RIDER TO BUSINESS LOAN AGREEMENT
                          (UNCOLLECTED FUNDS AGREEMENT)

     This  Rider  to Business Loan Agreement ("Rider") is attached to and made a
part  of that certain Business Loan Agreement ("Agreement") executed by I/OMAGIC
CORPORATION  ("Borrower")  in  favor  of  Chinatrust Bank (U.S.A.) ("Lender") in
connection  with  certain credit facilities granted by Lender to Borrower in the
principal sum of $9,000,00.00 evidenced, in part, by a Change In Terms Agreement
dated 12-31-2002 executed by Borrower in favor of Lender in the principal sum of
$9,000,000.00  ("Note").  Borrower  has  requested Lender to provide Uncollected
Funds  utilization  credit  to Borrower for certain deposits made by Borrower in
its  deposit  account(s)  with  Lender.  Lender  is  willing  to  provide  such
Uncollected  Funds  utilization  credit  subject  to  the  terms  and conditions
hereinafter  set  forth.  Capitalized  terms  not  defined herein shall have the
meaning  ascribed  to  it  in  the  Agreement.  In  consideration for the credit
facilities  extended by Lender to or at the request of Borrower, Borrower agrees
as  follows:

1.   Additional  Definitions.  1n  addition  to  any other term defined in the
Agreement,  the  following  words shall have the following meanings when used in
this  Rider.

     a.  "Account  Agreement" shall mean the Account Agreement and Disclosure of
Lender, Business Checking-Analyzed Schedule, Signature Card, and other documents
as  may  be  amended, substituted or replaced from time to time, with respect to
any  deposit  account  Borrower  has  with  Lender.

     b.  "Advance" or "Advances" shall mean any advances or disbursement of loan
proceeds  by  Lender  pursuant  to  the  Agreement  and  this  Rider.

     c.  "Advance Rate" shall mean the variable rate of interest per annum based
on  a 365/360 day year equal to 0.75% over Wall Street Journal prime rate. Under
no  circumstances  will  the  interest  rate  be  less  than  5.50%  per  annum.

     d. "Overdraft Protection Facility" shall mean the credit availability under
which  the  Borrower can request cash Advances to cover any accounts with Lender
which  are  overdrawn.

     e.  "Uncollected  Funds"  shall  mean any and all items, including, but not
limited  to,  checks,  drafts,  and  other  items  and  instruments deposited by
Borrower,  payable by a third party to Borrower, in Borrower's deposit account #
22606270  maintained with Lender which items have not yet been paid by the payer
of said items as a result of the Bank having to put a hold on the funds pursuant
to  the  Account  Agreement,  any  Banking  Regulation  or  because  of the time
necessary  for  an  item  to  be paid by the payer when submitted through normal
banking  channels.  The  term "Uncollected Funds" does not include those checks,
drafts  and  other  items  and  instruments  drawn  on  or  payable by Lender or
presented  for  direct collection by Lender or transferred through an electronic

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funds transfer system or through an automated clearing house, or any other funds
which  Lender  determines,  in  its sole discretion and judgment, to exclude for
purposes  of  making  an  Uncollected  Funds  Advance.

     f. "Uncollected Funds Obligations" shall mean any and all obligations owing
from Borrower to Lender, from time to time, arising from any and all Uncollected
Funds  Advances.

     g. "Uncollected Funds Line of Credit" shall mean the Line of Credit granted
to  Borrower  pursuant  to  this  Rider  for  the  purpose of covering all items
deposited  into  Borrower's  deposit  accounts with Lender which are Uncollected
Funds.

     h.  "Uncollected Funds Limit" shall mean Advances made on Uncollected Funds
not  to  exceed  the  sum  of  $1,000,000.00.

     i.  "Uncollected Funds Line of Credit Rate" shall mean the variable rate of
interest  per  annum  equal to 5% over Wall Street Journal prime rate based on a
365/365day  year.

2.     Uncollected  Funds  Facility.  (If  no  Overdraft  Protection Facility is
granted)

     a.  Fees  on  Uncollected  Funds  Advances  shall  accrue  on the date such
Advances  are  made and calculated based on the Uncollected Funds Line of Credit
Rate.

     b.  The aggregate amount of Uncollected Funds Advances in all of Borrower's
deposit  accounts  with  Lender  shall  not  exceed the Uncollected Funds Limit.

     c. Borrower agrees not to permit the outstanding balance of the Uncollected
Funds  Obligations  to  exceed  the  amount  set  forth  in  Paragraph 2b above.

     d.  Until  the  Maturity  Date  (as  defined  in  the  Note), unless sooner
terminated  as  provide in the Agreement, Borrower may use the Uncollected Funds
Line  of  Credit  in  accordance  with  the  terms and conditions of this Rider.

     e.  Lender shall assess a monthly usage fee on Borrower's Uncollected Funds
Line  of  Credit  as  set  forth in this Rider and the Account Agreement. 1f not
specifically  stated  in  the  Account Agreement, the monthly usage fee shall be
calculated  on  a daily basis by using the Uncollected Funds Line of Credit rate
based  on  a  365/365  year.

3.     Uncollected  Funds/Overdraft  Protection  Facility.

     a.  The  aggregate  usage of Uncollected Funds in all of Borrower's deposit
accounts  with  Lender  and  the  outstanding  balance  of  Advance  drawn under
Overdraft  Protection  Facility  shall  not  exceed  $ N/A.

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     b. A usage fee on Uncollected Funds Line of Credit shall accrue on the date
such  usage  is  made  of  the  Uncollected  Funds  and  is  calculated by using
Uncollected  Funds  Line  of  Credit  Rate.

     c.  Interest  on  outstanding balance of Advances drawn under the Overdraft
Protection Facility shall be calculated daily by using the Advance Rate based on
a  365/360  year.

     d.  Borrower  agrees  not  to  permit  the  aggregate amount of outstanding
balance of the Uncollected Funds Obligations and outstanding balance of Advances
under  the  Overdraft  Protection  Facility  to  exceed  the amount set forth in
Paragraph  3a  above.

     e.  Until  the  Maturity  Date  (as  defined  in  the  Note), unless sooner
terminated  as provided in the Agreement, Borrower may use the Uncollected Funds
Line  of  Credit  and Overdraft Protection Facility in accordance with the terms
and  conditions  of  this  Rider.

     f.  Lender  shall assess a monthly usage fee on Borrower's Uncollected Fund
Facility  and  Overdraft  Protection  Facility  and  Borrower shall pay interest
monthly  on  any  Advances  made  by  Lender  as set forth in this Rider and the
Account  Agreement.  If  not  specifically  stated in the Account Agreement, the
usage  fee  to be paid monthly is the interest due on the Uncollected Funds Line
of  Credit.

4.     Usage  Against  Uncollected  Funds. Borrower acknowledges and agrees that
any  Uncollected  Funds  Advance  is  a  loan  from Lender to Borrower under the
Agreement  and  constitutes  a  separate,  independent obligation of Borrower to
Lender  under  the  Agreement. Borrower further acknowledges and agrees that the
terms  set forth in the Agreement and in this Rider are in addition to any term,
provision and condition in the Account Agreement, including, but not limited to,
any  and  all  fees,  costs,  interest  due  on  uncollected  Funds for which an
Uncollected  Funds Advance is not made under the Agreement and fees for returned
items  and  overdrafts  and  do  not act as a waiver, amendment, substitution or
release  of  any of Borrower's obligation to Lender under the Account Agreement.

5.     Security  Interest.  Borrower  hereby  grants,  assigns,  pledges  and
hypothecates to Lender all of Borrower's right, title and interest in and to all
deposit accounts maintained by Borrower with Lender as security for each and all
of  the  obligations  of  Borrower to Lender under the Agreement and the Related
Documents.

6.     Indemnification.  Borrower  shall  indemnify,  defend  and  hold  Lender
harmless  from  and  against  any and all claims, demands, liabilities, damages,
costs,  expenses  of  any  kind  whatsoever, arising out of any advances made by
Lender  hereunder or Lender's refusal or failure to make any Advances hereunder.

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7.     Terms  of  the  Business  Loan  Agreements.  All  terms,  conditions  and
covenants  set forth in the Agreement are incorporated herein by this reference.
In  the  event  of  any  conflict  in the terms, conditions and covenants in the
Agreement  and  this  Rider,  the  terms  of  this  Rider  shall  control.

8.     Termination  of  Lender's  Obligation  to Advance. Lender's obligation to
make  any  Advances  on  either  the Uncollected Funds Line of Credit and/or the
Overdraft  Protection  Facility shall cease on the Maturity Date of the Note and
in  the event that Borrower (1) fails to make any payment due to Lender pursuant
to  the  Agreement,  the  Rider, the Account Agreement, the Related Documents or
with  respect  to any obligation of any kind with Lender, (2) exceeds the amount
of  usage  under  the  Uncollected  Funds Line of Credit or Overdraft Protection
Facility,  (3) breaches any term, condition or covenant of the Agreement, Rider,
Account  Agreement,  the  Related  Documents  or  any  other document evidencing
obligations  due  to  Lender, (4) if Lender in good faith believes that Borrower
will  be  unable  to  pay  any and all sums due to Lender, (5) if Borrower is in
default  of  any  obligation  of  any  kind  or nature to Lender or to any other
person,  (6)  a  Petition  pursuant to any Chapter of the Bankruptcy Code or any
other  insolvency  statute  or  law is filed by or against Borrower, or (7) if a
Receiver  is  appointed  over  Borrower's  assets.

9.     Failure  to  Make  Payments.  In the event that Borrower fails to pay any
sums  due  pursuant to this Rider, Borrower shall be liable to pay a late charge
for  any  payment  due  to  Lender  in the sum of five percent of payment due or
$5.00,  whichever  is  greater, Additionally, in the event Borrower fails to pay
any  sum  due  pursuant  to  this Rider, the Advance Rate and/or the Uncollected
Funds  Line  of  Credit  Rate  shall  be  increased  by  an  additional  5%.

BORROWER

I/OMAGIC  CORPORATION


/s/  TONY  SHAHBAZ
------------------
By:  Tony  Shahbaz,  President/Secretary


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