<PAGE>

                            CASH COLLATERAL AGREEMENT

     THIS CASH COLLATERAL AGREEMENT (this "Agreement") is made as of August 19,
2005 by and among VYTERIS HOLDINGS (NEVADA), INC., a Nevada corporation (the
"Company"), the investors signatory hereto (each, an "Investor" and,
collectively, the "Investors"), and WACHOVIA BANK, NATIONAL ASSOCIATION (the
"Collateral Agent"). Capitalized terms used herein but not defined have the
respective meanings set forth in the Securities Purchase Agreement, dated as of
August 19, 2005, between each Investor and the Company (the "Purchase
Agreement").

     WHEREAS, on the terms and subject to the conditions set forth in the
Purchase Agreement, each Investor has agreed to purchase from the Company,
severally and not jointly with any other Investor, one or more Senior Secured
Convertible Debentures (each a "Debenture" and, collectively, the "Debentures");

     WHEREAS, pursuant to the Purchase Agreement, on each Closing Date each
Investor will deduct from the Purchase Price and deposit into a cash collateral
account (the "Collateral Account") an amount of cash (the "Collateral Amount")
equal to the aggregate amount of interest scheduled to accrue on the Debentures
being purchased on such Closing Date during the period beginning on such Closing
Date and ending on the two (2) year anniversary of such Closing Date, assuming
for such purpose that the aggregate original principal amount of the Debentures
remains outstanding through the last day of such period (each such deposit being
referred to as the "Deposited Collateral Amount");

     WHEREAS, the Company and each Investor have requested that the Collateral
Agent (i) hold the Collateral Amount as secured party for the benefit of the
Investors and successor holders of the Debentures (each, a "Holder" and,
collectively, the "Holders") to secure the Company's performance of its
obligations under the Debentures and (ii) disburse the Collateral Amount
pursuant to the terms of this Agreement; and

     WHEREAS, the Collateral Agent is willing to hold the Collateral Amount as
secured party for the benefit of the Holders and to disburse the Collateral
Amount pursuant to the terms of this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I

                       ESTABLISHMENT OF COLLATERAL ACCOUNT

     1.1 The parties hereby agree to establish the Collateral Account or, if the
Collateral Account has been established prior to the date hereof, hereby ratify
and approve such action.
<PAGE>

Each Investor shall, on each Closing Date, deduct from the Purchase Price
payable by it and deposit in the Collateral Account such Investor's Pro Rata
Share of the Deposited Collateral Amount by means a wire transfer made in
accordance with the instructions attached as Exhibit A hereto. The name of each
Investor and its Pro Rata Share of the Deposited Collateral Amount with respect
to the Initial Closing are set forth on Schedule A attached hereto.

     1.2 The Company and each Investor hereby directs the Collateral Agent to
invest and reinvest the Collateral Amount in Wachovia Trust Money Access Account
CUSIP # 997981022 (the "Initial Investment"). The Company and each Investor
acknowledge receipt of a prospectus and/or disclosure materials associated with
the Initial Investment, either through means of hardcopy or via access to the
website associated with the Initial Investment. Each party acknowledges that it
has reviewed the Initial Investment and agrees that it constitutes an
appropriate investment of the Collateral Amount. The Company and a majority in
interest of the Holders may change the investment in which amounts contained in
the Collateral Account are invested (subject to applicable minimum investment
requirements) by furnishing written joint instructions to the Collateral Agent;
provided, however, that no such reinvestment may be made except in:

          a. direct obligations of the United States of America or obligations
     the principal of and the interest on which are unconditionally guaranteed
     by the United States of America;

          b. certificates of deposit issued by any bank, bank and trust company,
     or national banking association (including the Collateral Agent and its
     affiliates), and insured by the Federal Deposit Insurance Corporation or a
     similar governmental agency;

          c. repurchase agreements with any bank, trust company, or national
     banking association (including the Collateral Agent and its affiliates); or

          d. any institutional money market fund offered by the Collateral
     Agent, including any institutional money market fund managed by the
     Collateral Agent or any of its affiliates.

     If the Collateral Agent has not received written joint instructions from
the Company and each Holder at the time that an investment decision must be made
with respect to amounts contained in the Collateral Account, the Collateral
Agent shall invest such amount, or such portion thereof as to which no written
direction has been received, in investments described in clause (d) above. Each
of the foregoing investments shall be made in the name of the Collateral Agent.
No investment shall be made in any instrument or security that has a maturity of
greater than six (6) months. Notwithstanding anything to the contrary contained
herein, the Collateral Agent may, without notice to the Company or any Holder,
sell or liquidate any of the foregoing investments at any time if the proceeds
thereof are required for any disbursement of amounts contained in the Collateral
Account that is permitted or required hereunder. All investment earnings shall
become part of the Collateral Amount and investment losses shall be charged
against the Collateral Amount. The Collateral Agent shall not be liable or
responsible for loss in the value of any investment made pursuant to this
Agreement, or for any loss, cost or penalty resulting from any sale or
liquidation of the Collateral


                                       2
<PAGE>

Amount. With respect to any Collateral Amount received by the Collateral Agent
after ten o'clock, a.m., Boston, Massachusetts, time, the Collateral Agent shall
not be required to invest such funds or to effect any investment instruction
until the next Business Day.

     1.3 The Company shall be responsible for any taxes due or payable in
respect of interest generated by the investment of the Collateral Amount. The
Company's federal tax identification number, as set forth on the signature page
hereof, shall be used to open the Collateral Account.

                                   ARTICLE II

                                SECURITY INTEREST

     2.1 As security for the payment and performance of all of the Company's
indebtedness, liabilities and other obligations under and pursuant to the
Debentures, including all unpaid principal of and all interest accrued thereon,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
and including interest that accrues after the commencement by or against the
Company of any bankruptcy or insolvency proceeding naming the Company as the
debtor in such proceeding (collectively, the "Obligations"), the Company hereby
grants to the Collateral Agent, in its capacity as secured party and as agent
for the Holders, and to each Holder ratably in accordance with each Holder's Pro
Rata Share, a security interest in all of the Company's right, title and
interest in, to and under all funds held by the Collateral Agent under or
pursuant to this Agreement, including without limitation the Collateral Amount
and all proceeds of any and all of the foregoing, in each case whether presently
existing or owned or hereafter arising or acquired (collectively, the "Pledged
Collateral").

     2.2 This Agreement shall create a continuing security interest in the
Pledged Collateral which shall remain in effect until the Release Date (as
defined below) and thereafter until all of the Pledged Collateral has been
disbursed in accordance with Article III hereof.

     2.3 The Company shall (i) execute and deliver to the Collateral Agent, to
hold on behalf and at the direction of the Holders, and the Company hereby
authorizes the Collateral Agent to file or cause to be filed (with or without
the Company's signature), at any time and from time to time, all such financing
statements, continuation financing statements, termination statements, notices,
and all other documents and instruments which the Collateral Agent or any
Holders may reasonably request, in form reasonably satisfactory to the
Collateral Agent or any Holders, as the case may be, and (ii) take such other
action, which the Collateral Agent or any Holder may reasonably request, to
perfect and continue perfected, maintain the priority of or provide notice of
the pledge of and security interest in the Pledged Collateral and to accomplish
the purposes of this Agreement. The Company ratifies and authorizes the filing
by the Collateral Agent of any financing statements filed prior to the date
hereof.

     2.4 The Company shall not be entitled to withdraw or otherwise take
possession of or exercise control over any of the Pledged Collateral other than
as expressly provided in this Agreement.


                                       3
<PAGE>

     2.5 Except for the accounting for funds actually received by the Holders,
no Holder shall have any duty or liability to exercise or preserve any rights,
privileges or powers pertaining to the Pledged Collateral. The Company agrees
that Holders shall have no responsibility to the Company with respect to any
losses sustained on any item of, or investment in, the Pledged Collateral or for
any failure to realize any yields desired by the Company.

     2.6 The Company represents and warrants to each Holder that the Company's
chief executive office and principal place of business, and all books and
records concerning the Pledged Collateral, are located at its address set forth
in the Purchase Agreement; and the Company's jurisdiction of organization and
the Company's exact legal name each is as set forth in the first paragraph of
this Agreement.

     2.7 The Company waives, to the fullest extent permitted by law, any right
to require the Holders (a) to proceed against any Person, (b) to exhaust any
other collateral or security for any of the Obligations, (c) to pursue any
remedy, or (d) to make or give any presentments, demands for performance,
notices of nonperformance, protests, notices of protests or notices of dishonor
in connection with any of the Pledged Collateral.

     2.8 So long as any of the Obligations remain unsatisfied, the Company
agrees that:

          (a) The Company will, at its own expense, appear in and defend any
     action, suit or proceeding which purports to affect its title to, or right
     or interest in, the Pledged Collateral or the security interest of the
     Holders therein and the pledge to Holders thereof.

          (b) The Company shall give prior written notice to Holders and to the
     Collateral Agent (and in any event not less than thirty (30) days' written
     notice prior to any such change) of: (i) any change in the location of the
     Company's chief executive office or principal place of business; (ii) any
     change in the location of books and records pertaining to Pledged
     Collateral; (iii) any change in its name; (iv) any changes in its identity
     or structure in any manner which might make any financing statement filed
     hereunder incorrect or misleading; (v) any change in its jurisdiction of
     organization; or (vi) any change in its registration as an organization (or
     any new such registration).

          (c) The Company will not convey, transfer, assign or otherwise dispose
     of or transfer the Pledged Collateral or any right, title or interest
     therein, nor will the Company create, incur or permit to exist any pledge,
     security interest, assignment, deposit arrangement, charge or encumbrance
     or other lien, upon or with respect to the Pledged Collateral, other than
     the security interest of and pledge to the Holders created by this
     Agreement.

          (d) The Company will promptly, upon the written request from time to
     time of the Collateral Agent, execute, acknowledge and deliver, and file
     and record, all such financing statements and other documents and
     instruments, and take all such action, as shall be reasonably necessary to
     carry out the purposes of this Agreement.


                                       4
<PAGE>

                                   ARTICLE III

                        DISBURSEMENT OF COLLATERAL AMOUNT

     3.1 The Collateral Agent shall disburse the Collateral Amount as follows:

          (i) On or before the fifth (5th) Business Day prior to each Scheduled
Interest Payment Date (as defined below), the Company shall deliver to the
Collateral Agent and to each Holder a written notice signed by the Chief
Financial Officer of the Company (an "Interest Payment Notice"), which notice
shall (A) specify the amount of interest accrued and owing on the Debentures on
such date, both in the aggregate and as to each Holder and (B) certify that a
copy of such notice has been delivered to each Holder. If the Company chooses or
is required under the Debentures to pay all or a portion of such interest in
cash, the Interest Payment Notice shall so state and shall direct the Collateral
Agent to pay from the Collateral Account to the Holders in the respective
amounts specified in such notice cash in an amount equal to such interest to be
paid in cash. If the Company chooses to pay all or a portion of such interest in
Common Stock, and the conditions to do so are satisfied, the Interest Payment
Notice shall so specify. Upon written confirmation from each Holder that it has
received payment of interest in shares of Common Stock, the Collateral Agent
shall pay from the Collateral Account to the Company cash in an amount equal to
the aggregate amount of such interest paid in Common Stock. Each Holder shall be
obligated to provide such written confirmation promptly after receipt of payment
of interest in shares of Common Stock. In the event that the Company does not
deliver an Interest Payment Notice on or before such fifth Business Day (in
which case the Company shall be required to pay such interest in cash), or if
the Collateral Agent receives notice from a Holder that conflicts with or
disputes any information contained in an Interest Payment Notice, the Collateral
Agent shall make payment of any undisputed amounts in accordance with this
paragraph 3.1(i), but shall not be obligated to make any payment under this
paragraph 3.1(i) with respect to any disputed payments except pursuant to the
procedures described in Section 4.8 below. For purposes of this Agreement,
"Scheduled Interest Payment Date" means each March 31, June 30, September 30 and
December 31 of each calendar year while the Debentures are outstanding, with the
first Scheduled Interest Payment Date occurring on September 30, 2005 (or if any
such day is not a Business Day, on the next succeeding Business Day).

          (ii) In the event that the Company exercises its right to require a
Forced Conversion (as defined in the Debentures, a "Forced Conversion"), then on
or before the fifth (5th) Business Day prior to the effective date of such
Forced Conversion (a "Forced Conversion Date", the Company shall deliver to the
Collateral Agent and to each Holder a written notice signed by the Chief
Financial Officer of the Company (a "Forced Conversion Release Notice"), which
notice shall (A) specify the principal amount of the Debentures that are subject
to such Forced Conversion, (B) specify the amount of interest accrued and owing
as of the Forced Conversion Date on the Debentures to be so converted on such
Forced Conversion Date, both in the aggregate and as to each Holder of
Debentures to be so converted, (C) if the Forced Conversion Date occurs prior to
the (18) month anniversary of the date on which a Debenture was originally
issued, specify the amount of interest, if any, that would have accrued on the
principal amount of such Debenture during the period beginning on the Forced
Conversion Date and ending on such eighteen (18) month anniversary (the
"Make-Whole Amount"), and (D) certify that a copy of such notice has been
delivered to each Holder. If the Company chooses or


                                       5
<PAGE>

is required under the Debentures subject to a Forced Conversion to pay all or a
portion of the Make-Whole Amount or accrued interest in cash, the Forced
Conversion Release Notice shall so state and shall direct the Collateral Agent
to pay from the Collateral Account to the Holders in the respective amounts
specified in such Forced Conversion Release Notice cash in an amount equal to
such Make-Whole Amount and accrued interest to be paid in cash. If the Company
chooses (and is entitled) to pay all or a portion of the Make-Whole Amount
and/or such interest in Common Stock, then the Forced Conversion Release Notice
shall so state. In such event, each Holder shall deliver written confirmation to
the Collateral Agent promptly upon its receipt of the Conversion Shares to which
it is entitled in respect of such Forced Conversion (including, if applicable,
Conversion Shares in respect of accrued interest and in respect of the
Make-Whole Amount) and, upon receipt of such confirmation, the Collateral Agent
shall pay from the Collateral Account to the Company cash in an amount equal to
the aggregate amount of the Make-Whole Amount and accrued interest paid in
Common Stock as specified in such confirmation. In the event that the Collateral
Agent receives notice from a Holder that conflicts with or disputes any
information contained in an Forced Conversion Release Notice, the Collateral
Agent shall make payment of any undisputed amounts in accordance with this
paragraph 3.1(ii), but shall not be obligated to make any payment under this
paragraph 3.1(ii) with respect to any disputed payments except pursuant to the
procedures described in Section 4.8 below.

     (iii) In the event that the Company pays all amounts of principal and
interest owing on the Debentures in full pursuant to an Optional Redemption, and
delivers written notice of such event to the Collateral Agent and each Holder (a
"Prepayment Release Notice"), each Holder shall deliver written confirmation to
the Collateral Agent of such payment. On the date that is within one Business
Day of the date on which the Collateral Agent receives such confirmation from
each Holder (the "Prepayment Release Date"), the Collateral Agent will disburse
any amounts then maintained in the Collateral Account to the Company; provided,
however, that if the Collateral Agent receives notice from any Holder that
conflicts with or disputes any information contained in a Prepayment Release
Notice, the Collateral Agent shall not make any payment under this paragraph
3.1(iii) except pursuant to the procedures described in Section 4.8 below.

     (iv) In the event that one or more Holders declares a Mandatory Redemption
under such Holder's Debenture(s) and delivers written notice of such event to
the Collateral Agent and each other Holder (a "Mandatory Redemption Release
Notice"), then on the date that is within one Business Day of the date of the
delivery of such notice to the Collateral Agent (the "Mandatory Redemption
Release Date"), the Collateral Agent will disburse a Pro Rata Share of all
amounts then maintained in the Collateral Account (including in the calculation
of Pro Rata Share only those Debentures that remain outstanding as of the
Mandatory Redemption Release Date), if any, to each Holder that has provided a
Mandatory Redemption Release Notice, with the remainder to continue to be held
in accordance with this Agreement. If all Holders of outstanding Debentures have
issued Mandatory Redemption Release Notices, the Collateral Agent will disburse
all remaining amounts then maintained in the Collateral Account as follows: (A)
first, to each Holder, pro rata, in accordance with such Holder's Pro Rata Share
(including in the calculation of Pro Rata Share only those Debentures that
remain outstanding as of the Mandatory Redemption Release Date), in an amount
not to exceed the amounts (including


                                       6
<PAGE>

outstanding principal and unpaid accrued interest) then due under the
Debenture(s) held by such Holder; and (B) second, any remaining amounts to the
Company; provided, however, that if the Collateral Agent receives notice from
the Company or any Holder that conflicts with or disputes any information
contained in a Mandatory Redemption Release Notice, the Collateral Agent shall
not make any payment under this paragraph 3.1(iv) except pursuant to the
procedures described in Section 4.8 below.

     3.2 Wire transfers to the Company or to any Investor shall be made pursuant
to written instructions from time to time delivered by such party to the
Collateral Agent.

                                   ARTICLE IV

                                COLLATERAL AGENT

     4.1 The Collateral Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Investor and
the Collateral Agent.

     4.2 The Collateral Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and no duties shall be implied
and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed by the Collateral Agent to be genuine and to have
been signed or presented by the proper party or parties. The Collateral Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Agreement. The Collateral Agent's sole responsibility
shall be for the safekeeping and disbursement of the Collateral Amount in
accordance with the terms of this Agreement. Collateral Agent shall have no
implied duties or obligations and shall not be charged with knowledge or notice
of any fact or circumstance not specifically set forth herein. The Collateral
Agent shall not be personally liable for any act the Collateral Agent may do or
omit to do hereunder as the Collateral Agent while acting in good faith and in
the absence of gross negligence, fraud or willful misconduct, and any act done
or omitted by the Collateral Agent in good faith pursuant to the written advice
of the Collateral Agent's outside legal counsel shall be conclusive evidence of
such good faith. In no event shall the Collateral Agent be liable for
incidental, indirect, special, consequential or punitive damages (including, but
not limited to lost profits), even if the Collateral Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action. The
Collateral Agent shall not be obligated to take any legal action or commence any
proceeding in connection with the Collateral Amount, any account in which the
Collateral Amount is deposited, this Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. The Collateral Agent may consult
legal counsel selected by it in the event of any dispute or question as to the
construction of any of the provisions hereof or of any other agreement or of its
duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in good faith in accordance with the opinion or instruction
of such counsel. Company shall promptly pay, upon demand, the reasonable fees
and expenses of any such counsel, provided, however, if such amounts is not paid
by the Company within 30 days of the date of the Collateral Agent's invoice, the
each of the Holders shall be jointly and severally liable to pay such amounts.

     4.3 The Collateral Agent is hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court of law. If the Collateral Agent
obeys or complies with


                                       7
<PAGE>

any such order, judgment or decree, the Collateral Agent shall not be liable to
any of the parties hereto or to any other person, firm or corporation by reason
of such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without jurisdiction.

     4.4 The Collateral Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud or willful misconduct.

     4.5 The Collateral Agent shall be entitled to employ such experts as the
Collateral Agent may deem necessary properly to advise the Collateral Agent in
connection with the Collateral Agent's duties hereunder, may rely upon the
advice of such experts, and may pay such experts reasonable compensation, the
costs of which compensation shall be borne by the Company.

     4.6 The Collateral Agent's responsibilities as Collateral Agent hereunder
shall terminate if the Collateral Agent shall resign by giving written notice to
the Company and the Investors. Such resignation shall not be effective until the
earlier of (x) thirty (30) days following delivery of such notice and (y) the
appointment of a successor Collateral Agent. In the event of any such
resignation, the Investors and the Company shall appoint a successor Collateral
Agent and the Collateral Agent shall deliver to such successor Collateral Agent
any funds and other documents held by the Collateral Agent hereunder or pursuant
hereto.

     4.7 If the Collateral Agent reasonably requires other or further
instruments in connection with this Agreement or obligations in respect hereto,
the necessary parties hereto shall join in furnishing such instruments.

     4.8 It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the funds held by the
Collateral Agent hereunder, or if otherwise permitted or required under this
Agreement, the Collateral Agent is authorized and directed in the Collateral
Agent's sole discretion (1) to retain in the Collateral Agent's possession
without liability to anyone all or any part of said funds until such dispute
shall have been settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected, but the Collateral Agent shall be under no duty whatsoever to
institute or defend any such proceedings or (2) to deliver the funds held by the
Collateral Agent hereunder to a state or Federal court having competent subject
matter jurisdiction and located in the City of New York in accordance with the
applicable procedure therefor.

     4.9 The Company and each Investor agree jointly and severally to indemnify
and hold harmless the Collateral Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses
(including reasonable legal fees and expenses) in any way arising from or
relating to the duties or performance of the Collateral Agent hereunder or the
transactions contemplated hereby or by the Purchase Agreement other than any
such claim, liability, cost or expense to the extent the same shall have been
determined by final,


                                       8
<PAGE>

unappealable judgment of a court of competent jurisdiction to have resulted from
the gross negligence, fraud or willful misconduct of the Collateral Agent.
Notwithstanding the foregoing, as between the Company and the Investors, the
Company shall bear the cost of the Collateral Agent's fees and expenses for
serving as Collateral Agent hereunder.

                                    ARTICLE V

                                  MISCELLANEOUS

     5.1 No failure on the part of any Holder to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights and remedies
under this Agreement are cumulative and not exclusive of any rights, remedies,
powers and privileges that may otherwise be available to any Holder.

     5.2 Any notice, demand or request required or permitted to be given by the
Collateral Agent, the Company or the Holders pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is made
on a day that is not a Business Day, in which case such delivery will be deemed
to be made on the next succeeding Business Day and (ii) on the next Business Day
after timely delivery to an overnight courier, addressed as follows:

                  If to the Company:

                  Vyteris Holdings (Nevada), Inc.
                  13-01 Pollitt Drive
                  Fair Lawn, NJ 07410
                  Attn:    Chief Financial Officer
                  Tel:     201-703-2299
                  Fax:     201-703-2295

                  with a copy to:

                  Lowenstein Sandler PC
                  65 Livingston Avenue
                  Roseland, New Jersey 07068
                  Attn: Peter H. Ehrenberg, Esq.
                  Tel:     973-597-2350
                  Fax:     973-597-2351

                  If to the Collateral Agent:

                  Wachovia Bank, National Association
                  Corporate Trust Department
                  200 Berkeley Street, 17th Floor
                  Boston, MA 02116
                  Attn:    Timothy Donmoyer
                  Tel:      (617) 210-3772
                  Fax:      (617) 210-3775


                                       9
<PAGE>

and if to any Holder, to such address for such Holder as shall appear on Exhibit
B hereto or as shall be designated by such Holder in writing to the Collateral
Agent and the Company in accordance with this Section 5.2. A copy of any notice
or other communication delivered by or to the Collateral Agent shall
concurrently be delivered to the Company and to each Holder.

     5.3 This Agreement shall be binding upon and shall inure to the benefit of
the permitted successors and permitted assigns of the parties hereto. The
Company may not assign, transfer, or otherwise convey its rights, benefits,
obligations or duties hereunder. Each of the Holders may assign all or a portion
of its rights and obligations hereunder to any Person to whom such Holder
assigns or otherwise transfers all or a portion of the Debentures held by such
Holder. Upon any record assignment of a Debenture or any portion thereof, the
Company shall promptly (and in any event prior to the next following Scheduled
Interest Payment Date) give written notice of such assignment to the Collateral
Agent and copies of such written notice to the assignor and assignee of such
Debenture. Upon any such assignment, such assignee shall be entitled to enforce
such Holder's rights and remedies under this Agreement to the same extent as if
it were an original party hereto.

     5.4 This Agreement represents the entire agreement between or among the
parties with respect to the subject matter hereof and supersedes all prior
understandings or agreements, whether written or oral thereto. This Agreement
may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
party to be charged. The recitals set forth above hereby incorporated into this
Agreement as if fully set forth herein.

     5.5 Whenever required by the context of this Agreement, the singular shall
include the plural and masculine shall include the feminine. This Agreement
shall not be construed against any party hereto as the preparer hereof, it being
understood and agreed that each party participated equally in the negotiation
and preparation hereof.

     5.6 The parties hereto expressly agree that this Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of New York applicable to contracts made and to be performed
entirely within the State of New York. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City and County of New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.


                                       10
<PAGE>

     5.7 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Agreement shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Agreement, or the validity or effectiveness of such provision in any other
jurisdiction.

     5.8 This Agreement may be executed by the parties hereto in more than one
counterpart, each of which, when executed and delivered, shall be deemed to be
an original and all of which together shall constitute one and the same
document.


                            [SIGNATURE PAGE FOLLOWS]


                                       11
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Cash Collateral
Agreement as of date first written above.


VYTERIS HOLDINGS (NEVADA), INC.



By:      /s/ Michael McGuinness
         ----------------------
         Name: Michael McGuinness
         Title: Chief Financial Officer

Title:
Chief Financial Officer
Federal Tax ID No.: 84-1394211
                    ----------
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Cash Collateral
Agreement as of date first written above.




COLLATERAL AGENT:

WACHOVIA BANK, NATIONAL ASSOCIATION



By: /s/ Evangelos Ntavos
    --------------------
     Name:  Evangelos Ntavos
     Title:  Assistant Vice President
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Cash Collateral
Agreement as of date first written above.




INVESTORS:

SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

By:      Satellite Asset Management, L.P., its Manager


By:      /s/ Authorized Person
         -----------------------------------

SATELLITE STRATEGIC FINANCE PARTNERS, LTD.

By:      Satellite Asset Management, L.P., its Manager


By:      /s/ Authorized Person
         -----------------------------------

PALISADES MASTER FUND, L.P.


By:      /s/ Authorized Person
         -----------------------------------

QUBIT HOLDINGS LLC


By:      /s/ Authorized Person
         -----------------------------------