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                                                                    EXHIBIT 10.4

                          REGISTRATION RIGHTS AGREEMENT

            REGISTRATION RIGHTS AGREEMENT (this  "AGREEMENT"),  dated as of July
3,  2003,  by and among  Datatec  Systems,  Inc.,  a Delaware  corporation  (the
"COMPANY"), and the undersigned Investors (each, an "INVESTOR" and collectively,
the "INVESTORS").

            WHEREAS:

            A. In connection  with the Note Purchase  Agreement by and among the
parties hereto of even date herewith (the "PURCHASE AGREEMENT"), the Company has
agreed,  upon the terms and subject to the conditions of the Purchase Agreement,
to issue and sell to the Investors (i) Subordinated  Secured  Convertible  Notes
(the "NOTES")  convertible into shares of the Company's common stock, $0.001 par
value per share (the "COMMON  STOCK") (as issued upon  conversion  of the Notes,
the "CONVERSION  SHARES"),  and (ii) warrants ("WARRANTS") to purchase shares of
Common Stock (as issued upon exercise of the Warrants, the "WARRANT SHARES");

            B. To induce the  Investors  to execute  and  deliver  the  Purchase
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act  of  1933,  as  amended,  and  the  rules  and  regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.

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

            1. DEFINITIONS.

               As used in this  Agreement,  the  following  terms shall have the
following meanings:

               a.  "INVESTOR"  means an Investor,  any  permitted  transferee or
assignee thereof to whom an Investor assigns its rights under this Agreement and
who agrees to become bound by the  provisions  of this  Agreement in  accordance
with  Section 9 of this  Agreement  and any  permitted  transferee  or  assignee
thereof to whom a transferee or assignee assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 of this Agreement.

               b. "PERSON" means a corporation,  a limited liability company, an
association,  a partnership,  an  organization,  a business,  an  individual,  a
governmental or political subdivision thereof or a governmental agency.

               c.  "REGISTER,"  "REGISTERED,"  and  "REGISTRATION"  refer  to  a
registration   effected  by  preparing  and  filing  one  or  more  Registration
Statements  (as defined  below) in compliance  with the 1933 Act and pursuant to
Rule 415  under  the 1933  Act or any  successor  rule  providing  for  offering
securities on a continuous  basis ("RULE 415"),  and the declaration or ordering

of  effectiveness  of  such  Registration  Statement(s)  by  the  United  States
Securities and Exchange Commission (the "SEC").

               d. "REGISTRABLE  SECURITIES" means (i) the Common Stock issued or
issuable  under  the  Notes  and  the  Warrants,  respectively,   including  the
Conversion  Shares and the Warrant Shares,  and (ii) any shares of capital stock
issued or issuable with respect to the foregoing as a result of any stock split,
stock dividend, recapitalization,  anti-dilution adjustment, exchange or similar
event or otherwise,  without regard to any limitation on conversion of the Notes
or exercise of the Warrants.

               e.  "REGISTRATION  STATEMENT"  means a registration  statement or
registration statements of the Company filed under the 1933 Act.

            2. REGISTRATION.

               a. MANDATORY  REGISTRATION.  The Company shall  prepare,  and, as
soon as  practicable,  but in no event  later  than  thirty  (30) days after the
Closing  Date (as defined in the  Purchase  Agreement)  (the  "SCHEDULED  FILING
DATE"), file with the SEC a separate Registration Statement on Form S-3 covering
the resale of all of the  Registrable  Securities  issued and  issuable.  In the
event that Form S-3 is unavailable for such registration,  the Company shall use
such other form as is available for such registration, subject to the provisions
of Section 2.e of this Agreement.  The Registration  Statement prepared pursuant
hereto shall  register for resale that number of shares of Common Stock equal to
150% of the number of Registrable  Securities,  both issued and issuable,  as of
the  date  (the  "ACTUAL  FILING  DATE")  immediately  preceding  the  date  the
Registration Statement is initially filed with the SEC, assuming for the purpose
of determining  such number of issuable  Registrable  Securities that all of the
Notes were  converted in full at the Mandatory  Conversion  Price (as defined in
the Notes) in effect on the Actual Filing Date and that all of the Warrants were
exercised in full (without  giving effect to any  limitations on such conversion
or exercise  that  otherwise  apply) . The Company shall use its best efforts to
have  the  Registration  Statement  declared  effective  by the  SEC as  soon as
practicable,  but in no event later than sixty (60) days after the Closing  Date
if the SEC  conducts no review of such  Registration  Statement  and one hundred
twenty  (120) days after the Closing  Date if the SEC  conducts a review of such
Registration Statement (as applicable, the "SCHEDULED EFFECTIVE DATE"). The date
on  which  such  Registration  Statement  is  declared  effective  by the SEC is
referred to herein as the "ACTUAL EFFECTIVE DATE".

               b.  PIGGY-BACK  REGISTRATIONS.  If  at  any  time  prior  to  the
expiration  of the  Registration  Period (as  hereinafter  defined)  the Company
proposes  to  file  with  the  SEC  a  Registration  Statement  relating  to  an
underwritten  offering  for its own account or the  account of others  under the
1933 Act of any of its securities  (other than a Registration  Statement on Form
S-4 or Form S-8 (or their equivalents at such time) relating to securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans),  the Company shall promptly send to each Investor written notice
of  the  Company's  intention  to  file a  Registration  Statement  and of  such
Investor's  rights under this Section 2.b and, if within  twenty (20) days after
receipt of such notice,  such Investor shall so request in writing,  the Company
shall include in such Registration  Statement all of the Registrable  Securities
such Investor  requests to be registered  for resale,  subject to the priorities

                                       2

set forth in this Section 2.b below.  No right to  registration  of  Registrable
Securities  under this Section 2.b shall be construed to limit any  registration
required  under Section 2.a. The  obligations  of the Company under this Section
2.b may be waived by Investors holding a majority of the Registrable Securities.
To the extent that such Registration Statement has been filed in connection with
an  underwritten  offering,  each  Investor  whose  Registrable  Securities  are
included in such Registration Statement shall, unless otherwise agreed to by the
Company,  offer  and  sell  such  Registrable  Securities  in such  underwritten
offering  using  the  same  underwriter  or  underwriters  and,  subject  to the
provisions of this  Agreement,  on the same terms and conditions as other shares
of  Common  Stock  included  in  such  underwritten  offering.  If the  managing
underwriter(s)  advise the Company,  in writing,  that in their  reasonable good
faith  opinion,  marketing or other  factors  dictate  that a limitation  on the
number of  shares of Common  Stock  which may be  included  in the  Registration
Statement is  necessary  to  facilitate  and not  adversely  affect the proposed
offering, then the Company shall include in such registration:

               (1) first,  all securities  the Company  proposes to sell for its
own account;

               (2) second,  up to the full number of  securities  proposed to be
registered for the account of the holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights; and

               (3) third,  the  securities  requested  to be  registered  by the
Investors  and other  holders  of  securities  entitled  to  participate  in the
registration,  as of the date  hereof,  drawn  from  them pro rata  based on the
number  each  has  requested  to be  included  in such  Registration  Statement;
provided,  however,  that the Investors agree, at all times prior to November 3,
2003, to subordinate  their rights to include their shares  pursuant to this 2.b
to the  right  of Cisco to  include  a  minimum  of 30% of the  shares  they are
entitled to include and so request to include in the Registration Statement.

               c.  ALLOCATION OF REGISTRABLE  SECURITIES.  The initial number of
Registrable  Securities included in the Registration Statement and each increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors  based on the number of Registrable  Securities held by
each  Investor at the time the  Registration  Statement  covering such number of
Registrable  Securities or increase thereof is declared effective by the SEC. In
the event that an Investor sells or otherwise  transfers any of such  Investor's
Registrable Securities, each transferee shall be allocated a pro rata portion of
the  then  remaining   number  of  Registrable   Securities   included  in  such
Registration Statement for such Investor. Any shares of Common Stock included in
a Registration  Statement and which remain  allocated to any Person which ceases
to  hold  any  Registrable  Securities  shall  be  allocated  to  the  remaining
Investors,  pro rata based on the number of Registrable  Securities then held by
such Investors.

               d. LEGAL  COUNSEL.  Subject to  Section 5 hereof,  the  Investors
holding a majority of the Registrable  Securities shall have the right to select
one legal counsel to review and oversee as their  counsel any offering  pursuant
to this Section 2 ("LEGAL  COUNSEL"),  which shall be [                     ] as
their counsel or such other  counsel as is thereafter  designated by the holders
of a majority  of the  Registrable  Securities.  The  Company  shall  reasonably
cooperate with Legal Counsel in performing the Company's  obligations under this
Agreement.

                                       3

               e.  INELIGIBILITY  FOR FORM S-3.  In the  event  that Form S-3 is
unavailable  for any  registration  of  Registrable  Securities  hereunder,  the
Company  shall (i) register the sale of the  Registrable  Securities  on another
appropriate form and (ii) file a Registration Statement on Form S-3 covering the
resale of the  Registrable  Securities as soon as reasonably  practicable  after
such form becomes  available  (but in no event later than ten (10) Business Days
thereafter,  and use  its  best  efforts  to have  such  Registration  Statement
declared effective by the SEC as soon as practicable  thereafter,  provided that
the Company shall maintain the effectiveness of the Registration  Statement then
in effect until such time as a  Registration  Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.

               f. SUFFICIENT NUMBER OF SHARES  REGISTERED.  If, on any date, the
number of shares  available under the  Registration  Statement filed pursuant to
Section  2.a is  insufficient  to cover at least 110% of all of the  Registrable
Securities  issued or issuable  under the Notes and the Warrants,  respectively,
assuming  for the purpose of  determining  such  number of issuable  Registrable
Securities  that  all of the  Notes  were  converted  in full  at the  Mandatory
Conversion  Price (as  defined in the Notes) in effect on such date and that all
of the Warrants were exercised in full (without giving effect to any limitations
on such  conversion or exercise that otherwise  apply),  the Company shall amend
the Registration  Statement,  or file a new Registration Statement (on the short
form available therefor, if applicable), or both, as soon as practicable, but in
any event not later than fifteen (15) days after such date and if the Company is
so  requested by the  Investors  (such date,  an  "ADDITIONAL  SCHEDULED  FILING
DATE"),  so that the Registration  Statement(s)  cover in the aggregate at least
150% of all of the Registrable Securities issued or issuable under the Notes and
the Warrants, respectively, such number of issuable Registrable Securities to be
determined  based on the  foregoing  assumptions.  The Company shall use it best
efforts to cause such  amendment  and/or new  Registration  Statement  to become
effective as soon as practicable  following the filing thereof,  but in no event
later than sixty (60) days after the Additional Scheduled Filing Date (each such
date, an "ADDITIONAL SCHEDULED EFFECTIVE DATE").

            3. RELATED OBLIGATIONS.

            Whenever an Investor has requested that any  Registrable  Securities
be  registered  pursuant  to  Section  2.b or at  such  time as the  Company  is
obligated to file a Registration  Statement with the SEC pursuant to Section 2.a
or 2.f, the Company will use its best efforts to effect the  registration of the
Registrable  Securities in accordance  with the intended  method of  disposition
thereof and, pursuant thereto, the Company shall have the following  obligations
in addition to those under Sections 2.a and 2.f.

               a. The Company  shall not file any other  Registration  Statement
with  respect to any of its  securities  between the date hereof and ninety (90)
days after the Actual Effective Date or any Additional  Actual Effective Date of
any  Registration  Statement  required to be filed hereunder  (provided that the
Company may file (i) a Registration  Statement on Form S-8 (or its equivalent at
such time), (ii) a Registration Statement registering for resale securities held
as of the date hereof by the  Company's  directors  or  executive  officers,  or
holders who, as of the date of a proposed  registration,  beneficially own 5% or
more  of  the  Company's  common  stock,  or  (iii)  a  Registration   Statement
registering for resale shares underlying securities issued pursuant to a Private
Placement  Memorandum  dated June 6, 2003,  as  amended  or  supplemented).  The
Company  shall keep each of the  Registration  Statements  required  to be filed

                                       4

hereunder  effective  pursuant to Rule 415 at all times until the earlier of (i)
the date as of which the  Investors may sell all of the  Registrable  Securities
pursuant  to  paragraph  (k) of Rule  144  promulgated  under  the  1933 Act (or
successor  thereto)  ("RULE 144") or (ii) the date on which the Investors  shall
have  sold  all  of  the  Registrable   Securities   pursuant  to  an  effective
Registration  Statement or Rule 144 (the "REGISTRATION  PERIOD"),  each of which
Registration  Statements  (including any  amendments or supplements  thereto and
prospectuses  contained  therein)  shall not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. The term "best efforts" when used in the Section
3 shall mean,  among other  things,  that the Company  shall  submit to the SEC,
within two business days after the Company learns that no review of a particular
Registration Statement or amendment thereto will be made by the staff of the SEC
or that the staff has no further comments on the Registration  Statement, as the
case may be, a request for acceleration of  effectiveness  of such  Registration
Statement  to a time and date not later than 48 hours  after the  submission  of
such request.

               b.  The  Company  shall  prepare  and  file  with  the  SEC  such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this  Section  3.b by reason of the Company  filing a report on Form 10-K,  Form
10-Q or Form 8-K or any analogous  report under the  Securities  Exchange Act of
1934, as amended (the "1934 ACT"), if the  information  contained in such report
is not incorporated by reference into such Registration Statement),  the Company
shall file such amendments or supplements  with the SEC on the same day on which
the 1934 Act report is filed which  created the  requirement  for the Company to
amend or supplement the Registration Statement.

               c. The  Company  shall (a)  permit  Legal  Counsel  to review and
comment upon (i) the Registration Statement at least seven (7) days prior to its
filing  with  the  SEC  and  (ii)  all  other  Registration  Statements  and all
amendments and supplements to all  Registration  Statements  within a reasonable
number  of days  prior  to the  their  filing  with the SEC and (b) not file any
document in a form to which Legal Counsel reasonably objects.  The Company shall
not submit a request for  acceleration  of the  effectiveness  of a Registration
Statement or any amendment or supplement  thereto  without the prior approval of
Legal Counsel,  which approval shall not be unreasonably  withheld.  The Company
shall furnish to Legal Counsel,  without charge, (i) any correspondence  between
the SEC or the staff of the SEC and the Company or its representatives  relating
to any  Registration  Statement,  (ii)  promptly  after the same is prepared and
filed with the SEC, one copy of any Registration  Statement and any amendment(s)

                                       5

thereto,   including   financial   statements  and   schedules,   all  documents
incorporated   therein  by  reference  and  all  exhibits  and  (iii)  upon  the
effectiveness of any Registration Statement, one copy of the prospectus included
in such Registration Statement and all amendments and supplements thereto.

               d. The Company shall furnish to each Investor  whose  Registrable
Securities  are included in any  Registration  Statement,  without  charge,  (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration  Statement and any amendment(s)  thereto,  including financial
statements and schedules,  all documents incorporated therein by reference,  all
exhibits and each  preliminary  prospectus,  (ii) upon the  effectiveness of any
Registration  Statement,  ten (10)  copies of the  prospectus  included  in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may  reasonably  request) and (iii) such other
documents,  including  copies of any  preliminary or final  prospectus,  as such
Investor may  reasonably  request from time to time in order to  facilitate  the
disposition of the Registrable Securities owned by such Investor.

               e. The Company  shall (i)  register  and qualify the  Registrable
Securities  covered by a Registration  Statement under such other  securities or
"blue sky" laws of such  jurisdictions  in the United States as Legal Counsel or
any Investor reasonably requests,  (ii) prepare and file in those jurisdictions,
such amendments  (including  post-effective  amendments) and supplements to such
registrations   and   qualifications   as  may  be  necessary  to  maintain  the
effectiveness  thereof  during the  Registration  Period,  (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times  during  the  Registration  Period,  and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable  Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection  therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this  Section 3.e,  (y) subject  itself to general  taxation in any such
jurisdiction,  or (z) file a general  consent  to service of process in any such
jurisdiction.  The Company shall promptly notify Legal Counsel and each Investor
who  holds  Registrable  Securities  of  the  receipt  by  the  Company  of  any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.

               f. In the event  Investors who hold a majority of the Registrable
Securities being offered in an underwritten offering select underwriters for the
offering,  the Company  shall enter into and  perform its  obligations  under an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,  customary  indemnification and contribution  obligations,  with the
underwriters of such offering;  provided,  however,  that the Company shall have
the right to consent to the selection of such underwriters,  which consent shall
not be unreasonably withheld.

               g. As promptly as practicable after becoming aware of such event,
the Company  shall  notify  Legal  Counsel  and each  Investor in writing of the
happening  of any  event  as a result  of which  the  prospectus  included  in a
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made,  not  misleading,  and promptly  prepare a  supplement  or
amendment to such  Registration  Statement  to correct such untrue  statement or
omission,  and deliver ten (10) copies of such  supplement or amendment to Legal

                                       6

Counsel and each  Investor (or such other  number of copies as Legal  Counsel or
such Investor may reasonably  request).  The Company shall also promptly  notify
Legal  Counsel  and  each  Investor  in  writing  (i) when a  prospectus  or any
prospectus  supplement or  post-effective  amendment has been filed,  and when a
Registration  Statement or any  post-effective  amendment  has become  effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by  facsimile  on the same day of such  effectiveness  and by overnight
mail),  (ii) of any  request  by the  SEC for  amendments  or  supplements  to a
Registration  Statement or related prospectus or related information,  and (iii)
of the Company's reasonable  determination that a post-effective  amendment to a
Registration Statement would be appropriate.

               h. The Company shall use its best efforts to prevent the issuance
of any  stop  order or  other  suspension  of  effectiveness  of a  Registration
Statement,  or the  suspension of the  qualification  of any of the  Registrable
Securities for sale in any  jurisdiction  and, if such an order or suspension is
issued,  to obtain the  withdrawal  of such order or  suspension at the earliest
possible  moment  and to  notify  Legal  Counsel  and each  Investor  who  holds
Registrable  Securities  being  sold  (and,  in  the  event  of an  underwritten
offering,  the  managing  underwriters)  of the  issuance  of such order and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any  proceeding for such purpose (such notice to be delivered by facsimile on
the same day such notice of the  initiation or threat of such  proceeding,  such
order or suspension is received by the Company and by overnight mail).

               i. At the request of any  Investor,  the Company shall furnish to
such Investor,  on the date of the  effectiveness of the Registration  Statement
and  thereafter  from time to time on such dates as an Investor  may  reasonably
request (i) if required by an underwriter,  a letter,  dated such date, from the
Company's  independent  certified public accountants in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten  public  offering,  addressed to the  underwriters,  and (ii) an
opinion, dated as of such date, of counsel representing the Company for purposes
of such Registration  Statement,  in form, scope and substance as is customarily
given in an underwritten public offering,  addressed to the underwriters and the
Investors.

               j. The Company  shall make  available  for  inspection by (i) any
Investor,  (ii)  Legal  Counsel,  (iii)  any  underwriter  participating  in any
disposition pursuant to a Registration  Statement,  (iv) one firm of accountants
or other agents retained by the Investors and (v) one firm of attorneys retained
by such underwriters  (collectively,  the "INSPECTORS") all pertinent  financial
and other  records,  and pertinent  corporate  documents  and  properties of the
Company (collectively,  the "RECORDS"),  as shall be reasonably deemed necessary
by each Inspector, and cause the Company's officers,  directors and employees to
supply all  information  which any Inspector may reasonably  request;  provided,
however,  that each Inspector shall hold in strict confidence and shall not make
any  disclosure  (except  to an  Investor)  or  use  of  any  Records  or  other
information which the Company  determines in good faith to be confidential,  and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a  misstatement  or omission in
any Registration  Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final,  non-appealable subpoena

                                       7

or order from a court or government body of competent  jurisdiction,  or (c) the
information  in such  Records has been made  generally  available  to the public
other than by  disclosure  in violation of this or any other  agreement of which
the Inspector has knowledge.  Each Investor agrees that it shall,  upon learning
that disclosure of such Records is sought in or by a court or governmental  body
of competent  jurisdiction  or through  other means,  give prompt  notice to the
Company and allow the Company, at its expense,  to undertake  appropriate action
to prevent  disclosure  of, or to obtain a  protective  order for,  the  Records
deemed confidential.

               k.  The  Company  shall  hold  in  confidence  and not  make  any
disclosure of information  concerning an Investor provided to the Company unless
(i) disclosure of such  information is necessary to comply with federal or state
securities  laws, (ii) the disclosure of such  information is necessary to avoid
or correct a misstatement or omission in any Registration  Statement,  (iii) the
release of such  information  is ordered  pursuant to a subpoena or other final,
non-appealable   order  from  a  court  or   governmental   body  of   competent
jurisdiction,  or (iv) such information has been made generally available to the
public other than by  disclosure  in  violation  of this  Agreement or any other
agreement.  The Company agrees that it shall,  upon learning that  disclosure of
such  information  concerning  an  Investor  is  sought  in  or  by a  court  or
governmental body of competent  jurisdiction or through other means, give prompt
written  notice to such  Investor  and allow such  Investor,  at the  Investor's
expense, to undertake  appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

               l. The Company shall use its best efforts either,  at or prior to
the effective date of a Registration  Statement or any amendment thereto, to (i)
cause all the Registrable  Securities covered by such Registration  Statement or
amendment to be listed on each securities exchange or market on which securities
of the same class or series  issued by the Company are then  listed,  if any, if
the listing of such Registrable  Securities is then permitted under the rules of
such  exchange or market,  or (ii) secure the  inclusion  for  quotation  on the
over-the-counter  market on the electronic  bulletin board for such  Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least  two  market  makers  to  register  with the  National  Association  of
Securities  Dealers,  Inc.  ("NASD"),  as such with respect to such  Registrable
Securities.  The  Company  shall pay all fees and  expenses in  connection  with
satisfying its obligation under this Section 3.l.

               m.  The  Company  shall  cooperate  with the  Investors  who hold
Registrable Securities being offered and, to the extent applicable, any managing
underwriter or underwriters,  to facilitate the timely  preparation and delivery
of  certificates   (not  bearing  any  restrictive   legend)   representing  the
Registrable  Securities to be offered  pursuant to a Registration  Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the  managing  underwriter  or  underwriters,  if any, or, if there is no
managing  underwriter or underwriters,  the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any, or
the Investors may request.

               n. The Company  shall  provide a transfer  agent and registrar of
all such  Registrable  Securities  not  later  than the  effective  date of such
Registration Statement.

               o. If requested by the managing underwriter(s) in connection with
an  underwritten  offering  or an  Investor  (whether  or  not  an  offering  is
underwritten),  the Company shall:  (i) immediately  incorporate in a prospectus

                                       8

supplement or  post-effective  amendment such  information as, in the case of an
underwritten  offer,  the managing  underwriters and the Investors agree, and in
the case of any  other  type of  offering,  such  Investor  requests,  should be
included   therein   relating  to  the  sale  and  distribution  of  Registrable
Securities,  including,  without  limitation,  information  with  respect to the
number of  Registrable  Securities  being sold to such  underwriters  or by such
Investor,  the purchase price being paid therefor by any such underwriter(s) and
any other terms of the  underwritten  (including any best efforts  underwritten)
offering of the  Registrable  Securities to be sold in such offering;  (ii) make
all required filings of such prospectus  supplement or post-effective  amendment
as soon  as  notified  of the  matters  to be  incorporated  in such  prospectus
supplement or post-effective  amendment; and (iii) supplement or make amendments
to any Registration Statement.

               p.  The  Company   shall  use  its  best  efforts  to  cause  the
Registrable  Securities covered by the applicable  Registration  Statement to be
registered with or approved by such other  governmental  agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such   Registrable
Securities.

               q. The Company  shall make  generally  available  to its security
holders as soon as practical,  but not later than 90 days after the close of the
period  covered  thereby,  an earnings  statement  (in form  complying  with the
provisions  of Rule 158 under  the 1933  Act)  covering  a  twelve-month  period
beginning  not later than the first day of the  Company's  fiscal  quarter  next
following the effective date of the Registration Statement.

               r. The Company  shall  otherwise  use its best  efforts to comply
with all  applicable  rules and  regulations  of the SEC in connection  with any
registration hereunder.

               s. Within two (2) business  days after a  Registration  Statement
which covers applicable  Registrable Securities is ordered effective by the SEC,
the Company  shall  deliver,  and shall  cause legal  counsel for the Company to
deliver,  to the transfer agent for such Registrable  Securities (with copies to
the Investors  whose  Registrable  Securities are included in such  Registration
Statement)  confirmation  that such  Registration  Statement  has been  declared
effective by the SEC in the form attached hereto as Exhibit A.

               t. The Company shall take all other reasonable  actions necessary
to  expedite  and  facilitate   disposition  by  the  Investors  of  Registrable
Securities pursuant to a Registration Statement.

               u.  Notwithstanding  anything to the  contrary in Section 3.g, at
any time after the  Registration  Statement  has been  declared  effective,  the
Company may delay the disclosure of material,  non-public information concerning
the  Company  the  disclosure  of which at the  time is not,  in the good  faith
opinion of the Board of Directors  of the Company and its  counsel,  in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a "GRACE  PERIOD");  provided,  that the Company  shall  promptly  (i)
notify the  Investors  in  writing  of the  existence  of  material,  non-public
information  giving rise to a Grace Period (without  disclosing such information
to an Investor  unless  requested in writing by such  Investor to do so) and the
date on which the Grace  Period will begin,  and (ii)  notify the  Investors  in
writing of the date on which the Grace Period ends; and, provided further,  that

                                       9

during any consecutive 365-day period,  there shall be only three Grace Periods,
any such Grace Period not to exceed 15 consecutive days in the aggregate and all
Grace Periods  combined not to exceed 30 days in the  aggregate  (an  "ALLOWABLE
GRACE PERIOD").  For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the  Investors  receive the
notice referred to in clause (i) above and shall end on and include the date the
Investors  receive the notice referred to in clause (ii) above.  Upon expiration
of the  Allowable  Grace  Period,  the Company shall again be bound by the first
sentence of Section 3.g with  respect to the  information  giving rise  thereto.
Notwithstanding  anything to the contrary  contained  herein,  the Investors may
convert  some or all of the Note or  exercise  all or any  part of the  Warrants
during a Grace Period.

               v. Each of the following  events shall constitute a "REGISTRATION
DEFAULT" for purposes of this Agreement:

               (i) the Company's failure to file a Registration Statement by the
applicable Scheduled Filing Date or Additional Scheduled Filing Date thereof, as
appropriate, or in accordance with subsection 2(e) above, if applicable;

               (ii) the  SEC's  failure  to  declare  a  Registration  Statement
effective on or before the  applicable  Scheduled  Effective  Date or Additional
Scheduled  Effective Date thereof,  as appropriate,  except where the failure to
meet such deadline is the result solely of actions by the holders of Registrable
Securities;

               (iii)  the  Company's  failure  to  request  acceleration  of the
effectiveness of a Registration Statement within two (2) business days after the
SEC has notified the Company  that it may file such an  acceleration  request as
required by Section 3.a hereof,  except where the failure to meet such  deadline
is a result solely of actions by the holders of Registrable Securities;

               (iv) the Investors' inability to sell all Registrable  Securities
pursuant to an effective Registration Statement (whether because of a failure to
keep the Registration  Statement  effective,  to disclose such information as is
necessary  for  sales to be made  pursuant  to the  Registration  Statement,  to
register  sufficient  shares of Common Stock or  otherwise),  except  during any
Allowable Grace Period; or

               (v) the  aggregate  number  of days  included  in a Grace  Period
exceed the Allowable Grace Period.

Upon the  occurrence of a  Registration  Default,  the Company shall pay to each
Investor an amount  determined in accordance with the following formula for each
30-day period during which such Registration Default continues:

            2% x P x N for all Registration Defaults

            where

            P =   the average closing sale price of the Common Stock for the
                  applicable 30 days; and

                                       10

            N =   the number of Registrable  Securities issued or issuable under
                  such  Investor's Note and Warrant,  respectively,  on the last
                  day of the applicable 30-day period assuming,  for the purpose
                  of determining the number of issuable Registrable  Securities,
                  that  such  Note  was  converted  in  full  at  the  Mandatory
                  Conversion  Price (as  defined in the Notes) in effect on such
                  day and that the Warrant was exercised in full (without giving
                  effect to any  limitations on such conversion or exercise that
                  otherwise apply).

If a  Registration  Default  is cured  before  the end of a 30-day  period,  the
applicable formula shall be pro-rated. The Company shall pay such amount in cash
on  demand by an  Investor  made at any time  during  the  continuance  or after
termination of such Registration  Default. If the Company does not remit payment
of the  amount  due to such  Investor,  the  Company  will  pay  the  Investor's
reasonable costs of collection,  including  attorneys' fees. An Investor's right
to demand such  payment  shall be in  addition  to any other  rights it may have
under this Agreement, the Purchase Agreement or otherwise.

            4. OBLIGATIONS OF THE INVESTORS.

               a.  At  least  seven  (7)  business   days  prior  to  the  first
anticipated  filing date of a Registration  Statement,  the Company shall notify
each Investor in writing of the information the Company  requires from each such
Investor  if such  Investor  elects to have any of such  Investor's  Registrable
Securities  included  in such  Registration  Statement.  It shall be a condition
precedent  to the  obligations  of the  Company  to  complete  the  registration
pursuant to this  Agreement  with  respect to the  Registrable  Securities  of a
particular  Investor  that such  Investor  shall  furnish  to the  Company  such
information  regarding  itself,  the  Registrable  Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such  documents in connection  with such  registration  as the
Company may reasonably request.

               b. Each Investor by such Investor's acceptance of the Registrable
Securities  agrees to cooperate with the Company as reasonably  requested by the
Company  in  connection  with the  preparation  and  filing of any  Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's   Registrable
Securities from such Registration Statement.

               c.  In  the  event  any  Investor  elects  to  participate  in an
underwritten  public offering pursuant to Section 2.b, each such Investor agrees
to enter into and perform  such  Investor's  obligations  under an  underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution  obligations,  with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.

               d. Each Investor agrees that, upon receipt of any notice from the
Company of the  happening  of any event of the kind  described in Section 3.h or
the first  sentence of Section 3.g, such Investor will  immediately  discontinue
disposition of Registrable Securities pursuant to any Registration  Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies

                                       11

of the  supplemented  or amended  prospectus  contemplated by Section 3.h or the
first sentence of Section 3.g.

               e. Each  Investor  agrees not to take any action that causes such
Investor to become a broker-dealer  that is required to be registered  under the
1934 Act or to effect any change to such  Investor's  status that would preclude
the Company from using Form S-3 for the Registration Statement.

            5. EXPENSES OF REGISTRATION.

               All reasonable expenses (other than expenses incurred pursuant to
Section 3.j(iv) and (v) and underwriting  discounts and commissions) incurred in
connection with registrations,  filings or qualifications pursuant to Sections 2
and  3,  including,   without   limitation,   all   registration,   listing  and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company and reasonable fees and  disbursements of Legal Counsel,
shall be paid by the Company;  provided, however that any such expenses of Legal
Counsel  shall be included  in and  subject to the cap on expenses  set forth in
Section 13.8 of the Purchase Agreement.

            6. INDEMNIFICATION.

               In  the  event  any  Registrable  Securities  are  included  in a
Registration Statement under this Agreement:

               a. To the fullest extent  permitted by law, the Company will, and
hereby does,  indemnify,  hold  harmless and defend each Investor who holds such
Registrable Securities, the directors,  officers,  partners,  employees, agents,
representatives  of, and each Person,  if any, who controls any Investor  within
the  meaning of the 1933 Act or the 1934 Act (each,  an  "INDEMNIFIED  PERSON"),
against any losses, claims, damages,  liabilities,  judgments, fines, penalties,
charges, costs,  attorneys' fees, amounts paid in settlement or expenses,  joint
or several,  (collectively,  "CLAIMS")  incurred in investigating,  preparing or
defending any action, claim, suit, inquiry, proceeding,  investigation or appeal
taken from the foregoing by or before any court or governmental,  administrative
or other  regulatory  agency or body or the SEC,  whether pending or threatened,
whether or not an indemnified  party is or may be a party thereto  ("INDEMNIFIED
DAMAGES"),  to which any of them may become  subject  insofar as such Claims (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
arise out of or are based  upon:  (i) any untrue  statement  or  alleged  untrue
statement of a material fact in a Registration  Statement or any  post-effective
amendment  thereto or in any filing made in connection with the qualification of
the offering under the  securities or other "blue sky" laws of any  jurisdiction
in which Registrable Securities are offered ("BLUE SKY FILING"), or the omission
or alleged  omission to state a material fact  required to be stated  therein or
necessary  to make the  statements  therein  not  misleading,  (ii)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in light of the circumstances under which the
statements  therein were made,  not  misleading,  (iii) any violation or alleged

                                       12

violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant to a Registration  Statement or (iv) any material violation
of this Agreement (the matters in the foregoing  clauses (i) through (iv) being,
collectively, "VIOLATIONS").

               The  Company   shall   reimburse  the  Investors  and  each  such
underwriter  or controlling  person,  promptly as such expenses are incurred and
are due and payable, for any legal fees or reasonable other expenses incurred by
them in connection with investigating or defending any such Claim.

               Notwithstanding  anything to the contrary  contained herein,  the
indemnification  agreement contained in this Section 6.a: (i) shall not apply to
a Claim by an Indemnified  Person arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information  furnished in writing
to the Company by such  Indemnified  Person or underwriter for such  Indemnified
Person  expressly for use in connection with the preparation of the Registration
Statement  or  any  such  amendment  thereof  or  supplement  thereto,  if  such
prospectus  was timely made  available  by the Company  pursuant to Section 3.d;
(ii) with respect to any preliminary prospectus,  shall not inure to the benefit
of any such person from whom the person  asserting any such Claim  purchased the
Registrable  Securities  that are the subject  thereof (or to the benefit of any
person  controlling such person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or  supplemented,  if such  prospectus was timely made available by
the Company  pursuant to Section  3.d, and the  Indemnified  Person was promptly
advised in writing not to use the incorrect  prospectus  prior to the use giving
rise to a violation and such Indemnified  Person,  notwithstanding  such advice,
used it; and (iii) shall not be available to the extent such Claim is based on a
failure of the  Indemnified  Person to deliver or to cause to be  delivered  the
prospectus  made  available by the Company,  if such  prospectus was timely made
available by the Company pursuant to Section 3.d and such Indemnified Person had
an obligation under applicable law to deliver such prospectus,  as determined by
a court of competent jurisdiction. Such indemnity shall remain in full force and
effect regardless of any  investigation  made by or on behalf of any Indemnified
Person and shall  survive the  transfer  of the  Registrable  Securities  by the
Investors pursuant to Section 9 of this Agreement.

               b. In  connection  with any  Registration  Statement  in which an
Investor  is  participating,  each such  Investor  agrees to  severally  and not
jointly indemnify,  hold harmless and defend, to the fullest extent permitted by
law,  the  Company,  each of its  directors,  each of its officers who signs the
Registration Statement, each Person, if any, who controls the Company within the
meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PARTY"),  against
any Claim or Indemnified Damages to which any of them may become subject,  under
the 1933 Act, the 1934 Act or  otherwise,  insofar as such Claim or  Indemnified
Damages  arise  out of or are  based  upon any  Violation,  in each  case to the
extent, and only to the extent,  that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration  Statement;  and, subject
to  Section  6.d,  such  Investor  will  reimburse  any legal or other  expenses
reasonably  incurred by them in connection with  investigating  or defending any
such Claim;  provided,  however,  that the indemnity agreement contained in this

                                       13

Section 6.b and the agreement with respect to contribution  contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such  settlement
is effected  without the prior written  consent of such Investor,  which consent
shall  not be  unreasonably  withheld;  provided,  further,  however,  that  the
Investor  shall be liable under this Section 6.b for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to such Investor as a
result  of the sale of  Registrable  Securities  pursuant  to such  Registration
Statement.  Such indemnity  shall remain in full force and effect  regardless of
any  investigation  made by or on  behalf  of such  Indemnified  Party and shall
survive the transfer of the Registrable  Securities by the Investors pursuant to
Section 9.  Notwithstanding  anything  to the  contrary  contained  herein,  the
indemnification  agreement  contained  in this  Section 6.b with  respect to any
preliminary  prospectus shall not inure to the benefit of any Indemnified  Party
if  the  untrue  statement  or  omission  of  material  fact  contained  in  the
preliminary  prospectus  was corrected on a timely basis in the  prospectus  and
such  prospectus  was  provided to  Investors  as  required,  as then amended or
supplemented.

               c. The  Company  and each  Investor  shall be entitled to receive
indemnities  from  underwriters,  selling  brokers,  dealer managers and similar
securities industry professionals participating in any distribution, to the same
extent as provided above,  with respect to information such persons so furnished
in writing expressly for inclusion in the Registration Statement.

               d. Promptly after receipt by an Indemnified Person or Indemnified
Party  under  this  Section  6 of notice of the  commencement  of any  action or
proceeding  (including any governmental action or proceeding) involving a Claim,
such  Indemnified  Person or  Indemnified  Party  shall,  if a Claim in  respect
thereof is to be made  against  any  indemnifying  party  under this  Section 6,
deliver to the indemnifying party a written notice of the commencement  thereof,
and the  indemnifying  party shall have the right to participate in, and, to the
extent the indemnifying  party so desires,  jointly with any other  indemnifying
party similarly  noticed,  to assume control of the defense thereof with counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying  party, if, in
the  reasonable  opinion of counsel  retained  by the  indemnifying  party,  the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented by such counsel in such  proceeding.  The Company shall
pay reasonable  fees for only one separate legal counsel for the Investors,  and
such legal counsel shall be selected by the Investors  holding a majority of the
issued or issuable Registrable Securities included in the Registration Statement
to which the Claim relates.  The Indemnified  Party or Indemnified  Person shall
cooperate fully with the  indemnifying  party in connection with any negotiation
or  defense  of any such  action  or claim by the  indemnifying  party and shall
furnish to the indemnifying  party all information  reasonably  available to the
Indemnified  Party or Indemnified  Person which relates to such action or claim.
The indemnifying  party shall keep the Indemnified  Party or Indemnified  Person
fully  apprised at all times as to the status of the  defense or any  settlement
negotiations with respect thereto. No indemnifying party shall be liable for any

                                       14

settlement  of any  action,  claim or  proceeding  effected  without its written
consent;  provided,  however, that the indemnifying party shall not unreasonably
withhold,  delay or condition its consent. No indemnifying party shall,  without
the consent of the Indemnified Party or Indemnified Person,  consent to entry of
any judgment or enter into any  settlement  or other  compromise  which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified  Person of a release from all liability
in respect to such claim or litigation.  Following  indemnification  as provided
for hereunder,  the indemnifying  party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations  relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the  Indemnified  Person or  Indemnified
Party under this Section 6, except to the extent that the indemnifying  party is
prejudiced in its ability to defend such action.

               e. The indemnity agreements contained herein shall be in addition
to (i) any  cause  of  action  or  similar  right  of the  Indemnified  Party or
Indemnified  Person  against  the  indemnifying  party or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to applicable law.

            7. CONTRIBUTION.

               To the extent any  indemnification  by an  indemnifying  party is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable  Securities guilty of fraudulent  misrepresentation
(within  the  meaning of Section  11(f) of the 1933 Act)  shall be  entitled  to
contribution  from any seller of  Registrable  Securities  who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds  received by
such seller from the sale of such Registrable Securities.

            8. REPORTS UNDER THE 1934 ACT.

               With a view to making  available to the Investors the benefits of
Rule 144 , during the Registration Period, the Company agrees to:

               a. make and keep public information available, as those terms are
understood and defined in Rule 144;

               b. file with the SEC in a timely  manner  all  reports  and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such  requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

               c.  furnish  to each  Investor  so long  as  such  Investor  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
1933 Act and the 1934 Act,  (ii) a copy of the most recent  annual or  quarterly
report of the  Company  and such other  reports  and  documents  so filed by the

                                       15

Company,  and (iii) such other  information  as may be  reasonably  requested to
permit  the  Investors  to sell such  securities  pursuant  to Rule 144  without
registration.

            9. ASSIGNMENT OF REGISTRATION RIGHTS.

               The rights under this Agreement shall be automatically assignable
by the  Investors  to any  transferee  of all  or  any  portion  of  Registrable
Securities  if:  (i) the  Investor  agrees in  writing  with the  transferee  or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company  within a reasonable  time after such  assignment;  (ii) the Company is,
within a  reasonable  time after such  transfer or  assignment,  furnished  with
written notice of (a) the name and address of such  transferee or assignee,  and
(b) the  securities  with  respect to which such  registration  rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further  disposition  of such  securities  by the  transferee or assignee is
restricted  under the 1933 Act and applicable  state securities laws; (iv) at or
before the time the Company  receives the written notice  contemplated by clause
(ii) of this sentence the  transferee or assignee  agrees in writing to be bound
by all of the provisions contained herein; and (v) such transfer shall have been
made in accordance with the applicable requirements of the Purchase Agreement.

            10. AMENDMENT OF REGISTRATION RIGHTS.

               Provisions of this  Agreement  may be amended and the  observance
thereof may be waived (either  generally or in a particular  instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and  Investors  who then hold or have the right to  acquire  a  majority  of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section  10 shall  be  binding  upon  each  Investor  and the  Company.  No such
amendment  shall be  effective to the extent that it applies to less than all of
the holders of the Registrable Securities.  No consideration shall be offered or
paid to any  Person  to amend or  consent  to a waiver  or  modification  of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.

            11. MISCELLANEOUS.

               a. A Person is deemed  to be a holder of  Registrable  Securities
whenever  such  Person  owns or is  deemed  to own of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or  more  Persons  with  respect  to the  same  Registrable
Securities,  the  Company  shall act upon the basis of  instructions,  notice or
election received from the registered owner of such Registrable Securities.

               b.  Any  notices,   consents,  waivers  or  other  communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one business day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

                                       16

                If to the Company:

                      Datatec Systems, Inc.
                      23 Madison Road
                      Fairfield, New Jersey 07004
                      Attention:  Mark Hirschhorn
                      Telephone: (973) 808-4000
                      Facsimile:  (973) 890-2888

                With a copy to:

                      Olshan Grundman Frome Rosenzweig & Wolosky LLP
                      505 Park Avenue
                      New York, New York 10022
                      Attention:  Robert H. Friedman
                      Telephone: (212) 755-7200
                      Facsimile:  (212) 755-1467

If to an Investor,  to its address and facsimile  number on the signature  pages
attached hereto, with copies to such Investor's  representatives as set forth on
the signature pages or to such other address and/or  facsimile  number and/or to
the  attention  of such other  person as the  recipient  party has  specified by
written  notice  given  to each  other  party at least  five  days  prior to the
effectiveness of such change.  Written  confirmation of receipt (A) given by the
recipient  of  such  notice,  consent,   waiver  or  other  communication,   (B)
mechanically  generated by the sender's  facsimile machine  containing the time,
date,  recipient  facsimile  number  and an  image of such  transmission  or (C)
provided by a courier or overnight courier service shall be rebuttable  evidence
of personal service,  overnight or courier delivery or transmission by facsimile
in accordance with clause (i), (ii) or (iii) above, respectively.

               c.  Failure of any party to  exercise  any right or remedy  under
this  Agreement or otherwise,  or delay by a party in  exercising  such right or
remedy, shall not operate as a waiver thereof.

               d.  All  questions   concerning   the   construction,   validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by the
internal laws of the State of New York,  without  giving effect to any choice of
law or conflict of law provision or rule that would cause the application of the
laws of any  jurisdictions  other than the State of New York.  Each party hereby
irrevocably  submits to the non-exclusive  jurisdiction of the state and federal
courts  sitting  in  the  City  of New  York,  borough  of  Manhattan,  for  the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed  herein,  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit, action or proceeding is brought in an inconvenient  forum or that the
venue of such  suit,  action  or  proceeding  is  improper.  Each  party  hereby
irrevocably  waives  personal  service of process and consents to process  being
served in any such suit,  action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that

                                       17

such service shall constitute good and sufficient  service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve  process in any  manner  permitted  by law.  If any  provision  of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or  unenforceability  shall not affect the  validity  or  enforceability  of the
remainder  of  this   Agreement  in  that   jurisdiction   or  the  validity  or
enforceability  of any  provision of this  Agreement in any other  jurisdiction.
EACH PARTY HEREBY  IRREVOCABLY  WAIVES ANY RIGHT IT MAY HAVE,  AND AGREES NOT TO
REQUEST,  A JURY  TRIAL FOR THE  ADJUDICATION  OF ANY  DISPUTE  HEREUNDER  OR IN
CONNECTION  HEREWITH  OR  ARISING  OUT OF  THIS  AGREEMENT  OR  ANY  TRANSACTION
CONTEMPLATED HEREBY.

               e. This  Agreement,  the Notes,  the Purchase  Agreement  and the
other  Transaction  Documents (and the exhibits  thereto)  constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions,  promises, warranties or undertakings, other
than  those  set  forth or  referred  to  herein  and  therein.  This  Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

               f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

               g.  The  headings  in  this  Agreement  are  for  convenience  of
reference only and shall not limit or otherwise affect the meaning hereof.

               h. This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall  constitute  one and
the same agreement.  This Agreement,  once executed by a party, may be delivered
to the other party hereto by facsimile  transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

               i.  Each  party  shall  do and  perform,  or cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

               j. The language used in this  Agreement  will be deemed to be the
language  chosen by the parties to express  their mutual  intent and no rules of
strict construction will be applied against any party.

               k. This  Agreement  is  intended  for the  benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                       18

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

                              COMPANY:

                              DATATEC SYSTEMS, INC.

                              By: ______________________________________________
                              Name:_____________________________________________
                              Title: ___________________________________________

                              INVESTORS:

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                                       19

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                              By: ______________________________________________
                              Name:_____________________________________________

                              Address:

                              With a copy to:

                                       20

                                                                       Exhibit A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

            Attn:

                      Re:  DATATEC SYSTEMS, INC.
                           --------------------

Ladies and Gentlemen:

            We are counsel to Datatec Systems, Inc., a Delaware corporation (the
"COMPANY"), which has entered into that certain subordinated Secured Convertible
Notes and Warrants  Purchase  Agreement (the "PURCHASE  AGREEMENT") by and among
the  Company and the  Investors  named  therein  (collectively,  the  "HOLDERS")
pursuant to which the  Company  issued to the Holders  Notes,  convertible  into
shares of its common stock, $0.001 par value per share (the "COMMON STOCK"), and
Warrants to purchase  Common  Stock.  Pursuant to the  Purchase  Agreement,  the
Company also has entered into a Registration  Rights  Agreement with the Holders
(the  "REGISTRATION  RIGHTS  AGREEMENT")  pursuant to which the Company  agreed,
among other things,  to register the  Registrable  Securities (as defined in the
Registration Rights Agreement) under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights  Agreement,  on ____________  ___, 2003, the Company filed a Registration
Statement  on  Form  S-1  (File  No.   333-_____________)   (the   "REGISTRATION
STATEMENT") with the Securities and Exchange  Commission (the "SEC") relating to
the  Registrable  Securities  which  names  each  of the  Holders  as a  selling
stockholder thereunder.

            In connection with the foregoing, we advise you that a member of the
SEC's  staff has  advised  us by  telephone  that the SEC has  entered  an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no knowledge,
after  telephonic  inquiry of a member of the SEC's  staff,  that any stop order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose  are  pending  before,  or  threatened  by, the SEC and the  Registrable
Securities  are  available  for  resale  under  the  1933  Act  pursuant  to the
Registration Statement.

                                        Very truly yours,

                                        [ISSUER'S COUNSEL]

                                        By:_____________________________

cc:    [LIST NAMES OF HOLDERS]

                                       21sec document

                                                                    EXHIBIT 10.5

                               SECURITY AGREEMENT

            THIS SECURITY  AGREEMENT (the  "AGREEMENT") is made and entered into
as of July 3, 2003, by and among [                                             ]
(together,  the  "SECURED  PARTY")  and  Datatec  Systems,  Inc.  ("DSI"  or the
"DEBTOR").

                                   WITNESSETH:

            WHEREAS,  pursuant to the  provisions of a Note  Purchase  Agreement
dated  as of July 3,  2003,  between  the  Debtor  and the  Secured  Party  (the
"Purchase  Agreement") and those certain  Subordinated Secured Convertible Notes
dated as of July 3, 2003,  issued by DSI to the  Secured  Party  pursuant to the
Purchase  Agreement (the "Notes"),  the Secured Party has agreed to lend to DSI,
and DSI has agreed to borrow from the Secured  Party  $4,900,000  under  certain
terms and conditions set forth in the Purchase Agreement and the Notes;

            WHEREAS,  pursuant to the  provisions of the Purchase  Agreement and
the Notes, and as a condition to Secured Party's  obligation to lend thereunder,
the Debtor has also agreed to provide certain  collateral to secure the Debtor's
Obligations  (as defined  below) to the Secured  Party  pursuant to the Purchase
Agreement and the Notes.

            NOW,  THEREFORE,  in  consideration  of  the  foregoing  and  of the
covenants  set forth  herein,  the Secured  Party and the Debtor hereby agree as
follows:

                                   ARTICLE I
                                   COLLATERAL

            Section  1.1 GRANT AND  DESCRIPTION.  As security  for the  Debtor's
obligations under the Purchase Agreement and the Notes, the Debtor hereby grants
to the Secured Party a continuing first priority security interest in all of the
Debtor's  right,  title and  interest  in, to and under all of the  property  of
Debtor  listed and  described in EXHIBIT A attached  hereto (the  "Collateral").
Notwithstanding  the  foregoing,  such  grant of a security  interest  shall not
extend to, and the term  "Collateral"  shall not include:  (a) any rights in any
general intangibles  representing rights under agreements between the Debtor and
any other party  (other than  agreements  between a Debtor and a  subsidiary  or
parent entity of such Debtor),  which are now or hereafter held by the Debtor as
lessee,  licensee  or  otherwise,  only to the  extent  that  (i)  such  general
intangibles are not assignable or capable of being encumbered as a matter of law
or under the terms of the agreement applicable thereto (but solely to the extent
that any such restriction  shall be enforceable  under applicable law),  without
the  consent  of the other  party  thereto  and (ii) such  consent  has not been
obtained,  and (b) any capital stock or other ownership interests held by Debtor
of any foreign subsidiary to the extent that the pledge of such capital stock or
other ownership  interests would trigger the "deemed  dividend" rules of Section
900 et. seq. of the Internal Revenue Code of 1986, as amended. In furtherance of
the foregoing, the Debtor shall promptly take all actions necessary or otherwise
reasonably  requested  by the  Secured  Party to  perfect  the  Secured  Party's
security  interest in the capital stock and other ownership  interests of all of
the Debtor's  subsidiaries  (including,  without  limitation,  pledging all such
capital stock and ownership  interests to the Secured Party pursuant to a pledge
agreement that is in form and substance  satisfactory to the Secured Party,  and
delivering  the  certificates  representing  such  capital  stock and  ownership
interests  to the Secured  Party);  provided,  however,  the Debtor shall not be
obligated  to pledge the  capital  stock or other  ownership  interests  held by
Debtor of any foreign  subsidiary  to the extent that the pledge of such capital
stock or other ownership  interests would trigger the "deemed dividend" rules of
Section 900 et. seq. of the Internal Revenue Code of 1986, as amended.

                                       2

            Section 1.2 FINANCING  STATEMENTS;  FURTHER  ASSURANCES.  The Debtor
hereby  authorizes  the Secured  Party to file,  transmit,  or  communicate,  as
applicable,  UCC  financing  statements  and  amendments in order to perfect the
Secured Party's first priority security  interest in the Collateral  without the
Debtor's signature to the extent permitted by applicable law, including, but not
limited to,  describing the  Collateral as "all personal  property of debtor" or
"all  assets  of  debtor"  or  words  of  similar  effect.  Notwithstanding  the
foregoing,  at any time upon the request of the Secured Party,  the Debtor shall
promptly execute (or cause to be executed) and deliver to the Secured Party, any
and  all  financing  statements,   original  financing  statements  in  lieu  of
continuation  statements,   fixture  filings,   security  agreements,   pledges,
assignments, endorsements or certificates of title, and all other instruments or
documents (the "Additional  Documents") upon which the Debtor's signature may be
required and that the Secured Party may request in its  discretion,  in form and
substance satisfactory to the Secured Party, and/or perform any acts, to perfect
and continue  perfected or better perfect the Secured Party's security  interest
in the Collateral  (whether now owned or hereafter arising or acquired),  and in
order to fully consummate all of the transactions contemplated hereby, under the
Purchase  Agreement  and/or any other  agreement  or  document  related  thereto
(including,  without limitation, any amendment to this Agreement or the Purchase
Agreement that becomes  necessary,  in the sole discretion of the Secured Party,
as a result of any  amendment to the UCC).  To the maximum  extent  permitted by
applicable  law, the Debtor hereby  authorizes  the Secured Party to execute any
such Additional  Documents in the Debtor's name and authorizes the Secured Party
to file such executed Additional Documents in any appropriate filing office. The
Debtor also hereby  ratifies  its  authorization  for the Secured  Party to have
filed in any jurisdiction any financing  statements or amendments  thereto filed
prior to the date  hereof.  The Debtor  shall not  terminate,  amend or file any
correction  statement with respect to any UCC financing statement filed pursuant
to this Agreement without the Secured Party's prior written consent.  The Debtor
appoints  the Secured  Party as the Debtor's  attorney-in-fact,  with a power of
attorney to execute on behalf of the Debtor such Additional  Documents and other
similar instruments as the Secured Party may from time to time deem necessary or
desirable to protect or perfect the security  interest in the  Collateral.  Such
power of attorney is coupled with an interest and shall be irrevocable.

                                   ARTICLE II
                               OBLIGATIONS SECURED

            Section 2.1  OBLIGATIONS  SECURED.  The  Collateral and the power of
collection  pertaining thereto shall secure the prompt and complete  performance
and  repayment  of any and all  loans,  advances  or other  obligations  made by
Secured Party to Debtor  pursuant to this Agreement,  the Purchase  Agreement or
the Notes (or  pursuant to any  amendments  hereto or  thereto)  prior to, on or
after the date hereof,  and specifically the unpaid principal amount outstanding
at any time under the Notes,  plus all accrued and unpaid  interest  thereunder,
together with all fees, expenses,  commissions,  charges,  penalties,  and other
amounts owing or chargeable by Debtor under the Purchase  Agreement or the Notes
whether any of the foregoing are direct or indirect, joint or several,  absolute
or  contingent,  due or to become due,  now existing or  hereafter  arising,  no
matter how or when arising and whether under any present or future  agreement or
instrument or otherwise, whether or not evidenced by a writing (collectively the
"Obligations").

                                  ARTICLE III
                    DUTIES OF THE DEBTOR REGARDING COLLATERAL

            Section 3.1 DUTIES OF THE DEBTOR REGARDING COLLATERAL.  At all times
hereafter the Debtor agrees that it shall:

                                       3

            (a)  Preserve the  Collateral  in good  condition  and order and not
permit it to be abused or misused;

            (b) Not allow any of the  Collateral  to be affixed to real  estate,
except  for any  property  deemed to be  fixtures,  provided  such  property  is
included in the Secured Party's security interest given hereunder;

            (c) Maintain good and complete  title to the  Collateral  subject to
Permitted Liens (as defined in Section 3.2 below);

            (d) Keep the  Collateral  free and  clear at all  times of all other
security  interests,  liens,  or encumbrances  of any kind,  including,  without
limitation,  any lien arising as a result of the Debtors' failure to pay any and
all taxes or governmental assessments or charges of any kind whatsoever,  except
Permitted Liens;

            (e)  Take or cause to be taken  such  acts and  actions  as shall be
necessary or appropriate to assure that the Secured Party's security interest in
the Collateral shall not become subordinate or junior to the security interests,
liens or claims of any other Person (except with respect to the Permitted  Liens
described in Sections 3.2(a) - (d) and Sections 3.2(f) - (h));

            (f) Except as  otherwise  expressly  provided  herein,  refrain from
selling,  assigning or otherwise disposing of any of the Collateral or moving or
removing  any of the  Collateral  except  in the  ordinary  course  of  Debtor's
business,  without the prior written  consent of the Secured Party, or until all
of the Debtor's Obligations have been paid in full;

            (g) Promptly provide to the Secured Party such financial statements,
reports, lists and schedules related to the Collateral and any other information
relating to the Collateral as the Secured Party from time to time may reasonably
request;

            (h) Permit the Secured Party to inspect all books and records of the
Debtor  relating to the Collateral at such times,  upon such notice and as often
as the Secured Party may reasonably request;

            (i) Promptly  notify the Secured Party of any material change in any
fact or circumstance  warranted or represented by the Debtor herein or furnished
in connection herewith to the Secured Party or if any Event of Default occurs;

            (j) Promptly  notify the Secured  Party upon  acquiring or otherwise
obtaining  any  Collateral  after  the  date  hereof  consisting  of  Investment
Property,  Chattel  Paper  (electronic,   tangible  or  otherwise),   Documents,
Instruments or Supporting Obligations and, upon the request of the Secured Party
in accordance with Section 1.2 hereof, promptly execute such other documents, or
if applicable,  deliver such Chattel Paper or other  documents and do such other
acts or things deemed necessary or desirable by the Secured Party to protect the
Secured Party's security interest therein; and

            (k) Take all steps  reasonably  necessary to grant the Secured Party
control  of all  electronic  Chattel  Paper in  accordance  with the UCC and all
"transferable records" as defined in each of the Uniform Electronic Transactions
Act and the Electronic Signatures in Global and National Commerce Act.

            Section 3.2 "PERMITTED LIENS" means the following:

            (a)  purchase  money   security   interests  in  specific  items  of
equipment;

            (b)  leases  of  specific   items  of  equipment,   technology   and
intellectual property, including capital leases;

            (c) liens for taxes not yet payable;

            (d) security interests being terminated  substantially  concurrently
with this Agreement and liens created hereunder;

            (e) liens of  materialmen,  mechanics,  warehousemen,  carriers,  or
other  similar  liens  arising in the  ordinary  course of business and securing
obligations which are not delinquent;

            (f) liens  incurred in  connection  with the  extension,  renewal or
refinancing of the indebtedness  secured by liens of the type described above in
clauses (a) or (b) above,  provided that any  extension,  renewal or replacement
lien  is  limited  to the  property  encumbered  by the  existing  lien  and the
principal amount of the indebtedness being extended,  renewed or refinanced does
not increase;

            (g) liens in favor of customs and revenue  authorities  which secure
payment of customs duties in connection with the importation of goods; or

            (h) liens  consented  to in writing  and in  advance by the  Secured
Party in its sole and absolute discretion.

Secured  Party will have the right to  require,  as a  condition  to any consent
under clause (i) above, that (A) the holder of the additional  security interest
or lien sign an  intercreditor  agreement on Secured Party's then standard form,
acknowledge that the security  interest is subordinate to the security  interest
in favor of  Secured  Party,  and agree not to take any  action to  enforce  its
subordinate security interest so long as any Obligations remain outstanding, and
(B) the Debtor agrees that any uncured default in any obligation  secured by the
subordinate  security  interest shall also  constitute an Event of Default under
this Agreement.

            Section 3.3 LOCKBOX AND SPECIAL ACCOUNTS. Debtor hereby acknowledges
and agrees that its subsidiary Datetec Industries, Inc. ("DI") has established a
lockbox (the "Lockbox") and a special  account (the "Special  Account") with its
bank (the  bank(s)  used by Debtor or any of its  subsidiaries  are  hereinafter
collectively  referred to as the "Bank" or "Banks",  as the context requires) to
secure  the  obligations  of DI  relating  to or  arising  from the IBM Debt (as
defined in the Purchase Agreement). Debtor shall not, and shall cause DI not to,
terminate the Lockbox or Special  Account  without the prior written  consent of
Secured Party.  Debtor hereby further  acknowledges  and agrees that, other than
the Lockbox and Special  Account with IBM Lender,  none of Debtor nor any of its
subsidiaries has any other similar accounts with the Bank or any other financial
institution or other party,  Upon  satisfaction of the IBM Debt and until all of
the Obligations have been satisfied, Debtor shall:

            (a) deliver, or cause to be delivered, upon Secured Party's request,
a certificate,  certified by the Chief Financial  Officer of the Debtor or DI as
being true and  correct,  listing the Lockbox  and  Special  Account  then being
maintained  by DI, and  specifying  in detail all  account  information  and the
contact  information  of the Bank where each the Lockbox and Special  Account is
being maintained;

            (b)  take  all  actions  necessary  to  ensure  that  the  agreement
governing the terms and conditions of the Lockbox and Special Account is in form
and substance satisfactory to Secured Party;

                                       4

            (c) take all  actions  necessary  to ensure  that there is a blocked
account  agreement  with the Bank for the  benefit of Secured  Party in form and
substance  satisfactory to Secured Party pursuant to which,  among other things,
the Bank shall agree that,  upon notice from Secured Party,  disbursements  from
the Special Account shall be made only as Secured Party shall direct;

            (d) (i)  instruct  all  Account  (as  defined  in  Exhibit A hereto)
debtors to remit  payments  directly  to the  Lockbox  (such  instruction  to be
printed in conspicuous type on all invoices),  (ii) instruct the Bank to deposit
all remittances to the Lockbox into the Special  Account,  and (iii) not deposit
or permit any  deposits of funds other than  remittances  paid in respect of the
Accounts into the Special  Account or permit any  commingling of funds with such
remittances in the Lockbox or Special Account;

            (e) without limiting the Debtor's foregoing obligations,  if, at any
time, Debtor receives a remittance directly from an Account debtor, make entries
on its books  and  records  in a manner  that  shall  reasonably  identify  such
remittances  and  shall  keep a  separate  account  on its  record  books of all
remittances so received and deposit the same into the Special Account; and

            (f) pay for all costs and  expenses of  Debtor's  bank in respect to
collection  of checks and other items of payment,  all fees  relating to the use
and maintenance of the Lockbox and Special Account.

Notwithstanding the foregoing, if, upon satisfaction of the IBM Debt, the Debtor
(or any of its  subsidiaries)  may,  with the prior  written  consent of Secured
Party (such consent not to be  unreasonably  withheld),  obtain new  asset-based
financing,  and in connection with such permitted financing,  the Debtor or such
subsidiaries,  as the case may be, shall be  permitted  to  establish  and grant
control  over  lockboxes  and  special  accounts  to the lender  providing  such
permitted  financing to the extent (and only to the extent)  necessary to obtain
and maintain such permitted financing.

            Section 3.4 CONTROL OF DEPOSIT  ACCOUNTS.  Upon the  satisfaction of
the IBM Debt and until all of the Obligations have been satisfied, promptly upon
Secured Party's  request,  Debtor shall,  and shall cause its  subsidiaries  to,
enter into one or more control agreements substantially in the form of Exhibit B
hereto (each, a "Control  Agreement")  with the Banks at which Debtor and/or its
subsidiaries  maintain  Deposit  Accounts  (as  defined  in Exhibit A hereto) to
secure  Debtor's  Obligations.  In furtherance  of the foregoing,  Debtor shall,
promptly upon Secured Party's request, take all actions necessary to ensure that
the Control Agreement governing the terms and conditions of each Deposit Account
is in form and substance  satisfactory to Secured Party pursuant to which, among
other  things,  such Bank shall agree that,  upon  notice  from  Secured  Party,
disbursements  from such  Deposit  Account  shall be made only as Secured  Party
shall direct.  Notwithstanding  the foregoing,  if, upon satisfaction of the IBM
Debt, the Debtor (or any of its subsidiaries)  obtains new asset-based financing
as may be  permitted  in  accordance  with  SECTION  3.4,  the  Debtor  or  such
subsidiaries,  as the case may be, shall be permitted to grant  control over the
Deposit  Accounts to the lender  providing  such  asset-based  financing  to the
extent  (and only to the  extent)  necessary  to obtain  and  maintain  such new
asset-based financing.

            Section 3.5 NO NEW ACCOUNTS.  Debtor hereby  acknowledges and agrees
that,  except as expressly  provided in SECTIONS 3.3 and 3.4,  Debtor shall not,
and shall cause its subsidiaries not to, establish or grant control over any new
or existing lockboxes,  special accounts, Deposit Accounts, or any other account
to any lender or other party other than Secured Party.

                                       5

                                   ARTICLE IV
                                EVENTS OF DEFAULT

            Section 4.1 DEFINED.  The occurrence of any of the following  events
shall  constitute  an event of  default  under  this  Agreement  (an  "EVENT  OF
DEFAULT"):

          (i) The failure of the Debtor to perform or comply with any act,  duty
     or obligation required to be performed under this Agreement if such failure
     is not remedied within ten (10) days following  receipt by Debtor of notice
     of such failure from Secured Party;

          (ii) If any of the  representations  or  warranties  of the Debtor set
     forth in this Agreement shall prove to have been incorrect when made, or if
     they  become  incorrect,  if not cured  within ten (10) days of notice from
     Secured Party of such event;

          (iii) If any  material  portion of the  Collateral  shall be  damaged,
     destroyed or otherwise  lost and such  damage,  destruction  or loss is not
     covered by insurance; or

          (iv) If an Event  of  Default  as  defined  in the  Notes  shall  have
     occurred.

            Section 4.2 RIGHTS AND REMEDIES UPON DEFAULT. If an Event of Default
shall have  occurred  hereunder,  the  Secured  Party may,  at its sole  option,
without notice or demand,  declare the  Obligations  to be  immediately  due and
payable.  As to any  Collateral,  the  Secured  Party  shall have the rights and
remedies of any secured creditor under the Uniform Commercial Code as in effect,
at the time of the default, in New York ("UCC"),  such rights to be exercised in
such  order or manner as  Secured  Party may  determine  in its sole  discretion
against any one or more of the entities  constituting  Debtor. If for any reason
the Secured  Party  should be required by law or otherwise to give notice to the
Debtor of the sale of any Collateral,  the Debtor agrees that any written notice
sent by overnight  delivery  service not less than five (5) calendar days before
the sale or mailed postage prepaid to the Debtor's address listed below not less
than ten (10)  calendar  days  before  the sale shall be deemed  reasonable  and
adequate.

                                   ARTICLE V
                               ADDITIONAL REMEDIES

            Section 5.1 POWER OF  COLLECTION.  Upon the happening of an Event of
Default the Debtor shall:

          (a) Endorse any and all  documents  evidencing  any  Collateral to the
     Secured  Party and  notify  any  payor  that  said  documents  have been so
     endorsed  and that all sums due and owing  pursuant  to them should be paid
     directly to the Secured Party;

          (b) Turn over to the Secured Party all documents  evidencing any right
     to collection of any sums due the Debtor arising from or in connection with
     any of the Collateral;

          (c) Mark or stamp each of its accounting  records pertaining to any of
     its accounts,  relating  howsoever to this Agreement or the Notes, with the
     legend  "assigned  to  [                                ]" as agent for the
     Secured  Party,  and  keep  all  of  its  books,  records,   documents  and
     instruments  relating to the Collateral in such manner as the Secured Party
     may require;

                                       6

          (d) Mark or stamp all invoices  with a similar  legend as described in
     Section  5.1(c) above  satisfactory  to the Secured Party so as to indicate
     that the same must be paid directly to the Secured Party;

          (e) Take any action  reasonably  required  by the  Secured  Party with
     reference to the Federal Assignment of Claims Act; and

          (f)  Assign to Secured  Party any or all of  Debtor's  copyrights  and
     patents as demanded by Secured Party.

            The Secured Party shall also have the right,  at any time,  upon the
happening of any Event of Default hereunder or as defined in the Notes, directly
to notify any  obligors  of the Debtor to make  payments  of any and all amounts
directly to the  Secured  Party,  and the  Secured  Party shall have the further
right to notify the U.S.  postal  authorities to change the address for delivery
of mail of the  Debtor to an  address  designated  by the  Secured  Party and to
receive, open and dispose of all mail addressed to the Debtor.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

            Section 6.1 WARRANTIES. The Debtor represents and warrants:

          (a) That it is the owner of and,  subject to the Permitted  Liens, has
     good and marketable title to the Collateral secured hereby;

          (b) That it has not granted,  nor will it grant a security interest in
     the Collateral to any other  individual or entity other than the holders of
     the Permitted  Liens,  and that such Collateral is otherwise free and clear
     of any mortgage,  pledge, lease, trust, bailment,  lien, security interest,
     encumbrance, charge or other arrangement;

          (c) That it has the authority and capacity to perform its  obligations
     hereunder,  and this  Agreement,  when executed and delivered,  will be the
     valid and binding obligation of the Debtor  enforceable  against the Debtor
     in accordance with its terms, subject only to the following qualifications:

               (i)  certain  equitable   remedies  are  discretionary   and,  in
          particular,  may not be  available  where  damages are  considered  an
          adequate remedy at law, and

               (ii)  enforcement  may  be  limited  by  bankruptcy,  insolvency,
          liquidation,  reorganization,  reconstruction  and other  similar laws
          affecting  enforcement of creditors' rights generally  (insofar as any
          such law relates to the bankruptcy, insolvency or similar event of the
          Debtor);

          (d) That its true and correct  company  name,  any trade name(s) under
     which it  conducts  its  business,  its  jurisdiction  of  organization  or
     incorporation  and each of its chief  executive  office,  its  place(s)  of
     business and the  locations of the  Collateral  or records  relating to the
     Collateral are set forth in Exhibit C attached hereto; and

          (e)  That  upon  the  filing  of UCC  financing  statements  with  the
     Secretary of State of the State of Delaware  (and such other  jurisdictions
     where Debtor may, in the future, become organized or incorporated from time
     to time), the security  interest in the Collateral  granted hereunder shall
     constitute at all times a valid first  priority  security  interest  (other

                                       7

than with  respect to  Permitted  Liens and except  where the Secured  Party has
failed to file necessary continuation statements), perfected with respect to all
Collateral  for which  the  filing of the UCC  financing  statements  is a valid
method of perfection,  vested in the Secured Party,  in and upon the Collateral,
free of any liens except for Permitted Liens.

                                  ARTICLE VII
                               NEGATIVE COVENANTS

            Section 7.1 OTHER  ENCUMBRANCES.  Debtor  shall defend its title to,
and Secured  Party's  interest in, the Collateral  against all claims,  take any
action necessary to remove any encumbrances other than those permitted hereunder
and defend  the  right,  title and  interest  of Secured  Party in and to any of
Debtor's rights in the Collateral.

            Section  7.2 CHANGE  NAME OR  LOCATION.  Except  upon 30 days' prior
written  notice to Secured  Party,  Debtor  shall not change its company name or
conduct its  business  under any name other than that set forth herein or change
its jurisdiction of organization or incorporation, chief executive office, place
of business or location of the Collateral or records  relating to the Collateral
from the current location.

            Section 7.3 JUNIOR DEBT.  So long as any portion of the Notes remain
outstanding (whether or not any Event of Default under the Notes exists), Debtor
shall not make any  payments  of  principal,  interest,  penalties  or any other
amounts to any creditor of Debtor (or any other  party)  other than  payments to
(i) the Secured Party and (ii) IBM Lender with respect to the IBM Debt, provided
that payments to IBM Lender shall be limited  solely to Debtor's  obligations as
guarantor of the IBM Debt.

                                  ARTICLE VIII
                                     WAIVERS

            Section 8.1 WAIVERS.  The Debtor  acknowledges  that the Obligations
arose out of a commercial  transaction  and hereby  knowingly and  intelligently
waives any right to require the Secured Party to (a) proceed against any person,
(b) proceed against any other collateral  under any other agreement,  (c) pursue
any other  remedy  available  to the Secured  Party,  and (d) make  presentment,
demand, dishonor, notice of dishonor, acceleration and/or notice of non-payment.

            Section 8.2 WAIVER OF DEFENSE.  The Debtor  waives any defense which
it may have to the exercise by Secured Party of its rights under this Agreement,
other than payment in full of the Obligations.

                                   ARTICLE IX
                                  MISCELLANEOUS

            Section 9.1 ATTORNEY-IN-FACT.  The Debtor appoints the Secured Party
its true  attorney-in-fact  to perform any of the  following  powers,  which are
irrevocable until termination of this Agreement and may be exercised,  from time
to time,  by the Secured  Party's  officers  and  employees or any of them if an
Event of Default occurs  hereunder:  (i) to perform any obligation of the Debtor
hereunder  in  the  Debtor's  name  or  otherwise;  (ii)  to  collect  by  legal
proceedings or otherwise all dividends, interest, principal or other sums now or
hereafter payable upon or on account of the Collateral, to accept other property
in exchange for the Collateral,  and any money or property  received in exchange
for the  Collateral  may be applied to the  Obligations  to the Secured Party or
held by the Secured Party under this Agreement;  (iii) to make any compromise or
settlement  the  Secured  Party  deems  desirable  or proper in  respect  of the
Collateral;  and (iv) to  insure,  process  and  preserve  the  Collateral.  The

                                       8

foregoing  power of attorney  shall take effect only upon an Event of Default or
upon failure by Debtor to perform any of its obligations hereunder.

            Section  9.2 CROSS  DEFAULT.  Debtor  agrees and  acknowledges  that
default under the terms of this  Agreement  shall  constitute  default under the
Purchase  Agreement and the Notes,  and default under the Purchase  Agreement or
the Notes shall constitute default under this Agreement. The security interests,
liens and other  rights  and  interests  in and  relative  to any of the real or
personal property of the Debtor now or hereafter granted to the Secured Party by
Debtor by or in any instrument or agreement, including, but not limited to, this
Agreement,  the Purchase Agreement, or the Notes shall serve as security for any
and all liabilities of Debtor to Secured Party,  including,  but not limited to,
the  liabilities  described in this  Agreement,  the Purchase  Agreement and the
Notes, and, for the repayment thereof,  Secured Party may resort to any security
held by it in such order and manner as it may elect.

            Section  9.3  NOTICES.  Any  notices,  consents,  waivers  or  other
communications  required  or  permitted  to be  given  under  the  terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt,  when delivered  personally;  (ii) upon receipt, when sent by facsimile
(provided   confirmation  of  transmission  is  mechanically  or  electronically
generated  and kept on file by the sending  party);  or (iii) one  business  day
after deposit with a nationally  recognized  overnight delivery service, in each
case  properly  addressed to the party to receive the same.  The  addresses  and
facsimile numbers for such communications shall be:

       If to the Secured Party:

                                [                 ]

                                with a copy to:

                                [                 ]

       If to the Debtor:
                                Datatec Systems, Inc.
                                23 Madison Road
                                Fairfield, New Jersey 07004
                                Attention:  Mark Hirschhorn
                                Facsimile:  (973) 890-2888

                                with a copy to:

                                Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                505 Park Avenue
                                New York, New York 10022

                                       9

                                Attention: Robert H. Friedman
                                Facsimile:  (212) 755-1467

Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver  or other  communication,  (B)  mechanically  generated  by the
sender's facsimile machine containing the time, date, recipient facsimile number
and an image of such  transmission  or (C)  provided  by a courier or  overnight
courier service shall be rebuttable  evidence of personal service,  overnight or
courier  delivery or  transmission  by facsimile in accordance  with clause (i),
(ii) or (iii) above, respectively.

            Section 9.4 FEES AND EXPENSES.  On demand by Secured Party,  without
limiting  any of the terms of the Purchase  Agreement or the Note,  Debtor shall
pay all reasonable fees,  costs, and expenses  (including,  without  limitation,
reasonable  attorneys'  fees and legal  expenses)  incurred by Secured  Party in
connection  with (a) filing or recording any documents  (including  all taxes in
connection  therewith)  in public  offices;  and (b) paying or  discharging  any
taxes,  counsel  fees,  maintenance  fees,  encumbrances,  or other  amounts  in
connection  with  protecting,  maintaining,  or  preserving  the  Collateral  or
defending or prosecuting any actions or proceedings arising out of or related to
the Collateral;  provided,  however, that any expenses incurred by Secured Party
in enforcing its rights under this Agreement  shall not be subject to any cap on
expenses provided in the Purchase Agreement to the extent Secured Party prevails
in any action or proceeding to enforce such rights.

            Section  9.5 NO  WAIVER.  No course of  dealing  between  Debtor and
Secured Party,  nor any failure to exercise nor any delay in exercising,  on the
part of Secured Party, any right, power, or privilege under this Agreement,  the
Note, or under the Purchase Agreement or any other agreement, shall operate as a
waiver.  No single or partial  exercise of any right,  power, or privilege under
this  Agreement,  the Note or the Purchase  Agreement or any other  agreement by
Secured Party shall preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right,  power, or privilege by Secured
Party.

            Section 9.6 RIGHTS ARE CUMULATIVE. All of Secured Party's rights and
remedies with respect to the Collateral  whether  established by this Agreement,
the Purchase  Agreement,  the Notes or any other documents or agreements,  or by
law shall be cumulative and may be exercised concurrently or in any order.

            Section 9.7 INDEMNITY.  Debtor shall protect, defend, indemnify, and
hold harmless  Secured Party and Secured  Party's  officers,  agents and assigns
from  all  liabilities,   losses,  and  costs  (including,  without  limitation,
reasonable attorneys' fees) incurred or imposed on Secured Party relating to the
matters in this Agreement,  including,  without  limitation,  in connection with
Secured  Party's  defense of any action brought by a third party against Secured
Party  relating to this  Agreement or any of the  Collateral,  but otherwise not
arising from Secured Party's gross negligence or willful misconduct.

            Section 9.8  SEVERABILITY.  The  provisions  of this  Agreement  are
severable.  If any provision of this Agreement is held invalid or  unenforceable
in  whole  or  in  part  in  any   jurisdiction,   then   such   invalidity   or
unenforceability  shall affect only such  provision,  or part  thereof,  in such
jurisdiction,  and shall not in any manner affect such provision or part thereof
in any other  jurisdiction,  or any other  provision  of this  Agreement  in any
jurisdiction.

            Section 9.9 AMENDMENTS;  ENTIRE AGREEMENT. This Agreement is subject
to modification only by a writing signed by the parties.  To the extent that any
provision  of this  Agreement  conflicts  with  any  provision  of the  Purchase
Agreement or the Notes,  the provision  giving  Secured Party greater  rights or
remedies shall govern, it being understood that the purpose of this Agreement is
to add to, and not detract from,  the rights  granted to Secured Party under the

                                       10

Purchase Agreement and the Notes. This Agreement,  the Purchase  Agreement,  the
Notes and the documents  relating  thereto  comprise the entire agreement of the
parties with respect to the matters addressed in this Agreement.

            Section 9.10 RELEASE. No transfer or renewal, extension,  assignment
or termination  of this Agreement or of any instrument or document  executed and
delivered  by the  Debtor  or  any  other  obligor  to the  Secured  Party,  nor
additional  advances made by the Secured Party to the Debtor,  nor the taking of
further  security,  nor the retaking or  re-delivery  of the  Collateral  to the
Debtor by the Secured Party nor any other act of the Secured Party shall release
the Debtor  from any  Obligation,  except a release  or  discharge  executed  in
writing by the  Secured  Party  with  respect  to such  Obligation  or upon full
payment and  satisfaction  of all  Obligations  and termination of the Notes. At
such time as Debtor  shall  completely  satisfy all of the  Obligations  and the
Notes are no longer  outstanding,  Secured  Party  shall  execute and deliver to
Debtor all assignments and other  instruments as may be reasonably  necessary or
proper to terminate Secured Party's security interest in the Collateral, subject
to any  disposition of the Collateral  which may have been made by Secured Party
pursuant to this Agreement.  For the purpose of this Agreement,  the Obligations
shall be deemed to continue  if Debtor  enters  into any  bankruptcy  or similar
proceeding  at a time when any amount paid to Secured  Party could be ordered to
be repaid as a preference or pursuant to a similar  theory,  and shall  continue
until it is finally determined that no such repayment can be ordered.

            Section 9.11 SUCCESSORS.  The benefits and burdens of this Agreement
shall inure to the benefit of and be binding upon the respective  successors and
permitted  assigns of the parties;  provided that Debtor may not transfer any of
the  Collateral or any rights  hereunder,  without the prior written  consent of
Secured Party, except as specifically permitted hereby.

            Section  9.12  GOVERNING  LAW.  THE  VALIDITY,   INTERPRETATION  AND
ENFORCEMENT  OF THIS  AGREEMENT AND ANY DISPUTE  ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT,  WHETHER SOUNDING IN CONTRACT,  TORT,  EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE  INTERNAL  LAWS AND  DECISIONS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS  MADE AND TO BE PERFORMED  ENTIRELY  WITHIN THE STATE OF
NEW YORK. ALL DISPUTES BETWEEN THE DEBTOR AND SECURED PARTY, WHETHER SOUNDING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN NEW YORK CITY AND THE COURTS TO WHICH AN APPEAL  THEREFROM MAY
BE TAKEN;  PROVIDED,  HOWEVER,  THAT SECURED PARTY SHALL HAVE THE RIGHT,  TO THE
EXTENT  PERMITTED  BY  APPLICABLE  LAW,  TO  PROCEED  AGAINST  THE DEBTOR OR ITS
PROPERTY IN ANY LOCATION  REASONABLY  SELECTED BY SECURED PARTY IN GOOD FAITH TO
ENABLE  SECURED PARTY TO REALIZE ON SUCH  PROPERTY,  OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF SECURED PARTY.  THE DEBTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE  COUNTERCLAIMS,  SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING
BROUGHT BY SECURED  PARTY.  THE DEBTOR WAIVES ANY OBJECTION  THAT IT MAY HAVE TO
THE LOCATION OF THE COURT IN WHICH  SECURED  PARTY HAS  COMMENCED A  PROCEEDING,
INCLUDING,  WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
FORUM NON CONVENIENS.

            Section 9.13 WAIVER OF RIGHT TO JURY TRIAL. SECURED PARTY AND DEBTOR
EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY
OTHER  PRESENT OR FUTURE  INSTRUMENT  OR  AGREEMENT  BETWEEN  SECURED  PARTY AND
DEBTOR;  OR (III) ANY CONDUCT,  ACTS OR OMISSIONS OF SECURED  PARTY OR DEBTOR OR

                                       11

ANY OF THEIR  DIRECTORS,  OFFICERS,  EMPLOYEES,  AGENTS,  ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH SECURED PARTY OR DEBTOR; IN EACH OF THE FOREGOING CASES,
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

            Section 9.14 CAPITALIZED TERMS. All terms capitalized herein and not
otherwise  defined  shall have the meaning set forth in the Purchase  Agreement,
and in the UCC.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       12

            IN  WITNESS  WHEREOF,  the Debtor  and the  Secured  Party have duly
executed this Security Agreement as of the day and year first written above.

                            SECURED PARTY:

                            By: ______________________________________
                                Name:
                                Title:

                            By: ______________________________________
                                Name:
                                Title:

                            By: ______________________________________
                                Name:
                                Title:

                            By: ______________________________________
                                Name:
                                Title:

                            By: ______________________________________
                                Name:
                                Title:

                            By: ______________________________________
                                Name:
                                Title:

                                       13

                            DEBTOR:

                            DATATEC SYSTEMS, INC.

                            By: ______________________________________
                                Name:
                                Title

                                       14

                                                                       Exhibit A

                                   COLLATERAL

            All Accounts, Chattel Paper, Contracts, Deposit Accounts, Documents,
Goods,  Fixtures,  Securities,  Documents  of  Title,  Instruments,   Investment
Property,  Inventory,  General  Intangibles,  Equipment,  Records and Supporting
Obligations  now owned or acquired  at any time  hereafter  by Debtor,  wherever
located  or  situated;  all  books,  records,  files,  ledger  sheets  and other
documents  covering or relating to the  foregoing;  and all of the  products and
proceeds  (as  defined  in the  UCC,  including  condemnation  proceeds)  of the
foregoing.

            The capitalized  terms used herein shall have the meanings set forth
below.  All other  terms used  herein are used as defined in the UCC, as amended
from time to time.  The parties to the Security  Agreement  understand and agree
that (i) the terms defined below are intended to be and are consistent  with the
UCC, as amended and to be effective as of the date of the Security Agreement and
(ii) in the event the UCC is amended in the future to change the  meaning of any
of the following  terms,  such terms shall  automatically  be modified herein to
reflect and to be consistent with such amendment of the UCC.

            "Accounts" except as used in "account for," means a right to payment
of a monetary obligation, whether or not earned by performance, (i) for property
that  has  been or is to be  sold,  leased,  licensed,  assigned,  or  otherwise
disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of
insurance issued or to be issued, (iv) for a secondary obligation incurred or to
be incurred, (v) for energy provided or to be provided, (vi) for the use or hire
of a vessel under a charter or other contract, (vii) arising out of the use of a
credit or charge card or  information  contained on or for use with the card, or
(viii) as winnings in a lottery or other game of chance operated or sponsored by
a state,  governmental  unit of a state,  or person  licensed or  authorized  to
operate the game by a state or governmental  unit of a state.  The term includes
health  care  insurance  receivables.  The term does not  include  (i) rights to
payment  evidenced  by Chattel  Paper or an  Instrument,  (ii)  commercial  tort
claims, (iii) Deposit Accounts,  (iv) investment property,  (v) letter-of-credit
rights or  letters  of  credit,  or (vi)  rights to  payment  for money or funds
advanced or sold, other than rights arising out of the use of a credit or charge
card or information contained on or for use with the card.

            "Chattel  Paper"  means a Record or  Records  that  evidence  both a
monetary  obligation  and a security  interest  in  specific  Goods,  a security
interest in specific Goods and software used in the Goods,  a security  interest
in specific Goods and license of software used in the Goods, a lease of specific
Goods,  or a lease of specific  Goods and license of software used in the Goods.
In this paragraph,  "monetary obligation" means a monetary obligation secured by
the Goods or owed under a lease of the Goods and includes a monetary  obligation
with respect to software used in the Goods.  The term does not include  charters
or other  contracts  involving the use or hire of a vessel.  If a transaction is
evidenced by Records that include an  Instrument or series of  Instruments,  the
group of Records taken together constitutes Chattel Paper.

            "Contracts"  means all contracts and  agreements to which the Debtor
is a party or under  which the  Debtor has any right,  title or  interest  or to
which the Debtor or any of the Debtor's  property is subject,  as such contracts
and amendments may be amended,  supplemented or otherwise  modified from time to
time  (including,  without  limitation,  (i) all rights of the Debtor to receive
moneys  payable to it under any such  contract  or  agreement  or in  connection
therewith,  (ii) all  rights of the Debtor to  damages  arising  out of, or with
respect to, any breach or default in respect of any such  contract or agreement,
and (iii) all  rights of the  Debtor to  exercise  all  remedies  under any such
contract or  agreement),  but  excluding  any contract or agreement  that by its
terms  prohibits  the  Debtor  from  granting a security  interest  therein,  or
requires  the Debtor to obtain the consent of any other party  before a security
interest  can be granted  therein,  until the Debtor has  obtained  all consents

required to grant a security  interest to the Secured Party, in such contract or
agreement;  provided,  however,  that the foregoing exclusion shall not apply to
any of the Debtors'  Accounts or any money or other amounts due or to become due
under any contract or agreement.

            "Deposit  Accounts"  means a demand,  time,  savings,  passbook,  or
similar account  maintained with a bank (and all moneys deposited or required to
be  deposited  in the Deposit  Accounts).  The term does not include  investment
property or accounts evidenced by an Instrument.

            "Documents"  means a  document  of  title or a  receipt  of the type
described in subdivision (2) of Section 7201 of the UCC.

            "Documents  of Title"  means and  includes  a bill of  lading,  dock
warrant,  dock receipt,  warehouse receipt, gin ticket, or compress receipt, and
any other  Document  that, in the regular  course of business or  financing,  is
treated as adequately  evidencing  that the person  entitled  under the Document
(Section 7403(4) of the UCC) has the right to receive,  hold, and dispose of the
Document and the Goods it covers.  To be a Document of Title,  a Document  shall
purport to be issued by a bailee  and  purport  to cover  goods in the  bailee's
possession  that  either  are  identified  as or  are  fungible  portions  of an
identified mass.

            "Equipment"  means Goods other than  Inventory,  farm  products,  or
consumer  goods,  and also means all motor vehicles,  rolling stock,  machinery,
office  equipment,   plant  equipment,   tools,  dies,  molds,  store  fixtures,
furniture,  and other  Goods,  property,  and assets  which are used and/or were
purchased for use in the operation of furtherance of the Debtor's business,  and
any and all accessions, additions thereto, and substitutions therefore.

            "Fixtures"  means  Goods that have  become so related to  particular
real property that an interest in them arises under real property law.

            "General Intangibles" means any personal property,  including things
in action, other than Accounts,  Chattel Paper,  commercial tort claims, Deposit
Accounts, Documents, Goods, Instruments,  investment property,  letter-of-credit
rights,  letters  of credit,  money,  and oil,  gas,  or other  minerals  before
extraction,  and also means all books and  Records,  customer  lists,  goodwill,
causes of action, judgments,  literary rights, rights to performance,  licenses,
permits,  certificates of convenience and necessity,  and similar rights granted
by  any  governmental  authority;   copyrights,   trademarks,   patents,  patent
applications,  proprietary processes,  blueprints,  drawings, designs, diagrams,
plans,  reports,  charts,  catalogs,   manuals,   literature,   technical  data,
proposals, cost estimates and all other reproductions on paper, or otherwise, of
any and all the design, development,  manufacture, sale, marketing, lease or use
of any or all Goods  produced or sold or leased or credit  extended,  or service
performed  by the Debtor,  whether  intended for an  individual  customer or the
general business of Debtor. This term includes payment intangibles and software.

            "Goods"  means all things that are movable when a security  interest
attaches. The term includes (i) Fixtures, (ii) standing timber that is to be cut
and removed under a conveyance  or contract for sale,  (iii) the unborn young of
animals,  (iv)  crops  grown,  growing,  or to be  grown,  even if the crops are
produced on trees,  vines, or bushes, and (v) manufactured  homes. The term also
includes a computer  program  embedded in Goods and any  supporting  information
provided in  connection  with a  transaction  relating to the program if (i) the
program is  associated  with the Goods in such a manner that it  customarily  is
considered  part of the Goods,  or (ii) by  becoming  the owner of the Goods,  a
person  acquires a right to use the program in  connection  with the Goods.  The
term does not include a computer  program  embedded in Goods that consist solely
of the medium with which the program is embedded. The term also does not include
Accounts,  Chattel Paper,  commercial tort claims, Deposit Accounts,  Documents,
General Intangibles,  Instruments, investment property, letter-of-credit rights,

letters of credit, money, or oil, gas, or other minerals before extraction.

            "Instruments"  means a negotiable  instrument  or any other  writing
that evidences a right to the payment of a monetary obligation,  is not itself a
security  agreement  or  lease,  and is of a type  that in  ordinary  course  of
business  is  transferred   by  delivery  with  any  necessary   endorsement  or
assignment.  The term does not include (i) investment property,  (ii) letters of
credit,  or (iii)  writings that evidence a right to payment  arising out of the
use of a credit or charge card or  information  contained on or for use with the
card.

            "Inventory"  means Goods,  other than farm  products,  which are (i)
leased by a person as  lessor,  (ii) held by a person for sale or lease or to be
furnished  under a contract  of service,  (iii)  furnished  by a person  under a
contract of  service,  or (iv)  consist of raw  materials,  work in process,  or
materials used or consumed in a business. This term includes supplies,  finished
Goods, Goods returned by customers,  Goods in transit,  wherever located,  which
are-held  for sale (but  excluding  Goods not  manufactured  by the Debtor or an
affiliate  and which were  purchased  for resale  directly or  indirectly by the
Debtor from a non-affiliate pursuant to a then existing agreement or arrangement
with a non-affiliate  customer),  including the right of stoppage in transit, or
Goods which are or might be used in connection with the manufacturing or packing
of such Goods,  and all such Goods,  the sale or  disposition of which has given
rise to an Account,  which are returned to and/or  repossessed and/or stopped in
transit by the Debtor or by the Secured  Party,  or at any time hereafter in the
possession  or under the control of the Debtor or the Secured Party or any agent
or bailee  of the  Debtor  or the  Secured  Party,  and any  Documents  of Title
representing any of the above.

            "Investment  Property"  means a Security,  whether  certificated  or
uncertificated,  security entitlement, securities account, commodity contract or
commodity account (as such terms are defined in the UCC).

            "Records"  except as used in "for  record," "of record,"  "record or
legal  title," and "record  owner,"  means  information  that is  inscribed on a
tangible  medium or which is  stored in an  electronic  or other  medium  and is
retrievable in perceivable form.

            "Securities" means "securities" as that term is defined in the UCC.

            "Supporting  Obligation(s)"  mean(s)  a letter  of  credit  right or
secondary  obligation  that supports the payment or  performance  of an Account,
Chattel Paper,  a Document,  a General  Intangible,  an Instrument or Investment
Property.

            "UCC" means the Uniform Commercial Code as in effect in the State of
New York.

                                                                       Exhibit B

                                     FORM OF
                            ACCOUNT CONTROL AGREEMENT

            THIS  ACCOUNT  CONTROL   AGREEMENT,   dated  as  of  __________(this
"AGREEMENT"),  is made by and  among  Datatec  Systems,  Inc.,  (the  "DEBTOR"),
[                                                                              ]
(together,   the  "SECURED  PARTY"),   and  [Bank],  a   ________________   (the
"DEPOSITORY").

                                 R E C I T A L S
                                 ---------------

            WHEREAS,  pursuant  to a Security  Agreement,  dated as of July ___,
2003 (the "SECURITY  AGREEMENT"),  the Debtor has granted a security interest in
and  a  first-priority   lien  upon  all  of  its  assets  and  properties  (the
"COLLATERAL") to the Secured Party;

            WHEREAS,  the Collateral  includes the Deposit  Accounts (as defined
below) and financial assets held therein; and

            WHEREAS,  the Debtor is  entering  into this  Agreement  in order to
perfect the security interest in such proceeds granted to the Secured Party.

                               A G R E E M E N T
                                -----------------

            NOW,  THEREFORE,  in  consideration  of the  mutual  agreements  and
covenants  herein contained and for other good and valuable  consideration,  the
parties hereby agree as follows:

            Section 1.  ACKNOWLEDGMENT OF SECURITY INTEREST.  The Debtor and the
Secured  Party  hereby  notify  the  Depository  of, and the  Depository  hereby
acknowledges,  the security  interest granted by the Debtor to the Secured Party
in all of the Debtor's right, title and interest in and to the Collateral.

            Section 2.  ESTABLISHMENT OF DEPOSIT ACCOUNT.  The Depository hereby
represents and warrants to, and agrees with, the Secured Party that:

            (a)  The  Depository  has  established  a  deposit  account  (number
_______) in the name of the Debtor (the "DEPOSIT  ACCOUNT"),  and agrees that it
will refrain from closing or changing the name or account  number of the Deposit
Account without the prior written consent of the Secured Party.

            (b) The Debtor has  irrevocably  directed  the  Depository,  and the
Depository  hereby  agrees,  to make all notations in the  Depository's  records
pertaining to the Deposit  Account that are necessary or  appropriate to reflect
the security  interest of the Secured Party and to designate the Deposit Account
as "Datatec  Systems,  Inc. [or subsidiary  thereof]  Account for the benefit of
[                     ]."

            (c) The Depository  will promptly  credit to the Deposit Account all
funds  delivered  to the  Depository  by the  Debtor  pursuant  to the  Security
Agreement.

            (d) The Deposit Account is a "deposit account" within the meaning of
Section  9-102(a)(29)  of the Uniform  Commercial Code as in effect from time to
time (including any successor thereto) in the State of New York (the "NY UCC").

            (e) This  Agreement is the valid and legally  binding  obligation of
the Depository, enforceable against it in accordance with its terms.

            (f) On the date of this Agreement and, except as provided in Section
6  hereof,  the  Depository  does not know of any  claim to or  interest  in the
Collateral  or the Deposit  Account,  other than the interests of the Debtor and
the Secured  Party,  and has not identified in its records any other person as a
customer, secured party or similar designation with respect to the Collateral or
the Deposit Account.

            Section 3. CONTROL OF DEPOSIT ACCOUNT.

            (a) Subject to the provisions of this Agreement, the Deposit Account
shall be under the "control"  (within the meaning of Article 9 of the NY UCC) of
the  Secured  Party and the  Secured  Party shall have the sole right to make or
permit  withdrawals  from the Deposit  Account  and to exercise  all rights with
respect thereto from time to time as set forth in this Agreement.

            (b) The Debtor  irrevocably  authorizes and directs the  Depository,
and the Depository  agrees, to comply with any instructions given by the Secured
Party and received by the Depository in writing from the Secured Party,  without
further  notice to, or consent  from,  the Debtor,  at any time, by delivering a
notice to the Depository substantially in the form set forth in Exhibit A hereto
(a "NOTICE OF EXCLUSIVE CONTROL").

            (c)  Prior to the date on which a Notice  of  Exclusive  Control  is
received by the Depository from the Secured Party, the Secured Party agrees that
the Depository may accept  instructions  with respect to the Collateral from the
Debtor.

            (d) Upon receipt by the Depository of a Notice of Exclusive  Control
from the Secured  Party:  (i) the Debtor  shall direct the  Depository,  and the
Depository  agrees,  to take all  instructions  with  respect to the  Collateral
solely from or originated by the Secured Party;  and (ii) the  Depository  shall
cease to accept any and all instructions with respect to the Collateral from the
Debtor or any other person  (other than the Secured  Party) and shall accept all
such instructions only from the Secured Party.

                                       -2-

            Section 4. MAINTENANCE OF DEPOSIT ACCOUNT.  In addition to the other
obligations  of the  Depository  contained  herein,  the  Depository  agrees  to
maintain the Deposit Account as follows:

            (a)  PERMITTED  INVESTMENTS.  Until  such  time  as  the  Depository
receives a Notice of Exclusive  Control signed by the Secured Party,  the Debtor
shall direct the  Depository  with respect to the selection of  investments,  if
any, to be made for the Deposit Account.

            (b) STATEMENTS AND CONFIRMATIONS.  The Depository will promptly send
copies of all statements,  confirmations and other correspondence concerning the
Deposit Account and/or any funds credited thereto  simultaneously  to the Debtor
and the Secured Party at the address for each set forth in Section 9(a) hereof.

            (c) TAX REPORTING.  All items of interest, if any, recognized in the
Deposit Account shall be reported to the Internal  Revenue Service and all state
and local taxing authorities under the name and taxpayer  identification  number
of the Debtor.

            Section 5.  OTHER AGREEMENTS; DEPOSITORY'S FEES.

            (a) Except as otherwise provided in Section 6 hereof, the Debtor and
the  Depository  agree not to enter  into any  agreement  with any other  person
(except for the Secured  Party)  relating to any of the  Collateral  pursuant to
which such person  would be  identified  in the records of the  Depository  as a
person  having  an  interest  or claim  against  or with  respect  to any of the
Collateral.

            (b) Except as otherwise provided in Section 6 hereof, the Depository
will not  advance  any credit  secured  by any of the  Collateral,  directly  or
indirectly, to the Debtor.

            (c) All  charges,  fees and expenses of the  Depository  incurred in
connection with the performance of its duties  hereunder and the maintenance and
operation of the Deposit Account shall be for the account of the Debtor, and the
Secured Party shall not be responsible or liable therefor.

            Section 6.  SUBORDINATION OF LIEN; WAIVER OF SET-OFF.  To the extent
that the  Depository  has or may have in the future any security  interest in or
lien  on  any of the  Collateral,  the  Depository  subordinates  such  security
interest and lien to the security interest of the Secured Party, except that the
Depository  may retain its lien on the Collateral to secure (a) advances made by
the Depository in connection with the advance posting of any dividends, interest
and other  distributions,  the  crediting  of any checks  that are  subsequently
returned unpaid because of uncollected or insufficient  funds and other advances
made by the Debtor as part of its cash management services,  all in the ordinary
course of  business,  and (b) normal  fees for the  Deposit  Account.  Except as
provided in the preceding  sentence,  the Depository  waives any lien,  security
interest, right of set-off or deduction or banker's lien which it may have in or
on the Collateral.

            Section 7.  LIMITATION OF LIABILITY; INDEMNIFICATION.

                                      -3-

            (a) The  Depository  shall  not be  liable  for any  loss or  injury
resulting from any action or inaction or the  performance or lack of performance
of its duties  hereunder in the absence of negligence  or willful  misconduct on
its  part.  In no event  shall  the  Depository  be  liable  for (i)  acting  in
accordance with instructions  that it reasonably  believes to be from the Debtor
or, upon  delivery of a Notice of Exclusive  Control,  the Secured  Party,  (ii)
special,  consequential or punitive  damages,  (iii) losses due to forces beyond
the control of the Depository,  including,  without  limitation,  strikes,  work
stoppages,  acts  of war or  terrorism,  insurrection,  revolution,  nuclear  or
natural catastrophes or acts of God, and interruptions,  loss or malfunctions of
utilities,  communications or computer (software and hardware) services, or (iv)
the acts of omissions of its agents so long as the  selection of such agents was
not negligent or an act of willful misconduct.

            (b) The Debtor  hereby  agrees to  indemnify  and hold  harmless the
Depository  against  any  claims,  liabilities,  expenses  or  losses in any way
arising out of or related to this  Agreement  (including  reasonable  attorneys'
fees and  disbursements),  except to the extent  that the  claims,  liabilities,
expenses or losses are caused by the  negligence  or willful  misconduct  of the
Depository.  The  indemnity  provision of this  paragraph  (b) shall survive the
termination of this Agreement.

            Section 8. TERMINATION.  This Agreement shall remain in effect until
the earlier of (a) receipt by the  Depository of written notice from the Secured
Party  in  substantially  the  form  of the  Exhibit  B  hereto  (a  "NOTICE  OF
TERMINATION")  or (b) delivery by the Depository of all of the Collateral to the
Secured  Party by  crediting  such  Collateral  to an account in the name of the
Secured Party, or as otherwise agreed to in writing by the Secured Party and the
Depository. The rights and powers granted to the Secured Party in this Agreement
are powers  coupled with an interest and will not be affected by the  insolvency
or bankruptcy of the Debtor nor by the lapse of time.

            Section 9. MISCELLANEOUS.

            (a) NOTICES. Any notices,  consents, waivers or other communications
required or permitted to be given under the terms of this  Agreement  must be in
writing  and will be deemed  to have  been  delivered:  (i) upon  receipt,  when
delivered  personally;  (ii)  upon  receipt,  when sent by  facsimile  (provided
confirmation of transmission  is  mechanically or  electronically  generated and
kept on file by the sending party); or (iii) one business day after deposit with
a  nationally  recognized  overnight  delivery  service,  in each case  properly
addressed to the party to receive the same. The addresses and facsimile  numbers
for such communications shall be:

           If to Depository:     [Name]
                                 [Address]
                                 Fax:
                                 Attn:

           If to Secured Party:  [                       ]

                                       -4-

        with a copy to:

                                 [                       ]

           If to Debtor:         Datatec Systems, Inc.
                                 23 Madison Road
                                 Fairfield, New Jersey 07004
                                 Attention:  Isaac J. Gaon
                                 Fax:  (973) 890-2888

        with a copy to:

                                 Olshan Grundman Frome Rosenzweig & Wolosky LLP
                                 505 Park Avenue
                                 New York, New York 10022
                                 Attention:  Robert H. Friedman
                                 Fax:  (212) 755-1467

Written  confirmation  of receipt  (A) given by the  recipient  of such  notice,
consent,  waiver  or other  communication;  (B)  mechanically  generated  by the
sender's facsimile machine containing the time, date, recipient facsimile number
and an image of such  transmission;  or (C)  provided by a courier or  overnight
courier service shall be rebuttable  evidence of personal service,  overnight or
courier  delivery or  transmission  by facsimile in accordance  with clause (i),
(ii) or (iii) above, respectively.

            (b) NO WAIVER.  No course of dealing  among or between  the  Debtor,
Depository  and Secured  Party,  nor any  failure to  exercise  nor any delay in
exercising,  on the part of Secured Party, any right,  power, or privilege under
this Agreement shall operate as a waiver.  No single or partial  exercise of any
right,  power,  or privilege  under this  Agreement  shall preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege by Secured Party.

            (c)  RIGHTS  ARE  CUMULATIVE.  All of  Secured  Party's  rights  and
remedies with respect to the Collateral and the Deposit  Account  established by
this  Agreement  and/or  by  law  shall  be  cumulative  and  may  be  exercised
concurrently or in any order.

                                      -5-

            (d) SEVERABILITY. The provisions of this Agreement are severable. If
any provision of this Agreement is held invalid or  unenforceable in whole or in
part in any jurisdiction,  then such invalidity or unenforceability shall affect
only such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other  jurisdiction,  or any
other provision of this Agreement in any jurisdiction.

            (e)  AMENDMENTS;  ENTIRE  AGREEMENT.  This  Agreement  is subject to
modification  only by a writing  signed by each  party.  To the extent  that any
provision of this Agreement  conflicts with any provision of any of the Security
Agreement or any of the other loan  documents to which the Secured Party and the
Debtor  are a party,  the  provision  giving  Secured  Party  greater  rights or
remedies shall govern, it being understood that the purpose of this Agreement is
to add to, and not detract from,  the rights  granted to Secured Party under the
such other loan documents.  This Agreement and the other Loan Documents comprise
the entire  agreement of the parties  with  respect to the matters  addressed in
this Agreement.

            (f)  SUCCESSORS.  The benefits and burdens of this  Agreement  shall
inure to the  benefit  of and be  binding  upon the  respective  successors  and
permitted  assigns  of the  parties;  provided,  however,  that  Debtor  may not
transfer  any of the  Collateral  or assign  any of its  rights  or  obligations
hereunder, without the prior written consent of Secured Party.

            (g) NO ADDITIONAL  OBLIGATIONS.  This  Agreement does not create any
obligation  or duty of the  Depository  other  than  those  expressly  set forth
herein.

            (h) GOVERNING LAW. THE VALIDITY,  INTERPRETATION  AND ENFORCEMENT OF
THIS  AGREEMENT  AND ANY  DISPUTE  ARISING  OUT OF OR IN  CONNECTION  WITH  THIS
AGREEMENT,  WHETHER SOUNDING IN CONTRACT,  TORT,  EQUITY OR OTHERWISE,  SHALL BE
GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK  APPLICABLE
TO  CONTRACTS  MADE AND TO BE PERFORMED  ENTIRELY  WITHIN THE STATE OF NEW YORK.
REGARDLESS OF ANY OTHER  PROVISION IN ANY OTHER  AGREEMENT,  FOR PURPOSES OF THE
UNIFORM  COMMERCIAL  CODE,  THE  STATE OF NEW YORK  SHALL  BE  DEEMED  TO BE THE
DEPOSITORY'S  JURISDICTION  (WITHIN THE MEANING OF SECTION 9-304 OF THE NY UCC).
ALL DISPUTES BETWEEN OR AMONG THE PARTIES HERETO,  WHETHER SOUNDING IN CONTRACT,
TORT,  EQUITY OR OTHERWISE,  SHALL BE RESOLVED ONLY BY STATE AND FEDERAL  COURTS
LOCATED  IN NEW YORK CITY AND THE  COURTS TO WHICH AN  APPEAL  THEREFROM  MAY BE
TAKEN.

            (i) WAIVER OF RIGHT TO JURY TRIAL.  THE  PARTIES  HERETO EACH HEREBY
WAIVES  THE  RIGHT TO TRIAL BY JURY IN ANY  ACTION  OR  PROCEEDING  BASED  UPON,
ARISING OUT OF, OR IN ANY WAY  RELATING TO: (I) THIS  AGREEMENT;  (II) ANY OTHER
PRESENT OR FUTURE  INSTRUMENT  OR AGREEMENT  BETWEEN OR AMONG SUCH PARTY AND THE

                                      -6-

OTHER PARTIES HERETO;  OR (III) ANY CONDUCT,  ACTS OR OMISSIONS OF SUCH PARTY OR
BY ANY OF ITS DIRECTORS,  OFFICERS,  EMPLOYEES,  AGENTS,  ATTORNEYS OR ANY OTHER
PERSONS  AFFILIATED  WITH SUCH PARTY;  IN EACH OF THE FOREGOING  CASES,  WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

            (j)  COUNTERPARTS.  This Agreement may be executed in  counterparts,
each of which  shall  constitute  an  original,  but all of  which,  when  taken
together, shall constitute but one contract. Delivery of an executed counterpart
of this Agreement by facsimile  transmission shall constitute effective delivery
thereof.

                     [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                      -7-

            IN WITNESS  WHEREOF,  the Depository,  Debtor and Secured Party have
each duly executed this Agreement as of the day and year first written above.

                                   DEPOSITORY:

                                   [BANK]

                                   By: _________________________
                                       Name:
                                       Title:

                                   SECURED PARTY:

                                   By: _________________________
                                       Name:
                                       Title:

                                   By: _________________________
                                       Name:
                                       Title:

                                   By: _________________________
                                       Name:
                                       Title:

                                   By: _________________________
                                       Name:
                                       Title:

                                      -8-

                                   By: _________________________
                                       Name:
                                       Title:

                                   By: _________________________
                                       Name:
                                       Title:

                                   DEBTOR:

                                   DATATEC SYSTEMS, INC.

                                   By:_________________________
                                      Name:
                                      Title:

                                      -9-

                                                                       EXHIBIT A

DATE

NAME AND ADDRESS OF DEPOSITORY

Re: Notice of Exclusive Control

Sirs/Ladies:

Reference is made to the Account Control  Agreement  ("AGREEMENT" ), dated as of
___, 2002,  among Datatec  Systems,  Inc. (the "DEBTOR"),  [                   ]
(together,   the  "SECURED  PARTY"),   and  [Bank],  a   ________________   (the
"DEPOSITORY"  or "YOU").  Capitalized  terms used herein and not defined  herein
shall have the meanings assigned to such terms in the Agreement.

                                      -10-

We hereby give you notice of our exclusive  control over the Deposit Account and
all financial assets credited  thereto.  You are hereby instructed not to accept
any  direction,  instruction  or  entitlement  order with respect to the Deposit
Account or the financial  assets credited thereto from any person other than the
undersigned,  unless otherwise ordered by a court of competent jurisdiction. You
are hereby instructed to deliver a copy of this notice by facsimile transmission
to the Debtor.

Very truly yours,

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

                                      -11-

                                                                       EXHIBIT B

DATE

NAME AND ADDRESS OF DEPOSITORY

Re: Termination of Account Control Agreement

Sirs/Ladies:

Reference is made to the Account Control  Agreement  ("AGREEMENT" ), dated as of
___, 2002,  among Datatec  Systems,  Inc. (the "DEBTOR"),  [                   ]
(together,   the  "SECURED  PARTY"),   and  [Bank],  a   ________________   (the
"DEPOSITORY"  or "YOU").  Capitalized  terms used herein and not defined  herein
shall have the meanings assigned to such terms in the Agreement.

                                      -12-

You are hereby notified that the Account Control Agreement is terminated and you
have no further obligations to the undersigned  thereunder.  Notwithstanding any
previous  instructions  to you, you are hereby  instructed  to accept all future
directions  with  respect  to  the  Collateral  from  the  Debtor.  This  notice
terminates any obligations  you may have to the undersigned  with respect to the
Collateral;   however,   nothing  contained  in  this  notice  shall  alter  any
obligations  that you may  otherwise  owe to the  Debtor  pursuant  to any other
agreement.  You are  hereby  instructed  to  deliver  a copy of this  notice  by
facsimile transmission to the Debtor.

Very truly yours,

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

By: _________________________
    Name:
    Title:

                                      -13-

                                                                       Exhibit C

               LIST OF COLLATERAL LOCATIONS, EXECUTIVE OFFICES AND
             JURISDICTION OF ORGANIZATION OR INCORPORATION OF DEBTOR

Executive Offices:                              Datatec Systems, Inc.
                                                23 Madison Road
                                                Fairfield, New Jersey 07004
                                                Attention:  Isaac J. Gaon
                                                Telephone: (973) 808-4000
                                                Facsimile:  (973) 890-2888

Collateral Location(s):                         Datatec Systems, Inc.
                                                23 Madison Road
                                                Fairfield, New Jersey 07004

Jurisdiction of Incorporation:                  Delaware

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