Exhibit 10.1

                                                                                        Exhibit
    10.1

    AGREEMENT

     

    THIS
      AGREEMENT
      (“Agreement”)
      is
      made as of this the 30th
      day of
      March, 2007 by and between BIOMETRICS
      INVESTORS, L.L.C.,
      a
      Delaware limited liability company (“Lender”),
      and
SEQUIAM
      CORPORATION,
      a
      California corporation (“Borrower”).

     

    W
      I T
      N E S S E T H

     

    WHEREAS,
      Lender is the holder of the Prior Note (as defined below), which was made by
      Borrower and which has an outstanding balance as of the date of this Agreement,
      including principal and accrued interest, of $3,965,119.00. Subject to the
      terms
      and conditions of this Agreement, Lender has agreed to extend a Term Loan (as
      defined below) to Borrower in the total aggregate amount of $2,500,000 which
      Term Loan would be consolidated with the indebtedness evidenced by the Prior
      Note and evidenced by a new Term Note in the face amount of $6,500,000. Subject
      to the terms and conditions of this Agreement, Lender has agreed to extend
      a
      separate Term Loan to Borrower in the amount of $5,000,000. In connection with
      extending credits to Borrower, Borrower shall also issue Warrants to Lender
      which, if both Term Loans are funded, would allow Lender to purchase up to
      40%
      of Borrower’s Fully Diluted Common Shares, subject to adjustments as set forth
      in the Warrants.

     

    NOW,
      THEREFORE, in consideration of the Warrants and any Loans made for the account
      of Borrower, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged by Borrower, the parties agree
      as
      follows:

     

    
      	1.  	
              DEFINITIONS.

            


    

     

    “Account”
shall
      have meaning assigned to such term in the UCC.

     

    “Account
      Debtor”
shall
      have the meaning assigned to such term in the UCC.

     

    “Additional
      Warrants”
means
      the Common Share purchase warrants, in the form of Exhibit A delivered to
      Lender in accordance with Paragraph 4(c)(iv) hereof, which Warrants shall be
      exercisable immediately for 39,431,424 Common Shares at an exercise price of
      $0.01 per share and have a term of exercise equal to 5 years.

     

    “Advance
      Conditions”
shall
      have the meaning specified in Paragraph 4 hereof.

     

    “Affiliate”
shall
      mean any Person directly or indirectly controlling, controlled by or under
      common control with another Person.

     

    “Agreement”
shall
      mean this Agreement, any exhibits or schedules hereto, any concurrent or
      subsequent rider hereto and any extensions, supplements, amendments or
      modifications hereto.

     

    “Base
      Rate”
shall
      have the meaning specified in Paragraph 3(a) hereof.

     

    “Borrowing
      Base Certificate”
shall
      have the meaning specified in Paragraph 4(a)(i) hereof.

     

    “Chattel
      Paper”
shall
      have the meaning assigned to such term in the UCC.

     

    “Collateral”
shall
      mean all of the property of Borrower described in paragraph 5 hereof, together
      with all other real or personal property of Borrower now or hereafter pledged
      to
      Lender to secure repayment of any of the Liabilities.

     

    “Commercial
      Tort Claims”
shall
      have the meaning assigned to such term in the UCC.

     

    “Common
      Shares”
      means
      the common shares of Borrower, par value $.001 per share, and any other class
      of
      securities into which such securities may hereafter be reclassified or changed
      into.

     

    “Common
      Shares Equivalents”
means
      any securities of the Company or the Subsidiaries which would entitle the holder
      thereof to acquire at any time Common Shares, including, without limitation,
      any
      debt, preferred shares, rights, options, warrants or other instrument that
      is at
      any time convertible into or exercisable or exchangeable for, or otherwise
      entitles the holder thereof to receive, Common Shares.

     

    “Cost
      of Goods Sold”
shall
      have the meaning assigned to that term in GAAP.

     

    “Default
      Rate”
shall
      have the meaning specified in Paragraph 3(a) hereof.

     

    “Deposit
      Accounts”
shall
      have the meaning assigned to such term in the UCC.

     

    “Disclosure
      Schedule”
shall
      have the meaning specified in Paragraph 11.

     

    “Documents”
shall
      have the meaning assigned to such term in the UCC.

     

    “EBITDA”
shall
      mean, with respect to any period, Borrower’s and its Subsidiaries’ Net Income
      After Taxes for such period, plus
      interest
      expense, income tax expense, depreciation and amortization for such period,
      plus
      or
minus
      any
      other non-cash charges or gains which have been subtracted or added in
      calculating Net Income After Taxes for such period, all on a consolidated basis.
      As used herein, the term "Net Income After Taxes" for any period shall mean
      Borrower’s and its Subsidiaries net income after taxes for that period, subject
      to the following requirements: (i) any net operating loss carryforwards which
      would otherwise be available as deductions against Borrower’s gross income shall
      be disregarded for purposes of this calculation; (ii) any after-tax gains or
      losses on the sale of assets, other than the sale of Inventory in the ordinary
      course of business, shall be disregarded for purposes of this calculation;
      and
      (iii) any other after-tax extraordinary gains or losses shall be disregarded
      for
      purposes of this calculation.

     

    “EBITDA
      Projections”
shall
      have the meaning specified in Paragraph 12(b) hereof.

     

    “EBITDA
      Shortfall”
shall
      have the meaning specified in Paragraph 8(a) hereof.

     

    “Electronic
      Chattel Paper”
shall
      have the meaning assigned to such term in the UCC.

     

    “Eligible
      Accounts”
shall
      mean those Accounts of Borrower which are unpaid no more than ninety (90) days
      from invoice date, and which Lender, in its sole discretion, determines to
      be
      eligible. Without limiting Lender’s discretion, unless otherwise agreed by
      Lender, the following Accounts of Borrower are not Eligible Accounts:


     

    (i)  all
      Accounts owing by a single Account Debtor, if ten percent (10%) or more of
      the
      balance owing by such Account Debtor to Borrower is unpaid more than ninety
      (90)
      days after the invoice date; 

     

    (ii)  Accounts
      with respect to which the Account Debtor is an officer, director, employee,
      Subsidiary or Affiliate of Borrower; 

     

    (iii)  Accounts
      with respect to which the Account Debtor is the United States of America or
      any
      department, agency or instrumentality thereof, unless Borrower assigns its
      right
      to payment of such Accounts to Lender pursuant to, and in full compliance with,
      the Assignment of Claims Act of 1940, as amended; 

     

    (iv)  Accounts
      with respect to which the Account Debtor is not a resident of the continental
      United States, although Accounts with respect to which the Account Debtor is
      Fujitsu Microelectronics of America will not be disqualified as “Eligible
      Accounts” under this clause; 

     

    (v)  Accounts
      in dispute or with respect to which the Account Debtor has asserted or may
      assert a counterclaim or has asserted or may assert a right of setoff;


     

    (vi)  Accounts
      with respect to which the prospect of payment or performance by the Account
      Debtor is or will be impaired, as determined by Lender in the exercise of its
      sole discretion; 

     

    (vii)  Accounts
      with respect to which Lender does not have a first and valid fully perfected
      security interest; 

     

    (viii)  Accounts
      with respect to which the Account Debtor is the subject of bankruptcy or a
      similar insolvency proceeding or has made an assignment for the benefit of
      creditors or whose assets have been conveyed to a receiver or trustee;


     

    (ix)  Accounts
      with respect to which the Account Debtor’s obligation to pay the Account is
      conditional upon the Account Debtor’s approval or is otherwise subject to any
      repurchase obligation or return right, as with sales made on a bill-and-hold,
      guaranteed sale, sale-and-return, sale on approval or consignment basis;


     

    (x)  Accounts
      to the extent that the Account Debtor’s indebtedness to Borrower exceeds a
      credit limit determined by Lender in Lender’s sole discretion; 

     

    (xi)  Accounts
      with respect to which the Account Debtor is located in a state which requires
      Borrower, as a precondition to commencing or maintaining an action in the courts
      of that state, either to (a) receive a certificate of authority to do business
      and be in good standing in such state, or (b) file a notice of business
      activities report with such state’s taxing authority for the then current year
      unless Borrower has taken one of the actions described in clauses (a) or (b)
      or
      Borrower has proven to Lender’s satisfaction that it is exempt from such
      requirement; 

     

    (xii)  Accounts
      which arise out of sales (a) not made in the ordinary course of Borrower’s
      business, (b) which are not valid or legally enforceable, (c) which do not
      meet
      the Account Debtor’s specifications (if any) or (d) which have not been shipped;


     

    (xiii)  Accounts
      with respect to which the Account Debtor has refused to accept or returned
      to
      Borrower any portion of the Inventory the sale of which gave rise to such
      Accounts; and

     

    (xiv)  Accounts
      with respect to which any document or agreement executed or delivered in
      connection therewith, or any procedure used in connection with any such document
      or agreement, fails in any material respect to comply with the requirements
      of
      applicable law.

     

    "Eligible
      Inventory" shall
      mean Inventory of Borrower consisting of raw materials and finished goods which
      Lender, in its sole discretion, determines to be eligible. Without limiting
      Lender’s discretion, unless otherwise agreed by Lender, the following Inventory
      of Borrower is not Eligible Inventory: 

     

    (i)
      Inventory which is in transit; 

     

    (ii)
      Inventory which is not in good condition, or not currently usable or currently
      saleable in the ordinary course of Borrower’s business; 

     

    (iii)
      Inventory which is obsolete; 

     

    (iv)
      Inventory which Lender determines, in the exercise of its sole discretion,
      to be
      unacceptable due to age, type, category and/or quantity; 

     

    (v)
      Inventory with respect to which Lender does not have a first and valid fully
      perfected security interest; 

     

    (vi)
      Inventory consisting of work-in-progress, packaging materials or supplies;
      or


     

    (vii)
      Inventory which is stored with or located on the premises of a bailee,
      consignee, warehouseman, processor or other third party.

     

    “Eligible
      Orders”
shall
      mean those Orders of Borrower which Lender, in its sole discretion, determines
      to be eligible. Without limiting Lender’s discretion, unless otherwise agreed by
      Lender, the following Orders of Borrower are not Eligible Orders: 

     

    (i)  Any
      Order
      from a single Customer which is received at a time at which the amount of the
      outstanding Orders and Accounts from that Customer exceeds One Million Dollars
      ($1,000,000); 

     

    (ii)  Orders
      with respect to which the Customer is an officer, director, employee, Subsidiary
      or Affiliate of Borrower; 

     

    (iii)  Orders
      with respect to which the Customer is the United States of America or any
      department, agency or instrumentality thereof, unless Borrower assigns its
      right
      to payment for the Accounts arising from such Orders to Lender pursuant to,
      and
      in full compliance with, the Assignment of Claims Act of 1940, as amended;
      

     

    (iv)  Orders
      where the Customer is in dispute regarding Accounts in excess of Fifty Thousand
      Dollars ($50,000) or more, or where the Customer has asserted or may assert
      a
      counterclaim or has asserted or may assert a right of setoff with regard to
      Accounts in excess of Fifty Thousand Dollars ($50,000) or more; 

     

    (v)  Orders
      with respect to which the prospect of payment or performance by the Customer
      is
      or will be impaired, as determined by Lender in the exercise of its sole
      discretion; 

     

    (vi)  Orders
      having a Gross Profit Margin that does not satisfy the gross profit requirements
      set forth in Exhibit B; 

     

    (vii)  Orders
      with respect to which the Customer is the subject of bankruptcy or a similar
      insolvency proceeding or has made an assignment for the benefit of creditors
      or
      whose assets have been conveyed to a receiver or trustee; 

     

    (viii)  Orders
      with respect to which the Customer’s obligation to pay the Account for the Order
      is conditional upon the Customer’s approval or is otherwise subject to any
      repurchase obligation or return right, as with sales made on a bill-and-hold,
      guaranteed sale, sale-and-return, sale on approval or consignment basis;


     

    (ix)  Orders
      with respect to which the Customer is located in a state which requires
      Borrower, as a precondition to commencing or maintaining an action in the courts
      of that state, either to (a) receive a certificate of authority to do business
      and be in good standing in such state, or (b) file a notice of business
      activities report with such state’s taxing authority for the then current year
      unless Borrower has taken one of the actions described in clauses (a) or (b)
      or
      Borrower has proven to Lender’s satisfaction that it is exempt from such
      requirement; 

     

    (x)  Orders
      which arise out of sales (a) not made in the ordinary course of Borrower’s
      business, or (b) which are not valid or legally enforceable; and

     

    (xi)  Orders
      with respect to which any document or agreement executed or delivered in
      connection therewith, or any procedure used in connection with any such document
      or agreement, fails in any material respect to comply with the requirements
      of
      applicable law.

     

    “Equipment”
shall
      have the meaning assigned to such term in the UCC.

     

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as
      amended.

     

    “Event
      of Default”
shall
      have the meaning specified in Paragraph 13 hereof.

     

    “Finished
      Goods”
shall
      mean equipment fabricated by or on behalf of Borrower which conforms to the
      purchase requirements of an identified customer of Borrower.

     

    “Fixtures”
shall
      have the meaning assigned to such term in the UCC.

     

    “Fully
      Diluted”
shall
      mean the amount of Common Shares that would be outstanding if all options,
      warrants and other rights exercisable for the issuance of Common Shares and
      all
      conversion rights convertible for Common Shares were exercised, including the
      exercise of the Warrants herein.

     

    “GAAP”
shall
      mean generally accepted United States accounting principles, consistently
      applied.

     

    “General
      Advance Conditions”
shall
      have the meaning specified in Paragraph 4(a) hereof.

     

    “General
      Intangibles”
shall
      have the meaning assigned to such term in the UCC.

     

    “Governmental
      Authority”
      means:

     

    (a) the
      government of:

     

    (i) the
      United States of America or any State or other political subdivision thereof,
      or

     

    (ii) any
      jurisdiction in which the Borrower or any Subsidiary conducts all or any part
      of
      its business, or which asserts jurisdiction over any properties of the Borrower
      or any Subsidiary; or

     

    (b) any
      entity exercising executive, legislative, judicial, regulatory or administrative
      functions of, or pertaining to, any such government.

     

    “Gross
      Profit Margin”
shall
      mean, with respect to any Order, the result obtained by dividing (a) the result
      of subtracting the Cost of Goods Sold for the Inventory which is the subject
      of
      the Order from the gross sales price for that Inventory by (b) the gross sales
      price for that Inventory.

     

    “Indemnified
      Party”
shall
      have the meaning specified in Paragraph 15 hereof.

     

    “Information”
shall
      have the meaning specified in Paragraph 16 hereof.

     

    “Initial
      Warrants”
means
      the Common Share purchase warrants, in the form of Exhibit C delivered to
      Lender in accordance with Paragraph 4(b)(ii) hereof, which Warrants shall be
      exercisable immediately for 65,719,041 Common Shares at an exercise price of
      $0.01 per share and have a term of exercise equal to 5 years.

     

    “Instruments”
shall
      have the meaning assigned to such term in the UCC.

     

    “Intellectual
      Property”
shall
      mean collectively, all worldwide:

     

    (i) inventions,
      designs, algorithms and other industrial property, and all enhancements and
      improvements thereto, whether patentable or unpatentable and whether or not
      reduced to practice, and all patent rights in connection therewith (including
      all U.S. and foreign patents, patent applications, patent disclosures, mask
      works, and all divisions, continuations, continuations-in-part, reissues,
      re-examinations and extensions thereof), whether or not any of the foregoing
      are
      registered;

     

    (ii) trademarks,
      trade names and service marks, trade dress, logos, Internet domain names, and
      other commercial product or service designations, together with all
      translations, adaptations, derivations and combinations thereof, and all
      goodwill and similar value associated with any of the foregoing, and all
      applications, registrations, and renewals in connection therewith;

     

    (iii) copyrights
      (whether or not registered), moral rights, and all registrations and
      applications for registration thereof, as well as rights to renew
      copyrights;

     

    (iv) trade
      secrets (as such are determined under applicable law), know-how and other
      confidential business information, including technical
      information, marketing plans, research, designs, plans, methods, techniques,
      and
      processes, any
      and
      all technology, supplier lists, computer software programs or applications,
      in
      both source and object code form, technical documentation of such software
      programs, statistical models, supplier lists, e-mail lists, inventions, sui
      generis database rights, databases, and data, whether
      in tangible or intangible form and whether or not stored, compiled or
      memorialized physically, electronically, graphically, photographically or in
      writing;

     

    (v) any
      and
      all other rights to existing and future registrations and applications for
      any
      of the foregoing and all other proprietary rights in, or relating to, any of
      the
      foregoing, including remedies against and rights to sue for past infringements,
      and rights to damages and profits due or accrued in or relating to any of the
      foregoing; and

     

    (vi) any
      and
      all other tangible or intangible proprietary property, information and materials
      that are or have been used (including in the development of) the Borrower’s
      business and/or in any product, technology or process (a) currently being or
      formerly manufactured, published, marketed or used by Seller, or (b) previously
      or currently under development for possible future manufacturing, publication,
      marketing or other use by Seller.

     

    “Inventory”
shall
      have the meaning assigned to such term in the UCC.

     

    “Investment
      Property”
shall
      have the meaning assigned to such term in the UCC.

     

    “IP
      Diligence Issue” shall
      have the meaning specified in Paragraph 4(b)(i).

     

    “Knowledge”
shall
      mean the actual knowledge, after reasonable investigation, of Mark Mroczkowski,
      Nicholas Vandenbrekel, Alan McGinn, Kevin Henderson, or Phil Dumas.

     

    “Lender's
      IP Due Diligence”
shall
      have the meaning specified in Paragraph 4(b)(i).

     

    “Letter-of-Credit
      Right”
shall
      have the meaning assigned to such term in the UCC.

     

    “Liabilities”
shall
      mean any and all obligations, liabilities and indebtedness of Borrower to Lender
      or to any Affiliate of Lender of any and every kind and nature, howsoever
      created, arising or evidenced and howsoever owned, held or acquired, whether
      now
      or hereafter existing, whether now due or to become due, whether primary,
      secondary, direct, indirect, absolute, contingent or otherwise (including
      without limitation obligations of performance), whether several, joint or joint
      and several, and whether arising or existing under written or oral agreement
      or
      by operation of law, including without limitation all obligations, liabilities
      and indebtedness of Borrower under this Agreement.

     

    “Loan”
or
      “Loans”
shall
      mean Term Loan A and Term Loan B made by Lender to Borrower pursuant to
      Paragraph 2 hereof.

     

    “Lock
      Box,” “Lock
      Box Account”
and
      “Lock
      Box Event”
shall
      have the meanings specified in Paragraph 8(a) hereof.

     

    “Material
      Adverse Effect”
shall
      have the meaning specified in Paragraph 11(b) hereof.

     

    “Maturity
      Date”
shall
      mean April 15, 2009.

     

    “Obligor”
shall
      mean Borrower and each Person who is or shall become primarily or secondarily
      liable for any of the Liabilities.

     

    “Order”
shall
      mean a written purchase order from a third party for one or more items of
      Inventory sold or offered for sale by the Borrower in the ordinary course of
      business.

     

    “Other
      Agreements”
shall
      mean all agreements, instruments and documents, including without limitation
      the
      Registration Rights Agreement, the Warrants, the Shareholders Agreement,
      guaranties, mortgages, trust deeds, pledges, powers of attorney, consents,
      assignments, security agreements, intercreditor agreements, financing statements
      and all other writings heretofore, now or from time to time hereafter executed
      by or on behalf of Borrower or any other Person and delivered to Lender or
      to
      any Affiliate of Lender in connection with the Liabilities or the transactions
      contemplated hereby, including the Pledge Agreements, the Subsidiary Guarantees
      and the Subordination Agreements.

     

    “Permitted
      Liens”
shall
      mean (i) statutory liens of landlords, carriers, warehousemen, mechanics,
      materialmen or suppliers incurred in the ordinary course of business and
      securing amounts not yet due, (ii) liens or security interests in favor of
      Lender, (iii) zoning restrictions and easements, licenses, covenants and other
      restrictions affecting the use of real property that do not individually or
      in
      the aggregate have a material adverse effect on Borrower’s ability to use such
      real property for its intended purpose in connection with Borrower’s business,
      and (iv) the liens set forth on Exhibit D.

     

    “Person”
shall
      mean any individual, sole proprietorship, partnership, joint venture, trust,
      unincorporated organization, association, corporation, institution, entity,
      party or foreign or United States government (whether federal, state, county,
      city, municipal or otherwise), including without limitation any instrumentality,
      division, agency, body or department thereof.

     

    “Plan”
shall
      mean any employee benefit plan defined in Section 3(3) of ERISA, including
      any
      multiemployer plan or any employee welfare benefit plan which is maintained
      or
      has been maintained pursuant to a collective bargaining agreement to which
      two
      or more unrelated employers contribute and in respect of which Borrower is
      an
“employer” as defined in Section 3(5) of ERISA.

     

    “Pledge
      Agreements”
shall
      have the meaning specified in Paragraph 5(a) hereof.

     

    “Prior
      Indebtedness”
shall
      mean the indebtedness from Borrower to the holder of the Prior Note which is
      evidenced by the Prior Note.

     

    “Prior
      Note”
shall
      mean that Second Amended, Restated and Consolidated Senior Secured Term Note
      dated November 1, 2005 made by Borrower to Lee Harrison Corbin, Attorney In
      Fact
      for the Trust under the Will of John Svenningson. 

     

    “Proceeds”
shall
      have the meaning assigned to such term in the UCC.

     

    “Related
      Parties”
means,
      with respect to any specified Person, such Person’s Affiliates and the
      respective directors, officers, employees, agents and advisors of such Person
      and such Person’s Affiliates.

     

    “Registration
      Rights Agreement”
means
      the
      Registration Rights Agreement, dated the date hereof, between Borrower and
      Lender, in the form of Exhibit E delivered to Lender in accordance with
      Paragraph 4(b)(iii) hereof.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale of the Underlying Shares by Lender
      as
      provided for in the Registration Rights Agreement.

     

    “Securities”
      means
      the Warrants and the Underlying Shares.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended from time to time.

     

    “Securities
      Exchange Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Shareholders
      Agreement”
shall
      have the meaning specified in Paragraph 4(b)(v).

     

    “Subsidiary”
shall
      mean any corporation of which more than fifty percent (50%) of the outstanding
      capital stock having ordinary voting power to elect a majority of the board
      of
      directors of such corporation (irrespective of whether at the time shares of
      any
      other class of such corporation shall have or might have voting power by reason
      of the happening of any contingency) is at the time, directly or indirectly,
      owned by Borrower or by any partnership or joint venture of which more than
      fifty percent (50%) of the outstanding equity interests are at the time,
      directly or indirectly, owned by Borrower.

     

    “Subsidiary
      Guarantees”
shall
      have the meaning specified in Paragraph 5(b) hereof.

     

    “Subordination
      Agreements”
shall
      have the meaning specified in Paragraph 5(c) hereof.

     

    “Tangible
      Chattel Paper”
shall
      have the meaning assigned to such term in the UCC.

     

    “Term
      Loan A”
shall
      have the meaning specified in Paragraph 2(a) hereof.

     

    “Term
      Loan B”
shall
      have the meaning specified in Paragraph 2(c) hereof.

     

    “Term
      Loan B Cash Flow Advances”
shall
      have the meaning specified in Paragraph 2(d) hereof.

     

    “Term Note
      A”
shall
      mean the Term Note in the principal amount of $6,500,000 executed by Borrower
      in
      favor of Lender pursuant to Paragraph 2(a) hereof, and any extensions,
      supplements, amendments or modifications thereto.

     

    “Term
      Note B”
shall
      mean the Term Note in the principal amount of $5,000,000 executed by Borrower
      in
      favor of Lender pursuant to Paragraph 2(c) hereof, and any extensions,
      supplements, amendments or modifications thereto.

     

    “Termination
      Date”
shall
      mean the earliest to occur of the following: (i) the Maturity Date; and (ii)
      the
      date the Liabilities are accelerated pursuant to Paragraph 14
      hereof.

     

    “UCC”
shall
      mean the Uniform Commercial Code as in effect form time to time in the state
      of
      Illinois.

     

    “Underlying
      Shares”
means
      the Common Shares issued and issuable upon exercise of the Warrants in
      accordance with the terms of the Warrants.

     

    “Warrants”
means
      collectively the Initial Warrants and the Additional Warrants.

     

    2.  LOANS.

     

    (a)  Subject
      to the terms and conditions of this Agreement and the Other Agreements, Lender
      agrees to make a term loan to Borrower in the principal amount of Two Million
      Five Hundred Thousand Dollars ($2,500,000) (“Term
      Loan A”).
      Term
      Loan A shall be further evidenced by and payable in accordance with Term Note
      A,
      which is a consolidation, amendment and restatement of the Prior Note, and
      which
      has a face amount of Six Million Five Hundred Thousand Dollars ($6,500,000),
      reflecting the sum of the amounts previously advanced under the Prior Note
      (the
“Prior
      Indebtedness”),
      plus
      the amount of Term Loan A. Borrower agrees that Term Loan A includes the Prior
      Indebtedness, and that repayment in full of Term Loan A shall include repayment
      in full not only of the $2,500,000 which may be advanced by Lender under this
      Agreement, but also repayment in full of the Prior Indebtedness. Payments of
      principal of Term Loan A may not be reborrowed. Principal of and all accrued
      and
      unpaid interest on Term Loan A shall be payable in full on the Termination
      Date.

     

    (b)  Term
      Loan
      A shall be disbursed by Lender to Borrower in a series of 10 disbursements,
      each
      in the amount of Two Hundred Fifty Thousand Dollars ($250,000), each payable
      every other week, which shall be disbursed based on the Borrower’s satisfaction
      of the Advance Conditions stated in Paragraphs 4(a) and (b) of this Agreement,
      including the issuance by Borrower to Lender of the Initial Warrants for twenty
      five percent (25%) of Borrower’s Fully Diluted Common Shares. Lender, in its
      sole discretion, may elect to advance Term Loan A in greater amounts or on
      an
      accelerated funding schedule. 

     

    (c)  Subject
      to the terms and conditions of this Agreement and the Other Agreements, Lender
      agrees to make a term loan to Borrower in the principal amount of Five Million
      Dollars ($5,000,000) (“Term
      Loan B”).
      Term
      Loan B shall be evidenced by and payable in accordance with Term Note B, which
      has a face amount of Five Million Dollars ($5,000,000). Payments of principal
      of
      Term Loan B may not be reborrowed. Principal of and all accrued and unpaid
      interest on Term Loan B shall be payable in full on the Termination
      Date.

     

    (d)  Term
      Loan
      B shall consist of a series of advances not to exceed, in the aggregate, Five
      Million Dollars ($5,000,000) (“Term
      Loan B Cash Flow Advances”),
      which
      shall be disbursed to Borrower based on Borrower’s satisfaction of the Advance
      Conditions stated in Paragraphs 4(a) and (c) of this Agreement, including the
      issuance by Borrower to Lender of the Additional Warrants for fifteen percent
      (15%) of Borrower’s Fully Diluted Common Shares.. 

     

    3.  INTEREST,
      FEES AND CHARGES.
      Borrower shall pay to Lender the following:

     

    (a)  Borrower
      shall pay to Lender interest on the outstanding principal balance of the Loans
      monthly in arrears on the first day of each month beginning on May 1, 2007
      at
      the per annum rate of twelve percent (12%) (the “Base
      Rate”).
      Following the occurrence of an Event of Default, Borrower shall pay to Lender
      interest on the outstanding principal balance of the Loans at the per annum
      rate
      of four percent (4%) plus the Base Rate (the “Default
      Rate”).
      Interest shall be computed on the basis of a year of three hundred sixty (360)
      days for the actual number of days elapsed.

     

    (b)  It
      is the
      intent of the parties that the rate of interest and the other fees and charges
      to Borrower under this Agreement shall be lawful; therefore, if for any reason
      the interest or other fees and charges payable under this Agreement are found
      by
      a court of competent jurisdiction, in a final determination, to exceed the
      limit
      which Lender may lawfully charge Borrower, then the obligation to pay interest
      and other charges shall automatically be reduced to such limit and, if any
      amount in excess of such limit shall have been paid, then such amount shall
      be
      refunded to Borrower.

     

    4.  CONDITIONS
      OF ADVANCES.
      Without
      limiting Lender’s discretion to make advances hereunder, the making of any
      advance provided for in this Agreement shall be conditioned upon the following
      conditions (“Advance
      Conditions”):

     

    (a)  The
      following conditions (the “General
      Advance Conditions”)
      must
      be satisfied for any advance of the Loan:

     

    (i)  Lender
      shall have received, by at least twelve o’clock noon (12:00 noon)
      Chicago
      time on the day on which an advance is requested to be made hereunder, a
      telephonic request from an officer of Borrower (or any Person authorized by
      Borrower pursuant to a written list provided to Lender), for an advance in
      a
      specific amount. In addition, Lender shall also have received all of the
      schedules, reports, and the Borrowing Base Certificate, in the form of Exhibit
      F, required to have been delivered by Borrower pursuant to Paragraph 9 hereof
      (the “Borrowing
      Base Certificate”);

     

    (ii)  No
      Event
      of Default shall have occurred and be continuing or be caused by the making
      of
      such advance;

     

    (iii)  All
      of
      the representations and warranties contained in this Agreement and the Other
      Agreements, including the representations and warranties regarding Borrower’s
      Intellectual Property, shall be true and correct in all material respects as
      if
      made on the date the request for an advance is made;

     

    (iv)  Borrower’s
      employment agreements with Nicholas H. VandenBrekel and Mark L. Mroczowski
      provide for termination payments to Nicholas H. VandenBrekel and Mark L.
      Mroczowski in the event a change of control (as defined therein) occurs without
      the approval of the Borrower’s Board of Directors; it shall be a General Advance
      Condition Lender shall have received waivers of the application of those
      provisions of the employment agreements to the issuance of the Warrants, the
      issuance of shares to Lender pursuant to the Warrants and the exercise of
      Lender’s rights as a shareholder of Borrower, and those waivers must be in full
      force and effect at any time that an advance of the Loans is
      requested;

     

    (v)  Lender
      shall have received, in form and substance satisfactory to Lender, the Pledge
      Agreements, the Subsidiary Guarantees and the Subordination Agreements, and
      those agreements must be in full force and effect at any time that an advance
      of
      the Loans is requested; 

     

    (vi) Lender
      shall have received a Waiver and Consent in a form satisfactory to Lender from
      each of the Series A Preferred Shareholders and Series B Preferred Shareholders
      identified on Exhibit S; and

     

    (vii) Lender
      shall have received, in form and substance satisfactory to Lender, all
      certificates, orders, authorities, consents, affidavits, schedules, instruments,
      security agreements, financing statements, mortgages and other documents which
      are provided for hereunder, or which Lender may at any time request in a
      commercially reasonable manner.

     

    (b)  The
      following conditions must be satisfied before Lender will make any advance
      from
      the Term Loan A:

     

    (i)  Following
      the execution of this Agreement, Lender shall conduct due diligence with respect
      to Borrower’s Intellectual Property and Borrower’s rights to use Borrower’s
      Intellectual Property to commercialize technology (“Lender's
      IP Due Diligence”).
      On
      or
      before that date which will occur forty five (45) days after the date of this
      Agreement, Lender shall advise Borrower in writing as to whether Lender's IP
      Due
      Diligence has disclosed a condition or facts which Lender, in its sole
      discretion, regards as having the potential to result in a material adverse
      effect on the financial condition of Borrower (an "IP
      Diligence Issue").
      Lender's notice to Borrower of the existence of an IP Diligence Issue shall
      constitute evidence that a condition precedent to the funding of Term Loan
      A
      related to IP Due Diligence has not been satisfied and no further advance of
      either Term Loan A or Term Loan B shall be made unless and until the IP
      Diligence Issue is resolved to Lender's satisfaction. In the event that Lender
      determines, in Lender's sole discretion, that Lender and Borrower have not
      reached a satisfactory resolution of the IP Diligence Issue or in the event
      that
      Lender and Borrower have not agreed upon a plan for the protection of Borrower's
      IP within a period of thirty (30) days following the date of Lender's notice
      to
      Borrower regarding the IP Diligence Issue, then Lender may declare an Event
      of
      Default under this Agreement.

     

    (ii)  Lender
      shall have received the Initial Warrants registered in the name of
      Lender;

     

    (iii)  Lender
      shall have received the
      Registration Rights Agreement duly executed by Borrower;

     

    (iv)  Lender
      shall have received evidence of an amendment to the Borrower’s Articles of
      Incorporation to increase the amount of Borrower’s authorized Common Shares to
      cover all Fully Diluted Common Shares, including those exercisable under the
      Warrants;

     

    (v)  Lender
      shall have received a shareholders agreement providing for the election of
      2
      additional directors to Borrower’s Board of Directors designated by Lender, in
      the form attached hereto as Exhibit G (the “Shareholders
      Agreement”),
      executed by the holders of a sufficient number of Fully Diluted Common Shares;
      and

     

    (vi)  The
      General Advance Conditions must be satisfied as of the time of the proposed
      advance. 

     

    (c)  The
      following conditions must be satisfied for any Term Loan B Cash Flow
      Advance:

     

    (i)  Lender
      must have received from Borrower and approved Borrower’s annual budget and
      EBITDA Projections (as defined below) for the calendar year during which the
      advance is requested,
      and Borrower’s cumulative EBITDA for the portions of that calendar year
      occurring before the month in which the advance is requested must be equal
      to or
      in excess of Borrower’s projected EBITDA for those months;

     

    (ii)  Lender
      shall have received the Additional Warrants registered in the name of
      Lender;

     

    (iii)  The
      General Advance
      Conditions must be satisfied as of the time of the Term Loan B Working Capital
      Advance; and

     

    (iv)  at
      least
      one of the following conditions must be satisfied; either: 

     

    (A) Advances
      from the Term Loan B Cash Flow Facility may be requested for the purpose of
      obtaining Inventory for sale; for such advances, the Borrower must have one
      or
      more Eligible Orders for that Inventory, and no Order will be an Eligible Order
      unless fulfillment of that Order will produce a Gross Profit Margin in
      accordance with Exhibit B;

     

    (B) Advances
      from the Term Loan B Cash Flow Facility may be requested for the purpose of
      obtaining working capital by advancing against royalty payments or other forms
      of income; in each such case, Borrower and Lender shall agree upon a formula
      to
      advance against such royalty payments or other forms of income; or

     

    (C) Lender
      has, in its sole discretion, agreed to make an advance from the Term Loan B
      Cash
      Flow Facility.

     

    5.  GRANT
      OF SECURITY INTEREST TO LENDER.
      As
      security for the payment or other satisfaction of all Liabilities, Borrower
      hereby assigns to Lender and grants to Lender a continuing security interest
      in
      the following property of Borrower, whether now or hereafter owned, existing,
      acquired or arising and wherever now or hereafter located: (a) all Accounts
      and
      all Goods whose sale, lease or other disposition by Borrower has given rise
      to
      Accounts and have been returned to or repossessed or stopped in transit by
      Borrower; (b) all Chattel Paper, Instruments, Documents and General Intangibles
      (including without limitation all patents, patent applications, trademarks,
      trademark applications, tradenames, trade secrets, goodwill, copyrights, rights
      in Intellectual Property, registrations, licenses, software, franchises,
      customer lists, tax refund claims, claims against carriers and shippers,
      guarantee claims, contracts rights, payment intangibles, security interests,
      security deposits and any rights to indemnification); (c) all Inventory and
      other Goods, including without limitation Equipment, vehicles and Fixtures;
      (d)
      all Investment Property, including all shares of Borrower’s Subsidiaries; (e)
      all Deposit Accounts, bank accounts, deposits and cash; (f) all Letter-of-Credit
      Rights; (g) Commercial Tort Claims listed on Exhibit H hereto; (h) any other
      property of Borrower now or hereafter in the possession, custody or control
      of
      Lender or any agent or any Affiliate of Lender or any participant with Lender
      in
      the Loans for any purpose (whether for safekeeping, deposit, collection,
      custody, pledge, transmission or otherwise); and (f) all additions and
      accessions to, substitutions for, and replacements, products and proceeds of
      the
      foregoing property, including without limitation proceeds of all insurance
      policies insuring the foregoing property, and all of Borrower’s books and
      records relating to any of the foregoing and to Borrower’s business.


     

    (a)  To
      further evidence the foregoing security interests, as a General Advance
      Condition, Borrower shall execute and deliver to Lender in a form satisfactory
      to Lender a pledge of Borrower’s shares in the Subsidiaries and a pledge of
      Borrower’s Intellectual Property, plus such additional security agreements and
      UCC financing statements as Lender may request to evidence and document the
      foregoing grant of security interests (collectively, the “Pledge
      Agreements”),
      which
      Pledge Agreements shall include provisions recognizing that the security
      agreements and pledges which secured the Prior Note have been assigned to Lender
      and confirming that those security agreements and pledges remain in full force
      and effect, subject to no defenses of any kind. The Pledge Agreements shall
      include an agreement creating a security interest for Lender in the Deposit
      Accounts, which agreement shall be in the form of a control
      agreement.

     

    (b)  As
      a
      General Advance Condition, Borrower shall also cause the Subsidiaries to enter
      into guarantees of the Loans in a form satisfactory to Lender (the “Subsidiary
      Guarantees”),
      which
      Subsidiary Guarantees shall include provisions recognizing that the guarantees
      of the Prior Note made by the Subsidiaries have been assigned to Lender and
      confirming that those guarantees remain in full force and effect, subject as
      of
      the date hereof to no defenses of any kind.

     

    (c)  As
      a
      General Advance Condition, Borrower shall cause Nicholas H. VandenBrekel and
      Mark Mroczowski, as existing creditors of Lender, to enter into Subordination
      Agreements with Lender in a form satisfactory to Lender (the “Subordination
      Agreements”)
      which
      Subordination Agreements shall include provisions recognizing that the
      Subordination Agreements made with respect to the Prior Note have been assigned
      to Lender and confirming that those subordination agreements remain in full
      force and effect, subject to no defenses of any kind. 

     

    (d) Lender
      shall have the right now, and at any time in the future in his sole and absolute
      discretion, without notice to Borrower, to prepare, file and sign the Borrower’s
      name on any financing statement, notice of lien, assignment or satisfaction
      of
      lien or similar document in connection with the any and all security interests
      granted by Borrower to Lender under this Agreement. The Borrower hereby
      authorizes Lender to file financing statements containing the collateral
      description "All of the Debtor’s assets whether now owned or hereafter
      acquired." or such lesser amount of assets as Lender may determine, or Lender
      may, at his option, file financing statements containing any collateral
      description which reasonably describes the collateral in which a security
      interest is granted under this Agreement;

    


    6.  PRESERVATION
      OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.
      

     

    (a)  Borrower
      shall, at Lender’s request, at any time and from time to time, authenticate,
      execute and deliver to Lender such financing statements, documents and other
      agreements and instruments (and pay the cost of filing or recording the same
      in
      all public offices deemed necessary or desirable by Lender) and do such other
      acts and things or cause third parties to do such other acts and things as
      Lender may deem necessary or desirable in order to establish and maintain a
      valid, attached and perfected security interest in the Collateral in favor
      of
      Lender (free and clear of all other liens, claims and rights of third parties
      whatsoever, whether voluntarily or involuntarily created, except Permitted
      Liens) to secure payment of the Liabilities, and in order to facilitate the
      collection of the Collateral. Borrower irrevocably hereby makes, constitutes
      and
      appoints Lender (and all Persons designated by Lender for that purpose) as
      Borrower’s true and lawful attorney and agent-in-fact to execute such financing
      statements, documents and other agreements and instruments and do such other
      acts and things as may be necessary to preserve and perfect Lender’s security
      interest in the Collateral. 

     

    (b)  Immediately
      upon Borrower’s receipt of any portion of the Collateral evidenced by an
      Agreement, Instrument of Document including, without limitation, any Tangible
      Chattel Paper and any Investment Property consisting of certificated securities,
      Borrower shall deliver the original thereof to Lender together with an
      appropriate endorsement or other specific evidence of assignment thereof to
      Lender (in form and substance acceptable to Lender). If any endorsement or
      assignment of any such items shall not be made for any reason, Lender is hereby
      irrevocably authorized as Borrower’s attorney and agent-in-fact, to endorse or
      assign the same on Borrower’s behalf.

     

    (c)  To
      the
      extent Borrower obtains or maintains any Electronic Chattel Paper, Deposit
      Accounts or Letter-of-Credit Rights, Borrower shall do such acts and things
      or
      cause third parties to do such acts and things to establish control in favor
      of
      Lender as control for such type of Collateral is defined in the
      UCC.

     

    7.  COVENANTS
      REGARDING THE WARRANTS.
      Borrower shall maintain a reserve from its duly authorized Common Shares for
      issuance pursuant to the Warrants and the Other Agreements in such amount as
      may
      be required to fulfill its obligations in full under the Warrants and the Other
      Agreements.

     

    8.  COLLECTIONS.

     

    (a)  As
      used
      herein, the term “EBITDA
      Shortfall”
shall
      mean that for any month, Borrower’s actual EBITDA is less than the EBITDA shown
      in Borrower's EBITDA Projections for that month by a percentage factor of
      fifteen percent (15%) or more. Upon occurrence of an EBITDA Shortfall for any
      month which continues for a second consecutive month, Lender shall have the
      right to declare that a cash management event (a “Lock
      Box Event”)
      has
      occurred, and unless and until a Lock Box Reset Event (as defined below) occurs,
      Lender shall have the following rights to collect Borrower's cash
      payments.
      Following occurrence of a Lock Box Event, Lender shall have the right to direct
      Borrower to cause all of its Account Debtors to make all payments on the
      Accounts to a post office box (the “Lock
      Box”)
      designated by, and under the exclusive control of Lender or another financial
      institution acceptable to Lender. Upon direction by Lender, Borrower shall
      establish an account (the “Lock
      Box Account”)
      in
      Borrower’s name with a financial institution acceptable to Lender, into which
      all payments received in the Lock Box shall be deposited, and into which
      Borrower will immediately deposit all payments received by Borrower with respect
      to Accounts of Borrower and other Collateral in the identical form in which
      such
      payments were made, whether by cash or check. Following occurrence of a Lock
      Box
      Event, if Borrower, any Affiliate or Subsidiary of Borrower, or any shareholder,
      officer, director, employee or agent of Borrower or any Affiliate or Subsidiary
      of Borrower, or any other Person acting for or in concert with Borrower shall
      receive any monies, checks, notes, drafts or other payments relating to or
      as
      Proceeds of Accounts of Borrower or other Collateral, Borrower and each such
      Person shall receive all such items in trust for, and as the sole and exclusive
      property of, Lender and, immediately upon receipt thereof, shall remit the
      same
      (or cause the same to be remitted) in kind to the Lock Box Account. The
      financial institution with which the Lock Box Account is established shall
      acknowledge and agree, in a manner satisfactory to Lender, that the amounts
      on
      deposit in such Lock Box Account are the sole and exclusive property of Lender,
      that such financial institution will follow the instructions of Lender with
      respect to disposition of funds in the Lock Box and Lock Box Account without
      further consent from Borrower, that such financial institution has no right
      to
      setoff against the Lock Box Account or against any other account maintained
      by
      such financial institution into which the contents of the Lock Box Account
      are
      transferred, and that such financial institution shall wire to Lender, or
      otherwise transfer to Lender in immediately available funds in a manner
      satisfactory to Lender, funds deposited in the Lock Box Account on a daily
      basis
      as such funds are collected. For purposes of calculating interest on the
      Liabilities, three (3) business days after receipt by Lender of good Funds),
      Lender shall apply (conditional upon final collection) the whole or any part
      of
      such collections or Proceeds against the Liabilities in such order as Lender
      shall determine in its sole discretion. Borrower agrees that all payments
      deposited to such Lock Box Account or otherwise received by Lender, whether
      in
      respect of the Accounts of Borrower or as Proceeds of other Collateral or
      otherwise, will be applied on account of the Liabilities in accordance with
      the
      terms of this Agreement. Borrower agrees to pay all fees, costs and expenses
      which Lender incurs in connection with opening and maintaining the Lock Box
      Account and depositing for collection by Lender any check or other item of
      payment received by Lender on account of the Liabilities. All checks, drafts,
      instruments and other items of payment or Proceeds of Collateral shall be
      endorsed by Borrower to Lender, and, if that endorsement of any such item shall
      not be made for any reason, Lender is hereby irrevocably authorized to endorse
      the same on Borrower’s behalf. For the purpose of this Paragraph, Borrower
      irrevocably hereby makes, constitutes and appoints Lender (and all Persons
      designated by Lender for that purpose) as Borrower’s true and lawful attorney
      and agent-in-fact (i) to endorse Borrower’s name upon said items of payment
      and/or Proceeds of Collateral and upon any Tangible Chattel Paper of Borrower,
      document, instrument, invoice or similar document or agreement relating to
      any
      Account of Borrower or goods pertaining thereto; (ii) to take control in any
      manner of any item of payment or proceeds thereof; and (iii) to have access
      to
      any lock box or postal box into which any of Borrower’s mail is deposited, and
      open and process all mail addressed to Borrower and deposited
      therein.

     

    (b)  As
      used
      herein, the term "Lock
      Box Reset Event"
      shall
      mean that following the occurrence of a Lock Box Event, Borrower's actual EBITDA
      for two consecutive months has equaled or exceeded the amount of EBITDA shown
      in
      Borrower's EBITDA Projections for those two months.

     

    (c)  After
      the
      occurrence of a Lock Box Event, Lender may, at any time and from time to time,
      whether before or after notification to any Account Debtor and whether before
      or
      after the maturity of any of the Liabilities, (i) enforce collection of any
      of
      Borrower’s Accounts or contract rights by suit or otherwise; (ii) exercise all
      of Borrower’s rights and remedies with respect to proceedings brought to collect
      any Accounts of Borrower; (iii) surrender, release or exchange all or any part
      of any Accounts of Borrower, or compromise or extend or renew for any period
      (whether or not longer than the original period) any indebtedness thereunder;
      (iv) sell or assign any Account of Borrower upon such terms, for such amount
      and
      at such time or times as Lender deems advisable; (v) prepare, file and sign
      Borrower’s name on any proof of claim in bankruptcy or other similar document
      against any Account Debtor; and (vi) do all other acts and things which are
      necessary, in Lender’s sole discretion, to fulfill Borrower’s obligations under
      this Agreement and to allow Lender to collect the Accounts of Borrower. In
      addition to any other provision hereof, Lender may at any time, whether before
      or after the occurrence of an Event of Default, at Borrower’s expense, notify
      any parties obligated on any of the Accounts to make payment directly to Lender
      of any amounts due or to become due thereunder.

     

    (d)  Lender,
      in its sole discretion, without waiving or releasing any obligation, liability
      or duty of Borrower under this Agreement or the Other Agreements or any Event
      of
      Default, may at any time or times hereafter, but shall not be obligated to,
      pay,
      acquire or accept an assignment of any security interest, lien, encumbrance
      or
      claim asserted by any Person in, upon or against the Collateral. All sums paid
      by Lender in respect thereof and all costs, fees and expenses, including without
      limitation reasonable attorney fees, all court costs and all other charges
      relating thereto incurred by Lender shall constitute a loan, payable by Borrower
      to Lender on demand and, until paid, shall bear interest at the rate then
      applicable to the Loans.

     

    (e)  Immediately
      upon Borrower’s receipt of any portion of the Collateral evidenced by an
      agreement, Instrument or Document, including without limitation any Chattel
      Paper, Borrower shall deliver the original thereof to Lender together with
      an
      appropriate endorsement or other specific evidence of assignment thereof to
      Lender (in form and substance acceptable to Lender). If an endorsement or
      assignment of any such items shall not be made for any reason, Lender is hereby
      irrevocably authorized, as Borrower’s attorney and agent-in-fact, to endorse or
      assign the same on Borrower’s behalf.

     

    9.  SCHEDULES
      AND REPORTS.

     

    (a)  At
      the
      end of each
      month,
      upon each request for a Loan hereunder and at such other times as may be
      requested by Lender from time to time hereafter, Borrower shall deliver to
      Lender (i) a Borrowing Base Certificate certified by an authorized officer
      of
      Borrower, which certificate includes a schedule identifying each Eligible Order
      together with copies of the invoices, if requested by Lender (with evidence
      of
      shipment attached) pertaining to each such Eligible Order as well as daily
      sales, collections, cash receipts, credit and adjustment reports and all
      appropriate supporting documentation; and (ii) such additional schedules,
      certificates, reports and information with respect to the Collateral as Lender
      may from time to time require. Lender, through its officers, employees or
      agents, shall have the right, at any time and from time to time in Lender’s
      name, in the name of a nominee of Lender or in Borrower’s name, to verify the
      validity, amount or any other matter relating to any of Borrower’s Accounts, by
      mail, telephone, telegraph or otherwise. Borrower shall reimburse Lender, on
      demand, for all costs, fees and expenses incurred by Lender in this regard.
      Borrower shall immediately notify Lender of any event causing loss or
      depreciation in value of Borrower’s Inventory (other than normal depreciation
      occurring in the ordinary course of business). Such monthly reports may be
      submitted by telecopy, with originals to follow by U.S. Mail.

     

    (b)  Without
      limiting the generality of the foregoing, Borrower shall deliver to Lender,
      at
      least once a month, not later than the tenth (10th)
      day of
      each month (or more frequently when requested by Lender), a month-end EBITDA
      certificate, certified by an authorized officer of Borrower which reconciles
      to
      all month-end financial reports and which states the amount of EBITDA for the
      prior month.

     

    (c)  Without
      limiting the generality of the foregoing, Borrower shall deliver to Lender,
      at
      least once a month, not later than the tenth (10th)
      day of
      each month (or more frequently when requested by Lender), a month-end Borrowing
      Base Certificate, certified by an authorized officer of Borrower which
      reconciles to all month-end financial reports, an accounts receivable aging
      report (aged by invoice date), an accounts payable aging report (aged by invoice
      date) and all appropriate supporting documentation.

     

    (d)  All
      schedules, certificates, reports, and assignments and other items delivered
      by
      Borrower to Lender hereunder shall be executed by an authorized representative
      of Borrower and shall be in such form and contain such information as Lender
      shall specify.

     

    10.  TERMINATION.
      This
      Agreement shall be in effect until the Termination Date. The security interests
      and liens created under this Agreement and the Other Agreements shall survive
      such termination until the payment of the Liabilities has become indefeasible.
      In addition, the
      Covenants contained in Paragraphs 12(a), (b), (k), (l), (m), (n), (o), (p),
      (q),
      (r), and (s) shall survive the Termination Date for so long as Lender holds
      the
      Initial Warrants, the Additional Warrants or the Underlying Shares representing
      25% of the Fully Diluted Common Shares. At
      such
      time as Borrower has repaid all of the Liabilities and this Agreement has
      terminated, Borrower shall deliver to Lender a release, in form and substance
      satisfactory to Lender, of all obligations and liabilities of Lender and its
      officers, directors, employees, agents and Affiliates to Borrower. 

     

    11.  REPRESENTATIONS,
      WARRANTIES AND COVENANTS.
      Except
      as
      set forth in the disclosure schedules provided by the Borrower to the Lender
      on
      the date hereof, which may be supplemented with Lender’s approval from time to
      time after the date hereof should any fact or condition require a change thereto
      (the “Disclosure
      Schedule”),
      Borrower
      hereby represents, warrants and covenants that:

     

    (a)  all
      of
      the direct and indirect Subsidiaries of Borrower are set forth on Exhibit I.
      Except as set forth on Exhibit G, Borrower owns, directly or indirectly, all
      of
      the capital stock or other equity interests of each Subsidiary free and clear
      of
      any Liens, and all the issued and outstanding shares of capital stock of each
      Subsidiary are validly issued and are fully paid, non-assessable and free of
      preemptive and similar rights to subscribe for or purchase
      securities;

     

    (b)  Borrower
      and each of its Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither Borrower nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of Borrower and its Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of this Agreement and/or the Other
      Agreements, (ii) a material adverse effect on the results of operations, assets,
      business, prospects or condition (financial or otherwise) of Borrower and its
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on Borrower’s
      ability to perform in any material respect on a timely basis its obligations
      under this Agreement and/or the Other Agreements (any of (i), (ii) or (iii),
      a
“Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification;

     

    (c)  the
      execution, delivery and performance of this Agreement and the Other Agreements
      by Borrower and the consummation by Borrower of the transactions contemplated
      hereby and thereby do not and will not: (i) conflict with or violate any
      provision of Borrower’s or any Subsidiary’s certificate or articles of
      incorporation, bylaws or other organizational or charter documents, or (ii)
      conflict with, or constitute a default (or an event that with notice or lapse
      of
      time or both would become a default) under, result in the creation of any Lien
      upon any of the properties or assets of Borrower or any Subsidiary, or give
      to
      others any rights of termination, amendment, acceleration or cancellation (with
      or without notice, lapse of time or both) of, any material agreement, credit
      facility, debt or other instrument (evidencing a Company or Subsidiary debt
      or
      otherwise) or other understanding to which Borrower or any Subsidiary is a
      party
      or by which any property or asset of Borrower or any Subsidiary is bound or
      affected, or (iii) subject to the Required Approvals, conflict with or result
      in
      a violation of any material law, rule, regulation, order, judgment, injunction,
      decree or other restriction of any court or governmental authority to which
      Borrower or a Subsidiary is subject (including federal and state securities
      laws
      and regulations), or by which any property or asset of Borrower or a Subsidiary
      is bound or affected; except in the case of each of clauses (ii) and (iii),
      such
      as could not have or reasonably be expected to result in a Material Adverse
      Effect;

     

    (d)  the
      financial statements delivered or to be delivered by Borrower to Lender at
      or
      prior to the date of this Agreement and at all times subsequent thereto
fairly
      reflect the financial condition of Borrower in accordance with GAAP, and there
      has been no adverse change in the financial condition, the operations or any
      other status of Borrower since the date of the financial statements delivered
      to
      Lender most recently prior to the date of this Agreement;

     

    (e)  the
      office where Borrower keeps its books, records and accounts (or copies thereof)
      concerning the Collateral, Borrower’s principal place of business and all of
      Borrower’s other places of business, locations of Collateral and post office
      boxes are as set forth in Exhibit J; Borrower shall promptly (but in no event
      less than ten (10) days prior thereto) advise Lender in writing of the proposed
      opening of any new place of business, the closing of any existing place of
      business, any change in the location of Borrower’s books, records and accounts
      (or copies thereof) or the opening or closing of any post office box of
      Borrower;

     

    (f)  the
      Collateral, including without limitation the Equipment (except any part thereof
      which prior to the date of this Agreement Borrower shall have advised Lender
      in
      writing consists of Collateral normally used in more than one state) is and
      shall be kept, or, in the case of vehicles, based, only at the addresses set
      forth on the first page of this Agreement or on Exhibit J;

     

    (g)  if
      any of
      the Collateral consists of Goods of a type normally used in more than one state,
      whether or not actually so used, Borrower shall immediately give written notice
      to Lender of any use of any such Goods in any state other than a state in which
      Borrower has previously advised Lender such Goods shall be used, and such Goods
      shall not, unless Lender shall otherwise consent in writing, be used outside
      of
      the continental United States;

     

    (h)  Borrower
      is and shall at all times be the lawful owner of its property now purportedly
      owned or hereafter purportedly acquired by Borrower, free from all liens,
      claims, security interests and encumbrances whatsoever, whether voluntarily
      or
      involuntarily created and whether or not perfected, other than the Permitted
      Liens and except for sales of Inventory in the ordinary course of
      business;

     

    (i)  Borrower
      has the right and power and is duly authorized and empowered to enter into,
      execute and deliver this Agreement and the Other Agreements and perform its
      obligations hereunder and thereunder; Borrower’s execution, delivery and
      performance of this Agreement and the Other Agreements does not and shall not
      conflict with the provisions of any statute, regulation, ordinance or rule
      of
      law, or any agreement, contract or other document which may now or hereafter
      be
      binding on Borrower, and Borrower’s execution, delivery and performance of this
      Agreement and the Other Agreements shall not result in the imposition of any
      lien or other encumbrance which might result in any Materially Adversely Effect
      upon any of Borrower’s property under any existing indenture, mortgage, deed of
      trust, loan or credit agreement or other agreement or instrument by which
      Borrower or any of its property may be bound or affected;

     

    (j)  Borrower
      shall, and shall cause each of its Subsidiaries to comply in all material
      respects with all applicable laws, rules and regulations of all governmental
      authorities, the violation of which would reasonably be expected to have a
      Material Adverse Effect upon the financial condition, operating results, assets,
      operations or business prospects of Borrower and its Subsidiaries taken as
      a
      whole, and pay and discharge when payable all taxes, assessments and
      governmental charges (except to the extent the same are being contested in
      good
      faith and adequate reserves therefor have been established);

     

    (k)  there
      are
      no actions or proceedings which are pending or threatened against Borrower
      which
      might result in any Materially
      Adversely Effect with respect to Borrower’s property and Borrower shall,
      promptly upon becoming aware of any such pending or threatened action or
      proceeding, give written notice thereof to Lender;

     

    (l)  Borrower
      has obtained all material licenses, authorizations, approvals and permits,
      the
      lack of which would have a Material Adverse Effect on the operation of its
      business, and Borrower is and shall remain in compliance in all material
      respects with all applicable federal, state, local and foreign statutes, orders,
      regulations, rules and ordinances (including, without limitation, statutes,
      orders, regulations, rules, and ordinances relating to taxes, securities,
      employee health and safety and environmental matters), the failure to comply
      with which would have a Material Adverse Effect on its business, property,
      assets, operations or condition, financial or otherwise;

     

    (m)  other
      than Lender and those entities listed in Exhibit K, no Person has any right
      to
      cause Borrower to effect the registration under the Securities Act of any
      securities of Borrower;

     

    (n)  the
      Securities are duly authorized and, when issued and paid for in accordance
      with
      this Agreement and/or the Other Agreements, will be duly and validly issued,
      fully paid and nonassessable, free and clear of all Liens imposed by Borrower
      other than restrictions on transfer provided for in this Agreement and/or the
      Other Agreements. The Underlying Shares, when issued in accordance with the
      terms of this Agreement and/or the Other Agreements, will be validly issued,
      fully paid and nonassessable, free and clear of all Liens imposed by Borrower.
      The Initial Warrants shall be exercisable for 25% of Borrower’s Fully Diluted
      Common Shares and the Additional Warrants shall be exercisable for 15% of
      Borrower’s Fully Diluted Common Shares, therefore, Borrower has reserved from
      its duly authorized capital stock a number of Common Shares for issuance of
      the
      Underlying Shares at least equal to 40% of the Borrower’s Fully Diluted Common
      Shares on the date hereof;

     

    (o)  the
      capitalization of Borrower is as set forth on Exhibit L. Borrower has not issued
      any capital stock since its most recently filed periodic report under the
      Securities Exchange Act, except as set forth on Exhibit K, other than pursuant
      to the exercise of employee stock options under Borrower’s stock option plans,
      the issuance of Common Shares to employees pursuant to Borrower’s employee stock
      purchase plan and pursuant to the conversion or exercise of Common Shares
      Equivalents outstanding as of the date of the most recently filed periodic
      report under the Securities Exchange Act. No Person has any right of first
      refusal, preemptive right, right of participation, or any similar right to
      participate in the transactions contemplated by this Agreement and/or the Other
      Agreements. Except as a result of the purchase and sale of the Securities,
      or as
      set forth in Schedule 11(o), there are no outstanding options, warrants, script
      rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities, rights or obligations convertible into or
      exercisable or exchangeable for, or giving any Person any right to subscribe
      for
      or acquire, any Common Shares, or contracts, commitments, understandings or
      arrangements by which Borrower or any Subsidiary is or may become bound to
      issue
      additional Common Shares or Common Shares Equivalents. The issuance and sale
      of
      the Securities will not obligate Borrower to issue Common Shares or other
      securities to any Person (other than the Purchasers) and will not result in
      a
      right of any holder of Company securities to adjust the exercise, conversion,
      exchange or reset price under any of such securities. All of the outstanding
      shares of capital stock of Borrower are validly issued, fully paid and
      nonassessable, have been issued in compliance with all federal and state
      securities laws, and none of such outstanding shares was issued in violation
      of
      any preemptive rights or similar rights to subscribe for or purchase securities.
      No further approval or authorization of any shareholder, the Board of Directors
      of Borrower or others is required for the issuance and sale of the Securities.
      There are no shareholders agreements, voting agreements or other similar
      agreements with respect to Borrower’s capital stock to which Borrower is a party
      or, to the Knowledge of Borrower, between or among any of Borrower’s
      shareholders;

     

    (p)  all
      written information now, heretofore or hereafter furnished by Borrower to Lender
      is and shall be materially
      true and correct as of the date with respect to which such information was
      or is
      furnished, except to the extent the failure of such information being true
      and
      correct would not result in a Material Adverse Effect on the
      Borrower;

     

    (q)  Borrower
      is not conducting, permitting or suffering to be conducted, nor shall it
      conduct, permit or suffer to be conducted, any activities or transactions with
      any Affiliate of Borrower; provided, however, that Borrower may enter into
      transactions with Affiliates of Borrower in the ordinary course of business
      pursuant to terms that are no less favorable to Borrower than the terms upon
      which such transfers or transactions would have been made had they been made
      to
      or with a Person that is not an Affiliate of Borrower and, in connection
      therewith, may transfer cash or property to Affiliates of Borrower for fair
      value;

     

    (r)  Except
      as
      set forth on Exhibit M, Borrower’s name has always been as set forth on the
      first page of this Agreement and Borrower uses no tradenames or division names
      in the operation of its business; Borrower shall notify Lender in writing within
      ten (10) days of the change of its name or the use of any tradenames or division
      names not previously disclosed to Lender in writing;

     

    (s)  with
      respect to Borrower’s Equipment: (i) Borrower has good and indefeasible and
      merchantable title to and ownership of all Equipment, including without
      limitation the Equipment described on Exhibit N; (ii) Borrower shall keep and
      maintain the Equipment in good operating condition and repair and shall make
      all
      necessary replacements thereof and renewals thereto so that the value and
      operating efficiency thereof shall at all times be preserved and maintained;
      (iii) Borrower shall not permit any such items to become a Fixture to real
      estate or an accession to other personal property; and (iv) Borrower,
      immediately on demand by Lender, shall deliver to Lender any and all evidence
      of
      ownership of, including without limitation, if applicable, certificates of
      title
      and applications of title to, any of the Equipment;

     

    (t)  this
      Agreement and the Other Agreements to which Borrower is a party are the legal,
      valid and binding obligations of Borrower and are enforceable against Borrower
      in accordance with their respective terms except as may be limited by
      bankruptcy, insolvency, reorganization or other similar laws affecting the
      enforcement of creditors’ rights generally and by general principles of
      equity;

     

    (u)  Except
      as
      set forth on Schedule 11(u), Borrower is not now obligated, nor shall it create,
      incur, assume or become obligated (directly or indirectly), for any loans or
      other indebtedness for borrowed money other than the Loans, except that Borrower
      may (i) borrow money from a Person other than Lender on an unsecured and
      subordinated basis if a subordination agreement in favor of Lender and in form
      and substance satisfactory to Lender is executed and delivered to Lender
      relative thereto; (ii) maintain any present indebtedness to any Person which
      is
      set forth on Exhibit O; and (iii) incur unsecured indebtedness to trade
      creditors in the ordinary course of Borrower’s business;

     

    (v)  Borrower
      does not own any margin securities, and none of the proceeds of the Loans
      hereunder shall be used for the purpose of purchasing or carrying any margin
      securities or for the purpose of reducing or retiring any indebtedness which
      was
      originally incurred to purchase any margin securities or for any other purpose
      not permitted by Regulation U of the Board of Governors of the Federal Reserve
      System as in effect from time to time;

     

    (w)  Exhibit
      H
      sets forth the names of all of the Subsidiaries of Borrower and except as set
      forth on Exhibit H, Borrower has no subsidiaries or divisions, nor is Borrower
      engaged in any joint venture or partnership with any other Person;

     

    (x)  Borrower
      has not received written notice that it is in default under any material
      contract, lease or commitment to which it is a party or by which it is bound,
      nor does Borrower know of any dispute regarding any contract, lease or
      commitment which is material to the continued financial success and well-being
      of Borrower;

     

    (y)  there
      are
      no controversies pending or to the Borrower’s Knowledge, threatened between
      Borrower and any of its employees, other than employee grievances arising in
      the
      ordinary course of business which would not, in the aggregate, have a Material
      Adverse Effect on Borrower, and Borrower is in compliance with all federal
      and
      state laws respecting employment and employment terms, conditions and practices,
      except to the extent the Borrower’s failure to be in compliance with all such
      laws would not result in a Material Adverse Effect on Borrower; 

     

    (z)  Exhibit
      P, Schedule 1 contains a true and complete list of the Intellectual Property,
      and includes details of all due dates for further filings, maintenance and
      other
      payments or other actions falling due in respect of the Intellectual Property
      within twelve (12) months following the date of this Agreement, and the current
      status of the corresponding registrations, filings, applications and
      payments;

     

    (aa)  Borrower
      has not received written notice that it has infringed upon or misappropriated
      any Intellectual Property rights of any person in Borrower’s conduct of the
      Business. No written notice (i) challenging the validity, effectiveness or
      ownership by Borrower of any of the Intellectual Property, or (ii) to the effect
      that the use, distribution, licensing, sublicensing, sale or any other exercise
      of rights in any product, service, work, technology or process as now used
      or
      offered or proposed for use, licensing, sublicensing, sale or other manner
      of
      commercial exploitation by Borrower infringes or will infringe on any
      Intellectual Property rights or personal right of any Person have been asserted
      or, to Borrower’s Knowledge, are threatened by any Person, nor are there, to
      Borrower’s knowledge, any valid grounds for any bona fide claim of any such
      kind. To Borrower’s knowledge, there is and has been no unauthorized use,
      infringement or misappropriation of any Intellectual Property by any third
      party, employee or former employee; 

     

    (bb)  Except
      as
      set forth on Exhibit P, Borrower does not owe any royalties or other payments
      to
      third parties in respect of the Intellectual Property. All royalties or other
      payments set forth on Exhibit P, Schedule 2 that have accrued prior to the
      date
      of this Agreement have been paid; and

     

    (cc)  Borrower
      represents, warrants and covenants to Lender that all representations and
      warranties of Borrower contained in this Agreement (whether appearing in
      Paragraph 11 or 12 hereof or elsewhere) shall be true at the time of Borrower’s
      execution of this Agreement, shall survive the execution, delivery and
      acceptance hereof by the parties hereto and the closing of the transactions
      described herein or related hereto, shall be remade by Borrower at the time
      each
      Loan is made pursuant to this Agreement.

     

    12.  ADDITIONAL
      COVENANTS OF BORROWER.
      Except
      as otherwise contemplated in this Agreement or necessary to comply with this
      Agreement or the Other Agreements, unless Borrower obtains Lender’s prior
      written consent waiving or modifying any of Borrower’s covenants hereunder in
      any specific instance, Borrower agrees as follows:

     

    (a)  Borrower
      shall at all times keep accurate and complete books, records and accounts with
      respect to all of Borrower’s
      business activities, in accordance with sound accounting practices and generally
      accepted accounting principles consistently applied, and shall keep such books,
      records and accounts, and any copies thereof, only at the addresses indicated
      for such purpose on Exhibit J;

     

    (b)  Borrower
      agrees to deliver to Lender the following financial information, all of which
      shall be prepared in accordance with generally accepted accounting principles
      consistently applied: (i) no later than thirty (30) days after each calendar
      month, copies of internally prepared financial statements, including without
      limitation balance sheets and statements of income, retained earnings and cash
      flow of Borrower, with a Compliance Certificate in the form of Exhibit Q hereto,
      acknowledged by the Chief Financial Officer of Borrower to be true and correct
      and free from material error, as well as detailed accounts payable and accounts
      receivable agings; (ii) no later than ninety (90) days after the end of each
      of
      Borrower’s fiscal years, annual financial statements audited by independent
      certified public accountants selected by Borrower and satisfactory to Lender,
      which financial statements shall be accompanied by a letter from such
      accountants acknowledging that they are aware that Lender is relying upon such
      financial statements in connection with the exercise of its rights hereunder
      and
      a Compliance Certificate acknowledged by the Chief Financial Officer of Borrower
      to be true and correct and free from material error; (iii) no later than the
      end
      of each fiscal year of Borrower, Borrower shall deliver to Lender projected
      balance sheets, income statements and projections of EBITDA (“EBITDA
      Projections”)
      for
      the succeeding fiscal year, such projections to be prepared showing monthly
      calculations; (iv) within ten (10) days after the filing thereof, copies of
      Borrower’s United States corporate income tax returns; and (v) such other
      financial information as Lender shall reasonably request;

     

    (c)  Borrower
      shall promptly advise Lender in writing of any event that has had a Material
      Adverse Effect, the occurrence of any Event of Default hereunder or the
      occurrence of any event which, if uncured, will become an Event of Default
      hereunder after notice or lapse of time (or both), and such written advise
      under
      this Paragraph 12(c) shall not be deemed to cure or waive and an Event of
      Default;

     

    (d)  Lender,
      or any Persons designated by it, shall have the right, upon providing the
      Borrower or its Subsidiaries, as the case may be, with no less than one day
      prior written notice, to call at Borrower’s places of business at any reasonable
      times, and, without hindrance or delay, to inspect the Collateral and to
      inspect, audit, check and make extracts from Borrower’s books, records,
      journals, orders, receipts and any correspondence and other data relating to
      Borrower’s business, the Collateral or any transactions between the parties
      hereto, and shall have the right to make such verification concerning Borrower’s
      business as Lender may consider reasonable under the circumstances. Borrower
      shall furnish to Lender such information relevant to Lender’s rights under this
      Agreement as Lender shall at any time and from time to time request. Borrower
      authorizes Lender to discuss the affairs, finances and business of Borrower
      with
      any officers, employees or directors of Borrower or with any Affiliate or the
      officers, employees or directors of any Affiliate, and to discuss the financial
      condition of Borrower with Borrower’s independent public
      accountants;

     

    (e)  Borrower
      shall:

     

    (i)  keep
      the
      Collateral properly housed and shall keep the Collateral insured for the full
      insurable value thereof against loss or damage by fire, theft, explosion,
      sprinklers, collision (in the case of motor vehicles) and such other risks
      as
      are customarily insured against by Persons engaged in businesses similar to
      that
      of Borrower with such companies, in such amounts and under policies in such
      form
      as shall be reasonably satisfactory to Lender. At the request of Lender,
      original (or certified) copies of such policies of insurance shall be delivered
      to Lender, together with evidence of payment of all premiums therefor, and
      shall
      contain an endorsement, in form and substance acceptable to Lender, showing
      loss
      under such insurance policies payable to Lender. Such endorsement, or an
      independent instrument furnished to Lender, shall provide that the insurance
      company shall give Lender at least thirty (30) days written notice before any
      such policy of insurance is altered or cancelled and that no act, whether
      willful or negligent, or default of Borrower or any other Person shall affect
      the right of Lender to recover under such policy of insurance in case of loss
      or
      damage. In addition, Borrower shall cause to be executed and delivered to Lender
      an assignment of proceeds of its business interruption insurance policies.
      Borrower hereby directs all insurers under such policies of insurance to pay
      all
      proceeds payable thereunder directly to Lender; and

     

    (ii)  maintain,
      at its expense, such public liability and third party property damage insurance
      as is customary for Persons engaged in businesses similar to that of Borrower
      with such companies and in such amounts, with such deductibles and under
      policies in such form as shall be satisfactory to Lender and, at the request
      of
      Lender, original (or certified) copies of such policies shall be delivered
      to
      Lender, together with evidence of payment of all premiums therefor; each such
      policy shall contain an endorsement showing Lender as additional insured
      thereunder and providing that the insurance company shall give Lender at least
      thirty (30) days written notice before any such policy shall be altered or
      cancelled.

     

    If
      Borrower at any time or times hereafter shall fail to obtain or maintain any
      of
      the policies of insurance required above or to pay any premium in whole or
      in
      part relating thereto, then Lender, without waiving or releasing any obligation
      or default by Borrower hereunder, may (but shall be under no obligation to)
      obtain and maintain such policies of insurance and pay such premiums and take
      such other actions with respect thereto as Lender deems advisable. Such
      insurance, if obtained by Lender, may, but need not protect Borrower’s
      interests or pay any claim made by or against Borrower with respect to the
      Collateral. Such insurance may be more expensive than the cost of insurance
      Borrower may be able to obtain on its own and may be cancelled only upon
      Borrower providing evidence that it has obtained the insurance as required
      above. All sums disbursed by Lender in connection with any such actions,
      including without limitation court costs, expenses, other charges relating
      thereto and reasonable attorneys’ fees, shall be payable on demand by Borrower
      to Lender and, until paid, shall bear interest at the highest rate then
      applicable to the Term Loans hereunder;

     

    (f)  Borrower
      shall not use its property, or any part thereof, in any unlawful business or
      for
      any unlawful purpose or use or maintain any of its property in any manner that
      does or could result in material damage to the environment or a violation of
      any
      applicable environmental laws, rules or regulations; shall keep its property
      in
      good condition, repair and order; shall permit Lender to examine any of its
      property at any time; shall not permit its property, or any part thereof, to
      be
      levied upon under execution, attachment, distraint or other legal process;
      shall
      not grant a security interest in or suffer to exist a lien on any of its
      property; shall not sell, lease, transfer or otherwise dispose of any of its
      property except for the sale of Inventory in the ordinary course of its
      business; and shall not secrete or abandon any of its property, or remove or
      permit removal of any of its property from any of the locations listed on
Exhibit
      J
      or in any written notice to Lender pursuant to Paragraph 11(b) hereof, except
      for the removal of Inventory sold in the ordinary course of Borrower’s
      business;

     

    (g)  all
      monies and other property obtained by Borrower from Lender pursuant to this
      Agreement will be used solely for business purposes of Borrower as set forth
      in
      its Securities Exchange Act reports;

     

    (h)  Borrower
      shall, at the request of Lender, indicate on its records concerning the
      Collateral a notation, in form satisfactory to Lender, of the security interest
      of Lender hereunder, and Borrower shall not maintain duplicates or copies of
      such records at any address other than Borrower’s principal place of business
      set forth on the first page of this Agreement;

     

    (i)  Borrower
      shall file all required tax returns and pay all of its taxes when due, including
      without limitation taxes imposed by federal, state or municipal agencies, and
      shall cause any liens for taxes to be promptly released; provided, that Borrower
      shall have the right to contest the payment of such taxes in good faith by
      appropriate proceedings so long as (i) the amount so contested is shown on
      Borrower’s financial statements, (ii) the contesting of any such payment does
      not give rise to a lien for taxes, (iii) Borrower keeps on deposit with Lender
      an amount of money which, in the sole judgment of Lender, is sufficient to
      pay
      such taxes and any interest or penalties that may accrue thereon, and (iv)
      if
      Borrower fails to prosecute such contest with reasonable diligence, Lender
      may
      apply the money so deposited in payment of such taxes. If Borrower fails to
      pay
      any such taxes and in the absence of any such contest by Borrower, Lender may
      (but shall be under no obligation to) advance and pay any sums required to
      pay
      any such taxes and/or to secure the release of any lien therefor, and any sums
      so advanced by Lender shall be payable by Borrower to Lender on demand, and,
      until paid, shall bear interest at the highest rate then applicable to the
      Term
      Loans hereunder;

     

    (j)  Borrower
      shall not assume, guarantee or endorse, or otherwise become liable in connection
      with, the obligations of any Person, except by endorsement of instruments for
      deposit or collection or similar transactions in the ordinary course of
      business;

     

    (k)  Except
      for the payment of dividends to the holders of the Borrower’s Series A or Series
      B Preferred Stock, Borrower shall not, except as expressly contemplated by
      this
      Agreement, directly or indirectly declare or pay any dividends or make any
      distributions upon any of its Common Shares;

     

    (l)  Except
      in
      accordance with the rights and preferences of the Series A and Series B
      Preferred Stock, Borrower shall not, directly or indirectly redeem, purchase
      or
      otherwise acquire, or permit any Subsidiary to redeem, purchase or otherwise
      acquire, any of Borrower’s Common Shares (including, without limitation,
      warrants, options and other rights to acquire Common Shares);

     

    (m)  Borrower
      shall not, except as expressly contemplated by this Agreement, authorize, issue,
      sell or enter into any agreement providing for the issuance (contingent or
      otherwise), or permit any Subsidiary to authorize, issue, sell or enter into
      any
      agreement providing for the issuance (contingent or otherwise) of, (i) any
      notes
      or debt securities containing equity features (including, without limitation,
      any notes or debt securities convertible into or exchangeable for Common Shares,
      issued in connection with the issuance of Common Shares or containing profit
      participation features), (ii) any Common Shares (or any securities convertible
      into or exchangeable for any Common Shares) or rights to acquire any Common
      Shares, except in connection with any existing obligations or issued and
      outstanding securities as of the date hereof that may be convertible or
      exchangeable into Common Shares of the Borrower, in accordance with their terms,
      or (iii) any Preferred Shares or rights to acquire any Preferred
      Shares;

     

    (n)  Borrower
      shall not merge or consolidate with any Person or permit any Subsidiary to
      merge
      or consolidate with any Person (other than a wholly-owned
      Subsidiary);

     

    (o)  Borrower
      shall not sell, lease or otherwise dispose of, or permit any Subsidiary to
      sell,
      lease or otherwise dispose of, more than 5% of the consolidated assets of
      Borrower and its Subsidiaries (computed on the basis of book value, determined
      in accordance with GAAP or fair market value, determined by the Board in its
      reasonable good faith judgment) in any transaction or series of related
      transactions (other than sales of inventory in the ordinary course of
      business);

     

    (p)  Borrower
      shall not liquidate, dissolve or effect a recapitalization or reorganization
      in
      any form of transaction (including, without limitation, any reorganization
      into
      partnership form);

     

    (q)  Borrower
      shall not enter into, or permit any Subsidiary to enter into, the ownership,
      active management or operation of any business other than the business of
      Borrower as set forth in its Securities Exchange Act reports;

     

    (r)  Borrower
      shall not enter into, or permit any Subsidiary to enter into, any transaction
      with any of its or any of its Subsidiary’s officers, directors, employees or
      Affiliates except in the ordinary course of its business;

     

    (s)  Borrower
      shall not create, incur, assume or suffer to exist, or permit any Subsidiary
      to
      create, incur, assume or suffer to exist, indebtedness for borrowed money except
      as contemplated in this Agreement;

     

    (t)  Borrower
      shall (i) keep in full force and effect any and all Plans which may, from time
      to time, come into existence under ERISA, unless such Plans can be terminated
      without liability to Borrower; (ii) make contributions to all of the Plans
      in a
      timely manner and in a sufficient amount to comply with the requirements of
      ERISA; (iii) comply with all material requirements of ERISA which relate to
      Plans (including without limitation the minimum funding standards of Section
      302
      of ERISA); and (iv) notify Lender immediately upon receipt by Borrower of any
      notice of the institution of any proceeding or other action which may result
      in
      the termination of any Plans;

     

    (u)  Borrower
      shall reimburse Lender for all costs and expenses, including without limitation
      legal expenses and reasonable attorneys’ fees, incurred by Lender in connection
      with documentation and consummation of this transaction and any other future
      transactions between Borrower and Lender, including without limitation Uniform
      Commercial Code and other public record searches, lien filings, Federal Express
      or similar express or messenger delivery, appraisal costs, surveys, title
      insurance and environmental audit or review costs, and in seeking to administer,
      collect, protect or enforce any rights in or to the Collateral or incurred
      by
      Lender in seeking to collect any Liabilities and to administer and/or enforce
      any of Lender’s rights under this Agreement and the Other Agreements. All such
      costs, expenses and charges shall be payable by Borrower to Lender on demand,
      and, until paid, shall bear interest at the highest rate then applicable to
      the
      Term Loans hereunder; 

     

    (v)  Borrower
      shall not purchase or otherwise acquire (including without limitation
      acquisition by way of capitalized lease), or commit to purchase or otherwise
      acquire, any fixed asset, if, after giving affect to such purchase or other
      acquisition, the aggregate costs of all fixed assets purchased or otherwise
      acquired by Borrower would exceed Two Hundred Fifty Thousand Dollars ($250,000)
      during any fiscal year of Borrower; 

     

    (w)  As
      required by federal law and the Lender’s policies and practices, the Lender may
      need to obtain, verify and record certain customer identification information
      and documentation in connection with opening or maintaining accounts, or
      establishing or continuing to provide services and Borrower agrees to provide
      such information. In addition, and without limiting the foregoing sentence,
      the
      Borrower shall (a) ensure,
      and cause each Subsidiary to ensure, that no Person who owns a controlling
      interest in or otherwise controls the Borrower or any Subsidiary is or shall
      be
      listed on the Specially Designated Nationals and Blocked Person List
or
      other
      similar lists maintained
      by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury
or
      included in any
      Executive Orders, (b) not
      use or permit the use of the proceeds of the Loans to violate any of the foreign
      asset control regulations of OFAC or any enabling statute or Executive Order
      relating thereto, and
      (c) comply, and cause each Subsidiary to comply, with all applicable Bank
      Secrecy Act (“BSA”) laws and regulations, as amended; and

     

    (x)  Borrower
      will propose to Lender procedures to protect the secrecy, confidentiality,
      and
      value of all trade secrets and Intellectual Property Rights included in the
      Intellectual Property; and, following Lender's reasonable approval of such
      procedures, Borrower will implement and adhere to those procedures in a
      commercially reasonable manner.

     

    13.  INVESTMENT
      REPRESENTATIONS OF THE LENDER.
      In
      connection with its acquisition of the Initial Warrants, the Additional Warrants
      and the underlying shares of common stock of the Borrower, the Lender hereby
      represents and warrants to the Borrower as follows:

    


    (a) The
      Lender is aware that the Initial Warrants, the Additional Warrants and the
      underlying shares of common stock of the Borrower are being offered and sold
      by
      means of an exemption under the Securities Act, as well as exemptions under
      certain state securities laws for nonpublic offerings, and that they make the
      representations, declarations and warranties as contained in this Section 13
      with the intent that the same shall be relied upon by the Borrower in
      determining the Lender’s suitability as a purchaser of the Initial Warrants, the
      Additional Warrants and the underlying shares of common stock of the
      Borrower;

     

    (b) The
      Lender is, and on each date it exercises either the Initial Warrants or the
      Additional Warrants, an “Accredited Investor” as defined in Rule 501 of
      Regulation D promulgated under the Securities Act and has such knowledge and
      experience in financial and business matters that it is capable of evaluating
      the merits and risks of an investment in the Borrower and of making an informed
      investment decision;

    


    (c) The
      Lender is aware that it cannot sell or otherwise transfer the Initial Warrants,
      the Additional Warrants or the underlying shares of common stock of the Borrower
      without registration under applicable securities laws or without an exemption
      therefrom, and is aware that it will be required to bear the financial risks
      of
      its purchase for an indefinite period of time because, among other reasons,
      the
      Initial Warrants, the Additional Warrants and the underlying shares of common
      stock of the Borrower have not been registered with any regulatory authority
      and, therefore, cannot be transferred or resold unless subsequently registered
      under applicable securities laws or an exemption from such registration is
      available;

     

    (d) The
      Lender recognizes that no agency has recommended or endorsed the purchase of
      the
      Initial Warrants, the Additional Warrants or the underlying shares of common
      stock of the Borrower or passed upon the adequacy or accuracy of the information
      set forth herein, and that the Borrower is relying on the truth and accuracy
      of
      the representations, declarations and warranties made by the Lender as contained
      herein in selling the Initial Warrants, the Additional Warrants and the
      underlying shares of common stock of the Borrower to the Lender;

    


    (e) The
      Lender is not purchasing the Initial Warrants, the Additional Warrants or the
      underlying shares of common stock of the Borrower as a result of any
      advertisement, article, notice or other communication regarding the Initial
      Warrants, the Additional Warrants or the underlying shares of common stock
      of
      the Borrower published in any newspaper, magazine or similar media or broadcast
      over television or radio or presented at any seminar or any other general
      solicitation or general advertisement; and

    


    (f) The
      Lender is purchasing the Initial Warrants, the Additional Warrants and the
      underlying shares of common stock of the Borrower for investment for its own
      account and not with a view to or for sale in connection with any distribution
      of the Initial Warrants, the Additional Warrants or the underlying shares of
      common stock of the Borrower to or for the accounts of others. The Lender does
      not have any agreement or understanding, directly or indirectly, with any Person
      to distribute the Initial Warrants, the Additional Warrants or the underlying
      shares of common stock of the Borrower. The Lender agrees that it will not
      dispose of the Initial Warrants, the Additional Warrants or the underlying
      shares of common stock of the Borrower, or any portion thereof or interest
      therein, unless and until counsel for the Borrower shall have determined that
      the intended disposition is permissible and does not violate applicable
      securities laws.

    


    14.  DEFAULT.
      The
      occurrence of any one or more of the following events shall constitute an
“Event
      of Default”
by
      Borrower hereunder:

     

    (a)  the
      failure of any Obligor to pay when due any of the Liabilities,
      unless
      otherwise cured by Borrower within five (5) days after the receipt of written
      notice thereof;

     

    (b)  the
      failure of any Obligor to perform, keep or observe any of the covenants,
      conditions, promises, agreements or obligations of such Obligor under this
      Agreement or any of the Other Agreements, unless otherwise cured by Borrower
      within thirty (30) days after the receipt of written notice
      thereof;

     

    (c)  the
      making or furnishing by any Obligor to Lender of any representation, warranty,
      certificate, schedule, report or other communication within or in connection
      with this Agreement or the Other Agreements or in connection with any other
      agreement between such Obligor and Lender, which is untrue or misleading in
      any
      material respect;

     

    (d)  the
      making or any attempt to make any levy, seizure or attachment of any of
      Borrower’s property, unless otherwise cured by Borrower within thirty (30) days
      after the receipt of written notice thereof;

     

    (e)  the
      commencement of any proceedings in bankruptcy by or against any Obligor or
      for
      the liquidation or reorganization of any Obligor, or alleging that such Obligor
      is insolvent or unable to pay its debts as they mature, or for the readjustment
      or arrangement of any Obligor’s debts, whether under the United States
      Bankruptcy Code or under any other law, whether state or federal, now or
      hereafter existing for the relief of debtors, or the commencement of any
      analogous statutory or non-statutory proceedings involving any Obligor;
      provided, however, that if such commencement of proceedings against such Obligor
      is involuntary and such Obligor is contesting such proceedings in good faith,
      such action shall not constitute an Event of Default unless such proceedings
      are
      not dismissed within thirty (30) days after the commencement of such
      proceedings;

     

    (f)  the
      appointment of a receiver or trustee for any Obligor, for any of the Collateral
      or for any substantial part of any Obligor’s assets or the institution of any
      proceedings for the dissolution, or the full or partial liquidation, of any
      Obligor which is a corporation or a partnership; provided, however, that if
      such
      appointment or commencement of proceedings against such Obligor is involuntary
      and such Obligor is contesting such proceedings in good faith, such action
      shall
      not constitute an Event of Default unless such appointment is not revoked or
      such proceedings are not dismissed within thirty (30) days after the
      commencement of such proceedings;

     

    (g)  the
      entry
      of any judgment or order against any Obligor which remains unsatisfied or
      undischarged and in effect for thirty (30) days after such entry without a
      stay
      of enforcement or execution;

     

    (h)  the
      dissolution
      of any Obligor which is a partnership or corporation, unless otherwise cured
      by
      Borrower within thirty (30) days after the receipt of written notice
      thereof;

     

    (i)  the
      occurrence of a change of control of Borrower, except as contemplated in this
      Agreement;

     

    (j)  unless
      otherwise cured by Borrower within thirty (30) days after the receipt of written
      notice thereof, the occurrence of an event of default under, or the revocation
      or termination of, any agreement, instrument or document executed and delivered
      by any Person to Lender pursuant to which such Person has guaranteed to Lender
      the payment of all or any of the Liabilities or has granted Lender a security
      interest in or lien upon some or all of such Person’s real and/or personal
      property to secure the payment of all or any of the Liabilities; 

     

    (k)  unless
      otherwise cured by Borrower within thirty (30) days after the receipt of written
      notice thereof, the occurrence of any material adverse change in the financial
      condition of Borrower, including a material adverse change regarding Borrower's
      Intellectual Property,, as determined by Lender in its sole judgment or the
      occurrence of any event which, in Lender’s sole judgment might have a material
      adverse effect on the financial condition of Borrower, including a material
      adverse change regarding Borrower's Intellectual Property; or

     

    (l)  Lender
      shall have declared an Event of Default with respect to an IP Diligence Issue
      under Section 4(b)(i) of this Agreement. 

     

    15.  REMEDIES
      UPON AN EVENT OF DEFAULT.

     

    (a)  Without
      limiting Lender’s
      right
      to demand payment of the Liabilities at any time, upon the occurrence of an
      Event of Default, all of Borrower’s Liabilities shall immediately and
      automatically become due and payable, without notice of any kind and upon the
      occurrence of any other Event of Default, all Liabilities may, at the option
      of
      Lender, and without demand, notice or legal process of any kind, be declared,
      and immediately shall become, due and payable.

     

    (b)  Upon
      the
      occurrence of an Event of Default, Lender may exercise from time to time any
      rights and remedies available to it under the Uniform Commercial Code and any
      other applicable law in addition to, and not in lieu of, any rights and remedies
      expressly granted in this Agreement or in any of the Other Agreements and all
      of
      Lender’s rights and remedies shall be cumulative and non-exclusive to the extent
      permitted by law. In particular, but not by way of limitation of the foregoing,
      Lender may, without notice, demand or legal process of any kind, take possession
      of any or all of the Collateral (in addition to Collateral of which it already
      has possession), wherever it may be found, and for that purpose may pursue
      the
      same wherever it may be found, and may enter into any of Borrower’s premises
      where any of the Collateral may be without disturbing the business of the
      Borrower in any respect or causing any damage to the real or personal property
      of the Borrower, and search for, take possession of, remove, keep and store
      any
      of the Collateral until the same shall be sold or otherwise disposed of, and
      Lender shall have the right to store the same at any of Borrower’s premises
      without cost to Lender. At Lender’s request, Borrower shall, at Borrower’s
      expense, assemble the Collateral and make it available to Lender at one or
      more
      places to be designated by Lender and reasonably convenient to Lender and
      Borrower. Borrower recognizes that if Borrower fails to perform, observe or
      discharge any of its Liabilities under this Agreement or the Other Agreements,
      no remedy at law will provide adequate relief to Lender, and agrees that Lender
      shall be entitled to temporary and permanent injunctive relief in any such
      case
      without the necessity of proving actual damages. Any notification of intended
      disposition of any of the Collateral required by law will be deemed to be a
      reasonable authenticated notification of disposition if given at least ten
      (10)
      days prior to such disposition and such notice shall (i) describe Lender and
      Borrower, (ii) describe the Collateral that is the subject of the intended
      disposition, (iii) state the method of the intended disposition, (iv) state
      that
      Borrower is entitled to an accounting of the Liabilities and state the charge,
      if any, for an accounting and (v) state the time and place of any public
      disposition or the time after which any private sale is to be made. Lender
      may
      disclaim any warranties that might arise in connection with the sale, lease
      or
      other disposition of the Collateral and has no obligation to provide any
      warranties at such time. Any proceeds of any disposition by Lender of any of
      the
      Collateral may be applied by Lender to the payment of expenses in connection
      with the Collateral, including without limitation reasonable legal expenses
      and
      reasonable attorneys’ fees, and any balance of such proceeds may be applied by
      Lender toward the payment of such of the Liabilities, and in such order of
      application, as Lender may from time to time elect.

     

    16.  INDEMNIFICATION.
      Borrower agrees to defend (with counsel satisfactory to Lender), protect,
      indemnify and hold harmless Lender, each Affiliate of Lender, and each of their
      respective officers, directors, employees, attorneys and agents (each an
“Indemnified
      Party”)
      from
      and against any and all liabilities, obligations, losses, damages, penalties,
      actions, judgments, suits, claims, costs, expenses and disbursements of any
      kind
      or nature (including without limitation the disbursements and the reasonable
      fees of counsel for each Indemnified Party in connection with any investigative,
      administrative or judicial proceeding, whether or not the Indemnified Party
      shall be designated a party thereto), which may be imposed on, incurred by,
      or
      asserted against, any Indemnified Party (whether direct, indirect or
      consequential and whether based on any federal, state or local laws or
      regulations, including without limitation securities, environmental and
      commercial laws and regulations, under common law or in equity, or based on
      contract or otherwise) in any manner relating to or arising out of this
      Agreement or any Other Agreement, or any act, event or transaction related
      or
      attendant thereto, the making and the management of the Loans; provided,
      however, that Borrower shall not have any obligation hereunder to any
      Indemnified Party with respect to matters caused by or resulting from the
      willful misconduct or gross negligence of such Indemnified Party. To the extent
      that the undertaking to indemnify set forth in the preceding sentence may be
      unenforceable because it is violative of any law or public policy, Borrower
      shall satisfy such undertaking to the maximum extent permitted by applicable
      law. Any liability, obligation, loss, damage, penalty, cost or expense covered
      by this indemnity shall be paid to each Indemnified Party within 15 days of
      receipt of a written demand from an Indemnified Party, and, failing prompt
      payment, shall, together with interest thereon at the highest rate then
      applicable to the Loans hereunder from the date incurred by each Indemnified
      Party until paid by Borrower, be added to the Liabilities of Borrower and be
      secured by the Collateral. The provisions of this Paragraph 15 shall survive
      the
      satisfaction and payment of the other Liabilities and the termination of this
      Agreement.

     

    17.  CONFIDENTIALITY.
      The
      Lender agrees to maintain the confidentiality of the Information (as defined
      below), except that Information may be disclosed (a) to its Related
      Parties, including accountants, legal counsel and other advisors (it being
      understood that the Persons to whom such disclosure is made will be informed
      of
      the confidential nature of such Information and instructed to keep such
      Information confidential), (b) to the extent requested by any Governmental
      Authority or rating agency, (c) to the extent required by applicable laws
      or regulations or by any subpoena or similar legal process, (d) to any
      other party to this Agreement, (e) in connection with the exercise of any
      remedies hereunder or any suit, action or proceeding relating to this Agreement
      or any other Loan Document or the enforcement of rights hereunder or thereunder,
      (f) subject to an agreement containing provisions substantially the same as
      those of this Paragraph, to any assignee of or participant in, or any
      prospective assignee of or participant in, any of its rights or obligations
      under this Agreement, (g) to any direct or indirect contractual
      counterparty relating to this Agreement or such counterparty's professional
      advisor, (h) with the consent of the Borrower, and (i) to the extent
      such Information (i) becomes publicly available other than as a result of a
      breach of this Paragraph 16 or (ii) becomes available to the Lender on a
      nonconfidential basis from a source other than a Borrower. The Lender further
      agrees not to buy or sell Common Shares on the basis of Information that is
      material and nonpublic at such time. For the purposes of this Paragraph,
“Information”
means
      all information received from any Borrower relating to a Borrower or its
      business, other than any information that (i) is or becomes publicly known
      through no wrongful act of the Lender; (ii) is obtained by the Lender from
      a
      third party lawfully in possession of such information and having the legal
      right to transmit the same, (iii) is already known to the Lender free of any
      restrictions at the time it is obtained from the Borrower or (iv) is
      independently developed by the Lender without reference to any confidential
      information of the Borrower. Any Person required to maintain the confidentiality
      of Information as provided in this Paragraph shall be considered to have
      complied with its obligation to do so if such Person has exercised the same
      degree of care to maintain the confidentiality of such Information as such
      Person would accord to its own confidential information. 

     

    18.  NOTICE.
      All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (a) upon personal delivery to the party to be notified;
      (b)
      when sent by confirmed facsimile if sent during normal business hours of the
      recipient, if not, then on the next business day; (c) three (3) business days
      after having been sent by registered or certified mail, return receipt
      requested, postage prepaid; or (d) one (1) day after
      deposit
      with a nationally recognized overnight courier, specifying next day delivery,
      with written verification of receipt.

     

    All
      communications shall be sent as follows:

     

    
      	
              If
                to Borrower, to:

               

            	
              Sequiam
                Corporation

               

              300
                Sunport Lane

               

              Orlando,
                FL 32809

               

              Attention: Mark
                L. Mroczkowski

               

              Facsimile: 407-240-1431

               

            
	 	 
	 	
              with
                a copy to:

               

            
	 	 
	 	
              Greenberg
                Traurig, P.A.

               

              450
                South Orange Avenue, Suite 650

               

              Orlando,
                Florida 32801

               

            
	 	
              Attention: Randolph
                Fields, Esq.

               

              Facsimile:
                407-650-8472

               

            
	 	 
	
              If
                to Lender, to:

               

            	
              Biometric
                Investors, L.L.C.

               

              5111
                Maryland Way, Suite 201

               

              Brentwood,
                TN 37027

               

              Attention:
                Roger Brown

               

              Facsimile:
                (615) 221-1199

               

            
	 	
              with
                a copy to:

               

            
	 	
              Kenneth
                Hartmann, Esq.

               

              330
                W. State Street

               

              Suite
                200

               

              Geneva,
                IL 60134

               

              Facsimile:
                (630) 845-4039

               

               

               

              with
                a copy to:

               

               

               

              Stephen
                Tsoris, Esq.

               

              Drinker
                Biddle Gardner Carton

               

              191
                N. Wacker Drive

               

              Chicago,
                IL 60601

               

              Facsimile:
                (312) 569-3142

               

            


    

    


     

    19.  CHOICE
      OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
      This
      Agreement and the Other Agreements are submitted by Borrower to Lender for
      Lender’s acceptance or rejection at Lender’s principal place of business as an
      offer by Borrower to borrow monies from Lender now and from time to time
      hereafter, and shall not be binding upon Lender or become effective until
      accepted by Lender, in writing, at said place of business. If so accepted by
      Lender, this Agreement and the Other Agreements shall be deemed to have been
      made at said place of business. THIS
      AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
      INTERNAL LAWS OF THE STATE OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT,
      VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING WITHOUT
      LIMITATION THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING
      PERFECTION OF THE SECURITY INTERESTS IN THE COLLATERAL, WHICH SHALL BE GOVERNED
      AND CONTROLLED BY THE LAWS OF THE RELEVANT JURISDICTION.
      If any
      provision of this Agreement shall be held to be prohibited by or invalid under
      applicable law, such provision shall be ineffective only to the extent of such
      prohibition or invalidity, without invalidating the remainder of such provision
      or remaining provisions of this Agreement.

     

    To
      induce
      Lender to accept this Agreement, Borrower irrevocably agrees that, subject
      to
      Lender’s
      sole
      and absolute election, ALL
      ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM
      OR
      RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE
      LITIGATED IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.
      BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE
      OR
      FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. BORROWER HEREBY WAIVES ANY
      RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
      AGAINST BORROWER BY LENDER IN ACCORDANCE WITH THIS
      PARAGRAPH.

     

    20.  PARTICIPATION;
      ASSIGNMENT.
      Lender
      shall have the right to assign all or any of its rights under this Agreement
      and
      the Other Agreements, and/or to offer participation interests therein, to any
      Person, without the consent of Borrower. In such event, Borrower shall execute
      such agreements, instruments and documents as Lender shall request in connection
      therewith, including without limitation agreements, instruments and documents
      in
      favor of each assignee and participant.

     

    21.  MODIFICATION
      AND BENEFIT OF AGREEMENT.
      This
      Agreement and the Other Agreements may not be modified, altered or amended
      except by an agreement in writing signed by Borrower and Lender. Borrower may
      not sell, assign or transfer this Agreement, or the Other Agreements or any
      portion thereof, including without limitation Borrower’s rights, titles,
      interest, remedies, powers or duties thereunder.

     

    22.  HEADINGS
      OF SUBDIVISIONS.
      The
      headings of subdivisions in this Agreement are for convenience of reference
      only, and shall not govern the interpretation of any of the provisions of this
      Agreement. As
      used
      herein, the term “including” and its variations shall be construed to mean
“including without limitation.”

     

    23.  POWER
      OF ATTORNEY.
      Borrower acknowledges and agrees that its appointment of Lender as its attorney
      and agent-in-fact for the purposes specified in this Agreement is an appointment
      coupled with an interest and shall be irrevocable until all of the Liabilities
      are paid in full and this Agreement is terminated.

     

    24.  WAIVER
      OF JURY TRIAL; OTHER WAIVERS.

     

    (a)  BORROWER
      HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH
      PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS,
      THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY BORROWER OR
      LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES
      TO
      THE RELATIONSHIP BETWEEN BORROWER AND LENDER. IN NO EVENT SHALL LENDER BE LIABLE
      FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

     

    (b)  Except
      as
      otherwise set forth herein, Borrower
      hereby waives demand, presentment, protest and notice of
      nonpayment.

     

    (c)  Lender’s
      failure, at any time or times hereafter, to require strict performance by
      Borrower of any provision of this Agreement or any of the Other Agreements
      shall
      not waive, affect or diminish any right of Lender thereafter to demand strict
      compliance and performance therewith. Any suspension or waiver by Lender of
      an
      Event of Default under this Agreement or any default under any of the Other
      Agreements shall not suspend, waive or affect any other Event of Default under
      this Agreement or any other default under any of the Other Agreements, whether
      the same is prior or subsequent thereto and whether of the same or of a
      different kind or character. No delay on the part of Lender in the exercise
      of
      any right or remedy under this Agreement or any Other Agreement shall preclude
      other or further exercise thereof or the exercise of any right or remedy. None
      of the undertakings, agreements, warranties, covenants and representations
      of
      Borrower contained in this Agreement or any of the Other Agreements and no
      Event
      of Default under this Agreement or default under any of the Other Agreements
      shall be deemed to have been suspended or waived by Lender unless such
      suspension or waiver is in writing, signed by a duly authorized officer of
      Lender and directed to Borrower specifying such suspension or
      waiver.

     

    (Signatures
      continue on attached page)

     


    
      
        --

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

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

     

    BORROWER:

     

    SEQUIAM
      CORPORATION,
      a
      California corporation

     

    By:
       

     

    Name:
       

     

    Title:
       

     

    


     

    LENDER:

     

    BIOMETRICS
      INVESTORS, L.L.C.,
      a
      Delaware limited liability company 

     

    By:
       

     

    Name:
      Roger Brown

     

    Title:
      Manager

     

    


     

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     


    LIST
      OF EXHIBITS

     

    A - Additional
      Warrants

     

    B - Gross
      Profit Margin Requirements

     

    C - Initial
      Warrants

     

    D - Permitted
      Liens

     

    E - Registration
      Rights Agreement

     

    F - Form
      of
      Borrower’s Base certificate 

     

    G
      - Form
      of
      Shareholders Agreement

     

    H
      - Commercial
      Tort Claims 

     

    I - Subsidiaries 

     

    J - Business
      and Collateral Locations

     

    
      	
              K

            	
              -

            	
              Entities
                Authorized to Cause Borrower to Effect a Registration Under the
                Securitieis Exchange Act of any Securities of
                Borrower

            


    

     

    L - Borrower’s
      Capitalization 

     

    M - Additional
      Names

     

    N - Equipment
      List

     

    O - Indebtedness

     

    P - Intellectual
      Property

     

    Q - Certificate
      of Compliance

     

    R - Forms
      of
      Notes 

     

    S - Series
      A
      and Series B preferred Shareholders

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    EXHIBIT
      A

     

    Additional
      Warrants

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

     

    Gross
      Profit Margin Requirements

     

    


     

    For
      any
      customer (unless otherwise specified below), the Gross Profit Margin for items
      of Inventory sold pursuant to any particular Order shall be greater or equal
      to
      the gross profit margins set forth in the table below, in order to be
      considered, in Lender’s sole discretion (unless otherwise agreed by Lender), an
      Eligible Order.

     

    


     

    


     

    
      	
              Customer

               

            	
              Item
                of Inventory

               

            	
              Gross
                Profit Margin

               

            
	
              All
                Customers of Borrower

               

            	
              Any
                Item of Inventory

               

            	
              [25%]

               

            
	 	 	 
	 	 	 
	 	 	 


    

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      C

     

    Initial
      Warrants

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      D

     

    Permitted
      Liens

     

    The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except that all Leasehold improvements
      are collaterized by the landlord (East Group Properties, LP) and Biometrics
      Investors, L.L.C. has a security interest in all assets of the Company.
      All
      the
      assets of Biometric Security (PTY) LTD are secured as collateral for a purchase
      money note payable to AreGee
      Investments No. 105 (PTY)
      LTD. The unpaid balance of that note is $37,500 and 178,000 Sequiam Corporation
      restricted common shares. The shares of Sequiam East, Inc. serve as collateral
      for a purchase money note of $150,000.

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      E

     

    Registration
      Rights Agreement

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      F

     

    Form
      of
      Borrower’s Base certificate

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      G

     

    Form
      of
      Shareholders Agreement

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      H

     

    Commercial
      Tort Claims

     

    None

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      I

     

    Subsidiaries

     

    Each
      direct and indirect Subsidiary of the Company, the direct owner of such
      Subsidiary and its percentage ownership thereof, is set forth
      below:

    


    
      	
              Subsidiary

            	
              Owner

            	
              Employer
                Identification #

            	
              Place
                of Incorporation

            	
              Percentage
                Ownership

            
	
              Sequiam
                Software, Inc.

            	
              Sequiam
                Corporation

            	
              33-0998899

            	
              CA

            	
              100.00%

            
	
              Sequiam
                Biometrics, Inc.

            	
              Sequiam
                Corporation

            	
              06-1691143

            	
              FL

            	
              100.00%

            
	
              Sequiam
                Education, Inc.

            	
              Sequiam
                Corporation

            	
              41-2097750

            	
              FL

            	
              100.00%

            
	
              Sequiam
                Sports, Inc.

            	
              Sequiam
                Corporation

            	
              59-3650544

            	
              DE

            	
              99.38%

            
	
              Fingerprint
                Detection Technologies, Inc.

            	
              Sequiam
                Corporation

            	
              20-1115746

            	
              FL

            	
              100.00%

            
	
              Constellation
                Biometrics

              Corporation

            	
              Sequiam
                Corporation

            	
              20-1998878

            	
              FL

            	
              100.00%

            
	
              Biometric
                Security (Pty) Ltd.

            	
              Constellation
                Biometrics

              Corporation

            	
              2005/005066/07

            	
              South
                Africa

            	
              100.00%

            
	
              Sequiam
                East, Inc. (f/k/a Magstone Innovation, Inc.)

            	
              Sequiam
                Corporation

            	
              1164611

            	
              China

            	
              80.00%

            


    

    


    Biometrics
      Investors, L.L.C. holds the stock of all of the subsidiary companies shown
      above
      as collateral for their loan except for Sequiam East, Inc. whose ownership
      documentation is still in process with the Chinese government

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      J

     

    Business
      and Collateral Locations

     

    Corporate
      Headquarters

    Sequiam
      Corporation

    300
      Sunport Lane

    Orlando,
      FL 32809

    


    Africa
      Office

    Biometric
      Security (Pty) Ltd.

    Tijger
      Park 111

    No.
      4,
      Ground Floor

    Willie
      van Schoor Avenue

    Bellville,
      South Africa

    7535

    


    Asia
      Office

    Sequiam
      East, Inc.

    Room
      508,
      Venture Center

    Tianan
      Hi-Tech Park, No. 730

    Yingbin
      Road

    Shiqiao
      Town

    Panyu
      District

    Guangzhou,
      China 511400

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      K

     

    Entities
      Authorized to Cause Borrower to Effect a Registration Under the Exchange Act
      of
 Any
      Securities of Borrower

     

    


     

    Biometrics
      Investors, L.L.C.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      L

     

    Borrower’s
      Capitalization

     

    
      	
              Shares
                outstanding at December 31., 2006

            	
              82,281,212

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Shares
                issued - Litghtmaker LLC (3/7/07)

            	
              684,000

            	
              shares
                issued pursuant to pre-existing agreements

            	 	 	 	 	 	 	 	 	 	 
	
              Shares
                issued - Lee Maher (3/14/07)

            	
              322,581

            	
              shares
                issued pursuant to pre-existing agreements

            	 	 	 	 	 	 	 	 	 	 
	
              Shares
                outstanding at March 27, 2007

            	
              83,287,793

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrant
                Holder

            	
              Shares

            	
              Price

            	
              Amount
                Due on Exercise

            	
              Issue
                Date

            	
              Expiration
                Date

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              -

            	
              1.00
                

            	
              -

            	
              2/6/2003

            	
              2/6/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              1,000,000

            	
              0.75

            	
              750,000

            	
              4/22/2003

            	
              4/22/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              20,000

            	
              1.25

            	
              25,000

            	
              6/1/2003

            	
              6/1/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              1,000,000

            	
              0.75

            	
              750,000

            	
              6/19/2003

            	
              6/19/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              2,000,000

            	
              0.75

            	
              1,500,000

            	
              9/15/2003

            	
              9/15/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              1,000,000

            	
              0.50

            	
              500,000

            	
              10/15/2003

            	
              10/15/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              2,647,059

            	
              0.17

            	
              450,000

            	
              12/17/2003

            	
              12/17/2007

            	 	 	 	 	 	 	 	 	 	 
	
              Walter
                H. Sullivan, III

            	
              260,000

            	
              0.66

            	
              171,600

            	
              11/19/2004

            	
              11/19/2009

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen

            	
              350,000

            	
              1.00

            	
              350,000

            	
              5/13/2003

            	
              5/12/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin 

            	
              100,000

            	
              0.25

            	
              25,000

            	
              12/18/2003

            	
              12/18/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin

            	
              220,000

            	
              0.75

            	
              165,000

            	
              7/24/2003

            	
              7/24/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen

            	
              200,000

            	
              0.25

            	
              50,000

            	
              12/18/2003

            	
              12/18/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen

            	
              1,300,000

            	
              0.66

            	
              858,000

            	
              9/30/2004

            	
              9/30/2009

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen

            	
              150,000

            	
              0.33

            	
              49,500

            	
              12/16/2004

            	
              12/16/2009

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen

            	
              600,000

            	
              0.33

            	
              198,000

            	
              3/23/2005

            	
              3/23/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin

            	
              195,000

            	
              0.66

            	
              128,700

            	
              9/30/2004

            	
              9/30/2009

            	 	 	 	 	 	 	 	 	 	 
	
              Eagle
                Funding, LLC

            	
              400,000

            	
              0.66

            	
              264,000

            	
              9/7/2004

            	
              9/7/2009

            	 	 	 	 	 	 	 	 	 	 
	
              Jane
                P. Trudeau

            	
              280,000

            	
              0.75

            	
              210,000

            	
              7/24/2003

            	
              7/24/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Broad
                Street Ventures

            	
              350,000

            	
              0.35

            	
              -

            	
              11/25/2003

            	
              11/25/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Broad
                Street Ventures

            	
              350,000

            	
              0.35

            	
              -

            	
              11/25/2003

            	
              11/25/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin

            	
              525,000

            	
              0.32

            	
              168,000

            	
              1/5/2006

            	
              1/5/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                A Pfd Stock Placement Agent Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Vince
                Calicchia

            	
              25,190

            	
              0.21

            	
              5,290

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Vince
                Calicchia

            	
              16,031

            	
              0.21

            	
              3,367

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Carmelo
                Troccoli

            	
              58,929

            	
              0.21

            	
              12,375

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Carmelo
                Troccoli

            	
              37,501

            	
              0.21

            	
              7,875

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Capital Management LLC

            	
              344,500

            	
              0.21

            	
              72,345

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Capital Management LLC

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Jonathan
                Rich

            	
              7,990

            	
              0.21

            	
              1,678

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Jonathan
                Rich

            	
              5,086

            	
              0.21

            	
              1,068

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Jody
                Giraldo

            	
              11,786

            	
              0.21

            	
              2,475

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Jody
                Giraldo

            	
              7,500

            	
              0.21

            	
              1,575

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Brad
                Barnard

            	
              11,786

            	
              0.21

            	
              2,475

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Brad
                Barnard

            	
              7,500

            	
              0.21

            	
              1,575

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              vFinance
                Investments, Inc.

            	
              518,386

            	
              0.21

            	
              108,861

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              vFinance
                Investments, Inc.

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              589,286

            	
              0.21

            	
              123,750

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              375,000

            	
              0.21

            	
              78,750

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                A Pfd Stockholders Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Master Fund LP

            	
              823,129

            	
              0.21

            	
              172,857

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Monarch
                Capital Fund Ltd.

            	
              600,000

            	
              0.21

            	
              126,000

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Nite
                Capital LP

            	
              935,376

            	
              0.21

            	
              196,429

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Double
                U Master Fund LP

            	
              399,997

            	
              0.21

            	
              83,999

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Alpha
                Capital

            	
              3,741,495

            	
              0.21

            	
              785,714

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Whalehaven
                Capital Fund Ltd.

            	
              2,164,895

            	
              0.21

            	
              454,628

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              DKR
                Soundshire Oasis Holding Fund Ltd.

            	
              2,619,048

            	
              0.21

            	
              550,000

            	
              11/30/2005

            	
              11/30/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Pfd Stock (1st Issuance) Placement Agent
                Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Carmelo
                Troccoli

            	
              299,732

            	
              0.30

            	
              89,920

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Capital Management LLC

            	
              420,000

            	
              0.30

            	
              126,000

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Jonathan
                Rich

            	
              107,904

            	
              0.30

            	
              32,371

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Jody
                Giraldo

            	
              16,071

            	
              0.30

            	
              4,821

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Brad
                Barnard

            	
              16,071

            	
              0.30

            	
              4,821

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              vFinance
                Investments, Inc.

            	
              1,155,954

            	
              0.30

            	
              346,786

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              128,571

            	
              0.30

            	
              38,571

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Sean
                Martin

            	
              84,268

            	
              0.30

            	
              25,280

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Dani
                Sabo

            	
              42,857

            	
              0.30

            	
              12,857

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Thomas
                Suppanz

            	
              64,286

            	
              0.30

            	
              19,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Pfd Stockholders (1st Issuance) Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Ellis
                International

            	
              476,190

            	
              0.30

            	
              142,857

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Brio
                Capital LP

            	
              476,190

            	
              0.30

            	
              142,857

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Double
                U Master Fund LP

            	
              952,381

            	
              0.30

            	
              285,714

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin

            	
              714,286

            	
              0.30

            	
              214,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Nite
                Capital LP

            	
              714,286

            	
              0.30

            	
              214,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Sibex
                Capital Fund Inc.

            	
              1,428,571

            	
              0.30

            	
              428,571

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Master Fund LP

            	
              714,286

            	
              0.30

            	
              214,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Monarch
                Capital Fund Ltd.

            	
              952,381

            	
              0.30

            	
              285,714

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Alpha
                Capital AG

            	
              2,380,952

            	
              0.30

            	
              714,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Whalehaven
                Capital Fund

            	
              1,666,667

            	
              0.30

            	
              500,000

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Thomas
                Torelli

            	
              714,286

            	
              0.30

            	
              214,286

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Martin
                J. Ferkin

            	
              166,667

            	
              0.30

            	
              50,000

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              David
                Baum

            	
              119,048

            	
              0.30

            	
              35,714

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Howard
                Kent

            	
              190,476

            	
              0.30

            	
              57,143

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Noble
                Special Situations Fund LP

            	
              357,143

            	
              0.30

            	
              107,143

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Greg
                Silver

            	
              476,190

            	
              0.30

            	
              142,857

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              CMS
                Capital

            	
              476,190

            	
              0.30

            	
              142,857

            	
              5/17/2006

            	
              5/17/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Pfd Stock (2nd Issuance) Placement Agent
                Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              203,571

            	
              0.30

            	
              61,071

            	
              6/21/2006

            	
              6/21/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Pfd Stockholders (2nd Issuance) Warrants

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              RFJM
                Partners LLC

            	
              476,190

            	
              0.30

            	
              142,857

            	
              6/21/2006

            	
              6/21/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              297,619

            	
              0.30

            	
              89,286

            	
              6/21/2006

            	
              6/21/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Noble
                Special Situations Fund LP

            	
              357,143

            	
              0.30

            	
              107,143

            	
              6/21/2006

            	
              6/21/2011

            	 	 	 	 	 	 	 	 	 	 
	 	
              42,893,897

            	
              0.34
                

            	
              14,399,814

            	 	 	 	 	 	 	 	 	 	 	 	 
	
              Svenningsen
                Trust refinance of Laurus Funds

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrants

            	
              2,000,000

            	
              0.20
                

            	
              400,000

            	
              05/18/2005

            	
              05/18/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Warrants

            	
              2,000,000

            	
              0.25
                

            	
              500,000

            	
              05/18/2005

            	
              05/18/2011

            	 	 	 	 	 	 	 	 	 	 
	
              Warrants

            	
              2,000,000

            	
              0.30
                

            	
              600,000

            	
              05/18/2005

            	
              05/18/2011

            	 	 	 	 	 	 	 	 	 	 
	 	
              6,000,000

            	
              0.25
                

            	
              1,500,000

            	 	 	 	 	 	 	 	 	 	 	 	 
	
              Laurus
                Debt Financing

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrants
                - Original No. 1

            	
              -

            	
              0.41

            	
              -

            	
              04/27/2004

            	
              04/27/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Warrants
                - Original No. 2

            	
              -

            	
              0.50

            	
              -

            	
              04/27/2004

            	
              04/27/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Warrants
                - Original No. 3

            	
              222,222

            	
              0.58

            	
              128,889

            	
              04/27/2004

            	
              04/27/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Warrant
                issued on restructure No. 2

            	
              -

            	
              0.33

            	
              -

            	
              10/27/2004

            	
              10/27/2010

            	 	 	 	 	 	 	 	 	 	 
	
              Warrant
                issued on payoff No. 3

            	
              1,500,000

            	
              0.23

            	
              345,000

            	
              05/18/2005

            	
              05/18/2011

            	 	 	 	 	 	 	 	 	 	 
	 	
              1,722,222

            	
              0.28

            	
              473,889

            	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Convertible
                Preferred Stock 

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Series
                A Preferred Stock

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Master Fund LP

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Monarch
                Capital Fund Ltd.

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Nite
                Capital LP

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Double
                U Master Fund LP

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Alpha
                Capital

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Whalehaven
                Capital Fund Ltd.

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              DKR
                Soundshire Oasis Holding Fund Ltd.

            	
              -

            	
              0.21

            	
              -

            	
              11/30/2005

            	
              11/30/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Preferred Stock - 1st Issuance

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Ellis
                International

            	
              476,190

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Brio
                Capital LP

            	
              476,190

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Double
                U Master Fund LP

            	
              952,381

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Lee
                Harrison Corbin

            	
              714,286

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Nite
                Capital LP

            	
              714,286

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Sibex
                Capital Fund Inc.

            	
              952,381

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Harborview
                Master Fund LP

            	
              714,286

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Monarch
                Capital Fund Ltd.

            	
              952,381

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Alpha
                Capital AG

            	
              2,380,952

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Whalehaven
                Capital Fund

            	
              1,666,667

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Thomas
                Torelli

            	
              714,286

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Martin
                J. Ferkin

            	
              166,667

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              David
                Baum

            	
              119,048

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Howard
                Kent

            	
              190,476

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Noble
                Special Situations Fund LP

            	
              357,143

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Greg
                Silver

            	
              476,190

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              CMS
                Capital

            	
              476,190

            	
              0.21

            	
              -

            	
              5/17/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Series
                B Preferred Stock - 2nd Issuance

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              RFJM
                Partners LLC

            	
              476,190

            	
              0.21

            	
              -

            	
              6/21/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Nico
                Pronk

            	
              297,619

            	
              0.21

            	
              -

            	
              6/21/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	
              Noble
                Special Situations Fund LP

            	
              357,143

            	
              0.21

            	
              -

            	
              6/21/2006

            	
              none

            	 	 	 	 	 	 	 	 	 	 
	 	
              13,630,952

            	
              0.21

            	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Employee
                Stock Options

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Option
                Holder

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Scott
                Garron

            	
              22,500

            	
              0.17

            	
              3,825

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              L.
                Alan McGinn

            	
              225,000

            	
              0.17

            	
              38,250

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              L.
                Alan McGinn

            	
              500,000

            	
              1.17

            	
              585,000

            	
              12/1/2002

            	
              9/23/2008

            	 	 	 	 	 	 	 	 	 	 
	
              Daniel
                Merillat

            	
              22,500

            	
              0.17

            	
              3,825

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              Ron
                Spohn

            	
              22,500

            	
              0.17

            	
              3,825

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              Lisa
                Wilde

            	
              15,000

            	
              0.17

            	
              2,550

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              Nicholas
                VandenBrekel

            	
              5,000,000

            	
              0.187

            	
              935,000

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              Mark
                Mroczkowski

            	
              4,000,000

            	
              0.187

            	
              748,000

            	
              11/28/2003

            	
              11/28/2013

            	 	 	 	 	 	 	 	 	 	 
	
              Peter
                Scholtz

            	
              50,000

            	
              0.18

            	
              9,000

            	
              3/1/2006

            	
              3/1/2016

            	 	 	 	 	 	 	 	 	 	 
	
              Kevin
                Henderson

            	
              333,334

            	
              0.18

            	
              60,000

            	
              3/1/2006

            	
              3/1/2016

            	 	 	 	 	 	 	 	 	 	 
	 	
              10,190,834

            	
              0.23

            	
              2,389,275

            	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total
                options, warrants and convertible pfd stock

            	
              74,437,905

            	
              0.25

            	
              18,762,978

            	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Fully
                Diluted

            	
              157,725,698

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total
                number of fully diluted shares - subsequent to Biometrics Investors
                LLC
                receiving warrants for an amount of common shares that would represent
                40%
                of the number of shares of common stock that the Company would have
                if all
                warrants and conversion rights were exercised

            	
              262,876,163

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrants
                issued with the First Additional Advance (25%)

            	
              65,719,041

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Warrants
                issued with the Additional Advance (15%)

            	
              39,431,424

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              Total
                - 40%

            	
              105,150,465

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
               

              In
                addition to the foregoing the Company will be obligated to issue
                stock
                options for an additional 166,666 and 1,500,000 shares to Kevin Henderson
                and Edward Chen, respectively, when those options vest in accordance
                with
                the terms of their employment agreements all of which are publicly
                disclosed in SEC filings.

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              The
                Company has an obligation to issue 178,000 shares to Aregee Investments
                No. 105 (Pty) Ltd. in accordance with the Amended Promissory Note
                entered
                into on December 1, 2006. 

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


    

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      M

     

    Additional
      Names

     

    


     

    Wedge
      Net
      Experts, Inc.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      N

     

    Equipment
      List 

     

    
      	
              Equipment
                consists of the following at December 31, 2006:

            	 
	
              Leasehold
                improvements

            	
              $1,465,270

            
	
              Office
                furniture and fixtures

            	
              567,220

            
	
              Computer
                equipment

            	
              226,526

            
	
              Purchased
                software

            	
              151,701

            
	 	
              2,410,717

            
	
              Less
                accumulated depreciation

            	
              1,490,808

            
	 	
              $919,909

            


    

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      O

     

    Indebtedness

     

    Unrelated
      Parties

    Biometrics
      Investors, L.L.C.  $3,965,119

    EastGroup
      Properties, LP  $1,429,978

    Aregee
      Investments No. 105  
      $165,000
      ($37,500 cash + 178,000 shares of restricted common stock)

    E-Team
      International Limited  
      $184,675

    Cynthia
      Mroczkowski   
      $50,000

    


    Related
      Parties

    Nicholas
      VandenBrekel   
      $361,000

    Mark
      Mroczkowski   
      $50,000

    Alan
      McGinn    
      $12,000

    Edward
      Chen    
      $150,000

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      P

     

    Intellectual
      Property 

     

    Schedule
      1

     

    (a) Sequiam
      Biometrics, Inc. is a party to that certain Co-operative Development and Supply
      Agreement with Kwikset Corporation relating to the Smart Scan
      technology.

    


    (b)
      List
      of all Intellectual Property owned in whole or in part.

    Proprietary
      Biometric Technologies

    Software

    
      	1.  	
              BioTime
                4.0. Biometric Time and Attendance
                Software

            


    

    
      	2.  	
              BioPay.
                Payroll system for use with BioTime.
                (New)

            


    

    
      	3.  	
              BioTools
                4.0. Development Tools for creation of stand alone biometric applications.
                

            


    

    
      	4.  	
              BioTools
                4.0 Professional. Advanced development tools for creation of biometric
                client server applications. 

            


    

    
      	5.  	
              BioWeb.
                2.0 Development tools for creation of biometrically authenticated
                web
                sites. 

            


    

    
      	6.  	
              BioDoor.
                Stand alone access control software.


            


    

    
      	7.  	
              BioAccess.
                (now part of BioTools)

            


    

    
      	8.  	
              BioRegister.
                Software for club/group membership
                tracking.

            


    

    
      	9.  	
              BioMail.
                Biometric enabling plug-in for Microsoft Outlook.
                

            


    

    
      	10.  	
              CanSecU
                4.0. Biometric software suite that is bundled with OEM and ODM USB
                fingerprint pods. Includes features like Windows login, biometric
                screensaver, biometric file encryption,  one-touch biometric web site
                login, biometric encrypted hard disk partitions
                etc..

            


    

    
      	11.  	
              CanSecU
                925. Client/Server time and attendance software.
                

            


    

    
      	12.  	
              Shanghai
                Police Project. Client/Server biometric matching software for the
                Shanghai
                police department. 

            


    

    
      	13.  	
              Universal
                Biometric Interface (UBI) software development kit. Allows OEM customers
                to modify the functionality of the UBI in real time.
                

            


    

    
      	14.  	
              HCB
                Development Tools. Software tools for testing and development of
                software
                for the HCB product.

            


    

    
      	15.  	
              ScanQ
                Software Suite. A suite of software similar to CanSecU 4 that is
                to be
                bundled with Authentec, Fujitsu and other sensors.
                

            


    

    


    Hardware

     

    
      	1.  	
              Biovault
                2.0. Full features biometric vault.


            


    

    
      	2.  	
              BioBox.
                Smaller version of the Biovault 2.0

            


    

    
      	3.  	
              Bank
                Box. Box designed to hold money for Banks in the Chinese market.
                

            


    

    
      	4.  	
              ScanQ.
                Fujitsu and CMOS II based PC based biometric pod.
                

            


    

    
      	5.  	
              BioPod.
                A match-on-device pod for real time authentication. Contains an ISO
                7816
                smart card reader and an Authentec sensor. We store the fingerprint
                on a
                smart card and the device compares the fingerprints taken from the
                device
                to the one on the card.

            


    

    
      	6.  	
              Biolock.
                Low cost biometric door lock. 

            


    

    
      	7.  	
              HCB.
                Client/server time and attendance box that communicates billing data
                in
                real time to Sequiam’s network operations center. The billing data is then
                made accessible to clients. 

            


    

    
      	8.  	
              HDT.
                Biometric/RFID PDA. This is a wireless Windows CE 5.0 PDA with a
                removable
                RFID/Biometric module. When the device scans a user using its RFID
                chip
                the fingerprint sensor authenticates that user, then the device wirelessly
                pulls that users records from the server and displays it on the screen.
                Can be used for venue control, ticketing and other portable projects
                (similar to devices used by rental car attendants).
                

            


    

    
      	9.  	
              HCT.
                This device is under development for the US Border Patrol and the
                US Army.
                It records a voice entry and attaches it to a fingerprint record.
                

            


    

    
      	10.  	
              OEM
                Mini. Inexpensive stripped down version of the UBI. This is used
                in very
                low cost devices such as small safes and inexpensive
                products.

            


    

    
      	11.  	
              OEM
                2. Full featured ‘wall-hang’ box used for access control and time and
                attendance. Features include wireless access, Power over Ethernet,
                Data
                over Ethernet, Camera, Anti-pass-thru mechanism, smart card interface,
                match fingerprints on board and via server.


            


    

    
      	12.  	
              UBI.
                Mid to low range device for allowing manufacturers of products to
                enable
                biometrics. This device can be added to safes, medicine cabinets
                etc. Can
                be used with any product that uses an electric locking mechanism.
                

            


    

    
      	13.  	
              CMOS
                II. Low cost flat form factor optical biometric sensor. 500 dpi biometric
                sensor for use in notebook computers, PDA’s, portable devices
                etc..

            


    

    
      	14.  	
              Fujitsu
                BioPod. Enclosure and mechanical design for the Fujitsu OEM/ODM sensor.
                

            


    

    


    Test
      Hardware

    


    
      	1.  	
              We
                have various test equipment we have developed for testing BioVaults,
                BioLocks  and other products during the manufacturing process. Both
                hardware and software. 

            


    

    
      	2.  	
              Some
                of the software includes software used to serialize the BioVault
                etc..

            


    

    
      	3.  	
              Sequiam
                also owns the injection molding tools for most of the products.
                

            


    

    


    Trademarks

    


    
      	1.  	
              Sequiam
                BioLock - pending

            


    

    
      	2.  	
              Biometrics
                is the Key - pending

            


    

    
      	3.  	
              Consumer
                Lifestyle Biometrics - pending

            


    

    
      	4.  	
              Universal
                Biometrics Interface - pending

            


    

    
      	5.  	
              BioVault
                - Registration No. 3,182,790

            


    

    
      	6.  	
              IRP
                Internet Remote Print - Registration No.
                3,105,889

            


    

    
      	7.  	
              QuestPrint
                - Registration No. 2,620,977

            


    

    
      	8.  	
              Sequiam
                - Registration No. 2,930,720

            


    

    


    Patents

    


    
      	1.  	
              BioVault
                Patent Pending No. 60/302,154

            


    

    
      	2.  	
              BioVault
                locking Mechanism Patent Pending No.
                10/358,013

            


    

    
      	3.  	
              Briteprint
                Patent No. 6,865,285 B1

            


    

    


    Although
      the Company and the Subsidiaries have, or have rights to use, all patents,
      patent applications, trademarks, trademark applications, service marks, trade
      names, trade secrets, inventions, copyrights, licenses and other similar
      intellectual property rights necessary or material for use in connection with
      their respective businesses as described in the SEC Reports, the Company granted
      a security interest in all of its patents and trademarks to Biometrics
      Investors, L.L.C..

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      P

     

    Intellectual
      Property

     

    Schedule
      2

     

    Tacoma
      Technology, Inc. (“Tacoma”) shall receive a royalty on Tacoma products sold by
      the Company on a per unit basis equal to the sum of 7% of monies received.
      This
      payment shall be calculated and paid by wire transfer to Tacoma every 30
      days.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      Q

     

    Certificate
      of Compliance 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      R

     

    Forms
      of
      Notes 

     

    Term
      Note
      A

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      R

     

    Forms
      of
      Notes 

     

    Term
      Note
      B

     

     

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      S

     

    Series
      A
      Preferred Shareholders

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      S

     

    Series
      B
      Preferred Shareholders