referred to herein as the "Pledged Securities")
          and all  rights  arising  under  or in  connection  with  the  Pledged
          Securities, including, but not limited to, all dividends, interest and
          cash.

               Notwithstanding the foregoing,  nothing herein shall be deemed to
          constitute  an  assignment  of any  asset  which,  in the  event of an
          assignment,  becomes  void  by  operation  of  applicable  law  or the
          assignment of which is otherwise prohibited by applicable law (in each
          case to the  extent  that such  applicable  law is not  overridden  by
          Sections  9-406,  9-407  and/or  9-408  of the  UCC or  other  similar
          applicable law);  provided,  however,  that to the extent permitted by
          applicable law, this Agreement shall create a valid security  interest
          in such asset and, to the extent  permitted by  applicable  law,  this
          Agreement  shall create a valid  security  interest in the proceeds of
          such asset.


<PAGE>


               The  definition  of   "Collateral"   specifically   excludes  any
          information  or files of any  nature  in any  format  which is  deemed
          "classified  information" by any U.S. federal government  authority to
          the extent that any  agreement  among the Company (or any  Subsidiary)
          and such  government  authority  prohibits  the granting of a security
          interest in such information ("Classified Information").

          (b)  "Intellectual  Property"  means the  collective  reference to all
     rights,  priorities  and  privileges  relating  to  intellectual  property,
     whether  arising  under  United  States,  multinational  or foreign laws or
     otherwise,  including, without limitation, (i) all copyrights arising under
     the  laws  of the  United  States,  any  other  country  or  any  political
     subdivision  thereof,   whether  registered  or  unregistered  and  whether
     published or unpublished, all registrations and recordings thereof, and all
     applications in connection therewith,  including,  without limitation,  all
     registrations,  recordings and  applications in the United States Copyright
     Office,  (ii) all letters patent of the United States, any other country or
     any political subdivision thereof, all reissues and extensions thereof, and
     all  applications  for  letters  patent of the  United  States or any other
     country and all divisions, continuations and continuations-in-part thereof,
     (iii) all trademarks, trade names, corporate names, company names, business
     names, fictitious business names, trade dress, service marks, logos, domain
     names and other source or business identifiers, and all goodwill associated
     therewith, now existing or hereafter adopted or acquired, all registrations
     and  recordings  thereof,  and all  applications  in connection  therewith,
     whether in the United States Patent and Trademark  Office or in any similar
     office or agency  of the  United  States,  any State  thereof  or any other
     country or any political subdivision thereof, or otherwise,  and all common
     law rights related  thereto,  (iv) all trade secrets arising under the laws
     of the  United  States,  any other  country  or any  political  subdivision
     thereof,  (v) all rights to obtain any reissues,  renewals or extensions of
     the foregoing,  (vi) all licenses for any of the  foregoing,  and (vii) all
     causes of action for infringement of the foregoing.

          (c)  "Majority in Interest" shall mean, at any time of  determination,
     the majority in interest (based on  then-outstanding  principal  amounts of
     Debentures at the time of such determination) of the Secured Parties.

          (d)  "Necessary  Endorsement" shall mean undated stock powers endorsed
     in blank or other proper  instruments of assignment  duly executed and such
     other instruments or documents as the Agent (as that term is defined below)
     may reasonably request.

          (e)  "Obligations"  means all of the Debtors'  obligations  under this
     Agreement,  the  Debentures,   the  Guaranty  and  any  other  instruments,
     agreements  or other  documents  executed  and/or  delivered in  connection
     herewith or  therewith,  in each case,  whether now or hereafter  existing,
     voluntary  or  involuntary,  direct or  indirect,  absolute or  contingent,
     liquidated or  unliquidated,  whether or not jointly owed with others,  and
     whether  or not from  time to time  decreased  or  extinguished  and  later
     increased,  created or incurred, and all or any portion of such obligations
     or liabilities that are paid, to the extent all or any part of such payment
     is avoided or  recovered  directly  or  indirectly  from any of the Secured
     Parties  as  a  preference,   fraudulent  transfer  or  otherwise  as  such
     obligations may be amended,  supplemented,  converted, extended or modified
     from time to time.  Without  limiting the generality of the foregoing,  the
     term "Obligations" shall include, without limitation: (i) principal of, and
     interest on the Debentures and the loans extended  pursuant  thereto;  (ii)
     any and all other fees, indemnities,  costs, obligations and liabilities of
     the Debtors from time to time under or in connection  with this  Agreement,
     the Debentures, the Guaranty and any other instruments, agreements or other
     documents  executed and/or  delivered in connection  herewith or therewith;
     and (iii) all amounts (including but not limited to post-petition interest)


<PAGE>


     in respect of the foregoing that would be payable but for the fact that the
     obligations to pay such amounts are  unenforceable  or not allowable due to
     the  existence  of  a  bankruptcy,  reorganization  or  similar  proceeding
     involving any Debtor.

          (f)  "Organizational  Documents" means with respect to any Debtor, the
     documents  by which such Debtor was  organized  (such as a  certificate  of
     incorporation,   certificate   of  limited   partnership   or  articles  of
     organization,  and  including,  without  limitation,  any  certificates  of
     designation  for  preferred  stock or other forms of preferred  equity) and
     which relate to the internal  governance of such Debtor (such as bylaws,  a
     partnership  agreement  or  an  operating,  limited  liability  or  members
     agreement).

          (g)  "UCC" means the Uniform  Commercial Code of the State of New York
     and  or any  other  applicable  law  of  any  state  or  states  which  has
     jurisdiction with respect to all, or any portion of, the Collateral or this
     Agreement,  from time to time. It is the intent of the parties that defined
     terms in the UCC should be  construed in their  broadest  sense so that the
     term "Collateral"  will be construed in its broadest sense.  Accordingly if
     there are,  from time to time,  changes  to  defined  terms in the UCC that
     broaden  the  definitions,  they are  incorporated  herein and if  existing
     definitions  in the UCC are  broader  than  the  amended  definitions,  the
     existing ones shall be controlling.

     2.   Grant of Perfected First Priority Security Interest.  As an inducement
for the Secured  Parties to extend the loans as evidenced by the  Debentures and
to secure the complete and timely payment, performance and discharge in full, as
the case may be, of all of the Obligations,  each Debtor hereby  unconditionally
and  irrevocably  pledges,  grants and  hypothecates  to the  Secured  Parties a
continuing and perfected first priority security interest in and to, a lien upon
and a right of set-off against all of their respective right, title and interest
of  whatsoever  kind  and  nature  in and  to,  the  Collateral  (the  "Security
Interest").

     3.   Delivery  of  Certain  Collateral.  Contemporaneously  or prior to the
execution of this Agreement,  each Debtor shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments  representing or
evidencing the Pledged  Securities,  and (b) any and all  certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all  Necessary  Endorsements.  The Debtors are,  contemporaneously
with the execution hereof,  delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational  Document governing any of
the Pledged Securities.

     4.   Representations,  Warranties, Covenants and Agreements of the Debtors.
Each Debtor  represents  and warrants  to, and  covenants  and agrees with,  the
Secured Parties as follows:

          (a)  Each Debtor has the  requisite  corporate,  partnership,  limited
     liability company or other power and authority to enter into this Agreement
     and  otherwise  to carry  out its  obligations  hereunder.  The  execution,
     delivery and  performance  by each Debtor of this Agreement and the filings
     contemplated  therein have been duly authorized by all necessary  action on
     the part of such Debtor and no further  action is required by such  Debtor.
     This  Agreement  has been duly  executed  by each  Debtor.  This  Agreement
     constitutes  the  legal,  valid  and  binding  obligation  of each  Debtor,
     enforceable against each Debtor in accordance with its terms except as such
     enforceability  may  be  limited  by  applicable  bankruptcy,   insolvency,
     reorganization  and  similar  laws of general  application  relating  to or
     affecting the rights and remedies of creditors and by general principles of
     equity.

          (b)  The  Debtors  have no place of  business  or offices  where their
     respective books of account and records are kept (other than temporarily at
     the offices of its attorneys or accountants) or places where  Collateral is
     stored or  located,  except as set forth on  Schedule  A  attached  hereto.
     Except as  specifically  set forth on Schedule A, each Debtor is the record
     owner of the real  property  where such  Collateral  is located,  and there
     exist no  mortgages  or other  liens on any such real  property  except for
     Permitted  Liens (as  defined in the  Debenture).  Except as  disclosed  on


<PAGE>


     Schedule A, none of such  Collateral is in the possession of any consignee,
     bailee, warehouseman, agent or processor.

          (c)  Except  for  Permitted  Liens  and as set  forth  on  Schedule  B
     attached  hereto,  the  Debtors are the sole owner of, or have the right to
     use,  the  Collateral  (except for  non-exclusive  licenses  granted by any
     Debtor in the ordinary  course of  business),  free and clear of any liens,
     security  interests,   encumbrances,   rights  or  claims,  and  are  fully
     authorized  to  grant  the  Security  Interest.  Except  for the  financing
     statements  filed  with the New  Jersey  Secretary  of State  and  security
     interests  granted  by the  Company  in  favor  of  Hudson  United  Bank in
     connection with a term loan to the Company,  which loan will be repaid from
     the proceeds from the sale of the Securities and which financing  statement
     and security interest will be terminated  contemporaneous with the Closing,
     due  evidence of which shall be provided to the Secured  Parties,  there is
     not  on  file  in any  governmental  or  regulatory  authority,  agency  or
     recording  office an effective  financing  statement,  security  agreement,
     license or transfer or any notice of any of the foregoing (other than those
     that  will be  filed  in  favor of the  Secured  Parties  pursuant  to this
     Agreement)  covering or affecting  any of the  Collateral.  So long as this
     Agreement  shall be in effect,  the Debtors shall not execute and shall not
     knowingly  permit  to be on file in any  such  office  or  agency  any such
     financing  statement or other document or instrument  (except to the extent
     filed or recorded in favor of the Secured Parties  pursuant to the terms of
     this Agreement).

          (d)  No  written  claim  has  been  received  that any  Collateral  or
     Debtor's  use of any  Collateral  violates  the rights of any third  party.
     There has been no  adverse  decision  to any  Debtor's  claim of  ownership
     rights in or exclusive  rights to use the Collateral in any jurisdiction or
     to any Debtor's  right to keep and maintain  such  Collateral in full force
     and effect, and there is no proceeding involving said rights pending or, to
     the best  knowledge of any Debtor,  threatened  before any court,  judicial
     body, administrative or regulatory agency, arbitrator or other governmental
     authority.

          (e)  Each Debtor shall at all times  maintain its books of account and
     records  relating to the Collateral at its principal  place of business and
     its Collateral at the locations set forth on Schedule A attached hereto and
     may not relocate  such books of account and records or tangible  Collateral
     unless it delivers  to the  Secured  Parties at least 30 days prior to such
     relocation  (i)  written  notice of such  relocation  and the new  location
     thereof and (ii) evidence that appropriate  financing  statements under the
     UCC and other  necessary  documents  have been filed and recorded and other
     steps have been taken to perfect the  Security  Interest to create in favor
     of the Secured  Parties a valid,  perfected and continuing  perfected first
     priority lien in the Collateral.

          (f)  This Agreement  creates in favor of the Secured  Parties a valid,
     first priority  security  interest in the Collateral,  securing the payment
     and performance of the  Obligations.  Upon making the filings  described in
     the  immediately  following  paragraph,   all  security  interests  created
     hereunder  in any  Collateral  which may be  perfected  by  filing  Uniform
     Commercial Code financing statements shall have been duly perfected. Except
     for the filing of the Uniform Commercial Code financing statements referred
     to  in  the  immediately  following  paragraph,   the  recordation  of  the
     Intellectual Property Security Agreement (as defined below) with respect to
     copyrights and copyright applications in the United States Copyright Office
     referred to in paragraph  (m),  when  requested by any Secured  Party,  the
     execution and delivery of deposit account control agreements satisfying the
     requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
     account of the  Debtors,  and the  delivery of the  certificates  and other
     instruments  provided  in  Section  3, no action is  necessary  to  create,
     perfect  or protect  the  security  interests  created  hereunder.  Without
     limiting the  generality  of the  foregoing,  except for the filing of said
     financing  statements,   the  recordation  of  said  Intellectual  Property
     Security Agreement,  and the execution and delivery of said deposit account
     control  agreements  when requested by any Secured Party, no consent of any
     third  parties and no  authorization,  approval or other  action by, and no
     notice to or filing with, any governmental  authority or regulatory body is
     required for (i) the execution, delivery and performance of this Agreement,


<PAGE>


     (ii) the creation or perfection of the Security Interests created hereunder
     in the  Collateral  or (iii) the  enforcement  of the rights of the Secured
     Parties hereunder.

          (g)  Each Debtor  hereby  authorizes  the Secured  Parties,  or any of
     them, to file one or more financing  statements under the UCC, with respect
     to the Security  Interest with the proper filing and recording  agencies in
     any jurisdiction deemed proper by them.

          (h)  The execution,  delivery and performance of this Agreement by the
     Debtors does not (i) violate any of the  provisions  of any  Organizational
     Documents  of any  Debtor or any  judgment,  decree,  order or award of any
     court,  governmental  body or  arbitrator  or any  applicable  law, rule or
     regulation  applicable to any Debtor or (ii) conflict with, or constitute a
     default (or an event that with notice or lapse of time or both would become
     a default) under,  or give to others any rights of termination,  amendment,
     acceleration  or  cancellation  (with or without  notice,  lapse of time or
     both)  of,  any  agreement,  credit  facility,  debt  or  other  instrument
     (evidencing any Debtor's debt or otherwise) or other understanding to which
     any  Debtor is a party or by which any  property  or asset of any Debtor is
     bound  or  affected.  No  consent  (including,   without  limitation,  from
     stockholders  or  creditors  of any Debtor) is  required  for any Debtor to
     enter into and perform its obligations hereunder.

          (i)  The capital stock and other equity interests listed on Schedule H
     hereto represent all of the capital stock and other equity interests of the
     Guarantors,  and  represent  all capital  stock and other equity  interests
     owned,  directly  or  indirectly,  by  the  Company.  All  of  the  Pledged
     Securities  are  validly  issued,  fully  paid and  nonassessable,  and the
     Company is the legal and beneficial owner of the Pledged  Securities,  free
     and clear of any lien,  security interest or other  encumbrance  except for
     the security interests created by this Agreement.

          (j)  The  ownership  and other equity  interests in  partnerships  and
     limited  liability  companies  (if any)  included  in the  Collateral  (the
     "Pledged  Interests")  by their  express terms do not provide that they are
     securities  governed  by  Article  8 of the  UCC  and  are  not  held  in a
     securities account or by any financial intermediary.

          (k)  Each Debtor  shall at all times  maintain  the liens and Security
     Interest provided for hereunder as valid and perfected first priority liens
     and security  interests in the  Collateral in favor of the Secured  Parties
     until  this  Agreement  and  the  Security  Interest   hereunder  shall  be
     terminated  pursuant  to Section 11 hereof.  Each Debtor  hereby  agrees to
     defend the same  against the claims of any and all  persons  and  entities.
     Each Debtor shall  safeguard and protect all  Collateral for the account of
     the Secured  Parties.  At the request of the Secured  Parties,  each Debtor
     will sign and  deliver to the  Secured  Parties at any time or from time to
     time  one  or  more  financing  statements  pursuant  to the  UCC  in  form
     reasonably  satisfactory  to the  Secured  Parties and will pay the cost of
     filing the same in all public offices  wherever  filing is, or is deemed by
     the Secured Parties to be,  necessary or desirable to effect the rights and
     obligations  provided for herein.  Without  limiting the  generality of the
     foregoing,  each  Debtor  shall  pay all  fees,  taxes  and  other  amounts
     necessary to maintain the Collateral and the Security  Interest  hereunder,
     and each Debtor shall  obtain and furnish to the Secured  Parties from time
     to time,  upon demand,  such releases and/or  subordinations  of claims and
     liens  which may be  required to  maintain  the  priority  of the  Security
     Interest hereunder.

          (l)  No Debtor will transfer, pledge, hypothecate,  encumber, license,
     sell  or  otherwise  dispose  of any  of the  Collateral  (except  for  (i)
     non-exclusive  licenses  granted  by a Debtor  in its  ordinary  course  of
     business,  (ii) sales of inventory  by a Debtor in its  ordinary  course of
     business,  (iii) sales,  transfers or dispositions of surplus,  worn-out or
     obsolete equipment, (iv) leases or subleases granted in the ordinary course
     of  business,  (v)  non-exclusive  licenses  of  intellectual  property  or
     know-how  granted in the  ordinary  course of  business,  (vi) other sales,
     transfers,  conveyances or  dispositions of property with an aggregate book
     value not to exceed  $50,000 in any year,  (vii) the  granting of Permitted
     Liens,  (viii) payments and transfers  consistent with a Debtor's practices


<PAGE>


     in the  ordinary  course  of  business  not  otherwise  prohibited  by this
     Agreement to the extent such  payments and  transfers do not create or with
     the passage of time would create an Event of Default; (ix) the surrender or
     waiver of litigation rights or settlement,  release or surrender of tort or
     other litigation claims of any kind except for any claim or claims asserted
     by  Borrower  having  a book  value  individually  or in the  aggregate  of
     $250,000 in any fiscal year and (x) loans,  advances  or  contributions  to
     subsidiaries  of a Debtor  to fund  the  operations  of such  subsidiaries)
     without the prior written consent of a Majority in Interest.

          (m)  Each Debtor shall keep and preserve its equipment,  inventory and
     other tangible  Collateral in good  condition,  repair and order  (ordinary
     wear and tear excepted) and shall not operate or locate any such Collateral
     (or cause to be operated or located) in any area  excluded  from  insurance
     coverage.

          (n)  Each Debtor shall maintain with  financially  sound and reputable
     insurers,  insurance with respect to the Collateral  against loss or damage
     of the kinds and in the amounts  customarily insured against by entities of
     established  reputation having similar properties similarly situated and in
     such amounts as are  customarily  carried  under similar  circumstances  by
     other such  entities and  otherwise  as is prudent for entities  engaged in
     similar   businesses  but  in  any  event  sufficient  to  cover  the  full
     replacement  cost thereof.  Each Debtor shall cause each  insurance  policy
     issued in  connection  herewith to provide,  and the insurer  issuing  such
     policy to  certify  to the Agent that (a) the Agent will be named as lender
     loss payee and additional  insured under each such insurance policy; (b) if
     such  insurance be proposed to be cancelled or  materially  changed for any
     reason  whatsoever,  such insurer will  promptly  notify the Agent and such
     cancellation  or change shall not be effective as to the Agent for at least
     thirty  (30) days  after  receipt by the Agent of such  notice,  unless the
     effect of such change is to extend or increase  coverage  under the policy;
     and (c) the Agent will have the right (but no  obligation)  at its election
     to remedy any default in the payment of premiums within thirty (30) days of
     notice from the insurer of such default. If no Event of Default (as defined
     in the Debenture) exists, loss payments in each instance will be applied by
     the  applicable  Debtor to the repair and/or  replacement  of property with
     respect to which the loss was incurred to the extent  reasonably  feasible,
     and any loss payments or the balance thereof  remaining,  to the extent not
     so applied, shall be payable to the applicable Debtor;  provided,  however,
     that payments  received by any Debtor after an Event of Default  occurs and
     is  continuing  shall be paid to the Agent and, if received by such Debtor,
     shall be held in trust for and  immediately  paid over to the Agent  unless
     otherwise directed in writing by the Agent.  Copies of such policies or the
     related  certificates,  in each case, naming the Agent as lender loss payee
     and  additional  insured shall be delivered to the Agent at least  annually
     and at the time any new policy of insurance is issued.

          (o)  Each  Debtor  shall,   within  fifteen  (15)  days  of  obtaining
     knowledge  thereof,  advise the Secured  Parties  promptly,  in  sufficient
     detail, of any substantial change in the Collateral,  and of the occurrence
     of any event which would have a material adverse effect on the value of the
     Collateral or on the Secured Parties' security interest therein.

          (p)  Each  Debtor  shall  promptly  execute and deliver to the Secured
     Parties such further deeds,  mortgages,  assignments,  security agreements,
     financing  statements or other  instruments,  documents,  certificates  and
     assurances  and take such  further  action as the Secured  Parties may from
     time to time reasonably  request and may in its reasonable  discretion deem
     necessary  to  perfect,  protect or enforce  its  security  interest in the
     Collateral including,  without limitation, if applicable, the execution and
     delivery of a separate  security  agreement  with respect to each  Debtor's
     Intellectual Property ("Intellectual Property Security Agreement") in which
     the  Secured  Parties  have been  granted a  security  interest  hereunder,
     substantially  in  a  form  acceptable  to  the  Secured   Parties,   which
     Intellectual  Property  Security  Agreement,  other than as stated therein,
     shall be subject to all of the terms and conditions hereof.


<PAGE>


          (q)  Each  Debtor   shall   permit  the  Secured   Parties  and  their
     representatives  and agents to inspect the  Collateral at reasonable  times
     during  business  hours  from time to time,  and to make  copies of records
     pertaining  to the  Collateral  (provided,  however,  copies  of  any  such
     Collateral that constitutes Classified Information may only be copied after
     the  classified  portion of such  information  has been redacted) as may be
     requested by a Secured Party from time to time.

          (r)  Each  Debtor  shall  take  all  steps  reasonably   necessary  to
     diligently  pursue and seek to  preserve,  enforce and collect any material
     rights,  claims, causes of action and accounts receivable in respect of the
     Collateral.

          (s)  Each  Debtor  shall  promptly   notify  the  Secured  Parties  in
     sufficient  detail  upon  becoming  aware of any  attachment,  garnishment,
     execution or other legal process levied against any material portion of the
     Collateral  and of any other  information  received by such Debtor that may
     materially affect the value of the Collateral, the Security Interest or the
     rights and remedies of the Secured Parties hereunder.

          (t)  All information  heretofore,  herein or hereafter supplied to the
     Secured  Parties  by or on  behalf  of  any  Debtor  with  respect  to  the
     Collateral is or will be accurate and complete in all material  respects as
     of the date furnished.

          (u)  The Debtors  shall at all times  preserve  and keep in full force
     and effect  their  respective  valid  existence  and good  standing and any
     rights and franchises material to its business.

          (v)  No  Debtor   will   change  its  name,   type  of   organization,
     jurisdiction of organization,  organizational  identification number (if it
     has  one),  legal  or  corporate  structure,  or  identity,  or add any new
     fictitious name unless it provides at least 15 days prior written notice to
     the  Secured  Parties  of such  change  and,  at the  time of such  written
     notification,  such Debtor  provides any  financing  statements  or fixture
     filings necessary to perfect and continue  perfected the perfected security
     Interest granted and evidenced by this Agreement.

          (w)  No Debtor may  consign  any of its  Inventory  or sell any of its
     Inventory  on bill and hold,  sale or return,  sale on  approval,  or other
     conditional  terms of sale  without  the  consent of a Majority in Interest
     which  shall  not be  unreasonably  withheld,  except  for  demo  and  test
     equipment or to the extent such  consignment or sale does not exceed 25% of
     the total value of all of the Company's finished goods in Inventory.

          (x)  No  Debtor  may  relocate  its  chief  executive  office to a new
     location without  providing 30 days prior written  notification  thereof to
     the  Secured  Parties  and  so  long  as,  at  the  time  of  such  written
     notification,  such Debtor  provides any  financing  statements  or fixture
     filings necessary to perfect and continue  perfected the perfected Security
     Interest granted and evidenced by this Agreement.

          (y)  Each Debtor was organized and remains  organized solely under the
     laws  of the  state  set  forth  next to such  Debtor's  name in the  first
     paragraph  of this  Agreement.  Schedule D attached  hereto sets forth each
     Debtor's  organizational  identification  number or, if any Debtor does not
     have one, states that one does not exist.

          (z)  (i) The  actual  name of each  Debtor  is the name  set  forth in
     Schedule  D; (ii) no  Debtor  has any  trade  names  except as set forth on
     Schedule  E attached  hereto;  (iii) no Debtor has used any name other than
     that  stated in the  preamble  hereto or as set forth on Schedule E for the
     preceding five years; and (iv) no entity has merged into any Debtor or been
     acquired  by any Debtor  within the past five years  except as set forth on
     Schedule E.


<PAGE>


          (aa) At any time and from time to time that any Collateral consists of
     instruments,  certificated securities or other items that require or permit
     possession  by the secured party to perfect the security  interest  created
     hereby, the applicable Debtor shall deliver such Collateral to the Agent.

          (bb) Each Debtor,  in its capacity as issuer,  hereby agrees to comply
     with any and all orders and  instructions  of Agent  regarding  the Pledged
     Interests  consistent with the terms of this Agreement  without the further
     consent of any Debtor as  contemplated  by Section  8-106 (or any successor
     section) of the UCC.  Further,  each Debtor  agrees that it shall not enter
     into a similar  agreement  (or one that would confer  "control"  within the
     meaning of Article 8 of the UCC) with any other person or entity.

          (cc) Each Debtor shall cause all tangible  chattel paper  constituting
     Collateral  to be  delivered  to the  Agent,  or, if such  delivery  is not
     possible,  then to cause such  tangible  chattel  paper to contain a legend
     noting  that  it is  subject  to the  security  interest  created  by  this
     Agreement. To the extent that any Collateral consists of electronic chattel
     paper, the applicable Debtor shall cause the underlying chattel paper to be
     "marked"  within  the  meaning of  Section  9-105 of the UCC (or  successor
     section thereto).

          (dd) If there is any investment  property or deposit account  included
     as Collateral that can be perfected by "control" through an account control
     agreement,  the  applicable  Debtor  shall  cause such an  account  control
     agreement,  in form and substance in each case  satisfactory to the Secured
     Parties, to be entered into and delivered to the Secured Parties.

          (ee) To the extent that any  Collateral  consists of  letter-of-credit
     rights,  the  applicable  Debtor shall cause the issuer of each  underlying
     letter of credit to consent to an assignment of the proceeds thereof to the
     Secured Parties upon any Event of Default.

          (ff) To the extent that any material  Collateral is in the  possession
     of any third  party,  the  applicable  Debtor  shall join with the  Secured
     Parties in  notifying  such third  party of the Secured  Parties'  security
     interest  in such  Collateral  and  shall use its  commercially  reasonable
     efforts to obtain an  acknowledgement  and agreement  from such third party
     with respect to the Collateral,  in form and substance  satisfactory to the
     Secured Parties.

          (gg) If any Debtor shall at any time hold or acquire a commercial tort
     claim,  such Debtor shall promptly  notify the Secured Parties in a writing
     signed by such Debtor of the  particulars  thereof and grant to the Secured
     Parties in such  writing a security  interest  therein and in the  proceeds
     thereof,  all upon the terms of this Agreement,  with such writing to be in
     form and substance satisfactory to the Secured Parties.

          (hh) Each  Debtor  shall  immediately  provide  written  notice to the
     Secured  Parties of any and all accounts  which arise out of contracts with
     any  governmental  authority  and,  to the extent  necessary  to perfect or
     continue the perfected status of the Security Interest in such accounts and
     proceeds  thereof,  shall  execute and  deliver to the  Secured  Parties an
     assignment of claims for such accounts,  to the extent permitted under such
     contracts with such  governmental  authority and cooperate with the Secured
     Parties in taking any other steps required,  in their reasonable  judgment,
     under the Federal Assignment of Claims Act or any similar federal, state or
     local  statute or rule to perfect or continue the  perfected  status of the
     Security Interest in such accounts and proceeds thereof.

          (ii) Each Debtor  shall  cause each  Subsidiary  to promptly  become a
     party hereto (an  "Additional  Debtor"),  by executing  and  delivering  an
     Additional  Debtor  Joinder in  substantially  the form of Annex A attached
     hereto and comply with the  provisions  hereof  applicable  to the Debtors.
     Concurrent  therewith,  the  Additional  Debtor shall  deliver  replacement
     schedules for, or supplements to all other Schedules to (or referred to in)


<PAGE>


     this Agreement, as applicable, which replacement schedules shall supersede,
     or supplements shall modify,  the Schedules then in effect.  The Additional
     Debtor   shall  also  deliver   such   opinions  of  counsel,   authorizing
     resolutions,   good   standing   certificates,   incumbency   certificates,
     organizational  documents,  financing  statements and other information and
     documentation as the Secured Parties may reasonably request.  Upon delivery
     of the foregoing to the Secured Parties, the Additional Debtor shall be and
     become a party to this  Agreement  with the same rights and  obligations as
     the Debtors,  for all purposes hereof as fully and to the same extent as if
     it were an original  signatory  hereto and shall be deemed to have made the
     representations,  warranties  and covenants set forth herein as of the date
     of  execution  and  delivery of such  Additional  Debtor  Joinder,  and all
     references  herein  to the  "Debtors"  shall  be  deemed  to  include  each
     Additional Debtor.

          (jj) Each Debtor shall vote the Pledged  Securities to comply with the
     covenants and agreements set forth herein and in the Debentures.

          (kk) Each Debtor shall register the pledge of the  applicable  Pledged
     Securities  on the books of such  Debtor.  Each  Debtor  shall  notify each
     issuer of Pledged  Securities  to  register  the  pledge of the  applicable
     Pledged  Securities in the name of the Secured Parties on the books of such
     issuer.  Further,  except with respect to certificated securities delivered
     to  the  Agent,   the   applicable   Debtor  shall   deliver  to  Agent  an
     acknowledgement of pledge (which, where appropriate,  shall comply with the
     requirements   of  the  relevant  UCC  with   respect  to   perfection   by
     registration)  signed by the issuer of the applicable  Pledged  Securities,
     which  acknowledgement shall confirm that: (a) it has registered the pledge
     on its books and records;  and (b) at any time directed by Agent during the
     continuation  of an Event of Default,  such issuer will transfer the record
     ownership  of such  Pledged  Securities  into the name of any  designee  of
     Agent, will take such steps as may be necessary to effect the transfer, and
     will comply with all other  instructions  of Agent  regarding  such Pledged
     Securities without the further consent of the applicable Debtor.

          (ll) In the event  that,  upon an  occurrence  of an Event of Default,
     Agent shall sell all or any of the Pledged  Securities  to another party or
     parties (herein called the "Transferee") or shall purchase or retain all or
     any of the Pledged Securities, each Debtor shall, to the extent applicable:
     (i) deliver to Agent or the Transferee, as the case may be, the articles of
     incorporation,  bylaws,  minute books, stock certificate  books,  corporate
     seals, deeds, leases,  indentures,  agreements,  evidences of indebtedness,
     books of account,  financial records and all other Organizational Documents
     and records of the Debtors and their direct and indirect subsidiaries; (ii)
     use its best efforts to obtain  resignations of the persons then serving as
     officers  and  directors  of the  Debtors  and their  direct  and  indirect
     subsidiaries, if so requested; and (iii) use its best efforts to obtain any
     approvals that are required by any governmental or regulatory body in order
     to permit  the sale of the  Pledged  Securities  to the  Transferee  or the
     purchase  or  retention  of the Pledged  Securities  by Agent and allow the
     Transferee  or Agent to  continue  the  business  of the  Debtors and their
     direct and indirect subsidiaries.

          (mm) Without  limiting the generality of the other  obligations of the
     Debtors hereunder, each Debtor shall promptly (i) cause to be registered at
     the United States  Copyright  Office all of its material  copyrights,  (ii)
     cause  the  security  interest  contemplated  hereby  with  respect  to all
     Intellectual  Property  registered at the United States Copyright Office or
     United  States  Patent  and  Trademark  Office to be duly  recorded  at the
     applicable  office,  and (iii) give the Agent  notice  whenever it acquires
     (whether  absolutely  or by  license) or creates  any  additional  material
     Intellectual Property.

          (nn) Each  Debtor  will  from time to time,  at the joint and  several
     expense of the  Debtors,  promptly  execute and  deliver  all such  further
     instruments  and  documents,  and take all such  further  action  as may be
     necessary or desirable,  or as the Secured Parties may reasonably  request,
     in order to perfect and protect any security  interest granted or purported
     to be granted  hereby or to enable the  Secured  Parties  to  exercise  and
     enforce  their  rights  and  remedies  hereunder  and with  respect  to any
     Collateral or to otherwise carry out the purposes of this Agreement.


<PAGE>


          (oo) Schedule  F  attached  hereto  lists all of the  patents,  patent
     applications,  trademarks,  trademark applications,  registered copyrights,
     and  domain  names  owned  by any of the  Debtors  as of the  date  hereof.
     Schedule F lists all  material  licenses in favor of any Debtor for the use
     of any  patents,  trademarks,  copyrights  and domain  names as of the date
     hereof.  All material  patents and trademarks of the Debtors have been duly
     recorded at the United States Patent and Trademark  Office and all material
     copyrights of the Debtors have been recorded at the United States Copyright
     Office.

          (pp) Except as set forth on  Schedule G attached  hereto,  none of the
     account  debtors  or other  persons  or  entities  obligated  on any of the
     Collateral is a governmental authority covered by the Federal Assignment of
     Claims  Act or any  similar  federal,  state  or local  statute  or rule in
     respect of such Collateral.

     5.   Effect of Pledge on Certain Rights.  If any of the Collateral  subject
to  this  Agreement   consists  of  nonvoting  equity  or  ownership   interests
(regardless of class,  designation,  preference or rights) that may be converted
into voting equity or ownership  interests upon the occurrence of certain events
(including,  without  limitation,  upon the  transfer of all or any of the other
stock or assets of the  issuer),  it is agreed that the pledge of such equity or
ownership  interests  pursuant to this  Agreement or the  enforcement  of any of
Agent's rights hereunder shall not be deemed to be the type of event which would
trigger  such   conversion   rights   notwithstanding   any  provisions  in  the
Organizational  Documents  or  agreements  to which any  Debtor is subject or to
which any Debtor is party.

     6.   Defaults. The following events shall be "Events of Default":

          (a)  The  occurrence  of an  Event  of  Default  (as  defined  in  the
     Debenture) under the Debenture;

          (b)  Any  material  representation  or  warranty of any Debtor in this
     Agreement  shall prove to have been incorrect in any material  respect when
     made;

          (c)  The  failure  by any  Debtor to  observe  or  perform  any of its
     obligations  hereunder  for ten (10) days after  delivery to such Debtor of
     written  notice of such  failure by or on behalf of a Secured  Party unless
     such  default is capable of cure but cannot be cured within such time frame
     and such Debtor is using best efforts to cure same in a timely fashion,  in
     which case, such event shall not be an Event of Default; or

          (d)  If any  provision  of this  Agreement  shall  at any time for any
     reason be declared to be null and void,  or the validity or  enforceability
     thereof  shall  be  contested  by any  Debtor,  or a  proceeding  shall  be
     commenced  by  any  Debtor,   or  by  any  governmental   authority  having
     jurisdiction  over any  Debtor,  seeking to  establish  the  invalidity  or
     unenforceability  thereof, or any Debtor shall deny that any Debtor has any
     liability or obligation purported to be created under this Agreement.

     7.   Duty To Hold In Trust.

          (a)  Upon  the  occurrence  of any  Event of  Default  and at any time
     thereafter,  each  Debtor  shall,  upon  receipt  of any  revenue,  income,
     dividend,  interest or other sums subject to the Security Interest, whether
     payable  pursuant to the  Debenture or otherwise,  or of any check,  draft,
     note, trade acceptance or other instrument  evidencing an obligation to pay
     any such sum,  hold the same in trust  for the  Secured  Parties  and shall
     forthwith  endorse and transfer any such sums or  instruments,  or both, to
     the Secured Parties,  pro-rata in proportion to their initial  purchases of


<PAGE>


     Debentures for application to the  satisfaction of the Obligations  (and if
     any  Debenture is not  outstanding,  pro-rata in  proportion to the initial
     purchases of the remaining Debentures).

          (b)  If any Debtor shall become  entitled to receive or shall  receive
     any securities or other property (including,  without limitation, shares of
     Pledged Securities or instruments  representing Pledged Securities acquired
     after the date hereof,  or any options,  warrants,  rights or other similar
     property or certificates  representing a dividend,  or any  distribution in
     connection  with any  recapitalization,  reclassification  or  increase  or
     reduction of capital,  or issued in connection with any  reorganization  of
     such  Debtor or any of its direct or indirect  subsidiaries)  in respect of
     the Pledged  Securities  (whether as an addition to, in substitution of, or
     in exchange for, such Pledged Securities or otherwise),  such Debtor agrees
     to (i) accept the same as the agent of the Secured  Parties;  (ii) hold the
     same in trust on behalf of and for the benefit of the Secured Parties;  and
     (iii) to deliver any and all  certificates  or  instruments  evidencing the
     same to Agent on or before the close of business on the fifth  business day
     following  the receipt  thereof by such Debtor,  in the exact form received
     together  with the Necessary  Endorsements,  to be held by Agent subject to
     the terms of this Agreement as Collateral.

     8.   Rights and Remedies Upon Default.

          (a)  Upon  the  occurrence  of any  Event of  Default  and at any time
     thereafter, the Secured Parties, acting through any agent appointed by them
     for such  purpose,  shall have the right to  exercise  all of the  remedies
     conferred hereunder and under the Debentures, and the Secured Parties shall
     have all the rights and remedies of a secured party under the UCC.  Without
     limitation, the Secured Parties shall have the following rights and powers:

               (i)  The Secured  Parties shall have the right to take possession
          of the  Collateral  and,  for that  purpose,  enter,  with the aid and
          assistance of any person,  any premises where the  Collateral,  or any
          part thereof, is or may be placed and remove the same, and each Debtor
          shall  assemble  the  Collateral  and make it available to the Secured
          Parties at places which the Secured Parties shall  reasonably  select,
          whether at such Debtor's premises or elsewhere,  and make available to
          the Secured  Parties,  without rent,  all of such Debtor's  respective
          premises and facilities for the purpose of the Secured  Parties taking
          possession  of,  removing  or putting  the  Collateral  in saleable or
          disposable form.

               (ii) Upon  notice to the  Debtors  by Agent,  all  rights of each
          Debtor to exercise  the voting and other  consensual  rights  which it
          would  otherwise be entitled to exercise and all rights of each Debtor
          to receive the  dividends  and  interest  which it would  otherwise be
          authorized to receive and retain, shall cease. Upon such notice, Agent
          shall have the right to receive any interest,  cash dividends or other
          payments on the Collateral and, at the option of Agent, to exercise in
          such Agent's discretion all voting rights pertaining thereto.  Without
          limiting the generality of the  foregoing,  Agent shall have the right
          (but not the  obligation)  to exercise  all rights with respect to the
          Collateral as it were the sole and absolute owners thereof, including,
          without  limitation,   to  vote  and/or  to  exchange,   at  its  sole
          discretion,  any or all of the Collateral in connection with a merger,
          reorganization,  consolidation, recapitalization or other readjustment
          concerning  or involving  the  Collateral  or any Debtor or any of its
          direct or indirect subsidiaries.

               (iii) The  Secured  Parties  shall have the right to operate  the
          business of each Debtor using the  Collateral and shall have the right
          to assign,  sell, lease or otherwise dispose of and deliver all or any
          part of the Collateral, at public or private sale or otherwise, either
          with or without  special  conditions or  stipulations,  for cash or on
          credit or for future  delivery,  in such parcel or parcels and at such
          time or times and at such  place or  places,  and upon such  terms and
          conditions as the Secured  Parties may deem  commercially  reasonable,
          all without  (except as shall be required by applicable  statute which
          cannot be waived) advertisement or demand upon or notice to any Debtor


<PAGE>


          or right of redemption of a Debtor, which are hereby expressly waived.
          Upon  each  such  sale,   lease,   assignment  or  other  transfer  of
          Collateral,  the Secured Parties may, unless  prohibited by applicable
          law which cannot be waived, purchase all or any part of the Collateral
          being sold, free from and discharged of all trusts,  claims,  right of
          redemption  and  equities of any Debtor,  which are hereby  waived and
          released.

               (iv) The  Secured  Parties  shall  have  the  right  (but not the
          obligation)  to notify any  account  debtors  and any  obligors  under
          instruments  or  accounts  to make  payments  directly  to the Secured
          Parties  and to enforce  the  Debtors'  rights  against  such  account
          debtors and obligors.

               (v)  The Secured  Parties may (but are not  obligated  to) direct
          any financial  intermediary  or any other person or entity holding any
          investment  property  to transfer  the same to the Secured  Parties or
          their designee.

               (vi) The Secured  Parties may (but are not obligated to) transfer
          any or all Intellectual  Property registered in the name of any Debtor
          at the United  States Patent and  Trademark  Office  and/or  Copyright
          Office  into the name of the  Secured  Parties or any  designee or any
          purchaser of any Collateral.

               (b)  The Secured  Parties shall comply with any applicable law in
          connection  with a disposition of Collateral and such  compliance will
          not be considered adversely to affect the commercial reasonableness of
          any sale of the Collateral.  The Agent may sell the Collateral without
          giving any warranties and may  specifically  disclaim such warranties.
          If the Agent sells any of the  Collateral on credit,  the Debtors will
          only be credited with  payments  actually  made by the  purchaser.  In
          addition,  each Debtor waives any and all rights that it may have to a
          judicial  hearing in advance of the  enforcement of any of the Agent's
          rights and remedies  hereunder,  including,  without  limitation,  its
          right  following an Event of Default to take  immediate  possession of
          the  Collateral  and to exercise its rights and remedies  with respect
          thereto, except as otherwise required by law.

               (c)  For the  purpose of enabling  the Agent to further  exercise
          rights and  remedies  under this  Section 8 or  elsewhere  provided by
          agreement or  applicable  law, each Debtor hereby grants to the Agent,
          for the benefit of the Agent and the Secured Parties, to the extent it
          is in  such  Debtor's  power,  an  irrevocable,  nonexclusive  license
          (exercisable  without payment of royalty or other compensation to such
          Debtor) to use,  license or sublicense  following an Event of Default,
          any  Intellectual  Property  now owned or  hereafter  acquired by such
          Debtor,  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.

               (d)  The rights of the Secured Parties or their agent  enumerated
          in this  section  shall  be  subject  to the  Debtor's  obligation  to
          maintain the confidentiality of any Classified Information.

     9.   Applications  of  Proceeds.  The  proceeds of any such sale,  lease or
other  disposition of the Collateral  hereunder  shall be applied first,  to the
actual  expenses of retaking,  holding,  storing,  processing  and preparing for
sale, selling, and the like (including,  without limitation, any taxes, fees and
other  costs  incurred  in  connection  therewith)  of  the  Collateral,  to the
reasonable  attorneys'  fees and  expenses  incurred by the  Secured  Parties in
enforcing their rights hereunder and in connection with collecting,  storing and
disposing of the  Collateral,  and then to  satisfaction  of the Obligations pro
rata among the Secured Parties (based on  then-outstanding  principal amounts of
Debentures  at the time of any such  determination),  and to the  payment of any
other amounts  required by applicable law, after which the Secured Parties shall
pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or
other  disposition of the Collateral,  the proceeds  thereof are insufficient to
pay all amounts to which the Secured Parties are legally  entitled,  the Debtors
will be liable for the deficiency,  together with interest thereon,  at the rate


<PAGE>


of 10% per annum or the lesser amount  permitted by applicable law (the "Default
Rate"),  and the reasonable fees of one counsel  employed by the Secured Parties
to collect such  deficiency.  To the extent  permitted by  applicable  law, each
Debtor  waives all  claims,  damages and  demands  against  the Secured  Parties
arising out of the repossession,  removal,  retention or sale of the Collateral,
unless due solely to the gross  negligence or willful  misconduct of the Secured
Parties as determined by a final  judgment (not subject to further  appeal) of a
court of competent jurisdiction.

     10.  Securities Law  Provision.  Each Debtor  recognizes  that Agent may be
limited  in its  ability  to  effect a sale to the  public of all or part of the
Pledged  Securities by reason of certain  prohibitions  in the Securities Act of
1933, as amended, or other federal or state securities laws  (collectively,  the
"Securities  Laws"),  and may be  compelled  to resort to one or more sales to a
restricted  group of  purchasers  who may be  required  to agree to acquire  the
Pledged Securities for their own account,  for investment and not with a view to
the distribution or resale thereof. Each Debtor agrees that sales so made may be
at prices and on terms less favorable than if the Pledged  Securities  were sold
to the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time  necessary to register the Pledged  Securities
for sale to the public under the Securities  Laws.  Each Debtor shall  cooperate
with Agent in its attempt to satisfy any requirements  under the Securities Laws
(including,  without limitation,  registration thereunder if requested by Agent)
applicable to the sale of the Pledged Securities by Agent.

     11.  Costs  and  Expenses.   Each  Debtor  agrees  to  pay  all  reasonable
out-of-pocket  fees,  costs and expenses  incurred in connection with any filing
required hereunder, upon presentation of documentary evidence thereof, including
without limitation,  any financing statements pursuant to the UCC,  continuation
statements,  partial releases and/or  termination  statements related thereto or
any expenses of any searches  reasonably  required by the Secured  Parties.  The
Debtors  shall also pay all other  claims and  charges  which in the  reasonable
opinion of the Secured Parties might prejudice,  imperil or otherwise affect the
Collateral or the Security Interest therein. The Debtors will also, upon demand,
pay to the  Secured  Parties  the  amount  of any and all  reasonable  expenses,
including the reasonable fees and expenses of one counsel and of any experts and
agents,  which  the  Secured  Parties  may  incur  in  connection  with  (i) the
enforcement of this Agreement,  (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral,  or (iii)
the exercise or  enforcement  of any of the rights of the Secured  Parties under
the Debentures.  Any fees payable  hereunder not paid within twenty (20) days of
written request by the Secured Parties shall be added to the principal amount of
the Debentures and shall bear interest at the Default Rate.

     12.  Responsibility for Collateral.  The Debtors assume all liabilities and
responsibility  in connection with all Collateral,  and the Obligations shall in
no way be affected or diminished by reason of the loss,  destruction,  damage or
theft of any of the  Collateral or its  unavailability  for any reason.  Without
limiting the generality of the foregoing,  (a) neither the Agent nor any Secured
Party (i) has any duty  (either  before or after an Event of Default) to collect
any amounts in respect of the  Collateral or to preserve any rights  relating to
the Collateral,  or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each  contract  or  agreement  included  in the  Collateral  to be  observed  or
performed  by such Debtor  thereunder.  Neither the Agent nor any Secured  Party
shall have any  obligation or liability  under any such contract or agreement by
reason of or arising  out of this  Agreement  or the receipt by the Agent or any
Secured Party of any payment  relating to any of the  Collateral,  nor shall the
Agent or any  Secured  Party be  obligated  in any manner to perform  any of the
obligations  of any Debtor under or pursuant to any such  contract or agreement,
to make inquiry as to the nature or sufficiency  of any payment  received by the
Agent or any Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or agreement, to present
or file any claim,  to take any action to enforce any  performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.

     13.  Security Interest  Absolute.  Except as otherwise required by law, all
rights of the Secured  Parties  and all  obligations  of the Debtors  hereunder,
shall be absolute and  unconditional,  irrespective of: (a) any lack of validity


<PAGE>


or  enforceability  of this Agreement,  the Debentures or any agreement  entered
into in connection with the foregoing, or any portion hereof or thereof; (b) any
change in the time,  manner or place of  payment  or  performance  of, or in any
other term of, all or any of the  Obligations,  or any other amendment or waiver
of or any consent to any departure  from the  Debentures or any other  agreement
entered into in connection  with the  foregoing;  (c) any  exchange,  release or
nonperfection of any of the Collateral, or any release or amendment or waiver of
or consent to departure from any other  collateral for, or any guaranty,  or any
other security, for all or any of the Obligations; (d) any action by the Secured
Parties  to  obtain,  adjust,  settle  and  cancel  in its sole  discretion  any
insurance  claims or matters made or arising in connection  with the Collateral;
or (e) any other  circumstance  which might  otherwise  constitute  any legal or
equitable  defense  available to a Debtor,  or a discharge of all or any part of
the Security Interest granted hereby. Until the Obligations shall have been paid
and performed in full, the rights of the Secured  Parties shall continue even if
the Obligations are barred for any reason,  including,  without limitation,  the
running of the statute of  limitations  or  bankruptcy.  Each  Debtor  expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and
demand  for  performance.  In the  event  that at any time any  transfer  of any
Collateral or any payment  received by the Secured  Parties  hereunder  shall be
deemed  by final  order  of a court of  competent  jurisdiction  to have  been a
voidable preference or fraudulent  conveyance under the bankruptcy or insolvency
laws of the United  States,  or shall be deemed to be otherwise due to any party
other  than  the  Secured  Parties,  then,  in any  such  event,  each  Debtor's
obligations  hereunder shall survive  cancellation of this Agreement,  and shall
not be discharged or satisfied by any prior payment thereof and/or  cancellation
of this Agreement,  but shall remain a valid and binding obligation  enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all right
to require the Secured  Parties to proceed against any other person or entity or
to apply any  Collateral  which the Secured  Parties may hold at any time, or to
marshal  assets,  or to pursue any other remedy.  Each Debtor waives any defense
arising  by reason of the  application  of the  statute  of  limitations  to any
obligation secured hereby.

     The Secured  Parties shall  promptly  notify the Debtors of the sale of any
Collateral and the amount received therefor.

     14.  Term of  Agreement.  This  Agreement and the Security  Interest  shall
terminate  on the date on which  all  payments  under the  Debentures  have been
indefeasibly  paid  in  full  and  all  other  Obligations  have  been  paid  or
discharged;  provided, however, that all indemnities of the Debtors contained in
this Agreement (including, without limitation, Annex B hereto) shall survive and
remain  operative and in full force and effect  regardless of the termination of
this Agreement.

     15.  Power of Attorney; Further Assurances.

          (a)  Each Debtor authorizes the Secured Parties, and does hereby make,
constitute  and  appoint  the Secured  Parties  and their  respective  officers,
agents, successors or assigns with full power of substitution,  as such Debtor's
true and lawful attorney-in-fact, with power, in the name of the various Secured
Parties  or such  Debtor,  subject  to he other  terms  hereof,  to,  after  the
occurrence and during the  continuance  of an Event of Default,  (i) endorse any
note,  checks,  drafts,  money orders or other instruments of payment (including
payments  payable  under or in respect of any policy of insurance) in respect of
the Collateral  that may come into  possession of the Secured  Parties;  (ii) to
sign and endorse any  financing  statement  pursuant to the UCC or any  invoice,
freight or express bill, bill of lading,  storage or warehouse receipts,  drafts
against  debtors,  assignments,  verifications  and notices in  connection  with
accounts,  and  other  documents  relating  to the  Collateral;  (iii) to pay or
discharge taxes,  liens,  security  interests or other  encumbrances at any time
levied  or placed on or  threatened  against  the  Collateral;  (iv) to  demand,
collect,  receipt for,  compromise,  settle and sue for monies due in respect of
the Collateral;  (v) to transfer any  Intellectual  Property or provide licenses
respecting any Intellectual Property;  and (vi) generally,  at the option of the
Secured Parties, and at the expense of the Debtors, at any time, or from time to
time, to execute and deliver any and all documents and instruments and to do all
acts and things which the Secured  Parties deem  necessary to protect,  preserve
and realize upon the Collateral  and the Security  Interest  granted  therein in
order to effect the intent of this Agreement and the Debentures all as fully and
effectually  as the Debtors might or could do; and each Debtor  hereby  ratifies
all that said attorney  shall  lawfully do or cause to be done by virtue hereof.


<PAGE>


This power of attorney is coupled with an interest and shall be irrevocable  for
the term of this  Agreement  and  thereafter  as long as any of the  Obligations
shall be outstanding.  The designation set forth herein shall be deemed to amend
and  supersede any  inconsistent  provision in the  Organizational  Documents or
other  documents  or  agreements  to which any Debtor is subject or to which any
Debtor is a party.  Without limiting the generality of the foregoing,  after the
occurrence and during the continuance of an Event of Default, each Secured Party
is  specifically  authorized  to  execute  and  file  any  applications  for  or
instruments of transfer and assignment of any patents, trademarks, copyrights or
other  Intellectual  Property with the United States Patent and Trademark Office
and the United States Copyright Office.

          (b)  On  a  continuing   basis,   each  Debtor  will  make,   execute,
     acknowledge,  deliver, file and record, as the case may be, with the proper
     filing and  recording  agencies  in any  jurisdiction,  including,  without
     limitation,  the jurisdictions indicated on Schedule C attached hereto, all
     such  instruments,  and take all such  action as may  reasonably  be deemed
     necessary or advisable,  or as reasonably requested by the Secured Parties,
     to perfect the Security  Interest granted  hereunder and otherwise to carry
     out  the  intent  and  purposes  of this  Agreement,  or for  assuring  and
     confirming  to the Secured  Parties the grant or  perfection of a perfected
     security interest in all the Collateral under the UCC.

          (c)  Each Debtor hereby  irrevocably  appoints the Secured  Parties as
     such  Debtor's  attorney-in-fact,  with  full  authority  in the  place and
     instead of such Debtor and in the name of such Debtor, from time to time in
     the  Secured  Parties'  discretion,  to take any action and to execute  any
     instrument  which the Secured  Parties may deem  necessary  or advisable to
     perfect  the  Security  Interests  granted  pursuant  to the  terms of this
     Agreement,  including the filing,  in its sole  discretion,  of one or more
     financing or continuation  statements and amendments  thereto,  relative to
     any of the Collateral  without the signature of such Debtor where permitted
     by law,  which  financing  statements  may  (but  need  not)  describe  the
     Collateral  as "all  assets" or "all  personal  property"  or words of like
     import,  and ratifies all such actions taken by the Secured  Parties.  This
     power of attorney is coupled with an interest and shall be irrevocable  for
     the term of this Agreement and thereafter as long as any of the Obligations
     shall be outstanding.

     16.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Debentures).

     17.  Other  Security.  To  the  extent  that  the  Obligations  are  now or
hereafter  secured by property  other than the  Collateral or by the  guarantee,
endorsement or property of any other person, firm,  corporation or other entity,
then the  Secured  Parties  shall have the  right,  in its sole  discretion,  to
pursue,  relinquish,  subordinate,  modify or take any other action with respect
thereto,  without in any way modifying or affecting any of the Secured  Parties'
rights and remedies hereunder.

     18.  Appointment of Agent.  The Secured  Parties  hereby appoint  Bluegrass
Growth Fund  Partners,  LLC  ("Bluegrass")  to act as their agent  ("Agent") for
purposes of  exercising  any and all rights and remedies of the Secured  Parties
hereunder.  Such  appointment  shall  continue  until  revoked  in  writing by a
Majority in Interest,  at which time a Majority in Interest  shall appoint a new
Agent; provided, that the Bluegrass may not be removed as Agent unless Bluegrass
shall then hold less than $25,000 principal amount of Debentures.

     19.  Miscellaneous.

          (a)  No course of dealing between the Debtors and the Secured Parties,
     nor any failure to exercise,  nor any delay in  exercising,  on the part of
     the Secured Parties,  any right, power or privilege  hereunder or under the
     Debentures  shall  operate  as a waiver  thereof;  nor shall any  single or
     partial exercise of any right,  power or privilege  hereunder or thereunder
     preclude any other or further exercise thereof or the exercise of any other
     right, power or privilege.


<PAGE>


          (b)  All of the  rights  and  remedies  of the  Secured  Parties  with
     respect to the Collateral,  whether established hereby or by the Debentures
     or by any other  agreements,  instruments  or  documents or by law shall be
     cumulative and may be exercised singly or concurrently.

          (c)  This Agreement  constitutes  the entire  agreement of the parties
     with respect to the subject  matter hereof and is intended to supersede all
     prior  negotiations,  understandings  and agreements with respect  thereto.
     Except as specifically  set forth in this  Agreement,  no provision of this
     Agreement  may  be  modified  or  amended  except  by a  written  agreement
     specifically referring to this Agreement and signed by the parties hereto.

          (d)  In the  event  any  provision  of  this  Agreement  is held to be
     invalid,  prohibited or  unenforceable  in any jurisdiction for any reason,
     unless such provision is narrowed by judicial construction,  this Agreement
     shall, as to such jurisdiction, be construed as if such invalid, prohibited
     or  unenforceable  provision had been more  narrowly  drawn so as not to be
     invalid,  prohibited or unenforceable.  If,  notwithstanding the foregoing,
     any  provision  of this  Agreement  is held to be  invalid,  prohibited  or
     unenforceable in any jurisdiction, such provision, as to such jurisdiction,
     shall be  ineffective  to the  extent of such  invalidity,  prohibition  or
     unenforceability   without  invalidating  the  remaining  portion  of  such
     provision or the other  provisions of this Agreement and without  affecting
     the validity or enforceability of such provision or the other provisions of
     this Agreement in any other jurisdiction.

          (e)  No  waiver of any  breach or  default  or any  right  under  this
     Agreement  shall be  considered  valid  unless in writing and signed by the
     party  giving such  waiver,  and no such waiver shall be deemed a waiver of
     any subsequent  breach or default or right,  whether of the same or similar
     nature or otherwise.

          (f)  This Agreement  shall be binding upon and inure to the benefit of
     each party hereto and its successors and assigns.

          (g)  Each party shall take such further action and execute and deliver
     such further documents as may be necessary or appropriate in order to carry
     out the provisions and purposes of this Agreement.

          (h)  All questions concerning the construction,  validity, enforcement
     and interpretation of this Agreement shall be governed by and construed and
     enforced in  accordance  with the  internal  laws of the State of New York,
     without regard to the  principles of conflicts of law thereof.  Each Debtor
     agrees that all proceedings concerning the interpretations, enforcement and
     defense  of  the  transactions  contemplated  by  this  Agreement  and  the
     Debentures  (whether  brought  against  a party  hereto  or its  respective
     affiliates, directors, officers, shareholders, partners, members, employees
     or agents) shall be commenced  exclusively  in the state and federal courts
     sitting in the City of New York,  Borough of Manhattan.  Each Debtor hereby
     irrevocably submits to the exclusive  jurisdiction of the state and federal
     courts  sitting  in the City of New  York,  Borough  of  Manhattan  for the
     adjudication of any dispute hereunder or in connection herewith or with any
     transaction contemplated hereby or discussed herein, and hereby irrevocably
     waives,  and agrees not to assert in any  proceeding,  any claim that it is
     not personally  subject to the  jurisdiction  of any such court,  that such
     proceeding  is  improper.  Each  party  hereto  hereby  irrevocably  waives
     personal  service of process and  consents to process  being  served in any
     such  proceeding by mailing a copy thereof via registered or certified mail
     or  overnight  delivery  (with  evidence of  delivery) to such party at the
     address in effect for  notices to it under this  Agreement  and agrees that
     such service shall  constitute  good and sufficient  service of process and
     notice thereof.  Nothing  contained  herein shall be deemed to limit in any
     way any right to serve  process in any manner  permitted by law. Each party
     hereto  hereby  irrevocably  waives,  to the fullest  extent  permitted  by
     applicable law, any and all right to trial by jury in any legal  proceeding
     arising  out  of  or  relating  to  this  Agreement  or  the   transactions


<PAGE>


     contemplated  hereby.  If any party shall  commence a proceeding to enforce
     any  provisions  of this  Agreement,  then  the  prevailing  party  in such
     proceeding  shall be  reimbursed  by the  other  party  for its  reasonable
     attorney's   fees  and  other  costs  and   expenses   incurred   with  the
     investigation, preparation and prosecution of such proceeding.

          (i)  This  Agreement  may be executed  in any number of  counterparts,
     each of which when so executed  shall be deemed to be an original  and, all
     of which taken together shall constitute one and the same Agreement. In the
     event that any  signature  is delivered  by  facsimile  transmission,  such
     signature  shall create a valid binding  obligation of the party  executing
     (or on whose  behalf such  signature  is  executed)  the same with the same
     force and effect as if such facsimile signature were the original thereof.

          (j)  All  Debtors  shall  jointly  and  severally  be  liable  for the
     obligations of each Debtor to the Secured Parties hereunder.

          (k)  Each Debtor  shall  indemnify,  reimburse  and hold  harmless the
     Secured  Parties  and their  respective  partners,  members,  shareholders,
     officers,  directors,  employees and agents  (collectively,  "Indemnitees")
     from  and  against  any  and  all  losses,  claims,  liabilities,  damages,
     penalties,  suits,  costs and expenses,  of any kind or nature,  (including
     fees  relating  to the  cost  of  investigating  and  defending  any of the
     foregoing)  imposed on, incurred by or asserted  against such Indemnitee in
     any way related to or arising from or alleged to arise from this  Agreement
     or the Collateral,  except any such losses, claims,  liabilities,  damages,
     penalties, suits, costs and expenses which result from the gross negligence
     or  willful  misconduct  of  the  Indemnitee  as  determined  by  a  final,
     nonappealable  decision  of  a  court  of  competent   jurisdiction.   This
     indemnification  provision is in addition to, and not in limitation of, any
     other indemnification  provision in the Debentures,  the Purchase Agreement
     (as  such  term is  defined  in the  Debentures)  or any  other  agreement,
     instrument or other document  executed or delivered in connection  herewith
     or therewith.

          (l)  Nothing in this Agreement  shall be construed to subject Agent or
     any  Secured  Party to  liability  as a partner in any Debtor or any if its
     direct or indirect subsidiaries that is a partnership or as a member in any
     Debtor or any of its  direct  or  indirect  subsidiaries  that is a limited
     liability  company,  nor shall Agent or any Secured Party be deemed to have
     assumed  any  obligations  under  any  partnership   agreement  or  limited
     liability company  agreement,  as applicable,  of any such Debtor or any if
     its direct or indirect subsidiaries or otherwise, unless and until any such
     Secured Party  exercises its right to be  substituted  for such Debtor as a
     partner or member, as applicable, pursuant hereto.

          (m)  To the  extent  that the grant of the  security  interest  in the
     Collateral  and the  enforcement  of the terms hereof  require the consent,
     approval or action of any partner or member,  as applicable,  of any Debtor
     or any direct or indirect  subsidiary of any Debtor or compliance  with any
     provisions of any of the Organizational Documents, the Debtors hereby grant
     such consent and approval and waive any such  noncompliance  with the terms
     of said documents.

                            [SIGNATURE PAGES FOLLOW]


<PAGE>


     IN WITNESS WHEREOF,  the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.


ELECTRONIC CONTROL SECURITY, INC.

By: /s/ Arthur Barchenko
    --------------------------------------------
    Name: Arthur Barchenko
    Title: President


ECSI INTERNATIONAL, INC.


By: /s/ Arthur Barchenko
    --------------------------------------------
    Name: Arthur Barchenko
    Title: President


ECSI-FOIDS INC.


By: /s/ Arthur Barchenko
    --------------------------------------------
    Name: Arthur Barchenko
    Title: President


CLARION SENSING SYSTEMS, INC.


By: /s/ Arthur Barchenko
    --------------------------------------------
    Name: Arthur Barchenko
    Title: President




                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]


<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO EKCS SA]

   Name of Investing Entity: __________________________
   Signature of Authorized Signatory of Investing entity: ______________________
   Name of Authorized Signatory: _________________________
   Title of Authorized Signatory: __________________________

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]