LAURUS MASTER FUND, LTD.

                                       and

                           COMVERGE TECHNOLOGIES, INC.



                            Dated:  December 4, 2002
<PAGE>
                               TABLE OF CONTENTS
                               ------------------
                                                                           Page
                                                                           -----


1.     (a)  General  Definitions. . . . . . . . . . . . . . . .. . . . .. . 1
       (b)     Accounting  Terms. . . . . . . . . . . . . . . .. . . . .. . 1
       (c)     Other  Terms. . . . . . . . . . . . . . . .. . . . .. . . . .1
       (d)     Rules  of  Construction. . . . . . . . . . . . . . . .. . . .1

2.     Credit  Advances.. . . . . . . . . . . . . . . .. . . . .. . . . . . 2

3.     Repayment  of  the  Loans. . . . . . . . . . . . . . . .. . . . .. . 3

4.     Procedure  for  Revolving  Credit  Advances. . . . . . . . . . . . . 4

5.     Interest  and  Fees.. . . . . . . . . . . . . . . .. . . . .. . .. . 4
       (a)     Interest.. . . . . . . . . . . . . . . .. . . . .. . .. . . .4
       (b)     Fees.. . . . . . . . . . . . . . . .. . . . .. . . . . . . . 4
               (i)     Closing  Fee. . . . . . . . . . . . . . . .. . . . ..5
               (ii)    Collateral  Management  Fee. . . . . . . . . . . . . 5
               (iii)   Unused  Line  Fee. . . . . . . . . . . . . . . .. . .5
               (iv)    Overadvance  Fee. . . . . . . . . . . . . . . .. . . 5
               (v)     Financial  Information  Default. . . . . . . . . . . 5
               (vi)    Remittance  Processing  Fee. . . . . . . . . . . . . 5

6.     Security  Interest.. . . . . . . . . . . . . . . .. . . . .. . . . . 5

7.     Representations, Warranties and Covenants Concerning the Collateral. 6

8.     Payment  of  Accounts.. . . . . . . . . . . . . . . .. . . . .. . . .9

9.     Collection  and  Maintenance  of  Collateral.. . . . . . . . . . . . 10

10.    Inspections  and  Appraisals. . . . . . . . . . . . . . . .. . . . ..10

11.    Financial  Reporting. . . . . . . . . . . . . . . .. . . . .. . .. . 11

12.    Additional  Representations,  Warranties  and  Covenants. . . . . .. 11

13.    Financial  Covenants.. . . . . . . . . . . . . . . .. . . . .. . .. .13

14.    Further  Assurances. . . . . . . . . . . . . . . .. . . . .. . .. . .16

15.    Power  of  Attorney. . . . . . . . . . . . . . . .. . . . .. . .. . .16

16.    Term  of  Agreement. . . . . . . . . . . . . . . .. . . . .. . .. . .16

17.    Termination  of  Lien. . . . . . . . . . . . . . . .. . . . .. . .. .17

18.    Events  of  Default. . . . . . . . . . . . . . . .. . . . .. . . . . 17

19.    Remedies. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . .19

                                             ii
<PAGE>
20.    Waivers. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . 19

21.    Expenses. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . .20

22.    Assignment  By  Laurus. . . . . . . . . . . . . . . .. . . . .. . . .20

23.    No  Waiver;  Cumulative  Remedies. . . . . . . . . . . . . . . .. . .21

24.    Application  of  Payments. . . . . . . . . . . . . . . .. . . . .. . 21

25.    Indemnity. . . . . . . . . . . . . . . .. . . . .. . .. . . . . . . .21

26.    Revival. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . 21

27.    Notices. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . . 22

28.    Governing  Law,  Jurisdiction  and  Waiver  of  Jury  Trial. . . .. .23

29.    Attorney  Fees.. . . . . . . . . . . . . . . .. . . . .. . . . . . . 23

30.    Limitation  of  Liability. . . . . . . . . . . . . . . .. . . . .. . 24

31.    Entire  Understanding. . . . . . . . . . . . . . . .. . . . .. . . . 24

32.    Severability. . . . . . . . . . . . . . . .. . . . .. . .  . . . . . 24

33.    Captions. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . .24

34.    Counterparts;  Telecopier  Signatures. . . . . . . . . . . . . . . . 24

35.    Construction. . . . . . . . . . . . . . . .. . . . .. . . . . . . . .24

36.    Publicity. . . . . . . . . . . . . . . .. . . . .. . . . . . . . . . 24

                                         iii
<PAGE>



                        PURCHASE AND SECURITY AGREEMENT

     This  Purchase and Security Agreement is made as of December 4, 2002 by and
among  LAURUS  MASTER  FUND,  LTD.,  a Cayman Islands corporation ("Laurus") and
COMVERGE  TECHNOLOGIES,  INC.,  a  Delaware  corporation  (the  "Company").

                                   BACKGROUND
                                   -----------

     The  Company  has  requested  that  Laurus  make  investments  and advances
available  to  the  Company;  and

     Laurus  has  agreed to make such investments and advances to the Company on
the  terms  and  conditions  set  forth  in  this  Agreement.

                                   AGREEMENT
                                   ----------

     NOW,  THEREFORE,  in consideration of the mutual covenants and undertakings
and  the  terms  and  conditions  contained  herein, the parties hereto agree as
follows:

     1.  (a) GENERAL DEFINITIONS. Capitalized terms used in this Agreement shall
have  the  meanings  assigned  to  them  in  Annex  A.

          (b)  ACCOUNTING  TERMS.  Any  accounting  terms used in this Agreement
which  are  not  specifically  defined shall have the meanings customarily given
them  in  accordance with GAAP and all financial computations shall be computed,
unless  specifically  provided  herein,  in  accordance  with  GAAP consistently
applied.

          (c) OTHER TERMS. All other terms used in this Agreement and defined in
the  UCC,  shall have the meaning given therein unless otherwise defined herein.

          (d)  RULES  OF  CONSTRUCTION.  All  Schedules,  Addenda,  Annexes  and
Exhibits  hereto  or  expressly  identified  to  this Agreement are incorporated
herein  by  reference  and  taken  together with this Agreement constitute but a
single  agreement. The words "herein", hereof" and "hereunder" or other words of
similar  import  refer  to  this  Agreement  as a whole, including the Exhibits,
Addenda,  Annexes  and  Schedules  thereto, as the same may be from time to time
amended,  modified, restated or supplemented, and not to any particular section,
subsection  or  clause contained in this Agreement. Wherever from the context it
appears  appropriate,  each  term  stated in either the singular or plural shall
include  the  singular  and  the  plural,  and pronouns stated in the masculine,
feminine  or  neuter  gender  shall  include the masculine, the feminine and the
neuter.  The  term  "or"  is  not  exclusive.  The term "including" (or any form
thereof)  shall  not  be  limiting  or exclusive. All references to statutes and

                                        1
<PAGE>


related  regulations  shall  include  any  amendments  of same and any successor
statutes  and regulations. All references in this Agreement or in the Schedules,
Addenda,  Annexes  and  Exhibits  to  this  Agreement  to  sections,  schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections,  schedules,  disclosure  schedules, exhibits, and attachments of or to
this  Agreement.  All  references  to  any  instruments or agreements, including
references  to  any  of this Agreement or the Ancillary Agreements shall include
any  and  all  modifications or amendments thereto and any and all extensions or
renewals  thereof.

          2.  CREDIT  ADVANCES.
              -----------------

          (a)  (i)  Subject  to the terms and conditions set forth herein and in
the  Ancillary  Agreements,  Laurus  shall  make  revolving credit advances (the
"Revolving  Credit  Advances")  to the Company from time to time during the Term
which,  in  the aggregate at any time outstanding, will not exceed the lesser of
(x)  (I)  the Capital Availability Amount minus (II) such reserves as Laurus may
reasonably  in  its  good  faith judgment deem proper and necessary from time to
time  (the  "Reserves") or (y) an amount equal to (I) the Borrowing Availability
minus  (II)  the  Reserves.  The  amount  derived  at  any  time  from  Section
2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall be referred to as the "Formula Amount".

                    (ii) Notwithstanding the limitations set forth above, Laurus
retains  the  right  to  lend  to  the Company from time to time such amounts in
excess  of  such  limitations  as  Laurus  may determine in its sole discretion.

                    (iii)  If the Company does not pay any interest, fees, costs
or  charges  to  Laurus  when  due,  the Company shall thereby be deemed to have
requested,  and Laurus is hereby authorized at its discretion to make and charge
to  the  Company's account, a Revolving Credit Advance to the Company as of such
date  in  an  amount  equal  to  such  unpaid  interest, fees, costs or charges.

                    (iv)  If the Company at any time fails to perform or observe
any  of  the  covenants  contained in this Agreement or any Ancillary Agreement,
Laurus  may, but need not, perform or observe such covenant on behalf and in the
name,  place  and  stead of the Company (or, at Laurus' option, in Laurus' name)
and  may,  but  need  not,  take any and all other actions which Laurus may deem
necessary  to  cure or correct such failure (including the payment of taxes, the
satisfaction  of  Liens, the performance of obligations owed to Account Debtors,
lessors  or  other  obligors,  the procurement and maintenance of insurance, the
execution  of assignments, security agreements and financing statements, and the
endorsement  of instruments); PROVIDED, HOWEVER, unless Laurus determines in the
exercise  of  its  reasonable  discretion  that the taking of any such action by
Laurus  is necessary to preserve or protect the Collateral or Laurus' rights and
remedies  under  this  Agreement and/or applicable law, the Company shall have a
period  of  not more than ten (10) Business Days to cure or correct such failure
prior  to  Laurus' taking any such action. The amount of all monies expended and
all  costs  and expenses (including attorneys' fees and legal expenses) incurred
by  Laurus in connection with or as a result of the performance or observance of
such  agreements  or the taking of such action by Laurus shall be charged to the
Company's account as a Revolving Credit Advance and added to the Obligations. To
facilitate  Laurus'  performance or observance of such covenants of the Company,
the  Company  hereby  irrevocably  appoints  Laurus, or Laurus' delegate, acting
alone,  as  the Company's attorney in fact (which appointment is coupled with an
interest)  with  the  right  (but  not  the  duty)  from time to time to create,
prepare,  complete,  execute, deliver, endorse or file in the name and on behalf
of  the  Company  any  and  all  instruments,  documents,  assignments, security

                                        2
<PAGE>


agreements,  financing  statements,  applications  for  insurance  and  other
agreements  and writings required to be obtained, executed delivered or endorsed
by  the  Company.

                    (v)  Laurus  will  account  to  the  Company  monthly with a
statement of all Loans and other advances, charges and payments made pursuant to
this  Agreement,  and  such  account  rendered  by Laurus shall be deemed final,
binding  and  conclusive  unless Laurus is notified by the Company in writing to
the  contrary  within  fifteen  (15)  days of the date each account was rendered
specifying  the  item  or  items  to  which  objection  is  made.

                    (vi)  During  the  Term,  the Company may borrow, prepay and
reborrow  Revolving  Credit  Advances,  all  in  accordance  with  the terms and
conditions  hereof.

                    (vii)  If  any  Eligible  Account is not paid by the Account
Debtor  within  ninety  (90)  days after the date that such Eligible Account was
invoiced  or  if  any  Account Debtor asserts a deduction, dispute, contingency,
set-off,  or  counterclaim  with  respect  to any Eligible Account, such Account
shall  cease to be an Eligible Account and shall reduce Accounts Availability by
the  net  face  amount  of  such  Account.

          (b)  Following  the  occurrence of an Event of Default, Laurus may, at
its  option,  elect  to  convert  the  credit facility contemplated hereby to an
accounts  receivable purchase facility. Upon such election by Laurus (subsequent
notice  of  which  Laurus  shall  provide  to the Company), the Company shall be
deemed  to  hereby  have  sold, assigned, transferred, conveyed and delivered to
Laurus,  and  Laurus  shall  be  deemed  to have purchased and received from the
Company,  all  right,  title  and interest of the Company in and to all Accounts
which  shall  at  any  time  constitute  Eligible  Accounts  (the  "Receivables
Purchase").  All  outstanding  Loans hereunder shall be deemed obligations under
such  accounts  receivable  purchase  facility.  The  conversion  to an accounts
receivable  purchase  facility  in accordance with the terms hereof shall not be
deemed  an  exercise by Laurus of its secured creditor rights under Article 9 of
the  UCC.  Immediately  following Laurus' request, the Company shall execute all
such  further documentation as may be required by Laurus to more fully set forth
the  accounts  receivable  purchase  facility  herein  contemplated,  including,
without  limitation,  Laurus'  standard  form  of  accounts  receivable purchase
agreement  and account debtor notification letters, but the Company's failure to
enter  into  any  such  documentation shall not impair or affect the Receivables
Purchase  in  any  manner  whatsoever.

          3. REPAYMENT OF THE LOANS. The Company shall be required to (a) make a
mandatory  prepayment  hereunder  at  any  time  that  the aggregate outstanding
principal balance of the Revolving Credit Advances made by Laurus to the Company
hereunder is in excess of the Formula Amount, in an amount equal to such excess;
and  (b)  repay on the expiration of the Term (i) the then aggregate outstanding
principal  balance of the Loans made by Laurus to the Company hereunder together
with  accrued  and  unpaid interest, fees and charges and (ii) all other amounts
owed  Laurus  under this Agreement and the Ancillary Agreements. Any payments of
principal,  interest,  fees  or any other amounts payable hereunder or under any
Ancillary Agreement shall be made prior to 12:00 noon (New York time) on the due
date  thereof  in  immediately  available  funds.

                                        3
<PAGE>


          4. PROCEDURE FOR REVOLVING CREDIT ADVANCES. The Company may by written
notice request a borrowing of Revolving Credit Advances prior to 12:00 noon (New
York time) on the Business Day of its request to incur, on that day, a Revolving
Credit Advance. Together with each request for a Revolving Credit Advance (or at
such other intervals as Laurus may request), the Company shall deliver to Laurus
a  Borrowing Base Certificate in the form of Exhibit A, which shall be certified
as true and correct by the Chief Executive Officer or Chief Financial Officer of
the  Company  together  with  all supporting documentation relating thereto. All
Revolving  Credit  Advances  shall  be  disbursed from whichever office or other
place  Laurus  may  designate  from  time  to  time  and shall be charged to the
Company's  account  on  Laurus'  books.  The  proceeds  of each Revolving Credit
Advance  made  by  Laurus shall be made available to the Company on the Business
Day following the Business Day so requested in accordance with the terms of this
Section  4  by  way of credit to the Company's operating account maintained with
such  bank  as the Company designated to Laurus. Any and all Obligations due and
owing  hereunder  may  be  charged to the Company's account and shall constitute
Revolving  Credit  Advances.

          5.  INTEREST  AND  FEES.
          ------------------------

          (a)  Interest.
               --------

                    (i)  Except  as  modified  by  Section  5(a)(iii) below, the
Company  shall pay interest at the Contract Rate on the unpaid principal balance
of  each Loan until such time as such Loan is collected in full in good funds in
dollars  of  the  United  States  of  America.

                    (ii)  Interest  and  fees  shall be computed on the basis of
actual  days elapsed in a year of 360 days. At Laurus' option, Laurus may charge
the  Company  account  for  said  interest.

                    (iii)  Effective upon the occurrence of any Event of Default
and  for  so long as any Event of Default shall be continuing, the Contract Rate
shall  automatically  be  increased  to  five  percent  (5%) per annum above the
Contract  Rate  (such  increased  rate, the "Default Rate"), and all outstanding
Obligations,  including  unpaid interest, shall continue to accrue interest from
the  date  of  such  Event  of  Default  at  the Default Rate applicable to such
Obligations.

                    (iv)  In  no  event  shall  the  aggregate  interest payable
hereunder  exceed  the  maximum  rate  permitted  under  any  applicable  law or
regulation, as in effect from time to time (the "Maximum Legal Rate") and if any
provision  of  this  Agreement or Ancillary Agreement is in contravention of any
such law or regulation, interest payable under this Agreement and each Ancillary
Agreement shall be computed on the basis of the Maximum Legal Rate (so that such
interest  will  not  exceed  the  Maximum  Legal  Rate).

                    (v)  The Company shall pay principal, interest and all other
amounts  payable  hereunder,  or  under  any  Ancillary  Agreement,  without any
deduction  whatsoever,  including any deduction for any set-off or counterclaim.

          (b)  FEES.

                                        4
<PAGE>


                    (i)  CLOSING/ANNUAL FEE. Upon execution of this Agreement by
the  Company  and  Laurus,  the  Company shall pay to Laurus a closing fee in an
amount  equal to two percent (2%) of the Capital Availability Amount. On each of
the  first  and second anniversary of the Closing Date, the Company shall pay to
Laurus  an  annual  fee  equal  to  one percent (1%) of the Capital Availability
Amount. Such fees shall be deemed fully earned on the Closing Date but shall not
become  payable  until  the occurrence of the execution of this Agreement or the
anniversary  of  the  Closing  Date,  as  the  case  may  be.

                    (ii)  COLLATERAL  MANAGEMENT  PAYMENT.  For  underwriting,
processing  and  supervising  the  Company's  Accounts,  the Company shall pay a
monthly  collateral  management  payment of 0.65% of all Accounts created during
each  month  to  the  extent  that  at the time such Account is created it is an
Eligible  Account  and for which there are outstanding Revolving Credit Advances
against  such Account or against which a Revolving Credit Advance is made during
such  month.  ("Collateral  Accounts"). This payment shall be payable monthly in
arrears  by  a  charge  by Laurus to the Company's account, and shall be paid as
follows: (A) 0.50% of Collateral Accounts to Laurus, and (B) 0.15% of Collateral
Accounts  to  Laurus  Capital  Management,  LLC.

                    (iii)  UNUSED  LINE  FEE.  If,  for  any  month, the average
outstanding Revolving Advances (the "Average Revolving Amount") do not equal the
Capital  Availability Amount, the Company shall pay to Laurus at the end of such
month  a fee (calculated on a per annum basis) in an amount equal to 0.5% of the
amount  by  which  the Capital Availability Amount exceeds the Average Revolving
Amount.

                    (iv)  OVERADVANCE  FEE.  Without  affecting  the  Company's
obligation  to immediately repay any Loans which exceed the amounts permitted by
Section  2  ("Overadvances"),  in  the  event  an  Overadvance  occurs, all such
Overadvances  shall bear interest at a monthly rate equal to 2% of the amount of
such  Overadvances  for  each  month or portion thereof as such amounts shall be
outstanding;  PROVIDED,  HOWEVER, that an Overadvance Fee, or a portion thereof,
payable pursuant to this section attributable solely to a Reserve established by
Laurus  shall  not be payable by the Company if the Company has repaid to Laurus
such  Overadvance or portion thereof within three Business Days after Laurus has
notified  the  Company in writing that such Overadvance has occurred as a result
of  the  Reserve  which  notice  shall  also  include  in  reasonable detail the
calculation of such Overadvance.FINANCIAL INFORMATION DEFAULT. Without affecting
Laurus' other rights and remedies, in the event the Company fails to deliver the
financial  information  required by Section 11 on or before the date required by
this  Agreement, the Company shall pay Laurus a fee in the amount of $750.00 per
week  (or  portion thereof) for each such failure until such failure is cured to
Laurus'  satisfaction  or waived in writing by Laurus. Such fee shall be charged
to  the  Company's  account  upon  the  occurrence  of  each  such  failure.

          6.  SECURITY  INTEREST.
          -----------------------

          (a)  To  secure  the  prompt payment to Laurus of the Obligations, the
Company  hereby  assigns,  pledges  and  grants  to Laurus a continuing security
interest  in and Lien upon all of the Collateral. All of the Company's Books and
Records  relating  to  the  Collateral  shall,  until delivered to or removed by

                                        5
<PAGE>


Laurus,  be  kept  by the Company in trust for Laurus until all Obligations have
been  paid  in  full.  Each  confirmatory  assignment  schedule or other form of
assignment  hereafter  executed  by  the  Company shall be deemed to include the
foregoing  grant,  whether  or  not  the  same  appears  therein.

          (b)  As  additional  security  for  the payment and performance of the
Obligations,  the Company hereby assigns to Laurus any and all monies (including
proceeds  of  insurance  and  refunds of unearned premiums) due or to become due
under, and all other rights of the Company with respect to, any and all policies
of  insurance  now  or  at  any  time  hereafter  covering the Collateral or any
evidence  thereof or any business records or valuable papers pertaining thereto,
and  the  Company  hereby  directs the issuer of any such policy to pay all such
monies  directly  to  Laurus.  At any time, whether or not a Default or Event of
Default  then  exists,  Laurus  may  (but  need  not), in Laurus' name or in the
Company's  names,  execute  and deliver proof of claim, receive all such monies,
endorse  checks  and  other instruments representing payment of such monies, and
adjust, litigate, compromise or release any claim against the issuer of any such
policy.

          (c)  The  Company  hereby  (i) authorizes Laurus to file any financing
statements,  continuation statements or amendments thereto that (x) indicate the
Collateral  (1)  as  all  assets of the Company (or any portion of the Company's
assets)  or  words of similar effect, regardless of whether any particular asset
comprised  in  the  Collateral falls within the scope of Article 9 of the UCC of
such  jurisdiction,  or (2) as being of an equal or lesser scope or with greater
detail, and (y) contain any other information required by Part 5 of Article 9 of
the  UCC  for  the  sufficiency  or  filing  office  acceptance of any financing
statement,  continuation  statement  or  amendment  and  (ii)  ratifies  its
authorization  for  Laurus  to  have  filed any initial financial statements, or
amendments  thereto if filed prior to the date hereof.  The Company acknowledges
that  it  is  not  authorized  to  file  any financing statement or amendment or
termination  statement with respect to any financing statement without the prior
written  consent  of  Laurus and agrees that it will not do so without the prior
written  consent  of  Laurus,  subject  to  the  Company's  rights under Section
9-509(d)(2)  of  the  UCC.

          (d)  The Company hereby grants to Laurus an irrevocable, non-exclusive
license (exercisable upon the termination of this Agreement due to an occurrence
and  during the continuance of an Event of Default without payment of royalty or
other  compensation  to the Company) to use, transfer, license or sublicense any
Intellectual  Property  now  owned,  licensed  to,  or hereafter acquired by the
Company,  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 and automatic machinery software and programs used for the
compilation  or  printout  thereof, and represents, promises and agrees that any
such  license  or  sublicense  is  not  and  will  not  be  in conflict with the
contractual  or  commercial  rights  of  any  third  Person; provided, that such
license  will  terminate on the termination of this agreement and the payment in
full  of  all  Obligations.

          7.  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  CONCERNING  THE
COLLATERAL. The Company represents, warrants (each of which such representations
and  warranties  shall  be deemed repeated upon the making of each request for a

                                        6
<PAGE>


Revolving  Credit  Advance  and  made as of the time of each and every Revolving
Credit  Advance  hereunder)  and  covenants  as  follows:

          (a)  All  of the Collateral (i) is owned by the Company free and clear
of  all  Liens  (including  any  claims of infringement) except those in Laurus'
favor  and  Permitted Liens and (ii) is not subject to any agreement prohibiting
the  granting  of  a Lien or requiring notice of or consent to the granting of a
Lien.

          (b)  The Company shall not encumber, mortgage, pledge, assign or grant
any  Lien  in any Collateral of the Company or any of the Company's other assets
to  anyone  other  than  Laurus  and  except  for  Permitted  Liens.

          (c)  The  Liens granted pursuant to this Agreement, upon completion of
the  filings  and other actions listed on EXHIBIT 7(C)(which, in the case of all
filings  and other documents referred to in said Exhibit, have been delivered to
Laurus  in  duly executed form) constitute valid perfected security interests in
all of the Collateral in favor of Laurus as security for the prompt and complete
payment  and  performance of the Obligations, enforceable in accordance with the
terms  hereof  against  any  and  all  creditors  of and any purchasers from the
Company,  except  (a)  as  limited  by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium  or  other  laws  of  general  application affecting
enforcement  of  creditors'  rights,  and  (b) general principles of equity that
restrict  the  availability  of  equitable  or legal remedies, and such security
interest  is  prior  to  all  other  Liens  in  existence  on  the  date hereof.

          (d)  No  effective  security  agreement,  mortgage,  deed  of  trust,
financing  statement,  equivalent  security  or  Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record  in  any  public  office,  except  those  relating  to  Permitted  Liens.

          (e)  The Company shall not dispose of any of the Collateral whether by
sale, lease or otherwise except for the sale of Inventory in the ordinary course
of  business  and  for  the  disposition  or  transfer in the ordinary course of
business  during  any  fiscal  year of obsolete and worn-out Equipment having an
aggregate fair market value of not more than $25,000 and only to the extent that
(i)  the  proceeds  of  any  such  disposition  are  used to acquire replacement
Equipment  which  is subject to Laurus' first priority security interest or (ii)
the  proceeds  of  which are remitted to Laurus in reduction of the Obligations.

          (f)  The  Company shall defend the right, title and interest of Laurus
in  and  to  the  Collateral  against  the  claims  and  demands  of all Persons
whomsoever,  and take such actions, including (i) all actions necessary to grant
Laurus  "control" of any Investment Property, Deposit Accounts, Letter-of-Credit
Rights  or  electronic  Chattel  Paper owned by the Company, with any agreements
establishing  control  to  be in form and substance satisfactory to Laurus which
such  action  shall  be taken by the Company within two Business Days of Laurus'
request  therefor, (ii) the prompt (but in no event later than two Business Days
following  Laurus'  request  therefor)  delivery  to  Laurus  of  all  original
Instruments, Chattel Paper, negotiable Documents and certificated Stock owned by
a  Company  (in  each  case,  accompanied  by  stock  powers,  allonges or other
instruments  of  transfer  executed  in  blank),  (iii)  notification of Laurus'

                                        7
<PAGE>


interest  in  Collateral  at  Laurus' request within two Business Days following
Laurus'  request  therefor, and (iv) the institution of litigation against third
parties  as  shall be prudent in order to protect and preserve the Company's and
Laurus'  respective  and several interests in the Collateral; PROVIDED, HOWEVER,
in  the  event  Laurus requests that the Company institutes any such litigation,
such  litigation  shall  be  instituted within 5 Business Days following Laurus'
request  therefor.

          (g)  The  Company  shall  promptly,  and in any event within three (3)
Business  Days after the same is acquired by it, notify Laurus of any commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
by  Laurus, the Company shall enter into a supplement to this Agreement granting
to  Laurus  a  Lien  in  such  commercial  tort  claim.

          (h)  The  Company  shall place notations upon its Books and Records to
disclose  Laurus'  Lien  in  the  Collateral.

          (i)  If  the  Company  retains  possession  of  any  Chattel  Paper or
Instrument  with  Laurus'  consent,  such Chattel Paper and Instruments shall be
marked  with  the  following  legend: "This writing and obligations evidenced or
secured hereby are subject to the security interest of Laurus Master Fund, Ltd."

          (j)  The  Company  shall  perform in a reasonable time all other steps
requested  by  Laurus  to create and maintain in Laurus' favor a valid perfected
first  Lien  in  all  Collateral  subject  only  to  Permitted  Liens.

          (k)  The  Company shall notify Laurus promptly and in any event within
four  (4)  Business  Days  after obtaining knowledge thereof (i) of any event or
circumstance  that to the Company's knowledge would cause Laurus to consider any
then  existing  Account as no longer constituting an Eligible Account and/or any
then  existing  Inventory  as no longer constituting Eligible Inventory; (ii) of
any material delay in the Company's performance of any of its obligations to any
Account  Debtor;  (iii)  of  any assertion by any Account Debtor of any material
claims,  offsets or counterclaims; (iv) of any allowances, credits and/or monies
granted  by  the  Company  to  any  Account  Debtor; (v) of any material adverse
information  relating  to  the financial condition of an Account Debtor; (vi) of
any  material  return  of goods; and (vii) of any loss, damage or destruction of
any  of  the  Collateral.

          (l)  All  Accounts (i) represent complete bona fide transactions which
require  no  further  act  under any circumstances on the Company's part to make
such  Accounts  payable  by  the  Account  Debtors,  (ii) are not subject to any
present,  contingent  or,  to  the  Company's  knowledge,  future  offsets  or
counterclaims,  and  (iii) do not represent consignment sales, guaranteed sales,
sale  or  return or other similar understandings or obligations of any Affiliate
or Subsidiary of the Company. The Company has not made, and will not make except
in  the ordinary course of business consistent with past practice, any agreement
with  any  Account  Debtor  for  any  extension  of  time for the payment of any
Account, any compromise or settlement for less than the full amount thereof, any
release  of  any  Account  Debtor  from  liability  therefor,  or  any deduction
therefrom  except a discount or allowance for prompt or early payment allowed by
the  Company  in  the ordinary course of its business consistent with historical
practice  and  as  previously  disclosed  to  Laurus  in  writing.

                                        8
<PAGE>


          (m)  The  Company  shall  keep  and  maintain  the  Equipment  in good
operating  condition,  except  for  ordinary  wear  and tear, and shall make all
necessary  repairs  and  replacements  thereof  so  that the value and operating
efficiency shall at all times be maintained and preserved. The Company shall not
permit  any such items to become a Fixture to real estate or accessions to other
personal  property.

          (n)  The  Company shall maintain and keep all of its Books and Records
concerning  the  Collateral at the Company's executive offices listed in EXHIBIT
12(D).

          (o)  The  Company  shall  maintain  and  keep  the  Collateral  at the
addresses  listed  in  EXHIBIT 12(D), provided, that the Company may change such
locations  or  open a new location, provided that the Company provides Laurus at
least  twenty (20) days prior written notice of such changes or new location and
(ii)  prior to such change or opening of a new location it executes and delivers
to  Laurus such agreements as Laurus may request, including landlord agreements,
mortgagee  agreements  and  warehouse  agreements,  each  in  form and substance
satisfactory  to  Laurus.

          (p)  EXHIBIT  7(N)lists  all banks and other financial institutions at
which  the  Company  maintains  deposits and/or other accounts, and such Exhibit
correctly  identifies  the  name,  address  and  telephone  number  of each such
depository,  the name in which the account is held, a description of the purpose
of the account, and the complete account number. The Company shall establish any
depository  or  other  bank account of any with any financial institution (other
than  the  accounts  set  forth  on  EXHIBIT  7(N)without  Laurus' prior written
consent.

     8.  PAYMENT  OF  ACCOUNTS.
         ----------------------

          (a) The Company will direct all present and future Account Debtors and
other  Persons  obligated  to make payments constituting Collateral to make such
payments  directly to the lockbox maintained by the Company (the "Lockbox") with
North  Fork  Bank  pursuant to the terms of the Lockbox Agreement dated December
__,  2002  or  such other financial institution accepted by Laurus in writing as
may  be selected by the Company (the "Lockbox Bank"). On or prior to the Closing
Date,  the Company shall and shall cause the Lockbox Bank to enter into all such
documentation  acceptable  to  Laurus  (i)  to  perfect  Laurus'  first priority
security  interest in the Blocked Account and (ii) pursuant to which the Lockbox
Bank  agrees  to:  (a) sweep the Lockbox on a daily basis and deposit all checks
received  therein  to  deposit account number ___________ maintained by Borrower
with  North  Fork  Bank  (the  "Blocked  Account")  and (b) comply only with the
instructions  or  other  directions  of  Laurus  concerning  the Lockbox and the
Blocked  Account.  All  of  the Company's invoices, account statements and other
written  or  oral communications directing, instructing, demanding or requesting
payment  of  any  Account  of  the  Company  or  any  other  amount constituting
Collateral  shall  conspicuously direct that all payments be made to the Lockbox
or  such  other address as Laurus may direct in writing. If, notwithstanding the
instructions  to Account Debtors, the Company receives any payments, the Company
shall  immediately  remit such payments to the Blocked Account in their original
form  with all necessary endorsements. Until so remitted, the Company shall hold
all  such  payments  in  trust  for  and as the property of Laurus and shall not
commingle  such  payments  with  any of its other funds or property. The Company
                                        9
<PAGE>


shall  pay  Laurus five percent (5%) of the amount of any payment so received by
the  Company  and  not  delivered in kind to the Blocked Account within five (5)
Business  Days  following  the  Company's  receipt  thereof.

          (b)  At  Laurus'  election, if an Event of Default has occurred and is
continuing,  Laurus may notify the Company's Account Debtors of Laurus' security
interest  in the Accounts, collect them directly and charge the collection costs
and  expenses  thereof  to  the  Company's  account.

     9.  COLLECTION  AND  MAINTENANCE  OF  COLLATERAL.
         ---------------------------------------------

          (a)  Laurus  verify  the Company's Accounts utilizing an audit control
company  or any other agent of Laurus. So long as no Default or Event of Default
shall  have  occurred  and  be  continuing  and/or  Laurus does not believe such
verifications  are necessary to preserve or protect the Collateral or its rights
and  remedies  under  this Agreement and applicable law, Laurus shall not verify
the Company's Accounts more than four (4) times during any calendar year and not
more  than  two  (2)  times  during  any  consecutive  six  (6)  month  period.

          (b)  Laurus  will  credit  (conditional  upon  final  collection)  all
proceeds  of  Accounts  to  the  Company's account three (3) Business Days after
receipt  by  Laurus  of good funds in dollars of the United States of America in
Laurus'  account. Any amount received by Laurus after 12:00 noon (New York time)
on  any Business Day shall be deemed received on the next Business Day. Eligible
Accounts  for  which  proceeds thereof have been received by Laurus shall remain
Eligible  Accounts  until  such  proceeds are credited to the Company's account.

          (c)  As  Laurus receives the proceeds of Accounts, it shall apply such
proceeds to (A) Revolving Credit Advances including Overadvances made by Laurus,
if  any,  (B)  the  interest  and  fees  earned  by  Laurus with respect to such
Accounts,  and  (C)  any  amounts  otherwise  due  Laurus  including,  without
limitation,  pursuant  to  Sections  2,  5(b),  21  and  25  hereof  which  have
theretofore  not  been  paid,  and  if  no  Revolving  Credit  Advances are then
outstanding,  pay  to  the  Company  in weekly intervals the aggregate amount so
collected.  Following  the  occurrence and during the continuance of an Event of
Default,  Laurus  shall  have the right to apply all proceeds of Accounts to the
Obligations  in  such  order  as  Laurus  shall  elect.

          10.  INSPECTIONS  AND  APPRAISALS. At all times during normal business
hours,  Laurus,  and/or  any  agent  of  Laurus shall have the right to (a) have
access  to,  visit, inspect, review, evaluate and make physical verification and
appraisals  of  the  Company's properties and the Collateral, (b) inspect, audit
and  copy  (or take originals if necessary) and make extracts from the Company's
Books  and  Records,  including  management  letters  prepared  by  independent
accountants,  and  (c)  discuss  with  the  Company's  principal  officers,  and
independent  accountants, the Company's business, assets, liabilities, financial
condition,  results  of  operations  and  business  prospects.  The Company will
deliver to Laurus any instrument necessary for Laurus to obtain records from any
service  bureau  maintaining records for the Company. If any internally prepared
financial  information,  including  that  required  under  this  paragraph  is
unsatisfactory  in any manner to Laurus, Laurus may request that the Accountants
review  the  same.

                                       10

<PAGE>


          11.  FINANCIAL  REPORTING.  The  Company  will deliver, or cause to be
delivered,  to  Laurus  each of the following, which shall be in form and detail
acceptable  to  Laurus:

          (a)  As  soon  as  available, and in any event within ninety (90) days
after  the  end  of  each  fiscal  year  of the Company, the Company's unaudited
financial  statements  reviewed  by  independent certified public accountants of
recognized  standing  selected  by  Company  and  acceptable  to  Laurus  (the
"Accountants"),which  annual  financial  statements  shall include the Company's
balance  sheet  as  at the end of such fiscal year and the related statements of
the  Company's income, retained earnings and cash flows for the fiscal year then
ended,  prepared,  if  Laurus  so  requests, on a consolidating and consolidated
basis  to  include  any  Affiliates,  all  in  reasonable detail and prepared in
accordance  with  GAAP  accepting  only  that  they  do  not  include all of the
information  and  footnotes required by accounting principles generally accepted
in  the United States of America for complete consolidated financial statements,
together with (i) copies of any management letters prepared by such accountants;
(ii)  a  report  signed  by  the  Accountants  stating  that  in  making  the
investigations  necessary for said opinion they obtained no knowledge, except as
specifically stated, of any Default or Event of Default; and (iii) a certificate
of the Company's Chief Executive Officer or Chief Financial Officer stating that
such financial statements have been prepared in accordance with GAAP and whether
or  not  such officer has knowledge of the occurrence of any Default or Event of
Default  hereunder  and,  if  so,  stating  in  reasonable detail the facts with
respect  thereto;

          (b)  As  soon  as  available  and in any event within thirty (30) days
after  the  end  of  each  quarter,  an  unaudited/internal  balance  sheet  and
statements  of income, retained earnings and cash flows of the Company as at the
end  of  and  for  such  quarter  and  for  the  year to date period then ended,
prepared,  if  Laurus  so requests, on a consolidating and consolidated basis to
include any Affiliates, in reasonable detail and stating in comparative form the
figures  for  the  corresponding  date  and  periods  in  the previous year, all
prepared  in  accordance  with  generally  accepted accounting principles in the
United  States  of  America  for  interim  financial  information and subject to
year-end  adjustments.  And  accordingly,  they  do  not  include  all  of  the
information  and  footnotes required by accounting principles generally accepted
in the United States of America for complete consolidated financial statements,;
and  accompanied  by  a certificate of the Company' President or Chief Financial
Officer,  stating  (i)  that  such  financial  statements  have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and (ii) whether or
not  such  officer  has  knowledge  of the occurrence of any Default or Event of
Default  hereunder  not theretofore reported and remedied and, if so, stating in
reasonable  detail  the  facts  with  respect  thereto;  and

          (c)  Within  fifteen  (15) days after the end of each month, agings of
the  Company's Accounts, unaudited trial balances and its accounts payable and a
calculation of the Company's Accounts, Eligible Accounts, Inventory and Eligible
Inventory  as  at  the  end  of  such  month  or  shorter  time  period.

          12.  ADDITIONAL REPRESENTATIONS AND WARRANTIES. The Company represents
and  warrants (each of which such representations and warranties shall be deemed
repeated upon the making of a request for a Revolving Credit Advance and made as
of  the  time  of  each  Revolving  Credit  Advance made hereunder), as follows:

                                       11
<PAGE>

          (a)  The  Company  is  a  corporation  duly  incorporated  and validly
existing  under  the  laws  of  the  jurisdiction  of its incorporation and duly
qualified and in good standing in every other state or jurisdiction in which the
nature  of  the  Company's  business  requires  such  qualification.

          (b)  The  execution,  delivery  and  performance of this Agreement and
the  Ancillary  Agreements  (i)  have  been  duly  authorized,  (ii)  are not in
contravention  of  the Company's certificate of incorporation, by-laws or of any
indenture,  agreement or undertaking to which the Company is a party or by which
the  Company  is  bound  and  (iii)  are  within the Company's corporate powers.

          (c)  This  Agreement  and  the  Ancillary  Agreements  executed  and
delivered by the Company are the Company's legal, valid and binding obligations,
enforceable  in  accordance  with  their  terms.

          (d)  EXHIBIT  12(D)sets  forth  the  Company's  name  as it appears in
official  filing  in  the  state of its incorporation, the type of entity of the
Company,  the organizational identification number issued by the Company's state
of  incorporation  or  a  statement  that  no  such  number has been issued, the
Company's  state  of  incorporation,  and  the  location  of the Company's chief
executive  office,  corporate offices, warehouses, other locations of Collateral
and  locations  where  records with respect to Collateral are kept (including in
each case the county of such locations) and, except as set forth in such EXHIBIT
12(D), such locations have not changed during the preceding twelve months. As of
the  Closing  Date,  during the prior five years, except as set forth in EXHIBIT
12(D), the Company has not been known as or conducted business in any other name
(including  trade  names).  The  Company  has  only  one state of incorporation.

          (e)  Based  upon  the  Employee  Retirement  Income  Security  Act  of
1974  ("ERISA"),  and  the regulations and published interpretations thereunder:
(i)  the  Company  has  not engaged in any Prohibited Transactions as defined in
Section  406 of ERISA and Section 4975 of the Internal Revenue Code, as amended;
(ii)  the  Company  has  met  all  applicable minimum funding requirements under
Section 302 of ERISA in respect of its plans; (iii) the Company has no knowledge
of  any  event  or  occurrence  which  would  cause the Pension Benefit Guaranty
Corporation  to  institute  proceedings under Title IV of ERISA to terminate any
employee  benefit  plan(s); (iv) the Company has no fiduciary responsibility for
investments  with  respect to any plan existing for the benefit of persons other
than  the Company's employees; and (v) the Company has not withdrawn, completely
or  partially,  from  any  multi-employer  pension plan so as to incur liability
under  the  Multiemployer  Pension  Plan  Amendments  Act  of  1980.

          (f)  The  Company  is  solvent,  able to pay its debts as they mature,
has  capital sufficient to carry on its business and all businesses in which the
Company is about to engage and the fair saleable value of its assets (calculated
on  a  going  concern  basis)  is  in  excess  of the amount of its liabilities.

          (g)  There  is  no  pending  or  threatened  litigation,  action  or
proceeding  which  involves the possibility of having a Material Adverse Effect.

<PAGE>


          (h)  All  balance  sheets  and  income  statements  which  have  been
delivered  to  Laurus  fairly state the Company's financial condition on a basis
consistent  with  that  of  previous  financial statements and there has been no
material  adverse  change  in  the Company's financial condition as reflected in
such statements since the balance sheet date of the statements last delivered to
Laurus and such statements do not fail to disclose any fact or facts which might
have  a  Material  Adverse  Effect  on  the  Company's  financial  condition.

          (i)  The  Company  possesses  all  of  the  Intellectual  Property
necessary  to  conduct  its  business.  There  has been no assertion or claim of
violation  or  infringement  with  respect to any Intellectual Property. EXHIBIT
12(I) sets  forth  all  Intellectual  Property  of  the  Company.

          (j)  Neither  this  Agreement,  the exhibits and schedules hereto, the
Ancillary  Agreements  nor any other document delivered by the Company to Laurus
or  its  attorneys  or  agents  in  connection herewith or therewith or with the
transactions  contemplated  hereby or thereby, contain any untrue statement of a
material  fact  nor omit to state a material fact necessary in order to make the
statements  contained  herein or therein, in light of the circumstances in which
they  are  made,  not  misleading. Any financial projections and other estimates
provided  to Laurus by the Company were based on the Company's experience in the
industry  and  on  assumptions of fact and opinion as to future events which the
Company,  at the date of the issuance of such projections or estimates, believed
to  be  reasonable. As of the date hereof no facts have come to the attention of
the Company that would, in its opinion, require the Company to revise or amplify
in  any  material  respect the assumptions underlying such projections and other
estimates  or  the  conclusions  derived  therefrom.

     13.  COVENANTS.  The  Company  covenants  as  follows:

          (a) The Company will not, without the prior written consent of Laurus,
change  (i)  its  name as it appears in the official filings in the state of its
incorporation  or  formation,  (ii)  the  type  of legal entity it is, (iii) its
organization  identification  number,  if  any,  issued  by  its  state  of
incorporation,  (iv)  its state of incorporation or (v) amend its certificate of
incorporation,  by-laws or other organizational document; provided, however, the
Company  may,  without  such  consent,  amend  its  certificate of incorporation
(subject to Section 13(a)(i)-(iv) above), by-laws or other organization document
in  connection  with  an equity investment in the Company, and the Company shall
provid  Laurus  with a copy of such amendment documentation not later than three
Business  Days  prior  to  the  effectiveness  thereof.

          (b) The operation of the Company's business is and will continue to be
in  compliance  in  all material respects with all applicable federal, state and
local  laws, rules and ordinances, including to all laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll taxes, employer and
employee  contributions  and  similar items, securities, employee retirement and
welfare  benefits,  employee  health  safety  and  environmental  matters.

          (c)  The Company will pay or discharge when due all taxes, assessments
and  governmental  charges  or  levies  imposed  upon  the Company or any of the
Collateral  unless  such amounts are being diligently contested in good faith by
appropriate proceedings provided that (i) adequate reserves with respect thereto

                                       13
<PAGE>


are  maintained on the books of the Company in conformity with GAAP and (ii) the
related  Lien  shall  have  no  effect  on the priority of the Liens in favor of
Laurus  or  the  value  of  the  assets  in  which  Laurus  has  a  Lien.

          (d)  The  Company  will  promptly inform Laurus in writing of: (i) the
commencement  of  all  proceedings  and  investigations  by or before and/or the
receipt  of  any  notices from, any governmental or nongovernmental body and all
actions  and proceedings in any court or before any arbitrator against or in any
way concerning any event which might singly or in the aggregate, have a Material
Adverse  Effect;  (ii)  any  amendment  of  the  Company's  certificate  of
incorporation,  by-laws or other organizational document; (iii) any change which
has  had  or  might have a Material Adverse Effect; (iv) any Event of Default or
Default;  (v)  any default or any event which with the passage of time or giving
of notice or both would constitute a default under any agreement for the payment
of  money  to which the Company is a party or by which the Company or any of the
Company's properties may be bound which would have a Material Adverse Effect and
(vi)  any  change  in the Company's name or any other name used in its business.

          (e)  The Company will not (i) create, incur, assume or suffer to exist
any  indebtedness  (exclusive  of  trade debt and intercompany indebtedness with
Data  Systems  &  Software  Inc.)  whether  secured  or unsecured other than the
Company's  indebtedness  to  Laurus and as set forth on EXHIBIT 13(E)(I)attached
hereto  and  made  a  part hereof; (ii) cancel any debt owing to it in excess of
$50,000  in  the  aggregate during any 12 month period; (iii) assume, guarantee,
endorse  or  otherwise become directly or contingently liable in connection with
any  obligations  of  any  other  Person,  except  the endorsement of negotiable
instruments  by  a  Company for deposit or collection or similar transactions in
the  ordinary  course  of  business; (iv) directly or indirectly declare, pay or
make  any dividend or distribution on any class of its Stock or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
Stock  of  a  Company;  (v)  purchase  or  hold  beneficially any Stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances  to,  or make any investment or acquire any interest whatsoever in, any
other  Person,  including  any  partnership  or joint venture, except (x) travel
advances, (y) loans to the Company's officers and employees not exceeding at any
one  time  an  aggregate  of  $10,000  or (z) the Existing Loans; (vi) create or
permit  to  exist  any Subsidiary, other than any Subsidiary in existence on the
date  hereof  and  listed  in  EXHIBIT  13(E)(II)  unless such new Subsidiary is
designated  by  Laurus  as  either  a  co-borrower or guarantor hereunder; (vii)
directly  or  indirectly,  prepay  any  indebtedness  (other than to Laurus), or
repurchase, redeem, retire or otherwise acquire any indebtedness other than such
indebtedness  owed  to  Data  Systems  & Software Inc. or Bank Leumi USA; (viii)
enter  into  any  merger, consolidation or other reorganization with or into any
other Person or acquire all or a portion of the assets or Stock of any Person or
permit  any  other  Person to consolidate with or merge with it; (ix) materially
change  the  nature of the business in which it is presently engaged; (x) change
its  fiscal  year  or  make  any  changes  in accounting treatment and reporting
practices  without  prior written notice to Laurus except as required by GAAP or
in the tax reporting treatment or except as required by law; (xi) enter into any
transaction  with  any  employee,  director or Affiliate, except in the ordinary
course  on  arms-length  terms; or (xii) bill Accounts under any name except the
present  name  of  the  Company.

                                       14
<PAGE>


          (f)  None of the proceeds of the Loans hereunder will be used directly
or  indirectly  to "purchase" or "carry" "margin stock" or to repay indebtedness
incurred  to "purchase" or "carry" "margin stock" within the respective meanings
of  each of the quoted terms under Regulation U of the Board of Governors of the
Federal  Reserve  System  as  now  and  from  time  to time hereafter in effect.

          (g)  The  Company will bear the full risk of loss from any loss of any
nature  whatsoever with respect to the Collateral. At the Company's own cost and
expense in amounts and with carriers acceptable to Laurus, the Company shall (i)
keep  all  its  insurable  properties and properties in which it has an interest
insured  against  the  hazards  of fire, flood, sprinkler leakage, those hazards
covered  by  extended  coverage  insurance  and such other hazards, and for such
amounts,  as is customary in the case of companies engaged in businesses similar
to the Company's including business interruption insurance; (ii) maintain a bond
in  such  amounts as is customary in the case of companies engaged in businesses
similar  to  the  Company's  insuring  against  larceny,  embezzlement  or other
criminal  misappropriation  of  insured's  officers and employees who may either
singly  or jointly with others at any time have access to the assets or funds of
the  Company either directly or through Governmental Authority to draw upon such
funds  or  to  direct  generally  the disposition of such assets; (iii) maintain
public and product liability insurance against claims for personal injury, death
or  property  damage  suffered  by  others;  (iv)  maintain  all  such  worker's
compensation or similar insurance as may be required under the laws of any state
or  jurisdiction  in  which  the Company is engaged in business; and (v) furnish
Laurus  with  (x) copies of all policies and evidence of the maintenance of such
policies  at least thirty (30) days before any expiration date, (y) endorsements
to  such  policies  naming  Laurus  as  "co-insured" or "additional insured" and
appropriate  loss  payable  endorsements  in  form and substance satisfactory to
Laurus,  naming  Laurus  as  loss  payee, and (z) evidence that as to Laurus the
insurance coverage shall not be impaired or invalidated by any act or neglect of
the  Company  and the insurer will provide Laurus with at least thirty (30) days
notice  prior to cancellation. The Company shall instruct the insurance carriers
that  in  the  event of any loss thereunder, the carriers shall make payment for
such  loss to Laurus and not to the Company and Laurus jointly. If any insurance
losses  are  paid by check, draft or other instrument payable to the Company and
Laurus  jointly, Laurus may endorse the Company's name thereon and do such other
things as Laurus may deem advisable to reduce the same to cash. Laurus is hereby
authorized  to  adjust  and  compromise  claims. All loss recoveries received by
Laurus  upon any such insurance may be applied to the Obligations, in such order
as  Laurus  in its sole discretion shall determine. Any surplus shall be paid by
Laurus  to  the  Company  or  applied  as  may be otherwise required by law. Any
deficiency  thereon  shall  be  paid  by  the  Company  to  Laurus,  on  demand.

          (h)  The  Company shall not at any time permit any accounts payable to
remain  unpaid  more than sixty (60) days from the due date thereof unless there
exists  an  agreement in writing between the Company and any Person with respect
to  such payable permitting extended payment terms or a bona fide dispute exists
with  respect  to  such  accounts  payable,  such  amounts  are being diligently
contested  in  good  faith  and  adequate  reserves  with  respect  thereto  are
maintained  on  the  books  of  the  Company  in  conformity  with  GAAP.

          (i)  George Morgenstern, or another person acceptable to Laurus, shall
serve  as  Chief  Executive  Officer  or  Chairman  of  the  Board of Guarantor.

                                       15
<PAGE>


          14.  FURTHER  ASSURANCES.  At any time and from time to time, upon the
written  request  of  Laurus and at the sole expense of the Company, the Company
shall promptly and duly execute and deliver any and all such further instruments
and  documents  and take such further action as Laurus may request (a) to obtain
the  full  benefits  of  this  Agreement  and  the  Ancillary Agreements, (b) to
protect,  preserve  and maintain Laurus' rights in the Collateral and under this
Agreement or any Ancillary Agreement, or (c) to enable Laurus to exercise all or
any  of  the  rights  and  powers  herein  granted  or  any Ancillary Agreement.

          15.  POWER  OF  ATTORNEY.  The  Company hereby appoints Laurus, or any
other Person whom Laurus may designate as the Company's attorney, with power to:
(i)  endorse the Company's name on any checks, notes, acceptances, money orders,
drafts  or  other  forms  of  payment  or  security  that  may come into Laurus'
possession;  (ii)  sign  the  Company's  name  on  any invoice or bill of lading
relating  to  any  Accounts,  drafts  against  Account  Debtors,  schedules  and
assignments  of  Accounts, notices of assignment, financing statements and other
public records, verifications of Account and notices to or from Account Debtors;
(iii) verify the validity, amount or any other matter relating to any Account by
mail, telephone, telegraph or otherwise with Account Debtors; (iv) do all things
necessary  to  carry out this Agreement, any Ancillary Agreement and all related
documents;  and  (v)  on or after the occurrence and continuation of an Event of
Default,  notify  the post office authorities to change the address for delivery
of  the  Company's mail to an address designated by Laurus, and to receive, open
and  dispose  of  all mail addressed to the Company. The Company hereby ratifies
and  approves all acts of the attorney. Neither Laurus, nor the attorney will be
liable for any acts or omissions or for any error of judgment or mistake of fact
or  law.  This  power, being coupled with an interest, is irrevocable so long as
Laurus  has  a  security  interest  and  until  the  Obligations have been fully
satisfied.

          16.  TERM  OF  AGREEMENT.  Laurus'  agreement to make Loans and extend
financial  accommodations  under  and  in  accordance  with  the  terms  of this
Agreement  or  any  Ancillary  Agreement shall continue in full force and effect
until  the  expiration  of the Initial Term. If an Event of Default has occurred
and  is  continuing, Laurus may terminate this Agreement. The termination of the
Agreement  shall  not  affect  any  of Laurus' rights hereunder or any Ancillary
Agreement  and  the  provisions  hereof  and  thereof shall continue to be fully
operative  until  all transactions entered into, rights or interests created and
the  Obligations have been disposed of, concluded or liquidated. Notwithstanding
the  foregoing,  Laurus  shall  release its security interests at any time after
thirty  (30)  days  notice  upon payment to it of all Obligations if the Company
shall  have  (i)  provided Laurus with an executed release of any and all claims
which  the  Company  may  have  or  thereafter have under this Agreement and all
Ancillary  Agreements  and (ii) paid to Laurus an early payment fee in an amount
equal  to  five  percent (5%) of the Capital Availability Amount if such payment
occurs prior to the end of the first year of the Initial Term, four percent (4%)
if  such payment occurs after the first year but prior to the end of second year
of  the Initial Term and three percent (3%) thereafter if such early payment fee
occurs  prior  to  the  end  of  the  Initial Term; such early payment fee being
intended  to  compensate Laurus for its costs and expenses incurred in initially
approving  this  Agreement. Such early payment fee shall also be due and payable
by  the Company to Laurus upon termination of this Agreement by Laurus after the
occurrence  of  an  Event  of  Default.


                                       16
<PAGE>


          17.  TERMINATION  OF  LIEN.  The  Liens  and  rights granted to Laurus
hereunder  and  any  Ancillary  Agreements and the financing statements filed in
connection  herewith  or  therewith  shall  continue  in  full force and effect,
notwithstanding  the termination of this Agreement or the fact that The Company'
account may from time to time be temporarily in a zero or credit position, until
(a)  all  of  the Obligations of the Company have been paid or performed in full
after  the  termination  of  this  Agreement and (b) the Company has an executed
release  of  any  and  all  claims which the Company may have or thereafter have
under  this  Agreement  and  all  Ancillary Agreements. Accordingly, the Company
waives  any  rights  which  it  may  have  under the UCC to demand the filing of
termination  statements  with respect to the Collateral, and Laurus shall not be
required  to  send  such  termination statements to the Company, or to file them
with  any  filing  office,  unless  and  until  this Agreement and the Ancillary
Agreements  shall  have  been  terminated in accordance with their terms and all
Obligations  paid  in  full  in  immediately  available  funds.

          18.  EVENTS  OF  DEFAULT. The occurrence of any of the following shall
constitute  an  Event  of  Default:

          (a)  failure  to  make payment of any of the Obligations when required
hereunder;  provided, however, that in the event such failure to pay arises from
the  occurrence  of  an Overadvance, then the Company shall have 2 Business Days
from  the  notice  thereof  to  cure  such  failure;

               (b) failure to pay any taxes when due unless such taxes are being
contested  in  good  faith  by appropriate proceedings and with respect to which
adequate  reserves have been provided on the Company's books; provided, however,
that  in  the  event  that  such  failure  is  curable, the Company shall have 7
Business  Days  from  the  notice  thereof  to  cure  such  failure;

               (c)  failure  to perform under and/or committing any material (as
determined  by  Laurus  in  the exercise of its good faith discretion) breach of
this  Agreement  or  any  Ancillary Agreement or any other agreement between the
Company  and  Laurus;  provided, however, that in the event that such failure is
curable,  the Company shall have 7 Business Days from the notice thereof to cure
such  failure,  except  that  with  respect to Section 13(i) hereof, the Company
shall  have  6  months  to  cure  such  failure;

               (d)  the occurrence of a default under any agreement to which the
Company  is  a  party  with  third  parties which has a Material Adverse Effect;

               (e)  any material (as determined by Laurus in the exercise of its
good faith discretion) representation, warranty or statement made by the Company
hereunder,  in  any  Ancillary Agreement, any certificate, statement or document
delivered  pursuant  to the terms hereof, or in connection with the transactions
contemplated  by this Agreement should at any time be false or misleading in any
material respect; provided, however, that in the event that such breach shall be
curable,  the Company shall have 7 Business Days from the notice thereof to cure
such  breach;

               (f)  an  attachment  or  levy  is  made upon the Company's assets
having  an  aggregate  value  in  excess  of  $100,000 or a judgment is rendered
against the Company or the Company's property involving a liability of more than

                                       17
<PAGE>


$100,000 which shall not have been vacated, discharged, stayed or bonded pending
appeal  within  thirty  (30)  days  from  the  entry  thereof;

               (g)  any  change in the Company's condition or affairs (financial
or  otherwise)  which  in  Laurus'  reasonable,  good faith opinion, impairs the
Collateral  or  the ability of the Company to perform its Obligations; provided,
however,  that the Company shall have 7 Business Days from the notice thereof to
cure  such  breach;

               (h)  any  Lien created hereunder or under any Ancillary Agreement
for  any reason ceases to be or is not a valid and perfected Lien having a first
priority  interest;

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

               (j)  the  Company  shall  admit  in  writing its inability, or be
generally  unable to pay its debts as they become due or cease operations of its
present  business;

               (k)  any  any Subsidiary, Guarantor or any significant subsidiary
of  Guarantor shall (i) apply for, consent to or suffer to exist the appointment
of, or the taking possession by, a receiver, custodian, trustee or liquidator of
itself  or  of  all or a substantial part of its property, (ii) admit in writing
its  inability,  or  be generally unable, to pay its debts as they become due or
cease  operations  of  its present business, (iii) make a general assignment for
the  benefit  of  creditors,  (iv)  commence  a voluntary case under the federal
bankruptcy  laws  (as now or hereafter in effect), (v) be adjudicated a bankrupt
or  insolvent,  (vi)  file a petition seeking to take advantage of any other law
providing  for  the  relief  of  debtors,  (vii)  acquiesce  to, or fail to have
dismissed,  within  thirty  (30)  days,  any  petition  filed  against it in any
involuntary  case  under  such bankruptcy laws or (viii) take any action for the
purpose  of  effecting  any  of  the  foregoing;

               (l) the Company directly or indirectly sells, assigns, transfers,
conveys,  or  suffers  or  permits  to  occur  any sale, assignment, transfer or
conveyance  of  any  assets  of  the  Company or any interest therein, except as
permitted  herein;

               (m)  a  default  by  the Company in the payment, when due, of any
principal  of  or  interest  on  any other indebtedness for money borrowed in an
amount  greater  than  $25,000, which is not cured within any applicable cure or
grace  period;

               (n)  the  occurrence  of a change in controlling ownership of the
Company;

               (o)  the  indictment or threatened indictment of the Company, any
officer of the Company under any criminal statute, or commencement or threatened
commencement  of criminal or civil proceeding against the Company or any officer
                                       18
<PAGE>


of  the  Company  pursuant  to which statute or proceeding penalties or remedies
sought  or  available  include forfeiture of any of the property of the Company;

               (p)  if  any  Guarantor  attempts  to  terminate,  challenges the
validity  of,  or  its  liability  under  any  Guaranty  Agreement;  or
               (q)  if  an  Event  of Default shall occur under the Note and the
Default  Notice  Period  (as  defined  in  the  Note)  has  expired.

               19.  REMEDIES.  If  an  Event  of  Default  has  occurred  and is
continuing,  Laurus  shall  have  the  right  to demand repayment in full of all
Obligations, whether or not otherwise due. Until all Obligations have been fully
satisfied, Laurus shall retain its Lien in all Collateral. Laurus shall have, in
addition  to  all  other  rights  provided  herein, the rights and remedies of a
secured party under the UCC, and under other applicable law, all other legal and
equitable  rights  to  which Laurus may be entitled, including the right to take
immediate  possession  of  the  Collateral, to require a Company to assemble the
Collateral,  at  the  Company's expense, and to make it available to Laurus at a
place designated by Laurus which is reasonably convenient to both parties and to
enter  any  of  the  premises  of  a Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the same
on  said  premises  until  sold  (and  if  said  premises be the property of the
Company,  the  Company agrees not to charge Laurus for storage thereof), and the
right  to  apply  for  the appointment of a receiver for the Company's property.
Further,  Laurus  may,  at any time or times after the occurrence of an Event of
Default,  sell  and  deliver  all  Collateral held by or for Laurus at public or
private  sale  for  cash, upon credit or otherwise, at such prices and upon such
terms  as  Laurus,  in  Laurus'  sole  discretion, deems advisable or Laurus may
otherwise  recover  upon the Collateral in any commercially reasonable manner as
Laurus,  in  its sole discretion, deems advisable. The requirement of reasonable
notice  shall  be met if such notice is mailed postage prepaid to the Company at
the Company's address as shown in Laurus' records, at least ten (10) days before
the  time  of  the  event  of  which  notice  is  being given. Laurus may be the
purchaser  at  any sale, if it is public. In connection with the exercise of the
foregoing  remedies,  Laurus  is  granted permission to use all of the Company's
trademarks,  tradenames,  tradestyles,  patents,  patent applications, licenses,
franchises  and  other proprietary rights. The proceeds of sale shall be applied
first  to  all costs and expenses of sale, including attorneys' fees, and second
to  the  payment (in whatever order Laurus elects) of all Obligations. After the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Laurus of any other amount required by any provision of
law, including Section 608(a)(1) of the Code (but only after Laurus has received
what  Laurus  considers  reasonable  proof  of  a  subordinate  party's security
interest),  the  surplus,  if  any,  shall  be  paid  to  the  Company  or  its
representatives or to whosoever may be lawfully entitled to receive the same, or
as a court of competent jurisdiction may direct. The Company shall remain liable
to  Laurus  for  any  deficiency.

               20.  WAIVERS. To the full extent permitted by applicable law, the
Company  waives  (a) presentment, demand and protest, and notice of presentment,
dishonor,  intent  to  accelerate,  acceleration,  protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all of
this  Agreement  and  the  Ancillary  Agreements  or any other notes, commercial

                                       19
<PAGE>


paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties
at  any  time  held by Laurus on which the Company may in any way be liable, and
hereby  ratifies  and  confirms  whatever  Laurus may do in this regard; (b) all
rights to notice and a hearing prior to Laurus' taking possession or control of,
or  to  Laurus'  replevy, attachment or levy upon, any Collateral or any bond or
security  that  might  be  required  by  any  court  prior to allowing Laurus to
exercise  any  of  its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws. The Company acknowledges that it has been advised by counsel
of  its  choices  and  decisions  with  respect to this Agreement, the Ancillary
Agreements  and  the  transactions  evidenced  hereby  and  thereby.

               21.  EXPENSES. The Company shall pay all of Laurus' out-of-pocket
costs  and  expenses, including reasonable fees and disbursements of in-house or
outside  counsel  and  appraisers, in connection with the preparation, execution
and  delivery  of this Agreement and the Ancillary Agreements (which such amount
shall  not exceed $20,000), and in connection with the prosecution or defense of
any  action,  contest,  dispute, suit or proceeding concerning any matter in any
way arising out of, related to or connected with this Agreement or any Ancillary
Agreement.  The  Company  shall  also  pay  all  of  Laurus'  fees,  charges,
out-of-pocket costs and expenses, including reasonable fees and disbursements of
counsel  and  appraisers,  in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements,  (b)  Laurus'  obtaining  performance  of the Obligations under this
Agreement  and  any  Ancillary  Agreements,  including,  but not limited to, the
enforcement  or defense of Laurus' security interests, assignments of rights and
Liens  hereunder  as  valid  perfected  security  interests,  (c) any attempt to
inspect,  verify,  protect, collect, sell, liquidate or otherwise dispose of any
Collateral,  (d)  any  appraisals  or  re-appraisals  of  any  property (real or
personal)  pledged  to  Laurus  by  the  Company as Collateral for, or any other
Person  as  security  for,  the  Company's  Obligations  hereunder  and  (e) any
consultations  in  connection  with any of the foregoing. The Company shall also
pay  Laurus'  customary  bank  charges  for  all  bank  services (including wire
transfers)  performed or caused to be performed by Laurus for the Company at the
Company's  request or in connection with the Company's loan account with Laurus.
All such costs and expenses together with all filing, recording and search fees,
taxes  and  interest payable by the Company to Laurus shall be payable on demand
and shall be secured by the Collateral. If any tax by any Governmental Authority
is  or  may  be imposed on or as a result of any transaction between the Company
and  Laurus  which  Laurus is or may be required to withhold or pay, the Company
agrees  to  indemnify and hold Laurus harmless in respect of such taxes, and the
Company will repay to Laurus the amount of any such taxes which shall be charged
to  the  Company's  account;  and  until  the  Company shall furnish Laurus with
indemnity  therefor  (or supply Laurus with evidence satisfactory to it that due
provision  for  the  payment  thereof  has  been  made), Laurus may hold without
interest  any  balance  standing to the Company's credit and Laurus shall retain
its  Liens  in  any  and  all  Collateral.

               22.  ASSIGNMENT  BY  LAURUS.  Laurus may assign any or all of the
Obligations together with any or all of the security therefor and any transferee
shall succeed to all of Laurus' rights with respect thereto. Upon such transfer,
Laurus  shall  be  released  from  all  responsibility for the Collateral to the
extent  same is assigned to any transferee. Laurus may from time to time sell or
otherwise  grant  participations in any of the Obligations and the holder of any

                                       20
<PAGE>


such  participation  shall, subject to the terms of any agreement between Laurus
and  such holder, be entitled to the same benefits as Laurus with respect to any
security  for the Obligations in which such holder is a participant. The Company
agrees  that  each such holder may exercise any and all rights of banker's lien,
set-off and counterclaim with respect to its participation in the Obligations as
fully  as though the Company were directly indebted to such holder in the amount
of  such  participation.

               23. NO WAIVER; CUMULATIVE REMEDIES. Failure by Laurus to exercise
any right, remedy or option under this Agreement, any Ancillary Agreement or any
supplement  hereto  or  thereto  or  any other agreement between the Company and
Laurus  or delay by Laurus in exercising the same, will not operate as a waiver;
no  waiver  by Laurus will be effective unless it is in writing and then only to
the extent specifically stated. Laurus' rights and remedies under this Agreement
and  the  Ancillary Agreements will be cumulative and not exclusive of any other
right  or  remedy  which  Laurus  may  have.

               24.  APPLICATION  OF PAYMENTS. The Company irrevocably waives the
right  to  direct  the  application of any and all payments at any time or times
hereafter  received  by  Laurus  from or on the Company's behalf and the Company
hereby  irrevocably agrees that Laurus shall have the continuing exclusive right
to  apply  and  reapply  any  and  all  payments  received  at any time or times
hereafter  against  the  Obligations hereunder in such manner as Laurus may deem
advisable  notwithstanding  any  entry  by  Laurus upon any of Laurus' books and
records.

               25.  INDEMNITY.  The Company agrees to indemnify and hold Laurus,
and  its  respective  affiliates,  employees,  attorneys  and  agents  (each, an
"Indemnified  Person"),  harmless  from  and against any and all suits, actions,
proceedings,  claims,  damages,  losses, liabilities and expenses of any kind or
nature  whatsoever  (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be  instituted or asserted against or incurred by any such Indemnified Person as
the  result  of  credit having been extended, suspended or terminated under this
Agreement  or  any of the Ancillary Agreements or with respect to the execution,
delivery,  enforcement,  performance  and administration of, or in any other way
arising  out  of or relating to, this Agreement, the Ancillary Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and  any actions or failures to act with respect to any of the foregoing, except
to  the  extent  that  any such indemnified liability is finally determined by a
court  of  competent  jurisdiction to have resulted solely from such Indemnified
Person's  gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE  OR LIABLE TO THE COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE  OR  THIRD  PARTY  BENEFICIARY  OR  ANY  OTHER  PERSON ASSERTING CLAIMS
DERIVATIVELY  THROUGH  SUCH  PARTY,  FOR  INDIRECT,  PUNITIVE,  EXEMPLARY  OR
CONSEQUENTIAL  DAMAGES  WHICH  MAY  BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED,  SUSPENDED  OR  TERMINATED  UNDER  THIS  AGREEMENT  OR  ANY  ANCILLARY
AGREEMENT  OR  AS  A  RESULT  OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.

               26.  REVIVAL.  The  Company further agrees that to the extent the
Company  makes a payment or payments to Laurus, which payment or payments or any

                                       21
<PAGE>


part  thereof  are  subsequently  invalidated,  declared  to  be  fraudulent  or
preferential,  set  aside and/or required to be repaid to a trustee, receiver or
any  other  party  under any bankruptcy act, state or federal law, common law or
equitable  cause,  then,  to  the  extent  of  such  payment  or  repayment, the
obligation  or  part  thereof  intended  to  be  satisfied  shall be revived and
continued  in  full  force  and  effect  as  if  said payment had not been made.

               27.  NOTICES. Any notice or request hereunder may be given to the
Company  or  Laurus  at  the  respective  addresses  set  forth  below or as may
hereafter  be specified in a notice designated as a change of address under this
Section.  Any  notice  or  request  hereunder  shall  be  given by registered or
certified  mail,  return  receipt  requested,  hand  delivery, overnight mail or
telecopy  (confirmed  by  mail).  Notices  and requests shall be, in the case of
those  by hand delivery, deemed to have been given when delivered to any officer
of  the party to whom it is addressed, in the case of those by mail or overnight
mail, deemed to have been given when deposited in the mail or with the overnight
mail  carrier,  and, in the case of a telecopy, when confirmed.

Notices  shall  be  provided  as  follows:

                                              Laurus  Master  Fund,  Ltd.
                If  to  Laurus:               C/o Laurus Capital Management, LLC
                                              152  West  57th  Street
                                              New  York,  New  York  10019
                                              Attention:  David  Grin
                                              Telephone:  (212)  541-4434
                                              Telecopier:  (212)  541-5800

                With  a  copy  to:            Loeb  &  Loeb  LLP
                                              345  Park  Avenue
                                              New  York, New  York  10154
                                              Attention: Scott J. Giordano, Esq.
                                              Telephone:  (212)  407-4000
                                              Telecopier:  (212)  407-4990

                If  to  the  Company:         Comverge  Technologies,  Inc.
                                              4497  Park  Drive
                                              Norcross,  Georgia  30093
                                              Attention:  Wayne  Wren
                                              Telephone:  (770)  696-7660
                                              Telecopier:  (770)  696-7665

                With  a  copy  to:            Ehrenreich Eilenberg & Krause LLP
                                              11  East  44th  Street
                                              New  York,  New  York,  10017
                                              Attention:  Sheldon  Krause,  Esq.
                                              Telephone:  212-986-9700
                                              Telecopier:  212-986-2399

                                       22
<PAGE>


               28.  GOVERNING  LAW,  JURISDICTION  AND WAIVER OF JURY TRIAL. (a)
THIS  AGREEMENT  AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED
AND  ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS  MADE  AND  PERFORMED  IN  SUCH  STATE.

(b)     THE  COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED  IN  THE  COUNTY  OF  NEW  YORK,  STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION  TO  HEAR  AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY
AND LAURUS PERTAINING TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO
     ANY  MATTER  ARISING  OUT  OF  OR  RELATED  TO THIS AGREEMENT OR ANY OF THE
ANCILLARY AGREEMENTS; PROVIDED, THAT LAURUS AND THE COMPANY ACKNOWLEDGE THAT ANY
                      ---------
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE
COUNTY  OF  NEW  YORK,  STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
                                           --------------------
THIS  AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM BRINGING SUIT
OR  TAKING  OTHER  LEGAL  ACTION  IN  ANY  OTHER  JURISDICTION  TO  COLLECT  THE
OBLIGATIONS,  TO  REALIZE  ON  THE  COLLATERAL  OR  ANY  OTHER  SECURITY FOR THE
OBLIGATIONS,  OR  TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS.
THE  COMPANY  EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY  ACTION  OR  SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES
ANY  OBJECTION  WHICH  IT  MAY  HAVE  BASED  UPON LACK OF PERSONAL JURISDICTION,
IMPROPER  VENUE  OR  FORUM  NON  CONVENIENS.  THE COMPANY HEREBY WAIVES PERSONAL
                     ----------------------
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET
FORTH  IN SECTION 27 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
          ----------
EARLIER  OF THE COMPANY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT
IN  THE  U.S.  MAILS,  PROPER  POSTAGE  PREPAID.

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

               29.  ATTORNEYS'  FEES.  In  the  event  that  any  suit  or
action  is instituted to enforce any provision in this Agreement, the prevailing
party  in  such  dispute  shall be entitled to recover from the losing party all

                                       23
<PAGE>


fees,  costs  and expenses of enforcing any right of such prevailing party under
or  with  respect  to  this  Agreement,  including,  without  limitation,  such
reasonable  fees and expenses of attorneys and accountants, which shall include,
without  limitation,  all  fees,  costs  and  expenses  of  appeals.

               30.  LIMITATION  OF  LIABILITY.  The  Company  acknowledges  and
understands  that  in  order  to  assure  repayment of the Obligations hereunder
Laurus  may  be  required to exercise any and all of Laurus' rights and remedies
hereunder  and  agrees  that  neither  Laurus nor any of Laurus' agents shall be
liable  for  acts  taken  or  omissions made in connection herewith or therewith
except  for  actual  bad  faith.

               31.  ENTIRE  UNDERSTANDING.  This  Agreement  and  the  Ancillary
Agreements  contain  the entire understanding between the Company and Laurus and
any  promises,  representations,  warranties  or guarantees not herein contained
shall  have  no  force and effect unless in writing, signed by the Company's and
Laurus'  respective  officers. Neither this Agreement, the Ancillary Agreements,
nor any portion or provisions thereof may be changed, modified, amended, waived,
supplemented,  discharged,  cancelled  or  terminated orally or by any course of
dealing,  or  in any manner other than by an agreement in writing, signed by the
party  to  be  charged.

               32.  SEVERABILITY.  Wherever  possible  each  provision  of  this
Agreement  or the Ancillary Agreements shall be interpreted in such manner as to
be  effective  and  valid  under  applicable  law,  but if any provision of this
Agreement  or  the  Ancillary Agreements shall be prohibited by or invalid under
applicable  law  such  provision  shall  be  ineffective  to  the extent of such
prohibition  or invalidity, without invalidating the remainder of such provision
or  the  remaining  provisions  thereof.

               33.  CAPTIONS.  All captions are and shall be without substantive
meaning  or  content  of  any  kind  whatsoever.

               34.  COUNTERPARTS;  TELECOPIER  SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall constitute an original
and all of which taken together shall constitute one and the same agreement. Any
signature delivered by a party via telecopier transmission shall be deemed to be
any  original  signature  hereto.

               35. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the  effect  that  any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules  or  exhibits  thereto.

               36.  PUBLICITY.  The  Company  hereby  authorize  Laurus  to make
appropriate  announcements  of  the  financial  arrangement  entered into by and
between  the  Company  and  Laurus, including, without limitation, announcements
which  are  commonly  known  as  tombstones,  in  such  publications and to such
selected  parties  as  Laurus  shall  in  its  sole and absolute discretion deem
appropriate.

                                       24
<PAGE>


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

                                            COMVERGE  TECHNOLOGIES,  INC.
                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:


                                            LAURUS  MASTER  FUND,  LTD.
                                            By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                       25
<PAGE>



                              Annex A - Definitions
                              ---------------------

               "ACCOUNT DEBTOR" means any Person who is or may be obligated with
respect  to,  or  on  account  of,  an  Account.

               "ACCOUNTANTS"  has  the  meaning  given  to  such term in Section
11(a).

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

               "ACCOUNTS  AVAILABILITY"  means  the  amount  of Revolving Credit
Advances  against  Eligible Accounts Laurus may from time to time make available
to  the  Company  up  to  ninety  percent  (90%)  of  the net face amount of the
Company's  Eligible  Accounts.

               "AFFILIATE"  of  any  Person  means  (a) any Person (other than a
Subsidiary)  which,  directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any  Person  described  in  clause  (a)  above. For purposes of this definition,
control  of  a Person shall mean the power, direct or indirect, (i) to vote five
percent  (5.00%)  or more of the securities having ordinary voting power for the
election  of  directors of such Person, or (ii) to direct or cause the direction
of  the management and policies of such Person whether by contract or otherwise.

               "ANCILLARY  AGREEMENTS"  means,  the  Note, Warrant, Registration
Rights  Agreement,  and all other agreements, instruments, documents, mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, trust agreements and guarantees whether heretofore, concurrently, or
hereafter  executed  by  or  on  behalf  of  the  Company or any other Person or
delivered  to  Laurus,  relating  to  this  Agreement  or  to  the  transactions
contemplated by this Agreement or otherwise relating to the relationship between
the  Company  and  Laurus.

                                       26
<PAGE>



               "BOOKS  AND  RECORDS"  means  all  books, records, board minutes,
contracts,  licenses,  insurance policies, environmental audits, business plans,
files,  computer  files,  computer discs and other data and software storage and
media  devices,  accounting  books and records, financial statements (actual and
pro  forma),  filings  with Governmental Authorities and any and all records and
instruments  relating to the Collateral or otherwise necessary or helpful in the
collection  thereof  or  the  realization  thereupon.

               "BORROWING  AVAILABILITY"  means  Accounts  Availability  plus
Inventory  availability.

               "BUSINESS  DAY"  means a day on which Laurus is open for business
and that is not a Saturday, a Sunday or other day on which banks are required or
permitted  to  be  closed  in  the  State  of  New  York.

               "CAPITAL  AVAILABILITY  AMOUNT"  means  $2,000,000.

               "CHATTEL  PAPER"  means  all  "chattel  paper,"  as  such term is
defined  in  the UCC, including electronic chattel paper, now owned or hereafter
acquired  by  any  Person.

               "CLOSING  DATE"  means  the date on which the Company shall first
receive  proceeds  of  the  initial  Loans.

               "COLLATERAL"  means  all  of  the  Company's property and assets,
whether  real  or  personal,  tangible  or  intangible, and whether now owned or
hereafter  acquired,  or  in  which  it now has or at any time in the future may
acquire any right, title or interests including all of the following property in
which  it  now  has or at any time in the future may acquire any right, title or
interest:

               (a)  all  Inventory;

               (b)  all  Equipment;

               (c)  all  Fixtures;

               (d)  all  General  Intangibles;

               (e)  all  Accounts;

               (f)  all  Deposit  Accounts, other bank accounts and all funds on
                    deposit  therein;

               (g)  all  Investment  Property;

               (h)  all  Stock;

               (i)  all  Chattel  Paper;

               (j)  all  Letter-of-Credit  Rights;

                                       27
<PAGE>


               (k)  all  Instruments;

               (l)  all  commercial  tort  claims  set  forth  on  Exhibit 1(A);

               (m)  all  Books  and  Records;

               (n)  all  Supporting  Obligations including letters of credit and
guarantees issued in support of Accounts, Chattel Paper, General Intangibles and
Investment  Property;

               (o)  (i)  all  money, cash and cash equivalents and (ii) all cash
held as cash collateral to the extent not otherwise constituting Collateral, all
other cash or property at any time on deposit with or held by Access Capital for
the  account  of Company (whether for safekeeping, custody, pledge, transmission
or  otherwise);  and

               (p)  all  products  and  Proceeds of all or any of the foregoing,
tort  claims  and  all  claims  and  other rights to payment including insurance
claims against third parties for loss of, damage to, or destruction of, and (ii)
payments  due  or to become due under leases, rentals and hires of any or all of
the  foregoing  and Proceeds payable under, or unearned premiums with respect to
policies  of  insurance  in  whatever  form.

               "CONTRACT  RATE"  means  an  interest rate per annum equal to the
Prime  Rate  plus  one  and  three-quarters  percent  (1.75%).

               "DEFAULT" means any act or event which, with the giving of notice
or  passage  of  time  or  both,  would  constitute  an  Event  of  Default.

               "DEFAULT  RATE"  has  the  meaning  given to such term in Section
5(a)(iii).

               "DEPOSIT  ACCOUNTS"  means all "deposit accounts" as such term is
defined  in the UCC, now or hereafter held in the name of any Person, including,
without limitation, Deposit Account number _________ maintained by Borrower with
North  Fork  Bank  and  all  replacements and substitutions thereof. "DOCUMENTS"
means  all  "documents",  as  such  term  is  defined  in  the UCC, now owned or
hereafter  acquired  by  any  Person,  wherever  located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents of
title,  whether  negotiable  or  non-negotiable.

               "ELIGIBLE  ACCOUNTS"  means  and  includes  each  Account  which
conforms  to  the  following  criteria:  (a)  shipment of the merchandise or the
rendition  of  services  has  been  completed;  (b)  no  return,  rejection  or
repossession  of the merchandise has occurred; (c) merchandise or services shall
not  have  been  rejected  or disputed by the Account Debtor and there shall not
have  been  asserted any offset, defense or counterclaim; (d) continues to be in
full  conformity  with the representations and warranties made by the Company to
Laurus  with  respect thereto; (e) there are no facts existing or threatened, to
the  knowledge  of the Company, which are likely to result in any adverse change
in an Account Debtor's financial condition; (f) is documented by an invoice in a
form  approved by Laurus and shall not be unpaid more than ninety (90) days from

                                       28
<PAGE>


invoice  date;  (g) not more than twenty-five percent (25%) of the unpaid amount
of  invoices  due  from such Account Debtor remains unpaid more than ninety (90)
days  from  invoice date; (h) is not evidenced by chattel paper or an instrument
of  any kind with respect to or in payment of the Account unless such instrument
is duly endorsed to and in possession of Laurus or represents a check in payment
of a Account; (i) the Account Debtor is located in the United States; (j) Laurus
has  a  first  priority  perfected  Lien in such Account and such Account is not
subject  to  any  Lien  other  than  Permitted  Liens; (k) does not arise out of
transactions  with  any  employee,  officer,  agent,  director,  stockholder  or
Affiliate  of the Company; (l) is payable to the Company; (m) does not arise out
of  a  bill  and hold sale prior to shipment and does not arise out of a sale to
any  Person  to  which  the  Company  is  indebted;  provided, however, that and
Eligible Account may arise out of a bill and hold sale if (i) the Account Debtor
has  manifested its approval (in a writing acceptable in all respects to Laurus)
to  such  sale  and  to  the  acceptable quality of the goods to be delivered in
connection therewith, (ii) the Account Debtor has agreed in a writing acceptable
in  all respects to Laurus that once delivered the Account Debtor may not return
such  bill  and  hold  goods  to  the  Company, (iii) Laurus shall have received
evidence  that  such  goods  are  covered  by insurance in amounts acceptable to
Laurus,  which  such  insurance  shall  name Laurus as loss payee and additional
insured,  and (iv) and the Account Debtor shall have delivered to the Company an
estoppel  certificate acceptable in all respects to Laurus pursuant to which the
Account Debtor agrees to pay for such goods in accordance with the express terms
of the applicable invoice; (n) is net of any returns, discounts, claims, credits
and allowances; (o) if the Account arises out of contracts between a Company and
the  United  States,  any state, or any department, agency or instrumentality of
any  of  them,  the  Company  has  so  notified Laurus, in writing, prior to the
creation  of  such  Account, and there has been compliance with any governmental
notice  or  approval  requirements,  including  compliance  with  the  Federal
Assignment  of  Claims  Act;  (p)  is  a  good and valid account representing an
undisputed  bona fide indebtedness incurred by the Account Debtor therein named,
for  a fixed sum as set forth in the invoice relating thereto with respect to an
unconditional  sale  and  delivery  upon  the  stated  terms  of goods sold by a
Company,  or  work,  labor  and/or  services rendered by a Company; (q) does not
arise  out  of  progress  billings  prior  to  completion  of the order; (r) the
Company's  right  to payment is absolute and not contingent upon the fulfillment
of  any  condition whatsoever; (s) the Company is able to bring suit and enforce
its  remedies  against the Account Debtor through judicial process; (t) does not
represent interest payments, late or finance charges or service charges owing to
a  Company;  and (u) is otherwise satisfactory to Laurus as determined by Laurus
in  the  exercise  of  its  reasonable,  good  faith  judgment.

               "ELIGIBLE  INVENTORY"  means  Inventory  which  Laurus,  in  its
reasonable  discretion,  determines:  (a) is subject to the security interest of
Laurus  and  is subject to no other liens or encumbrances whatsoever (other than
Permitted  Liens);  (b)  is in good condition and meets all standards imposed by
any  governmental  agency,  or  department or division thereof having regulatory
authority  over such Inventory, its use or sale including but not limited to the
Federal  Fair Labor Standards Act of 1938 as amended, and all rules, regulations
and  orders  thereunder, (c) is currently either usable or salable in the normal
course of Company's business; and (d) not to be ineligible for any other reason.

               "EQUIPMENT"  means all "equipment" as such term is defined in the
UCC,  now owned or hereafter acquired by any Person, wherever located, including
any  and  all  machinery,  apparatus,  equipment, fittings, furniture, fixtures,

                                       29
<PAGE>


motor  vehicles  and  other tangible personal property (other than Inventory) of
every  kind  and  description that may be now or hereafter used in such Person's
operations  or that are owned by such Person or in which such Person may have an
interest,  and  all  parts, accessories and accessions thereto and substitutions
and  replacements  therefor.

               "ERISA"  shall  have  the  meaning  given to such term in Section
12(g).

               "EVENT  OF DEFAULT" means the occurrence of any of the events set
forth  in Section  18.

               "EXISTING  LOANS"  means  loans  from  the  Company  to  George
Morgenstern,  Harvey  Eisenberger  and  Yacov  Kaufamn,  each  in  the amount of
$9,925.20,  and  a  loan  from the Company to Joseph D. Esteves in the amount of
$14,000.

               "FIXTURES"  means  all  "fixtures" as such term is defined in the
UCC,  now  owned  or  hereafter acquired by any Person. "Formula Amount" has the
meaning  set  forth  in  Section  2(a).

               "GAAP"  means generally accepted accounting principles, practices
and  procedures  in  effect  from  time to time in the United States of America.

               "GENERAL  INTANGIBLES"  means  all  "general intangibles" as such
term  is  defined  in  the  UCC,  now  owned or hereafter acquired by any Person
including  all  right,  title and interest that such Person may now or hereafter
have  in  or  under  any  contract,  all  Payment  Intangibles,  customer lists,
Licenses,  Intellectual  Property, interests in partnerships, joint ventures and
other  business  associations, permits, proprietary or confidential information,
inventions  (whether  or  not  patented  or  patentable), technical information,
procedures,  designs,  knowledge,  know-how,  Software, data bases, data, skill,
expertise,  experience,  processes,  models,  drawings,  materials,  Books  and
Records,  Goodwill  (including  the  Goodwill  associated  with any Intellectual
Property),  all  rights  and  claims  in  or under insurance policies (including
insurance  for  fire,  damage,  loss,  and  casualty,  whether covering personal
property,  real  property,  tangible rights or intangible rights, all liability,
life,  key-person,  and  business  interruption  insurance,  and  all  unearned
premiums), uncertificated securities, choses in action, deposit accounts, rights
to  receive  tax  refunds  and  other  payments,  rights  to received dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for  pledged  Stock  and  Investment  Property,  and  rights of indemnification.

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

               "GOODWILL"  means  all  goodwill,  trade  secrets, proprietary or
confidential  information,  technical information, procedures, formulae, quality
control  standards, designs, operating and training manuals, customer lists, and

                                       30
<PAGE>


distribution  agreements  now  owned  or  hereafter  acquired  by  any  Person.

               "GOVERNMENTAL  AUTHORITY"  means  any  nation  or government, any
state  or  other  political  subdivision  thereof, and any agency, department or
other  entity  exercising  executive,  legislative,  judicial,  regulatory  or
administrative  functions  of  or  pertaining  to  government.

               "GUARANTOR" means, individually, Data Systems & Software Inc. and
any  other  Person  who may guarantee payment or performance of the whole or any
part  of the Obligations and "GUARANTORS" means, collectively, all such Persons.

               "GUARANTY  AGREEMENTS" means each Guaranty which is executed by a
Guarantor  in  favor  of  Laurus.

               "INDEMNIFIED PERSON" shall have the meaning given to such term in
Section  25.

               "INITIAL  TERM"  means  the  Closing  Date  through  the close of
business  on  the third anniversary of the Closing Date, subject to acceleration
at  the option of Laurus upon the occurrence of an Event of Default hereunder or
other  termination  hereunder.

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

               "INTELLECTUAL  PROPERTY"  means  any  and  all Licenses, patents,
patent registrations, copyrights, copyright registrations, trademarks, trademark
registrations,  trade  secrets  and  customer  lists.

               "INVENTORY" means all "inventory", as such term is defined in the
UCC,  now owned or hereafter acquired by any Person, wherever located, including
all  inventory,  merchandise, goods and other personal property that are held by
or  on  behalf  of  such  Person for sale or lease or are furnished or are to be
furnished  under a contract of service or that constitute raw materials, work in
process,  finished  goods, returned goods, or materials or supplies of any kind,
nature  or  description  used  or  consumed  or  to  be used or consumed in such
Person's  business  or  in  the  processing,  production,  packaging, promotion,
delivery  or shipping of the same, including all supplies and embedded software.

               "INVENTORY  AVAILABILITY"  means  the  amount of Revolving Credit
Advances against Eligible Inventory Laurus may from time to time during the Term
make  available to the Company up to the lesser of (a) $800,000, (b) up to fifty
percent  (50%)  of  the  value  of Eligible Inventory (calculated at its orderly
liquidation  value)  and  (c)  fifty percent (50%) of the Accounts Availability;
PROVIDED,  HOWEVER,  until such time as Laurus shall have completed an appraisal
of  the Inventory, which appraisal shall be completed no later than December 31,
2002,  the  Inventory  Availability  shall  be  zero  ($0).

                                       31
<PAGE>


               "INVESTMENT  PROPERTY"  means  all "investment property", as such
term  is  defined  in  the  UCC,  now owned or hereafter acquired by any Person,
wherever  located.

               "LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such
term  is  defined  in  the  UCC,  now owned or hereafter acquired by any Person,
including  rights to payment or performance under a letter of credit, whether or
not  such  Person, as beneficiary, has demanded or is entitled to demand payment
or  performance.

               "LICENSE"  means  any  rights  under any written agreement now or
hereafter  acquired  by any Person to use any trademark, trademark registration,
copyright,  copyright  registration  or  invention  for  which  a  patent  is in
existence or other license of rights or interests now held or hereafter acquired
by  any Person. "LIEN" means any mortgage, security deed, deed of trust, pledge,
hypothecation,  assignment,  security  interest,  lien  (whether  statutory  or
otherwise),  charge,  claim  or  encumbrance,  or  preference, priority or other
security  agreement  or  preferential arrangement held or asserted in respect of
any  asset  of  any  kind or nature whatsoever including any conditional sale or
other  title  retention  agreement,  any  lease  having  substantially  the same
economic  effect  as  any  of  the foregoing, and the filing of, or agreement to
give,  any  financing  statement  under  the  UCC  or  comparable  law  of  any
jurisdiction.

               "LOANS" means the Revolving Credit Advances and all extensions of
credit  hereunder  or  under  any  Ancillary  Agreement.

               "MATERIAL  ADVERSE EFFECT" means a material adverse effect on (a)
the condition, operations, assets, business or prospects of the Company, (b) the
Company's ability to pay or perform the Obligations in accordance with the terms
hereof or any Ancillary Agreement, (c) the value of the Collateral, the Liens on
the Collateral or the priority of any such Lien or (d) the practical realization
of  the  benefits  of  Laurus'  rights and remedies under this Agreement and the
Ancillary  Agreements.

               "MAXIMUM LEGAL RATE" shall have the meaning given to such term in
Section  5(a)(iv).

               "NOTE"  means  the  Convertible  Note  in  the original principal
amount  of  $2,000,000  made  by  the Company in favor of Laurus dated as of the
Closing Date, as the same may be amended, modified and supplemented from time to
time.

               "OBLIGATIONS"  means all Loans, all advances, debts, liabilities,
obligations,  covenants  and  duties  owing  by  the  Company  to Laurus (or any
corporation that directly or indirectly controls or is controlled by or is under
common  control  with  Laurus)  of  every  kind  and description (whether or not
evidenced  by any note or other instrument and whether or not for the payment of
money  or  the  performance  or non-performance of any act), direct or indirect,
absolute  or  contingent,  due  or  to  become  due,  contractual  or  tortious,
liquidated  or  unliquidated,  whether existing by operation of law or otherwise
now  existing  or  hereafter arising including any debt, liability or obligation
owing from the Company to others which Laurus may have obtained by assignment or
otherwise and further including all interest (including interest accruing at the

                                       32
<PAGE>


then  applicable rate provided in this Agreement after the maturity of the Loans
and  interest  accruing  at  the then applicable rate provided in this Agreement
after  the  filing  of  any  petition  in bankruptcy, or the commencement of any
insolvency,  reorganization  or  like  proceeding,  whether  or  not a claim for
post-filing or post-petition interest is allowed in such proceeding), charges or
any  other  payments the Company is required to make by law or otherwise arising
under  or  as  a result of this Agreement and the Ancillary Agreements, together
with  all  reasonable  expenses and reasonable attorneys' fees chargeable to the
Company's account or incurred by Laurus in connection with the Company's account
whether  provided  for  herein  or  in  any  Ancillary  Agreement.

               "PAYMENT  INTANGIBLES"  means  all  "payment intangibles" as such
term  is  defined  in  the  UCC,  now owned or hereafter acquired by any Person,
including,  a  General  Intangible  under  which  the Account Debtor's principal
obligation  is  a  monetary  obligation.

               "PERMITTED  LIENS"  means  (a)  Liens  of carriers, warehousemen,
artisans,  bailees, mechanics and materialmen incurred in the ordinary course of
business securing sums not overdue; (b) Liens incurred in the ordinary course of
business  in  connection  with workmen's compensation, unemployment insurance or
other  forms  of  governmental  insurance  or  benefits,  relating to employees,
securing  sums  (i) not overdue or (ii) being diligently contested in good faith
provided that adequate reserves with respect thereto are maintained on the books
of the applicable Company in conformity with GAAP; (c) Liens in favor of Laurus;
(d)  Liens  for taxes (i) not yet due or (ii) being diligently contested in good
faith  by  appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the applicable Company in conformity with
GAAP  PROVIDED,  THAT, the Lien shall have no effect on the priority of Liens in
favor  of  Laurus  or  the  value  of the assets in which Laurus has a Lien; (e)
Purchase  Money  Liens  securing  Purchase  Money  Indebtedness  to  the  extent
permitted  in  this  Agreement  and  (f)  Liens  specified  on EXHIBIT 2 hereto.

               "PERSON"  means any individual, sole proprietorship, partnership,
limited  liability  partnership,  joint  venture,  trust,  unincorporated
organization,  association, corporation, limited liability company, institution,
public  benefit  corporation,  entity  or  government  (whether  federal, state,
county,  city,  municipal or otherwise, including any instrumentality, division,
agency,  body or department thereof), and shall include such Person's successors
and  assigns.

               "PRIME  RATE"  means the "base rate" or "prime rate" published in
the  Wall Street Journal from time to time. The Prime Rate shall be increased or
decreased  as the case may be for each increase or decrease in the Prime Rate in
an  amount  equal to such increase or decrease in the Prime Rate; each change to
be  effective  as  of  the  day  of  the  change  in  such  rate.

               "PROCEEDS"  means  "proceeds", as such term is defined in the UCC
and,  in  any  event,  shall include: (a) any and all proceeds of any insurance,
indemnity,  warranty or guaranty payable to the Company or any other Person from
time  to  time  with respect to any Collateral; (b) any and all payments (in any
form  whatsoever)  made  or  due and payable to the Company from time to time in
connection  with  any  requisition,  confiscation,  condemnation,  seizure  or
forfeiture  of  any Collateral by any governmental body, governmental authority,
bureau  or  agency (or any person acting under color of governmental authority);
(c)  any  claim  of  the  Company against third parties (i) for past, present or

                                       33
<PAGE>


future  infringement  of  any Intellectual Property or (ii) for past, present or
future  infringement  or  dilution  of any trademark or trademark license or for
injury  to the goodwill associated with any trademark, trademark registration or
trademark  licensed  under  any  trademark  License;  (d)  any recoveries by the
Company  against  third  parties  with  respect  to  any  litigation  or dispute
concerning  any  Collateral,  including  claims  arising  out  of  the  loss  or
nonconformity  of,  interference with the use of, defects in, or infringement of
rights  in,  or  damage  to,  Collateral;  (e)  all  amounts  collected  on,  or
distributed  on  account  of,  other  Collateral, including dividends, interest,
distributions  and  Instruments  with respect to Investment Property and pledged
Stock;  and  (f) any and all other amounts , rights to payment or other property
acquired  upon  the  sale,  lease,  license,  exchange  or  other disposition of
Collateral  and  all  rights  arising  out  of  Collateral.

               "PURCHASE MONEY INDEBTEDNESS" means (a) any indebtedness incurred
for the payment of all or any part of the purchase price of any fixed asset, (b)
any  indebtedness  incurred for the sole purpose of financing or refinancing all
or  any  part  of  the  purchase price of any fixed asset, and (c) any renewals,
extensions  or  refinancings  thereof  (but  not  any increases in the principal
amounts  thereof  outstanding  at  that  time).

               "PURCHASE  MONEY  LIEN" means any Lien upon any fixed assets that
secures  the  Purchase  Money Indebtedness related thereto but only if such Lien
shall  at  all times be confined solely to the asset the purchase price of which
was  financed  or  refinanced  through  the  incurrence  of  the  Purchase Money
Indebtedness  secured  by  such  Lien  and  only  if such Lien secures only such
Purchase  Money  Indebtedness.

               "REVOLVING  CREDIT ADVANCES" shall have the meaning given to such
term  in  Section  2(a)(i).

               "SOFTWARE"  means  all  "software" as such term is defined in the
UCC,  now  owned  or  hereafter  acquired  by any Person, including all computer
programs  and  all  supporting  information  provided  in  connection  with  a
transaction  related  to  any  program.

               "STOCK"  means  all  certificated  and  uncertificated  shares,
options,  warrants,  membership  interests,  general  or  limited  partnership
interests,  participation or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent entity
whether  voting  or  nonvoting,  including common stock, preferred stock, or any
other  "equity  security" (as such term is defined in Rule 3a11-1 of the General
Rules  and  Regulations  promulgated  by  the Securities and Exchange Commission
under  the  Securities  Exchange  Act  of  1934).

               "SUBSIDIARY"  of  any  Person means a corporation or other entity
whose  shares of stock or other ownership interests having ordinary voting power
(other  than stock or other ownership interests having such power only by reason
of  the happening of a contingency) to elect a majority of the directors of such
corporation,  or other Persons performing similar functions for such entity, are
owned,  directly  or  indirectly,  by  such  Person.

                                       34
<PAGE>


               "SUPPORTING  OBLIGATIONS"  means  all "supporting obligations" as
such  term  is  defined  in  the  UCC.

               "TERM"  means  the  Initial  Term.

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

                                    EXHIBITS
                                    --------

Exhibit  1(A)  -  Commercial  Tort  Claims
Exhibit  2  -  Permitted  Liens
Exhibit  7(c)  -  Actions  for  Perfection
Exhibit  7(n)  -  Bank  Accounts
Exhibit  12(d)  -  Corporate  Information  and  Locations  of  Collateral
Exhibit  12(i)  -  Licenses,  Patents,  Trademarks  and  Copyrights
Exhibit  13(e)(i)  -  Permitted  Indebtedness
Exhibit  13(e)(ii)  -  Existing  Subsidiaries
Exhibit  A  -  Form  of  Borrowing  Base  Certificate


                                       35

<PAGE>