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                                                                    Exhibit 10.3


                               SECURITY AGREEMENT


         SECURITY AGREEMENT dated as of June 25, 2001, between STUDENT
ADVANTAGE, INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "BORROWER"); each of the Subsidiaries of the
Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the signature
pages hereto (individually, a "SUBSIDIARY GUARANTOR", collectively, the
"SUBSIDIARY GUARANTORS" and, together with the Borrower, the "OBLIGORS"); and
RESERVOIR CAPITAL PARTNERS, L.P., as administrative agent for the lenders or
other financial institutions or entities party, as lenders, to the Loan
Agreement referred to below (in such capacity, together with its successors in
such capacity, the "ADMINISTRATIVE AGENT").

         The Borrower, the Subsidiary Guarantors, certain lenders and the
Administrative Agent are parties to a Loan Agreement dated as of June 25, 2001
(as modified and supplemented and in effect from time to time, the "LOAN
AGREEMENT"), providing, subject to the terms and conditions thereof, for loans
to be made by said lenders to the Borrower in an aggregate principal amount not
exceeding $15,000,000.

         To induce said lenders to enter into the Loan Agreement and to extend
credit thereunder, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each Obligor has agreed to
pledge and grant a security interest in the Collateral (as hereinafter defined)
as security for the Secured Obligations (as so defined). Accordingly, the
parties hereto agree as follows:

         Section 1. DEFINITIONS. Terms defined in the Loan Agreement are used
herein as defined therein. In addition, as used herein:

         "ACCOUNTS" has the meaning assigned to such term in Section 3(d).

         "COLLATERAL" has the meaning assigned to such term in Section 3.

         "COLLATERAL ACCOUNT" has the meaning assigned to such term in Section
     4.01.

         "COPYRIGHT COLLATERAL" means all Copyrights, whether now owned or
     hereafter acquired by any Obligor.

         "COPYRIGHTS" means all copyrights, copyright registrations and
     applications for copyright registrations, including, without limitation,
     all renewals and extensions thereof, the right to recover for all past,
     present and future infringements thereof, and all other rights of any kind
     whatsoever accruing thereunder or pertaining thereto.

                               SECURITY AGREEMENT

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         "DOCUMENTS" has the meaning assigned to such term in Section 3(j).

         "EQUIPMENT" has the meaning assigned to such term in Section 3(h).

         "EQUITY COLLATERAL" has the meaning assigned to such term in Section
     3(c).

         "INSTRUMENTS" has the meaning assigned to such term in Section 3(e).

         "INTELLECTUAL PROPERTY" means, collectively, all Copyright Collateral,
     all Patent Collateral and all Trademark Collateral, together with (a) all
     inventions, processes, production methods, proprietary information,
     know-how and trade secrets; (b) all licenses or user or other agreements
     granted to any Obligor with respect to any of the foregoing, in each case
     whether now or hereafter owned or used including, without limitation, the
     licenses or other agreements with respect to the Copyright Collateral, the
     Patent Collateral or the Trademark Collateral; (c) all information,
     customer lists, identification of suppliers, data, plans, blueprints,
     specifications, designs, drawings, recorded knowledge, surveys, engineering
     reports, test reports, manuals, materials standards, processing standards,
     performance standards, catalogs, computer and automatic machinery software
     and programs; (d) all field repair data, sales data and other information
     relating to sales or service of products now or hereafter manufactured; (e)
     all accounting information and all media in which or on which any
     information or knowledge or data or records may be recorded or stored and
     all computer programs used for the compilation or printout of such
     information, knowledge, records or data; (f) all licenses, consents,
     permits, variances, certifications and approvals of governmental agencies
     now or hereafter held by any Obligor; and (g) all causes of action, claims
     and warranties now or hereafter owned or acquired by any Obligor in respect
     of any of the items listed above.

         "INVENTORY" has the meaning assigned to such term in Section 3(f).

         "ISSUERS" means, collectively, the respective corporations,
     partnerships or other entities identified beneath the names of the Obligors
     on Annex 1 under the caption "ISSUER".

         "MOTOR VEHICLES" means motor vehicles, tractors, trailers and other
     like property, whether or not the title thereto is governed by a
     certificate of title or ownership.

         "PATENT COLLATERAL" means all Patents, whether now owned or hereafter
     acquired by any Obligor.

                               SECURITY AGREEMENT

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         "PATENTS" means all patents and patent applications, including, without
     limitation, the inventions and improvements described and claimed therein
     together with the reissues, divisions, continuations, renewals, extensions
     and continuations-in-part thereof, all income, royalties, damages and
     payments now or hereafter due and/or payable under and with respect
     thereto, including, without limitation, damages and payments for past or
     future infringements thereof, the right to sue for past, present and future
     infringements thereof, and all rights corresponding thereto throughout the
     world.

         "PLEDGED EQUITY" has the meaning assigned to such term in Section 3(a).

         "SECURED OBLIGATIONS" means, collectively, (a) in the case of the
     Borrower, the principal and interest on the Loans made by the Lenders to
     the Borrower and all other amounts from time to time owing to the Lenders
     or the Administrative Agent by the Borrower under the Basic Documents (or,
     following repayment in full of the Loans, the Loan Documents; PROVIDED that
     if a Put Right as that term is defined in the Warrant Agreement is
     exercised at or before such repayment, the Put Right will remain secured
     notwithstanding simultaneous or subsequent repayment of the Loans), (b) in
     the case of the Subsidiary Guarantors, all obligations of the Subsidiary
     Guarantors under the Loan Agreement and the other Loan Documents
     (including, without limitation, in respect of their Guarantee under Article
     III of the Loan Agreement), and (c) all obligations of the Obligors to the
     Lenders and the Administrative Agent hereunder.

         "TRADEMARK COLLATERAL" means all Trademarks, whether now owned or
     hereafter acquired by any Obligor. Notwithstanding the foregoing, the
     Trademark Collateral does not and shall not include any Trademark that
     would be rendered invalid, abandoned, void or unenforceable by reason of
     its being included as part of the Trademark Collateral.

         "TRADEMARKS" means all trade names, trademarks and service marks,
     logos, trademark and service mark registrations, and applications for
     trademark and service mark registrations, including, without limitation,
     all renewals of trademark and service mark registrations, all rights
     corresponding thereto throughout the world, the right to recover for all
     past, present and future infringements thereof, all other rights of any
     kind whatsoever accruing thereunder or pertaining thereto, together, in
     each case, with the product lines and goodwill of the business connected
     with the use of, and symbolized by, each such trade name, trademark and
     service mark.

         "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
     effect from time to time in the State of New York.

                               SECURITY AGREEMENT

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         Section 2. REPRESENTATIONS AND WARRANTIES. Each Obligor represents and
warrants to the Lenders and the Administrative Agent that:


         (a) OWNERSHIP AND LIENS. Such Obligor is the owner of the Collateral in
     which it purports to grant a security interest pursuant to Section 3, and
     no Lien exists or will exist upon such Collateral at any time, except for
     liens permitted under Section 7.02 of the Loan Agreement and except for the
     pledge and security interest in favor of the Administrative Agent for the
     benefit of the Lenders created or provided for herein, which pledge and
     security interest constitute a perfected pledge and security interest in
     and to all of such Collateral.

         (b) STATUS OF PLEDGED EQUITY. The Pledged Equity identified under the
     name of such Obligor in Annex 1 is, and all other Pledged Equity in which
     such Obligor shall hereafter grant a security interest pursuant to Section
     3 will be, duly authorized, validly existing, fully paid and non-assessable
     (in the case of any equity interest in a corporation) and duly issued and
     outstanding (in the case of any equity interest in any other entity), and
     none of such Pledged Equity is or will be subject to any contractual
     restriction, or any restriction under the charter, by-laws, partnership
     agreement or other organizational document of the respective Issuer of such
     Pledged Equity, upon the transfer of such Pledged Equity (except for any
     such restriction contained herein, in the Loan Agreement or in Annex 1).

         (c) NO OTHER STOCK. The Pledged Equity identified under the name of
     such Obligor in Annex 1 constitutes all of the issued and outstanding
     shares of capital stock, partnership or other ownership interest of any
     class or character of the Issuers beneficially owned by such Obligor on the
     date hereof (whether or not registered in the name of such Obligor), and
     Annex 1 correctly identifies, as at the date hereof, the respective Issuers
     of such Pledged Equity and (in the case of any corporate Issuer) the
     respective class and par value of the shares constituting such Pledged
     Equity and the respective number of shares (and registered owners thereof)
     represented by each such certificate.

         (d) NO PROCEEDINGS IN RESPECT OF COPYRIGHTS, PATENTS AND TRADEMARKS. To
     such Obligor's knowledge, no proceedings have been instituted or are
     pending against such Obligor or, to such Obligor's knowledge, threatened,
     and no claim against such Obligor has been received by such Obligor,
     alleging that such Obligor is infringing in any respect upon any Copyright,
     Patent or Trademark of any other Person, other than proceedings and claims
     that in the aggregate could not reasonably be expected to have a Material
     Adverse Effect.

                               SECURITY AGREEMENT
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         (e) TRADEMARK COLLATERAL. Such Obligor does not own any Trademarks
     registered in the United States of America to which the last sentence of
     the definition of Trademark Collateral applies.

         (f) FAIR LABOR STANDARDS ACT. Any goods now or hereafter produced by
     such Obligor or any of its Subsidiaries included in the Collateral have
     been and will be produced in compliance with the requirements of the Fair
     Labor Standards Act, as amended.

         Section 3. COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations, each Obligor hereby pledges and grants to
the Administrative Agent, for the benefit of the Lenders as hereinafter
provided, a security interest in all of such Obligor's right, title and interest
in the following property, whether now owned by such Obligor or hereafter
acquired and whether now existing or hereafter coming into existence (all being
collectively referred to herein as "COLLATERAL"):

         (a) the shares of common stock of, or partnership or membership
     interest and other ownership interest in, the Issuers identified in Annex 1
     under the name of such Obligor and all other shares of capital stock, or
     partnership and other ownership interest, of whatever class or character of
     the Issuers, now or hereafter owned by such Obligor, in each case together
     with the certificates evidencing the same (collectively, the "PLEDGED
     EQUITY");

         (b) all shares, securities, moneys or property representing a dividend
     on any of the Pledged Equity, or representing a distribution or return of
     capital upon or in respect of the Pledged Equity, or resulting from a
     split-up, revision, reclassification or other like change of the Pledged
     Equity or otherwise received in exchange therefor, and any subscription
     warrants, rights or options issued to the holders of, or otherwise in
     respect of, the Pledged Equity;

         (c) without affecting the obligations of such Obligor under any
     provision prohibiting such action hereunder or under the Loan Agreement, in
     the event of any consolidation or merger in which an Issuer is not the
     surviving entity, all ownership interests of any class or character of the
     successor entity (unless such successor entity is such Obligor itself)
     formed by or resulting from such consolidation or merger (the Pledged
     Equity, together with all other certificates, shares, securities,
     properties or moneys as may from time to time be pledged hereunder pursuant
     to clause (a) or (b) above and this clause (c) being herein collectively
     called the "EQUITY COLLATERAL");

                               SECURITY AGREEMENT

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         (d) all general intangibles (including payment intangibles and
     software) and accounts (each as defined in the Uniform Commercial Code) of
     such Obligor constituting any right to the payment of money, including (but
     not limited to) all moneys due and to become due to such Obligor in respect
     of any loans or advances or for Inventory or Equipment or other goods sold
     or leased or for services rendered, all moneys due and to become due to
     such Obligor under any guarantee (including a letter of credit) of the
     purchase price of Inventory or Equipment sold by such Obligor, all deposit
     accounts and all tax refunds (such accounts, general intangibles, moneys
     due and to become due, deposit accounts and tax refunds being herein
     collectively called "ACCOUNTS");

         (e) all instruments, chattel paper (whether tangible or electronic) or
     letters of credit (each as defined in the Uniform Commercial Code) of such
     Obligor evidencing, representing, arising from or existing in respect of,
     relating to, securing or otherwise supporting the payment of, any of the
     Accounts, including (but not limited to) promissory notes, drafts, bills of
     exchange and trade acceptances (herein collectively called "INSTRUMENTS");

         (f) all inventory (as defined in the Uniform Commercial Code) of such
     Obligor, all goods obtained by such Obligor in exchange for such inventory,
     and any products made or processed from such inventory including all
     substances, if any, commingled therewith or added thereto (herein
     collectively called "INVENTORY");

         (g) all Intellectual Property and all other accounts or general
     intangibles of such Obligor not constituting Intellectual Property or
     Accounts;

         (h) all equipment (as defined in the Uniform Commercial Code) of such
     Obligor, including all Motor Vehicles (herein collectively called
     "EQUIPMENT");

         (i) each contract and other agreement of such Obligor relating to the
     sale or other disposition of Inventory or Equipment;

         (j) all documents of title (as defined in the Uniform Commercial Code)
     or other receipts of such Obligor covering, evidencing or representing
     Inventory or Equipment (herein collectively called "DOCUMENTS");

         (k) all rights, claims and benefits of such Obligor against any Person
     arising out of, relating to or in connection with Inventory or Equipment
     purchased by such Obligor, including, without limitation, any such rights,
     claims or benefits against any Person storing or transporting such
     Inventory or Equipment;

                               SECURITY AGREEMENT

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         (l) the balance from time to time in the Collateral Account; and

         (m) all other tangible and intangible personal property and fixtures of
     such Obligor, including, without limitation, all proceeds, products,
     offspring, accessions, rents, profits, income, benefits, substitutions and
     replacements of and to any of the property of such Obligor described in the
     preceding clauses of this Section 3 (including, without limitation, any
     proceeds of insurance thereon and all causes of action, claims and
     warranties now or hereafter held by any Obligor in respect of any of the
     items listed above) and, to the extent related to any property described in
     said clauses or such proceeds, products and accessions, all books,
     correspondence, credit files, records, invoices and other papers, including
     without limitation all tapes, cards, computer runs and other papers and
     documents in the possession or under the control of such Obligor or any
     computer bureau or service company from time to time acting for such
     Obligor;

PROVIDED that in the case of any of the foregoing that consists of general or
limited partnership interests in a general or limited partnership or a
membership interest in a limited liability company, the security interest
hereunder shall be deemed to be created only to the maximum extent permitted
under the applicable organizational instrument pursuant to which such
partnership is formed or limited liability company is operated, and provided
further that, notwithstanding anything to the contrary herein or in a Loan
Document, the Collateral shall not include, and shall exclude, any personal
property of such Obligor to the extent that the pledge of or granting a security
interest in such personal property requires the consent of a third party (which
consent has not been obtained), all of which are listed on Annex 3, or, if such
personal property is a contract, it would be breached, violated or result in a
default thereunder by such pledge or granting of a security interest, as
described on Annex 3. Without limiting its other obligations hereunder, the
Borrower will use commercially reasonable efforts during the continuance of an
Event of Default to obtain consents to the pledge or granting of a security
interest under this Agreement in such contracts.

         Section 4. CASH PROCEEDS OF COLLATERAL.

         4.01 COLLATERAL ACCOUNT. The Administrative Agent may cause to be
established at a banking institution to be selected by the Administrative
Agent a cash collateral account (the "COLLATERAL ACCOUNT"), which may be a
"securities account" (as defined in Section 8501 of the Uniform Commercial
Code), in the name and under the sole dominion and control of the Administrative
Agent (and, in the case of a securities account, in respect of which the
Administrative Agent is the "entitlement holder" (as defined in Section
8102(a)(7) of the Uniform Commercial Code)), into which there shall be deposited
from time to time the cash proceeds of any of the Collateral (including proceeds
of insurance thereon) required to be delivered to the Administrative Agent
pursuant hereto and into which the Obligors may from


                               SECURITY AGREEMENT

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time to time deposit any additional amounts that any of them wishes to pledge to
the Administrative Agent for the benefit of the Lenders as additional collateral
security hereunder. The balance from time to time in the Collateral Account
shall constitute part of the Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as hereinafter provided. Except
as expressly provided in the next sentence, the Administrative Agent shall remit
the collected balance standing to the credit of the Collateral Account to or
upon the order of the respective Obligor as such Obligor through the Borrower
shall from time to time instruct. However, at any time following the occurrence
and during the continuance of an Event of Default, the Administrative Agent may
(and, if instructed by the Required Lenders, shall) in its (or their) discretion
apply or cause to be applied (subject to collection) the balance from time to
time standing to the credit of the Collateral Account to the payment of the
Secured Obligations in the manner specified in Section 5.09. The balance from
time to time in the Collateral Account shall be subject to withdrawal only as
provided herein.

         4.02 PROCEEDS OF ACCOUNTS. If requested by the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, each Obligor shall instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of the
Accounts either (a) directly to the Administrative Agent (by instructing that
such payments be remitted to a post office box which shall be in the name and
under the control of the Administrative Agent) or (b) to one or more other banks
in the United States of America (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of the
Administrative Agent) under arrangements, in form and substance satisfactory to
the Administrative Agent, pursuant to which such Obligor shall have irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Administrative Agent for deposit into
the Collateral Account. All payments made to the Administrative Agent, as
provided in the preceding sentence, shall be immediately deposited in the
Collateral Account. In addition to the foregoing, each Obligor agrees that, at
any time after the occurrence and during the continuance of an Event of Default,
if the proceeds of any Collateral hereunder (including the payments made in
respect of Accounts) shall be received by it, such Obligor shall, upon the
request of the Administrative Agent, as promptly as possible deposit such
proceeds into the Collateral Account. Until so deposited, all such proceeds
shall be held in trust by such Obligor for and as the property of the
Administrative Agent and shall not be commingled with any other funds or
property of such Obligor.

         4.03 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. The cash balance
standing to the credit of the Collateral Account shall be invested from
time to time in such Permitted Investments as the respective Obligor through the
Borrower (or, after the occurrence and during the continuance of a Default, the
Administrative Agent) shall determine, which Permitted Investments shall be held
in the name and be under the control of the Administrative Agent (and,

                               SECURITY AGREEMENT

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if the Collateral Account is a securities account, credited to the Collateral
Account), PROVIDED that at any time after the occurrence and during the
continuance of an Event of Default, the Administrative Agent may (and, if
instructed by the Required Lenders, shall) in its (or their) discretion at any
time and from time to time elect to liquidate any such Permitted Investments and
to apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 5.09.


         Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3, the Obligors hereby
jointly and severally agree with each Lender and the Administrative Agent as
follows:

         5.01 DELIVERY AND OTHER PERFECTION. Each Obligor shall:

         (a) if any of the shares, securities, moneys or property required to be
     pledged by such Obligor under clauses (a), (b) and (c) of Section 3 are
     received by such Obligor, forthwith either (x) transfer and deliver to the
     Administrative Agent such shares or securities so received by such Obligor
     (together with the certificates for any such shares and securities duly
     endorsed in blank or accompanied by undated stock powers duly executed in
     blank), all of which thereafter shall be held by the Administrative Agent,
     pursuant to the terms of this Agreement, as part of the Collateral or (y)
     take such other action as the Administrative Agent shall deem necessary or
     appropriate to duly record the Lien created hereunder in such shares,
     securities, moneys or property in said clauses (a), (b) and (c);

         (b) deliver and pledge to the Administrative Agent any and all
     Instruments, endorsed and/or accompanied by such instruments of assignment
     and transfer in such form and substance as the Administrative Agent may
     request; PROVIDED, that so long as no Default shall have occurred and be
     continuing, such Obligor may retain for collection in the ordinary course
     any Instruments received by such Obligor in the ordinary course of
     business, and the Administrative Agent shall, promptly upon request of such
     Obligor through the Borrower, make appropriate arrangements for making any
     Instrument pledged by such Obligor available to such Obligor for purposes
     of presentation, collection or renewal (any such arrangement to be
     effected, to the extent deemed appropriate by the Administrative Agent,
     against trust receipt or like document);

         (c) give, execute, deliver, file and/or record any financing statement,
     notice, instrument, document, agreement or other papers that may be
     necessary or desirable (in the judgment of the Administrative Agent) to
     create, preserve, perfect or validate the security interest granted
     pursuant hereto or to enable the Administrative Agent to exercise


                               SECURITY AGREEMENT
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     and enforce its rights hereunder with respect to such pledge and
     security interest, including, without limitation, causing any or all of the
     Equity Collateral to be transferred of record into the name of the
     Administrative Agent or its nominee (and the Administrative Agent agrees
     that if any Equity Collateral is transferred into its name or the name of
     its nominee, the Administrative Agent will thereafter promptly give to the
     respective Obligor copies of any notices and communications received by it
     with respect to the Equity Collateral pledged by such Obligor hereunder),
     PROVIDED that notices to account debtors in respect of any Accounts or
     Instruments shall be subject to the provisions of clause (i) below;

         (d) upon the acquisition after the date hereof by such Obligor of any
     Equipment covered by a certificate of title or ownership, cause the
     Administrative Agent to be listed as the lienholder on such certificate of
     title and within 120 days of the acquisition thereof deliver evidence of
     the same to the Administrative Agent;

         (e) keep full and accurate books and records relating to the
     Collateral, and stamp or otherwise mark such books and records in such
     manner as the Administrative Agent may reasonably require in order to
     reflect the security interests granted by this Agreement;

         (f) furnish to the Administrative Agent from time to time (but, unless
     a Default shall have occurred and be continuing, no more frequently than
     quarterly) statements and schedules further identifying and describing the
     Copyright Collateral, the Patent Collateral and the Trademark Collateral,
     respectively, and such other reports in connection with the Copyright
     Collateral, the Patent Collateral and the Trademark Collateral as the
     Administrative Agent may reasonably request, all in reasonable detail;

         (g) promptly upon request of the Administrative Agent, following
     receipt by the Administrative Agent of any statements, schedules or reports
     pursuant to clause (f) above, modify this Agreement to include any
     Copyright, Patent or Trademark that becomes part of the Collateral under
     this Agreement;

         (h) permit representatives of the Administrative Agent, upon reasonable
     notice, at any time during normal business hours to inspect and make
     abstracts from its books and records pertaining to the Collateral, and
     permit representatives of the Administrative Agent to be present at such
     Obligor's place of business to receive copies of all communications and
     remittances relating to the Collateral, and forward copies of any notices
     or communications received by such Obligor with respect to the Collateral,
     all in such manner as the Administrative Agent may require; and

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         (i) upon the occurrence and during the continuance of any Default, upon
     request of the Administrative Agent, promptly notify (and such Obligor
     hereby authorizes the Administrative Agent so to notify) each account
     debtor in respect of any Accounts or Instruments that such Collateral has
     been pledged to the Administrative Agent hereunder, and that any payments
     due or to become due in respect of such Collateral are to be made directly
     to the Administrative Agent.

         5.02 OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted under Section 7.02 of the Loan Agreement, without the prior written
consent of the Administrative Agent (granted with the authorization of the
Lenders as specified in Article IX of the Loan Agreement), no Obligor shall file
or suffer to be on file, or authorize or permit to be filed or to be on file, in
any jurisdiction, any financing statement or like instrument with respect to the
Collateral in which the Administrative Agent is not named as the sole secured
party for the benefit of the holders of Secured Obligations.

         5.03 PRESERVATION OF RIGHTS. The Administrative Agent shall not be
required to take steps necessary to preserve any rights against prior parties
to any of the Collateral.

         5.04 SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.

         (a) SPECIAL PROVISIONS RELATING TO EQUITY COLLATERAL.

         (1) The Obligors will cause the Equity Collateral to constitute at all
times not less than the ownership percentage of each Issuer that such Equity
Collateral constitutes on the date hereof.

         (2) So long as no Event of Default shall have occurred and be
continuing, and unless the Administrative Agent has provided the Obligors with
written notice of its election to exercise such voting rights while an Event of
Default is continuing, the Obligors shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Equity Collateral for
all purposes not inconsistent with the terms of this Agreement, the Loan
Agreement or any other instrument or agreement referred to herein, PROVIDED that
the Obligors jointly and severally agree that they will not vote the Equity
Collateral in any manner that is inconsistent with the terms of this Agreement,
the Loan Agreement or any such other instrument or agreement; and the
Administrative Agent shall execute and deliver to the Obligors or cause to be
executed and delivered to the Obligors all such proxies, powers of attorney,
dividend and other orders, and all such instruments, without recourse, as the
Obligors may reasonably request for the purpose of enabling the Obligors to
exercise the rights and powers that they are entitled to exercise pursuant to
this Section 5.04(a)(2).

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         (3) Unless and until an Event of Default has occurred and is
continuing, the Obligors shall be entitled to receive and retain any dividends,
distributions or proceeds in respect of the Equity Collateral.

         (4) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Administrative Agent or
any holder of a Secured Obligation exercises any available right to declare any
Secured Obligation due and payable or seeks or pursues any other relief or
remedy available to it under applicable law or under this Agreement, the Loan
Agreement or any other agreement relating to such Secured Obligation, all
dividends and other distributions on the Equity Collateral shall be paid
directly to the Administrative Agent and retained by it in the Collateral
Account as part of the Equity Collateral, subject to the terms of this
Agreement, and, if the Administrative Agent shall so request in writing, the
Obligors jointly and severally agree to execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Administrative
Agent shall, upon request of the Obligors (except to the extent theretofore
applied to the Secured Obligations), be returned by the Administrative Agent to
the Obligors.

         (b) INTELLECTUAL PROPERTY.

         (1) For the purpose of enabling the Administrative Agent to exercise
rights and remedies under Section 5.05 at such time as the Administrative Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Obligor hereby grants to the Administrative Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Obligor) to use, assign,
license or sublicense, while an Event of Default is continuing, any of the
Intellectual Property now owned or hereafter acquired by such Obligor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.

         (2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 7.03 of the Loan Agreement that limit the
rights of the Obligors to dispose of their property, so long as no Event of
Default shall have occurred and be continuing, the Obligors will be permitted to
exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in the ordinary
course of the business of the Obligors. In furtherance of the foregoing, unless
an Event of Default shall have occurred and be continuing the Administrative
Agent shall from time to time, upon the request of the respective Obligor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, that such Obligor through the Borrower shall have certified
are


                               SECURITY AGREEMENT
<PAGE>   13
                                     - 13 -


appropriate (in its judgment) to allow it to take any action permitted above
(including relinquishment of the license provided pursuant to clause (1)
immediately above as to any specific Intellectual Property). Further, upon the
payment in full of all of the Secured Obligations and cancellation or
termination of the Commitments or earlier expiration of this Agreement or
release of the Collateral, the Administrative Agent shall grant back to the
Obligors the license granted pursuant to clause (1) immediately above. The
exercise of rights and remedies under Section 5.05 by the Administrative Agent
shall not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by the Obligors in accordance with the first sentence of
this clause (2).

         5.05 EVENTS OF DEFAULT, ETC. During the period during which an Event of
Default shall have occurred and be continuing:

                  (a) each Obligor shall, at the request of the Administrative
         Agent, assemble the Collateral owned by it at such place or places,
         reasonably convenient to both the Administrative Agent and such
         Obligor, designated in its request;

                  (b) the Administrative Agent may make any reasonable
         compromise or settlement deemed desirable with respect to any of the
         Collateral and may extend the time of payment, arrange for payment in
         installments, or otherwise modify the terms of, any of the Collateral;

                  (c) the Administrative Agent shall have all of the rights and
         remedies with respect to the Collateral of a secured party under the
         Uniform Commercial Code (whether or not said Code is in effect in the
         jurisdiction where the rights and remedies are asserted) and such
         additional rights and remedies to which a secured party is entitled
         under the laws in effect in any jurisdiction where any rights and
         remedies hereunder may be asserted, including, without limitation, the
         right, to the maximum extent permitted by law, to exercise all voting,
         consensual and other powers of ownership pertaining to the Collateral
         as if the Administrative Agent were the sole and absolute owner thereof
         (and each Obligor agrees to take all such action as may be appropriate
         to give effect to such right);

                  (d) the Administrative Agent in its discretion may, in its
         name or in the name of the Obligors or otherwise, demand, sue for,
         collect or receive any money or property at any time payable or
         receivable on account of or in exchange for any of the Collateral, but
         shall be under no obligation to do so; and

                  (e) the Administrative Agent may, upon ten Business Days'
         prior written notice to the Obligors of the time and place, with
         respect to the Collateral or any part thereof


                               SECURITY AGREEMENT
<PAGE>   14
                                     - 14 -

         that shall then be or shall thereafter come into the possession,
         custody or control of the Administrative Agent, the holders of Secured
         Obligations or any of their respective agents, sell, lease, assign or
         otherwise dispose of all or any part of such Collateral, at such place
         or places as the Administrative Agent deems best, and for cash or for
         credit or for future delivery (without thereby assuming any credit
         risk), at public or private sale, without demand of performance or
         notice of intention to effect any such disposition or of the time or
         place thereof (except such notice as is required above or by applicable
         statute and cannot be waived), and the Administrative Agent or any
         holder of Secured Obligations or anyone else may be the purchaser,
         lessee, assignee or recipient of any or all of the Collateral so
         disposed of at any public sale (or, to the extent permitted by law, at
         any private sale) and thereafter hold the same absolutely, free from
         any claim or right of whatsoever kind, including any right or equity of
         redemption (statutory or otherwise), of the Obligors, any such demand,
         notice and right or equity being hereby expressly waived and released.
         In the event of any sale, assignment, or other disposition of any of
         the Trademark Collateral, the goodwill connected with and symbolized by
         the Trademark Collateral subject to such disposition shall be included,
         and the Obligors shall supply to the Administrative Agent or its
         designee, for inclusion in such sale, assignment or other disposition,
         all Intellectual Property relating to such Trademark Collateral. The
         Administrative Agent may, without notice or publication, adjourn any
         public or private sale or cause the same to be adjourned from time to
         time by announcement at the time and place fixed for the sale, and such
         sale may be made at any time or place to which the sale may be so
         adjourned.

The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 5.04(b), shall be applied in accordance with
Section 5.09.

         The Obligors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Obligors acknowledge that any such private sales may be at prices and on terms
less favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such circumstances,
agree that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective Issuer or
issuer thereof to register it for public sale.

                               SECURITY AGREEMENT
<PAGE>   15
                                     - 15 -

         5.06 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 are insufficient
to cover the costs and expenses of such realization and the payment in full of
the Secured Obligations, the Obligors shall remain liable for any deficiency.

         5.07 REMOVALS, ETC. Without at least 30 days' prior written
notice to the Administrative Agent, no Obligor shall (i) maintain any of its
books and records with respect to the Collateral at any office, or maintain its
principal place of business at any place, or permit any Inventory or Equipment
to be located anywhere, other than at its address set forth in Section 10.01 of
the Loan Agreement or at one of the locations identified in Annex 2 under its
name or in transit from one of such locations to another, (ii) change its name,
or the name under which it does business, from the name shown on the signature
pages hereto or (iii) change the jurisdiction in which it is organized from that
in which it is organized on the date hereof (or on the date on which it becomes
a party hereto).

                  5.08 PRIVATE SALE. The Administrative Agent and the holder of
Secured Obligations shall incur no liability as a result of the sale of the
Collateral, or any part thereof, at any private sale pursuant to Section 5.05
conducted in a commercially reasonable manner. Each Obligor hereby waives any
claims against the Administrative Agent or any Lender arising by reason of the
fact that the price at which the Collateral may have been sold at such a private
sale was less than the price that might have been obtained at a public sale or
was less than the aggregate amount of the Secured Obligations, even if the
Administrative Agent accepts the first offer received and does not offer the
Collateral to more than one offeree.

         5.09 APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization of
all or any part of the Collateral pursuant hereto, and any other cash at the
time held by the Administrative Agent under Section 4 or this Section 5, shall
be applied by the Administrative Agent:

                  FIRST, to the payment of the costs and expenses of such
         collection, sale or other realization, including reasonable
         out-of-pocket costs and expenses of the Administrative Agent and the
         fees and expenses of its agents and counsel, and all expenses incurred
         and advances made by the Administrative Agent in connection therewith;

                  NEXT, to the payment in full of the Secured Obligations, first
         to the payment of Secured Obligations under the Loan Documents and
         thereafter to the payment of Secured Obligations under the other Basic
         Documents, in each case equally and ratably in accordance with the
         respective amounts thereof then due and owing or as the Persons holding
         the same may otherwise agree; and


                               SECURITY AGREEMENT
<PAGE>   16
                                     - 16 -

                  FINALLY, to the payment to the respective Obligor, or their
         respective successors or assigns, or as a court of competent
         jurisdiction may direct, of any surplus then remaining.

         As used in this Section 5, "PROCEEDS" of Collateral means cash,
securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Obligors or any issuer of or obligor on
any of the Collateral.

         5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of each Obligor for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
any Obligor representing any dividend, payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.

         5.11 PERFECTION. Prior to or concurrently with the execution
and delivery of this Agreement, each Obligor shall (i) file such financing
statements and other documents in such offices as the Administrative Agent may
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) cause the Administrative Agent (if requested by the
Administrative Agent) to be listed as the lienholder on all certificates of
title or ownership relating to Motor Vehicles owned by such Obligor and (iii)
deliver to the Administrative Agent all certificates identified in Annex 1,
accompanied by undated stock powers duly executed in blank.

         5.12 TERMINATION. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Loan Agreement shall
have expired or been terminated, this Agreement shall terminate, and the
Administrative Agent shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or on the order of the respective Obligor and to be released and canceled all
licenses and rights referred to in Section 5.04(b). The Administrative Agent
shall also execute and deliver to the respective Obligor upon such termination
such Uniform Commercial Code termination statements, certificates for
terminating the Liens on the Motor Vehicles and such other


                               SECURITY AGREEMENT
<PAGE>   17
                                     - 17 -


documentation as shall be reasonably requested by the respective Obligor to
effect the termination and release of the Liens on the Collateral.

         5.13 FURTHER ASSURANCES. Each Obligor agrees that, from time to time
upon the written request of the Administrative Agent, such Obligor will execute
and deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.

         5.14 RELEASE OF MOTOR VEHICLES. So long as no Default shall have
occurred and be continuing, upon the request of any Obligor, the Administrative
Agent shall execute and deliver to such Obligor such instruments as such Obligor
shall reasonably request to remove the notation of the Administrative Agent as
lienholder on any certificate of title for any Motor Vehicle; PROVIDED that any
such instruments shall be delivered, and the release effective only upon receipt
by the Administrative Agent of a certificate from such Obligor stating that the
Motor Vehicle the lien on which is to be released is to be sold or has suffered
a casualty loss (with title thereto passing to the casualty insurance company
therefor in settlement of the claim for such loss).

         Section 6. MISCELLANEOUS.

         6.01 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
"Address for Notices" specified pursuant to Section 10.01 of the Loan Agreement
and shall be deemed to have been given at the times specified in said Section
10.01.

         6.02 NO WAIVER. No failure on the part of the Administrative Agent or
any Lender to exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Administrative Agent or
any Lender of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.

                  6.03 AMENDMENTS, ETC. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by
each Obligor and the Administrative Agent (with the consent of the Lenders as
specified in Article IX of the Loan Agreement). Any such amendment or waiver
shall be binding upon the Administrative Agent and each Lender, each holder of
any of the Secured Obligations and each Obligor.

         6.04 EXPENSES. The Obligors jointly and severally agree to reimburse
each of the Lenders and the Administrative Agent for all reasonable costs and
expenses of the Lenders and

                               SECURITY AGREEMENT
<PAGE>   18
                                     - 18 -

the Administrative Agent (including, without limitation, the reasonable
fees and expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceeding resulting therefrom, including, without
limitation, all manner of participation in or other involvement with (w)
performance by the Administrative Agent of any obligations of the Obligors in
respect of the Collateral that the Obligors have failed or refused to perform,
(x) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Collateral, and
for the care of the Collateral and defending or asserting rights and claims of
the Administrative Agent in respect thereof, by litigation or otherwise,
including expenses of insurance, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(ii) the enforcement of this Section 6.04, and all such costs and expenses shall
be Secured Obligations entitled to the benefits of the collateral security
provided pursuant to Section 3.

         6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of each Obligor,
the Administrative Agent, the Lenders and each holder of any of the Secured
Obligations (PROVIDED, however, that no Obligor shall assign or transfer its
rights or obligations hereunder without the prior written consent of the
Administrative Agent).

         6.06 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

         6.07 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.

         6.08 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

         6.09 AGENTS AND ATTORNEYS-IN-FACT. The Administrative Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith.

         6.10 SEVERABILITY. If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Administrative Agent and the
Lenders in order to carry out the intentions of the parties hereto as

                               SECURITY AGREEMENT
<PAGE>   19
                                     - 19 -

nearly as may be possible and (b) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

         6.11 ADDITIONAL OBLIGORS. As contemplated in Section 6.09 of the Loan
Agreement, a new Subsidiary of the Borrower formed or acquired by the Borrower
after the date hereof may become a "Subsidiary Guarantor" under the Loan
Agreement and an "Obligor" under this Agreement, by executing and delivering to
the Administrative Agent a Guarantee Assumption Agreement in the form of Exhibit
C to the Loan Agreement. Accordingly, upon the execution and delivery of any
such Guarantee Assumption Agreement by any such Subsidiary, such new Subsidiary
shall automatically and immediately, and without any further action on the part
of any Person, become an "Obligor" for all purposes of this Agreement, and each
of the Annexes hereto shall be supplemented in the manner specified in such
Guarantee Assumption Agreement.



                            [Signature pages follow.]




                               SECURITY AGREEMENT
<PAGE>   20

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

                                            BORROWER:

                                            STUDENT ADVANTAGE, INC.

                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President


                                            SUBSIDIARY GUARANTORS:

                                            SCHOLARAID.COM, INC.

                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President


                                            COLLEGE411.COM, INC.

                                            by  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President


                                            eSTUDENTLOAN, INC.

                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President


                                            STUDENT ADVANTAGE SECURITIES
                                            CORPORATION

                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President

                                            OCM DIRECT, INC.




                               SECURITY AGREEMENT
<PAGE>   21


                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President

                                            COLLEGIATE CARPETS, INC.

                                            By  /s/ Raymond V. Sozzi, Jr.
                                                -------------------------
                                               Name:  Raymond V. Sozzi
                                               Title:  President




                               SECURITY AGREEMENT
<PAGE>   22



                                            ADMINISTRATIVE AGENT:

                                            RESERVOIR CAPITAL PARTNERS, L.P.,
                                                as Administrative Agent

                                            By: Reservoir Capital Group, L.L.C.,
                                                General Partner

                                                By /s/ Craig Huff
                                                   -----------------------------
                                                   Name: Craig Huff
                                                   Title:  Managing Director


[The following annexes to this Security Agreement have been omitted and will be
provided to the Commission upon request to the Company:


ANNEX 1 - Part 1    RESTRICTIONS
ANNEX 1 - Part 2    PLEDGED EQUITY
ANNEX 2             LIST OF LOCATIONS
ANNEX 3             LIST OF CONSENTS AND CONTRACTS]





                               SECURITY AGREEMENT