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                                                                   Exhibit 10.11

                            MASTER SECURITY AGREEMENT
                                   NO. 5051091
                     Dated as of May 31, 2005 ("AGREEMENT")

     THIS AGREEMENT is between OXFORD FINANCE CORPORATION (together with its
successors and assigns, if any, "SECURED PARTY") and Alsius Corporation
("DEBTOR"). Secured Party has an office at 133 N. Fairfax Street, Alexandria, VA
22314. Debtor is a corporation organized and existing under the laws of the
state of California. Debtor's mailing address and chief place of business is
15770 Laguna Canyon Road, Suite 150, Irvine, California 92618.

1. CREATION OF SECURITY INTEREST.

     Debtor grants to Secured Party, its successors and assigns, a security
interest in and against the Collateral (as that term is defined herein). This
security interest is given to secure the payment and performance of all debts,
obligations and liabilities of any kind whatsoever of Debtor to Secured Party
under this Agreement and the Debt Documents, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time executed by Debtor (collectively "NOTES" and
each a "NOTE"), and any renewals, extensions and modifications of such debts,
obligations and liabilities (such Notes, debts, obligations and liabilities are
called the "INDEBTEDNESS").

     If Debtor shall at any time acquire a commercial tort claim, as defined in
the Code, Debtor shall immediately notify Secured Party in writing signed by
Debtor of the brief details thereof and grant to Secured Party in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Secured Party.

     Unless otherwise provided by applicable law, notwithstanding anything to
the contrary contained in this Agreement, to the extent that Secured Party
asserts a purchase money security interest in any items of Collateral (the "PMSI
COLLATERAL"): (i) the PMSI Collateral shall secure only that portion of the
Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the "PMSI
INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI Indebtedness.

     If Debtor at any time achieves Seven Million Dollars ($7,000,000) in
revenues during a continuous 12-month period, then Debtor may, at its option,
incur Additional Indebtedness as set forth in clause (v) of the definition of
Permitted Indebtedness (the "A/R FACILITY"). Secured Party agrees that the Liens
granted to it hereunder in Account Collateral shall be subordinate to the Liens
of the future lender providing the A/R Facility. Notwithstanding the foregoing,
the Indebtedness hereunder shall not be subordinate in right of payment to any
obligations to other lender and Secured Party's rights and remedies hereunder
shall not in any way be subordinate to the rights and remedies of any such
lender. So long as no default has occurred, Secured Party agrees to execute and
deliver such agreements and documents as may be reasonably requested by Debtor
or other lenders from time to time which set forth the lien subordination
described in this paragraph and are reasonably acceptable to Secured Party.
Secured Party shall have no obligation to execute any agreement or document
which would impose obligations, restrictions or lien priority on Secured Party
which are less favorable to Secured Party than those described in this
paragraph. "ACCOUNT COLLATERAL" means Debtor's accounts receivable due or to
become due to Debtor under all purchase orders and contracts for the sale of
products or the performance of services or both by Debtor (and related general
intangibles in the nature of rights to payment) and the proceeds thereof).

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

     Debtor represents, warrants and covenants as of the date of this Agreement
and as of the date of each Note (as appropriate) that:

     (a)  Due Organization. Debtor's exact legal name is as set forth in the
          preamble of this Agreement and Debtor is, duly organized, existing and
          in good standing under the laws of the State set forth in the preamble
          of this Agreement, has its chief executive offices at the location
          specified in the preamble, and is, and will remain duly qualified and
          licensed in every jurisdiction wherever necessary to carry on its
          business and operations;

     (b)  Power and Capacity to Enter Into and Perform Obligations. Debtor has
          adequate power and capacity to enter into, and to perform its
          obligations under this Agreement, each Note and any other documents
          evidencing, or given in connection with, any of the Indebtedness (all
          of the foregoing are called the "DEBT DOCUMENTS");

     (c)  Due Authorization. This Agreement and the other Debt Documents have
          been duly authorized, executed and delivered by Debtor and constitute
          legal, valid and binding agreements enforceable in accordance with
          their terms, except to the extent that the enforcement of remedies may
          be limited under applicable bankruptcy and insolvency laws;

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     (d)  Approvals and Consents. No approval, consent or withholding of
          objections is required from any governmental authority or
          instrumentality with respect to the entry into, or performance by
          Debtor of any of the Debt Documents, except any already obtained;

     (e)  No Violations or Defaults. The entry into, and performance by, Debtor
          of the Debt Documents will not (i) violate any of the organizational
          documents of Debtor or any judgment, order, law or regulation
          applicable to Debtor, or (ii) result in any breach of or constitute a
          default under any contract to which Debtor is a party, or result in
          the creation of any lien, claim or encumbrance on any of Debtor's
          property (except for liens in favor of Secured Party) pursuant to any
          indenture, mortgage, deed of trust, bank loan, credit agreement, or
          other agreement or instrument to which Debtor is a party;

     (f)  Litigation. There are no suits or proceedings pending in court or
          before any commission, board or other administrative agency against or
          affecting Debtor which could, in the aggregate, have a material
          adverse effect on Debtor, its business or operations, or its ability
          to perform its obligations under the Debt Documents, nor does Debtor
          have reason to believe that any such suits or proceedings are
          threatened;

     (g)  Solvency. The fair salable value of Debtor's assets (including
          goodwill minus disposition costs) exceeds the fair value of its
          liabilities; the Debtor is not left with unreasonably small capital
          after the transactions in this Agreement or any Notes and Debtor is
          able to pay its debts (including trade debts) as they mature.

     (h)  Financial Statements Prepared In Accordance with GAAP. All financial
          statements delivered to Secured Party in connection with the
          Indebtedness have been prepared in accordance with generally accepted
          accounting principles, and since the date of the most recent financial
          statement, there has been no material adverse change in Debtor's
          financial condition;

     (i)  Use of Collateral. The Collateral is not, and will not be, used by
          Debtor for personal, family or household purposes;

     (j)  Collateral in Good Condition and Repair. The Collateral is, and will
          remain, in good condition and repair and Debtor will not be negligent
          in its care and use;

     (k)  Ownership of Collateral. Debtor is, and will remain, the sole and
          lawful owner, and in possession of, the Collateral, and has the sole
          right and lawful authority to grant the security interest described in
          this Agreement;

     (l)  Encumbrances. The Collateral is, and will remain, free and clear of
          all liens, claims and encumbrances of any kind whatsoever, except for
          Permitted Liens;

     (m)  Intellectual Property. Debtor will take all reasonable steps to (i)
          protect, defend and maintain the validity and enforceability of the
          Intellectual Property and promptly advise Secured Party in writing of
          material infringements and (ii) not allow any Intellectual Property
          material to Debtor's business to be abandoned, forfeited or dedicated
          to the public without Secured Party's written consent;

     (n)  Taxes. All federal, state and local tax returns required to be filed
          by Debtor have been filed with the appropriate governmental agencies
          and all taxes due and payable by Debtor have been timely paid. Debtor
          will pay when due all taxes, assessments and other liabilities except
          as contested in good faith and by appropriate proceedings and for
          which adequate reserves have been established;

     (o)  No Defaults. No event or condition exists under any material
          agreement, instrument or document to which Debtor is a party or may be
          subject, or by which Debtor or any of its properties are bound, which
          constitutes a default or an event of default thereunder, or will, with
          the giving of notice, passage of time, or both, would constitute a
          default or event of default thereunder;

     (p)  Certification of Financial Information. All reports, certificates,
          schedules, notices and financial information submitted by Debtor to
          the Secured Party pursuant to this Agreement shall be certified as
          true and correct by the president or chief financial officer of
          Debtor; and

     (q)  Notice of Material Adverse Change. Debtor shall give the Secured Party
          prompt written notice of any event, occurrence or other matter which
          (a) has resulted or is likely to result in a material adverse change
          in its financial condition, business operations, prospects, product
          development, technology, or business or contractual relations with
          third parties of Debtor, or (b) which would impair the ability of
          Debtor to perform its obligations hereunder or under any of the other
          financing agreements to which it is a party, or (c) which would impair
          the ability of Secured Party to enforce the Indebtedness or realize
          upon the Collateral.

     (r)  .[intentionally omitted]

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     (s)  Transactions with Affiliates. Debtor shall not, without the prior
          written consent of Secured Party, directly or indirectly enter into or
          permit to exist any material transaction with any Affiliate of Debtor
          except for equity financings and transactions that are in the ordinary
          course of Debtor's business, upon fair and reasonable terms that are
          no less favorable to Debtor than would be obtained in an arm's length
          transaction with a nonaffiliated Person.

     (t)  Audits. Debtor shall allow Secured Party to audit Debtor's Collateral
          at Debtor's expense, which amount shall not exceed $2,500. Such audits
          will be conducted no more often than annually unless a default has
          occurred and is continuing.

     (u)  Primary Account and Wire Transfer Instructions. Debtor maintains its
          Primary Account (the "PRIMARY OPERATING ACCOUNT") and the Wire
          Transfer Instructions for the Primary Operating Account are as
          follows:

             Silicon Valley Bank
             3003 Tasman Drive
             Santa Clara, CA  95054
             ABA No.: 121140399
             Account No.: 3300392162 (Checking Account)
             Account Name: Alsius Corporation

     Debtor hereby agrees that Loans will be advanced to the account specified
     above and regularly scheduled payments will be automatically debited from
     the same account. In addition to the Primary Operating Account identified
     hereinabove, Debtor maintains the following other deposit and investment
     accounts:

             Silicon Valley Bank
             3003 Tasman Drive
             Santa Clara, CA  95054
             ABA No.: 121140399
             Account No.: 0600309575 (Money Market Account
                          #886-00101-1-8ZGQ - Investment Securities)
             Account Name: Alsius Corporation

     (v)  Right to Invest. Debtor hereby grants to Secured Party a right (but
          not an obligation) to invest in each Subsequent Financing of Debtor,
          up to (A) $750,000 if the Subsequent Financing is $4,000,000 or more
          of gross cash proceeds to Debtor, or (B) $375,000 if the Subsequent
          Financing is less than $4,000,000 gross cash proceeds to Debtor, all
          on the same terms, conditions and pricing offered to the lead investor
          of such financing. Debtor shall give Secured Party at least twenty
          (20) days prior written notice of each Subsequent Financing containing
          the terms, conditions and pricing of each Subsequent Financing. As
          used herein, "SUBSEQUENT FINANCING" shall mean the next and any future
          round of private equity financing in which the Debtor receives, in the
          aggregate, at least $2,000,000 of gross cash proceeds (excluding any
          bridge debt financing except to the extent actually converted to
          equity in the Debtor). The rights granted to Secured Party under this
          Section 2(v) shall terminate upon Debtor's merger with or
          consolidation into any other entity or a sale of all or substantially
          all of Debtor's assets

     (w)  Notice of Investor Abandonment. Debtor shall give the Secured Party
          prompt written notice Secured Party if (a) it is the clear intention
          of Debtor's investors to not continue to fund the Debtor in the
          amounts and timeframe necessary to enable Debtor to satisfy the
          Indebtedness as it becomes due and payable or (b) there is a material
          impairment in the perfection or priority of the Secured Party's
          security interest in the Collateral.

3. COLLATERAL.

     The Debtor, covenants and agrees that, so long as any of the Debt Documents
     shall remain in effect, or unless the Secured Party shall otherwise consent
     in writing:

     (a)  Possession of Collateral; Inspection of Collateral. Until the
          declaration of any default, Debtor shall remain in possession of the
          Collateral; except that Secured Party shall have the right to possess
          (i) any chattel paper or instrument that constitutes a part of the
          Collateral, and (ii) any other Collateral in which Secured Party's
          security interest may be perfected only by possession. Secured Party
          may inspect any of the Collateral during normal business hours after
          giving Debtor reasonable prior notice.

     (b)  Maintenance of Collateral. Debtor shall (i) use the Collateral only in
          its trade or business, (ii) maintain all of the Collateral in good
          operating order and repair, normal wear and tear excepted, (iii) use
          and maintain the Collateral only in compliance with manufacturers
          recommendations and all applicable laws, and (iv) keep all of the
          Collateral free and clear of all liens, claims and encumbrances
          (except for Permitted Liens).

     (c)  Disposition of Collateral. Secured Party does not authorize and Debtor
          agrees it shall not (i) part with possession of any of the Collateral
          (except to Secured Party, for maintenance and repair or in the sale of
          goods in the ordinary course of business), (ii) remove any of the
          Collateral from the continental United States (other than the
          following Collateral: (aa) approximately 40 Cool Guard Systems located
          at customer sites in Europe, and

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          (bb) office furniture, laptop computers, 2 vehicles, leasehold
          improvements, inventory necessary for maintenance and repair of
          customer systems and other miscellaneous equipment necessary for
          Debtor's service center in the Netherlands in an aggregate value not
          exceeding $400,000.00] or (iii) sell, rent, lease, mortgage, license,
          grant a security interest in or otherwise transfer or encumber (except
          for Permitted Liens or the sale of goods in the ordinary course of
          business) any of the Collateral. Once goods are sold in the ordinary
          course of business, Secured Party shall have no further security
          interest in such goods, and such goods shall be released from any
          liens by Secured Party; provided that Secured Party keeps a security
          interest in all proceeds of such sold goods. .

     (d)  Taxes. Debtor shall pay promptly when due all taxes, license fees,
          assessments and public and private charges levied or assessed on any
          of the Collateral, on its use, or on this Agreement or any of the
          other Debt Documents. At its option, if Debtor has failed to do so,
          Secured Party may discharge taxes, liens, security interests or other
          encumbrances at any time levied or placed on the Collateral and may
          pay for the maintenance, insurance and preservation of the Collateral
          and effect compliance with the terms of this Agreement or any of the
          other Debt Documents. Debtor agrees to reimburse Secured Party, on
          demand, all reasonable costs and expenses incurred by Secured Party in
          connection with such payment or performance and agrees that such
          reimbursement obligation shall constitute Indebtedness.

     (e)  Books and Records. Debtor shall, at all times, keep accurate and
          complete records of the Collateral, and Secured Party shall have the
          right to inspect and make copies of all of Debtor's books and records
          relating to the Collateral during normal business hours, after giving
          Debtor reasonable prior notice.

     (f)  Third Party Possession of Collateral. Debtor agrees and acknowledges
          that any third person who may at any time possess all or any portion
          of the Collateral shall be deemed to hold, and shall hold, the
          Collateral as the agent of, and as pledge holder for, Secured Party.
          Secured Party may at any time give notice to any third person
          described in the preceding sentence that such third person is holding
          the Collateral as the agent of, and as pledge holder for, the Secured
          Party.

     (g)  Receivables. As to each and every Receivable (a) it is a bona fide
          existing obligation, valid and enforceable against the Account Debtor
          for a sum certain for sales of goods shipped or delivered, or goods
          leased, or services rendered in the ordinary course of business; (b)
          all supporting documents, instruments, chattel paper and other
          evidence of indebtedness, if any, delivered to the Secured Party are
          complete and correct and valid and enforceable in accordance with
          their terms, and all signatures and endorsements that appear thereon
          are genuine, and all signatories and endorsers, to Debtor's knowledge,
          have full capacity to contract; (c) to the best of the Debtor's
          knowledge, the Account Debtor is liable for and will make payment of
          the amount expressed in such Receivable according to its terms; (d)
          except in the ordinary course of business, it will be subject to no
          discount, deduction, setoff, counterclaim, return, allowance or
          special terms of payment without the prior approval of the Secured
          Party; (e) it is subject to no dispute, defense or offset, real or
          claimed; (f) it is not subject to any prohibition or limitation upon
          assignment; (g) it has not been redated or reissued in satisfaction of
          prior Receivables; (h) the Debtor has full right and power to grant
          the Secured Party a security interest therein and the security
          interest granted in such Receivable to the Secured Party in this
          Agreement, when perfected, will be a valid first security interest
          which will inure to the benefit of the Secured Party without further
          action. The warranties set out herein shall be deemed to have been
          made with respect to each and every Receivable now owned or hereafter
          acquired by the Debtor.

     (h)  Bailees. The Inventory is not now and shall not at any time hereafter
          be stored with a bailee, warehouseman, or similar party without the
          Secured Party's prior written consent. If any Inventory is so stored,
          the Debtor will, concurrent with storing such Inventory, cause any
          such bailee, warehouseman, or similar party to issue and deliver to
          the Secured Party, in a form acceptable to the Secured Party,
          warehouse receipts in the Secured Party's name evidencing the storage
          of the Inventory. All such warehouse receipts do and will evidence
          ownership of the Inventory stored by the issuers thereof, and the
          holder thereof is and will continue to be the owner of good and
          marketable title of same, free and clear of any Liens or encumbrances.
          All such warehouse receipts are and will be genuine, valid and
          enforceable by the holder thereof in accordance with their terms and
          all statements thereon are and will be true and accurate in all
          respects.

     (i)  Change of Address. All of the Collateral is located in and will in the
          future be in the possession of the Debtor at its address stated above
          or at such other addresses as may be set forth on the attached
          Schedule A. The Debtor has not at any time within the past four (4)
          months either (a) maintained Inventory or Equipment or (b) maintained
          its chief executive office or its records with respect to the
          Receivables at any other location and shall not do so hereafter except
          with the prior written consent of the Secured Party. The Secured Party
          shall be entitled to rely upon the foregoing unless it receives 14
          days' advance written notice of a change in the address of the
          Debtor's executive offices or location of the Collateral.

     (j)  Schedules of Receivables. Upon the written request of Secured Party,
          deliver to the Secured Party schedules of all outstanding Receivables.
          Such schedules shall be in form satisfactory to the Secured Party and
          shall show the age of such Receivables in intervals of not more than
          thirty (30) days, and contain such other information and be
          accompanied by such supporting documents as the Secured Party may from
          time to time prescribe. The Debtor shall also deliver to the Secured
          Party copies of the Debtor's invoices, sales journals, evidences of
          shipment or delivery and such other schedules and information as the
          Secured Party may reasonably request. The items to be provided under
          this Section are to be prepared and

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          delivered to the Secured Party from time to time solely for its
          convenience in maintaining records of the Collateral and the Debtor's
          failure to give any of such items to the Secured Party shall not
          affect, terminate, modify or otherwise limit the Secured Party's
          security interest granted herein.

     (k)  Consignment. If at any time any of the Inventory is placed by the
          Debtor on consignment, other than goods placed with dealers, with any
          person or entity ("CONSIGNEE"), the Debtor shall, prior to the
          delivery of such consigned Inventory:

               a.   Provide the Secured Party with all consignment agreements
                    and other instruments and documentation to be used in
                    connection with such consignment, all of which agreements,
                    instruments, and documentation shall be acceptable in form
                    and substance to the Secured Party;

               b.   Prepare and file appropriate financing statements with
                    respect to any consigned Inventory showing the Consignee as
                    debtor, the Debtor as secured party, and the Secured Party
                    as assignee of the Debtor;

               c.   Prepare and file appropriate financing statements with
                    respect to any consigned Inventory showing the Debtor as
                    debtor, and the Secured Party as secured party;

               d.   After all financing statements referred to in the previous
                    two subsections have been filed, conduct a search of all
                    filings made against the Consignee in all jurisdictions in
                    which the Inventory to be consigned is to be located while
                    on consignment, and deliver to the Secured Party copies of
                    the results of all such searches; and

               e.   Notify, in writing, all creditors of the Consignee that are
                    or may be holders of security interests in the Inventory to
                    be consigned, that the Debtor expects to deliver certain
                    Inventory to the Consignee, all of which Inventory shall be
                    described in such notice by item or type.

     (l)  Fixtures. Not permit any item of the Equipment to become a fixture to
          real estate or an accession to other property without the prior
          written consent of the Secured Party, and the Equipment is now and
          shall at all times remain personal property except with the Secured
          Party's prior written consent. If any of the Collateral is or will be
          attached to real estate in such a manner as to become a fixture under
          applicable state law and if such real estate is encumbered, the Debtor
          will obtain from the holder of each Lien or encumbrance a written
          consent and subordination to the security interest hereby granted, or
          a written disclaimer of any interest in the Collateral, in a form
          acceptable to the Secured Party.

     (m)  Chattel Paper. Promptly, upon request by the Secured Party, deliver,
          assign, and endorse to the Secured Party all chattel paper and all
          other documents held by the Debtor in connection therewith.

     (n)  Copies of Government Contracts. Make available to the Secured Party,
          at the request of the Secured Party, a copy of each Government
          Contract in which the Secured Party has a security interest and a copy
          of each amendment thereto or modification thereof which changes the
          price of such contract or the amount funded to pay for such contract,
          except to the extent that furnishing such copies may be prohibited by
          government security regulations. Attached hereto as Schedule B is a
          complete list of all Government Contracts under which Receivables now
          exist or may hereafter arise, identified by the names of the
          contracting parties thereto, the date thereof and the number
          identifying the Government Contract or agreement and providing
          information in the form specified by the Secured Party from time to
          time regarding the contracting officer, the identity of any sureties
          and the disbursing officer, whether progress payments are to be made
          and the rate thereof, whether the Government Contract or agreement has
          been fully performed and such other information as the Secured Party
          may request. A true, complete and correct copy of each such Government
          Contract (including all modifications thereto and notice of exercise
          of options thereunder) now existing has been provided to the Secured
          Party by the Debtor. The Debtor shall as soon as practicable (but in
          no event later than five days prior to the date of execution thereof)
          notify the Secured Party of any additional Government Contracts, or
          any renewals or extensions of any Government Contract or the exercise
          of any options thereunder or modifications thereof, identified by the
          names of the contracting parties thereto, the date thereof and the
          number identifying the Government Contract or agreement and providing
          information in the form specified by the Secured Party from time to
          time regarding the contracting officer, the identity of any sureties
          and the disbursing officer, whether progress payments are to be made
          and the rate thereof, and such other information as the Secured Party
          may request, and a true, complete and correct copy of each such
          Government Contract, amendment or modification or exercise of option
          shall be provided to the Secured Party by the Debtor no later than the
          date of execution thereof.

     (o)  Claims and Disputes. Immediately upon learning thereof, report to the
          Secured Party any reclamation, return or repossession of goods except
          returns made in the ordinary course of business, any claim or dispute
          asserted by any Account Debtor or other obligor, and any other matter
          affecting the value and enforceability or collectability of any of the
          Collateral. In addition, the Debtor shall, at its sole cost and
          expense (including attorneys' fees), settle any and all such claims
          and disputes and indemnify and protect the Secured Party against any
          liability, loss or expense arising therefrom or out of any such
          reclamation, return or repossession of goods, provided, however, that
          the Secured Party, if Debtor is not doing so, and if it shall so
          elect, shall have the right at all times to settle, compromise, adjust
          or litigate all claims or disputes directly with the Account Debtor or
          other obligor upon such terms and conditions as the Secured Party
          deems advisable and charge all costs and expenses thereof (including
          reasonable attorneys' fees) to the Debtor's account and add them to
          the principal amount of the Indebtedness.

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     (p)  Government Contracts Are Binding, Etc. Take the necessary or
          appropriate steps to ensure that all Government Contracts have been,
          or if arising hereafter will be, legally awarded and binding on the
          parties thereto; no payment has been or will be made by the Debtor,
          any affiliate, or any person acting on their behalf, to any person
          that was, is or will be contingent upon the award of any Government
          Contract in violation of applicable procurement law or that would
          otherwise be in violation of applicable procurement law (including,
          but not limited to, the Federal Acquisition Regulations, the Defense
          Acquisition Regulations, the Federal Procurement Regulations and the
          Armed Services Procurement Regulations); there is no claim that has
          been asserted by any government agency or authority concerning the
          award or performance of any Government Contract and the Debtor shall
          immediately notify the Secured Party of the assertion of any such
          claim or the existence of any basis therefor; neither the Debtor nor
          any director, employee or Affiliate has been debarred or suspended
          from participation in the award of contracts with the federal
          government or any state or local government, or any agency or
          instrumentality thereof, or is a party to or the subject of any
          pending or threatened proceeding or investigation relating to
          debarment or suspension, and the Debtor shall immediately notify the
          Secured Party of the occurrence of any of the foregoing or the
          existence of any basis therefor; and neither the Debtor nor any
          Affiliate, nor any officer, director or employee of any of them, is
          permanently or temporarily enjoined or barred from engaging in or
          continuing any conduct or practice relating to the conduct of their
          business, or enjoining or requiring any of them to take any action of
          any kind relating thereto, and the Debtor shall immediately notify the
          Secured Party of the occurrence of any of the foregoing or the
          existence of any basis therefor.

     (q)  No Provisions Prohibiting Assignment of Government Contracts. Take the
          necessary or appropriate steps to ensure that each Government Contract
          (i) does not and will not contain any provision prohibiting assignment
          thereof as provided herein, (ii) contains a "no set-off" clause or
          does not permit any set-off against or reduction of the obligation to
          make payments thereunder for liability of the Debtor to the government
          because of re-negotiation, fine, penalty (other than as specifically
          permitted by the federal Assignment of Claims Act with respect to
          Government Contracts with the federal government), taxes, social
          security contributions, or withholding or failing to withhold taxes,
          social security contributions or similar amounts, whether arising from
          or independent of the Government Contract. The Debtor shall promptly
          notify the Secured Party of any claimed set-off or reduction or the
          disallowance of progress payment requests.

     (r)  Cost Accounting and Procurement Systems. The Debtor's cost accounting
          and procurement systems are and at all times have been, and will
          continue to be, in compliance with all applicable requirements.

     (s)  Compliance with Assignment Requirements for Government Contracts. The
          Debtor is now in compliance and hereby covenants and agrees that the
          Debtor will in the future comply with any and all of the requirements
          of Title 31 Section 3727 and Title 31 Section 15 of the United States
          Code and any similar state or local law and all rules and regulations
          relating thereto, as amended, where such statutes, rules and
          regulations are applicable to a particular Receivable, and shall at
          all times take all such other action as may be necessary to facilitate
          and/or ensure perfection of the Secured Party's security interest in
          and the assignment to the Secured Party of any Government Account and
          Government Contract.

     (t)  Information Concerning Government Contracts. At the request of the
          Secured Party, submit to the Secured Party for the Secured Party's
          approval each Government Contract which the Debtor desires to be
          included in determining eligible Government Accounts, and provide such
          other information concerning such Government Contract as the Secured
          Party may reasonably request.

     (u)  Domain Name. Take the necessary or appropriate steps to ensure that
          the identity and location of the servers used in connection with the
          Debtor's domain name and the identity of the party having control over
          the domain name server and of the administrative contact with the
          registry have been disclosed to the Secured Party. The Debtor shall
          not change the domain name server without notification to the Secured
          Party. The Debtor shall maintain the trademark of the domain name by
          defending against any infringement suits and by policing the
          trademark. The Debtor shall renew the domain name registration during
          the loan term. The Debtor shall make all payments to the domain name
          registrar necessary to maintain the domain name.

     (v)  Account Control Agreements. Debtor shall at all times maintain all
          Cash Equivalents owned by Debtor on deposit in a Deposit Account or
          accounts holding securities in Debtor's name at Silicon Valley Bank or
          in a Deposit Account or accounts holding securities at another
          institution (a "THIRD PARTY INSTITUTION") covered by an account
          control agreement in favor of Secured Party (the terms of which shall
          be substantially identical to the terms of that certain Control
          Agreement, dated May 31, 2005, between Debtor and Secured Party, or
          otherwise acceptable to Secured Party). At any time that the Cash
          Equivalents or any portion thereof are held in an account or accounts
          in one or more Third Party Institutions, the related account control
          agreement shall provide that Secured Party is to receive monthly
          account statements, in form and substance acceptable to Secured Party,
          evidencing that the Cash Equivalents are maintained in the related
          account. With respect to each such Deposit Account, Debtor, Secured
          Party, and each Third Party Institution with which a Deposit Account
          is maintained, shall enter into a written agreement, granting Secured
          Party control of the Deposit Account and providing that, upon an event
          of default by Debtor, the Third Party Institution will comply with
          instructions originated by the Secured Party directing disposition of
          the funds in the Deposit Account without further consent by Debtor.
          Such account control agreement may in accordance with the provisions
          thereof provide terms under which Debtor may remove funds from the
          Deposit Account; provided all funds in or transferred into the Deposit
          Account on or after the effectiveness of this Agreement shall be
          subject to the security interest granted under this Agreement.

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     (w)  Distributions. Debtor shall not (i) pay any dividends or make any
          distributions on its equity securities; (ii) purchase, redeem, retire,
          defease or otherwise acquire for value any of its equity securities
          (other than repurchases pursuant to the terms of employee stock
          purchase plans, employee restricted stock agreements or similar
          arrangements in an aggregate amount not to exceed Fifty Thousand
          Dollars ($50,000) per annum); (iii) return any capital to any holder
          of its equity securities as such; (iv) make any distribution of
          assets, equity securities, obligations or securities to any holder of
          its equity securities as such; or (v) set apart any sum for any such
          purpose; provided, however, Debtor may pay dividends payable solely in
          common stock.

     (x)  Indebtedness Payments. Debtor shall not (i) prepay, redeem, purchase,
          defease or otherwise satisfy in any manner prior to the scheduled
          repayment thereof any Additional Indebtedness for borrowed money or
          lease obligations, (ii) amend, modify or otherwise change the terms of
          any Additional Indebtedness for borrowed money or lease obligations so
          as to accelerate the scheduled repayment thereof or (iii) repay any
          notes to officers, directors or shareholders except as expressly
          provided for in a duly executed subordination agreement in favor of,
          and approved by Secured Party.

     (y)  Additional Indebtedness. Debtor shall not create, incur, assume or
          permit to exist any Additional Indebtedness except Permitted
          Indebtedness.

     (z)  Negative Pledge on Intellectual Property. Debtor's Intellectual
          Property is, and will remain, free and clear of all liens, claims and
          encumbrances of any kind whatsoever, except for Permitted Liens.
          Debtor shall not sell, transfer, assign, mortgage, pledge, lease,
          grant a security interest in, or encumber any of its Intellectual
          Property, or enter into any agreement, document, instrument or other
          arrangement (except with or in favor of Secured Party) with any entity
          which directly or indirectly prohibits or has the effect of
          prohibiting Debtor from selling, transferring, assigning, mortgaging,
          pledging, leasing, granting a security interest in or upon, or
          encumbering any of Debtor's Intellectual Property; provided, however,
          that Debtor may grant non-exclusive licenses with respect to
          components of Debtor's Intellectual Property in connection with joint
          ventures, corporate collaborations and distribution arrangements in
          the ordinary course of business.

4. INSURANCE.

     (a)  Risk of Loss. Debtor shall at all times bear the entire risk of any
          loss, theft, damage to, or destruction of, any of the Collateral from
          any cause whatsoever.

     (b)  Insurance Requirements. Debtor agrees to maintain general liability
          insurance and to keep the Collateral insured against loss or damage by
          fire and extended coverage perils, theft, burglary, risk of loss by
          collision (for any or all Collateral which are vehicles) and such
          other risks as Secured Party may reasonably require. The liability
          insurance coverage shall be in an amount standard for companies
          similar to Debtor in Debtor's industry in Debtor's geographic region.
          The property insurance coverage shall be in an amount no less than the
          full replacement value of the Collateral. All insurance policies shall
          be in a form, with companies and with deductible amounts, acceptable
          to Secured Party. Debtor shall deliver to Secured Party policies or
          certificates of insurance evidencing such coverage. Each policy shall
          name Secured Party as a loss payee and an additional insured, shall
          provide for coverage to Secured Party regardless of the breach by
          Debtor of any warranty or representation made therein, shall not be
          subject to co-insurance, and shall provide that coverage may not be
          canceled or altered by the insurer except upon thirty (30) days prior
          written notice to Secured Party. Debtor appoints Secured Party as its
          attorney-in-fact to make proof of loss, claim for insurance and
          adjustments with insurers, and to receive payment of and execute or
          endorse all documents, checks or drafts in connection with insurance
          payments. Secured Party shall not act as Debtor's attorney-in-fact
          unless Debtor is in default. Proceeds of insurance shall be applied,
          at the option of Secured Party, to repair or replace the Collateral or
          to reduce any of the Indebtedness.

5. REPORTS.

     (a)  Notice of Events. Debtor shall promptly notify Secured Party of (i)
          any change in the name of Debtor, (ii) any change in the state of its
          incorporation or registration, (iii) any relocation of its chief
          executive offices, (iv) any of the Collateral being lost, stolen,
          missing, destroyed, materially damaged or worn out, (v) any lien,
          claim or encumbrance other than Permitted Liens attaching to or being
          made against any of the Collateral, or (vi) any occurrence of any
          default pursuant to Section 7 herein.

     (b)  Financial Statements, Reports and Certificates. Debtor will deliver to
          Secured Party within one hundred twenty (120) days of the close of
          each fiscal year of Debtor, Debtor's complete financial statements
          including a balance sheet, income statement, statement of
          shareholders' equity and statement of cash flows, each prepared in
          accordance with generally accepted accounting principles consistently
          applied, certified by a recognized firm of certified public
          accountants satisfactory to Secured Party. Debtor will deliver to
          Secured Party copies of Debtor's quarterly financial statements
          including a balance sheet, income statement and statement of cash
          flows, each prepared by Debtor in accordance with generally accepted
          accounting principles consistently applied by Debtor and certified by
          Debtor's president or chief financial officer, within forty-five (45)
          days after the close of each of Debtor's fiscal quarter. Debtor will
          deliver to Secured Party copies of all Forms 10-K and 10-Q, if any,
          within 30 days after the

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          dates on which they are filed with the Securities and Exchange
          Commission. Debtor will deliver to Secured Party copies of Debtor's
          monthly financial statements including a balance sheet and income
          statement, each prepared by Debtor in accordance with generally
          accepted accounting principles consistently applied by Debtor and
          certified by Debtor's president or chief financial officer, within
          thirty (30) days after the close of each month. Concurrently with
          delivery of the foregoing information, and from time to time promptly
          upon request of Secured Party, Debtor will deliver to Secured Party a
          Compliance Certificate substantially consistent with the form of the
          document attached hereto as Schedule C. Debtor will deliver to Secured
          Party promptly upon request of Secured Party, in form satisfactory to
          Secured Party, such other and additional information as Secured Party
          may reasonably request from time to time.

6. FURTHER ASSURANCES.

     (a)  Further Assurances Regarding Security Interests. Debtor shall, upon
          request of Secured Party, furnish to Secured Party such further
          information, execute and deliver to Secured Party such documents and
          instruments (including, without limitation, Uniform Commercial Code
          financing statements) and shall do such other acts and things as
          Secured Party may at any time reasonably request relating to the
          perfection or protection of the security interest created by this
          Agreement or for the purpose of carrying out the intent of this
          Agreement. Without limiting the foregoing, Debtor shall cooperate and
          do all acts deemed necessary or advisable by Secured Party to continue
          in Secured Party a perfected first security interest in the
          Collateral, and shall obtain and furnish to Secured Party any
          subordinations, releases, landlord waivers, lessor waivers, mortgagee
          waivers, or control agreements, and similar documents as may be from
          time to time reasonably requested by, and in form and substance
          satisfactory to, Secured Party.

     (b)  Authorization To File Financing Statements. Debtor shall perform any
          and all acts requested by the Secured Party to establish, maintain and
          continue the Secured Party's security interest and liens in the
          Collateral, including but not limited to, executing or authenticating
          financing statements and such other instruments and documents when and
          as reasonably requested by the Secured Party. Debtor hereby authorizes
          Secured Party through any of Secured Party's employees, agents or
          attorneys to file any and all financing statements, including, without
          limitation, any original filings, continuations, transfers or
          amendments thereof required to perfect Secured Party's security
          interest and liens in the Collateral under the UCC without
          authentication or execution by Debtor. Debtor hereby irrevocably
          authorizes the Secured Party at any time and from time to time to file
          in any filing office in any Uniform Commercial Code jurisdiction any
          initial financing statement(s) and amendments thereto that (a)
          indicate the Collateral (i) as all assets of the Debtor or words of
          similar effect, regardless of whether any particular asset comprised
          in the Collateral falls within the scope of Article 9 of the Uniform
          Commercial Code of the State or such jurisdiction, or (ii) as being of
          an equal or lesser scope or with greater detail, and (b) provide any
          other information required by part 5 of Article 9 of the Uniform
          Commercial Code of the State or such other jurisdiction for the
          sufficiency or filing office acceptance of any financing statement or
          amendment, including (i) whether the Debtor is an organization, the
          type of organization and any organization identification number issued
          to the Debtor, and (ii) in the case of a financing statement filed as
          a fixture filing, a sufficient description of real property to which
          the Collateral relates. The Debtor agrees to furnish any such
          information to the Secured Party promptly upon the Secured Party's
          request.

     (c)  Indemnification. Debtor shall indemnify and defend the Secured Party,
          its successors and assigns, and their respective directors, officers
          and employees, from and against all claims, actions and suits
          (including, without limitation, related attorneys' fees) of any kind
          whatsoever arising, directly or indirectly, in connection with any of
          the Collateral or the Debt Documents.

7. DEFAULT AND REMEDIES.

     (a)  Defaults. Debtor shall be in default under this Agreement and each of
          the other Debt Documents if any one of the following should occur:

          (i)  Debtor breaches its obligation to pay when due any installment or
               other amount due or coming due under any of the Debt Documents;

          (ii) Debtor, without the prior written consent of Secured Party,
               attempts to or does sell, rent, lease, license, mortgage, grant a
               security interest in, or otherwise transfer or encumber, or allow
               Liens (except for Permitted Liens) upon, any of the Collateral
               (other than the sale of goods in the ordinary course of business)
               and Debtor fails to cure such breach within thirty (30) days
               after the occurrence thereof;

          (iii) Debtor breaches any of its insurance obligations under Section
               4;

          (iv) Debtor breaches any of its obligations under Sections 2(v) or
               2(w) or Sections 3(v), (w), (x), (y) or (z);

          (v)  Debtor breaches any of its other non-payment obligations under
               any of the Debt Documents and fails to cure that breach within
               thirty (30) days after it has occurred;

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          (vi) Any warranty, representation or statement made by Debtor in any
               of the Debt Documents or otherwise in connection with any of the
               Indebtedness shall be false or misleading in any material
               respect;

          (vii) Any of the Collateral is subjected to attachment, execution,
               levy, seizure or confiscation in any legal proceeding or
               otherwise, or if any legal or administrative proceeding is
               commenced against Debtor or any of the Collateral, which in the
               good faith judgment of Secured Party subjects any of the
               Collateral to a material risk of attachment, execution, levy,
               seizure or confiscation and no bond is posted or protective order
               obtained to negate such risk;

          (viii) Debtor breaches or is in default under any other agreement
               between Debtor and Secured Party;

          (ix) Debtor or any guarantor or other obligor for any of the
               Indebtedness (collectively "GUARANTOR") dissolves, terminates its
               existence, becomes insolvent or ceases to do business as a going
               concern;

          (x)  If Debtor or any Guarantor is a natural person, and Debtor or any
               such Guarantor dies or becomes incompetent;

          (xi) A receiver is appointed for all or of any part of the property of
               Debtor or any Guarantor, or Debtor or any Guarantor makes any
               assignment for the benefit of creditors;

          (xii) Debtor or any Guarantor files a petition under any bankruptcy,
               insolvency or similar law, or any such petition is filed against
               Debtor or any Guarantor and is not dismissed within forty-five
               (45) days;

          (xiii) Debtor's improper filing of an amendment or termination
               statement relating to a filed financing statement describing the
               Collateral and Debtor fails to cure such breach within thirty
               (30) days after the occurrence thereof;

          (xiv) Debtor shall merge with or consolidate into any other entity or
               sell all or substantially all of its assets or in any manner
               terminate its existence;

          (xv) If Debtor is a privately held corporation, more than 50% of
               Debtor's voting capital stock, or effective control of Debtor's
               voting capital stock, issued and outstanding from time to time,
               is not retained by the holders of such stock on the date the
               Agreement is executed; provided, however, this provision shall
               not apply to an equity financing of Debtor;

          (xvi) If Debtor is a publicly held corporation, there shall be a
               change in the ownership of Debtor's stock such that Debtor is no
               longer subject to the reporting requirements of the Securities
               Exchange Act of 1934 or no longer has a class of equity
               securities registered under Section 12 of the Securities Act of
               1933;

          (xvii) Debtor defaults under any agreement to pay Additional
               Indebtedness or any other financing arrangement between Debtor
               and a third party and Debtor fails to cure such breach within
               thirty (30) days after the occurrence thereof;

          (xviii) [omitted intentionally]

          (xix) Secured Party shall have determined in its sole and good faith
               judgment that there has been a material adverse change in the
               financial condition, business, operations, prospects, product
               development, technology, or business or contractual relations
               with third parties of Debtor from the date hereof, or a change or
               event shall have occurred which would impair the ability of
               Debtor to perform its obligations hereunder or under any of the
               other financing agreements to which it is a party or of Secured
               Party to enforce the Indebtedness or realize upon the Collateral.

     (b)  Acceleration. If Debtor is in default, the Secured Party, at its
          option, may declare any or all of the Indebtedness to be immediately
          due and payable, without demand or notice to Debtor or any guarantor
          (provided that if there is a default as a result of a bankruptcy or
          insolvency all Indebtedness shall become immediately due and payable
          without any action by Secured Party). The accelerated obligations and
          liabilities shall bear interest (both before and after any judgment)
          until paid in full at the Default Rate.

     (c)  Rights and Remedies. Secured Party shall have all of the rights and
          remedies of a Secured Party under the Uniform Commercial Code, and
          under any other applicable law. Without limiting the foregoing, if
          Debtor is in default, Secured Party shall have the right to (i) notify
          any Account Debtor of Debtor or any obligor on any instrument which
          constitutes part of the Collateral to make payment to the Secured
          Party, (ii) with or without legal process, enter any premises where
          the Collateral may be and take possession of and remove the Collateral
          from the premises or store it on the premises, (iii) sell the
          Collateral at public or private sale, in whole or in part, and have
          the right to bid and purchase at said sale, (iv) to instruct the bank
          maintaining any Deposit Account to transfer the funds in the Deposit
          Account to any account of the Secured Party, or (v) lease or otherwise
          dispose of all or part of the Collateral, applying proceeds from such
          disposition to the obligations then in default. If Debtor is in
          default and if

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          requested by Secured Party, Debtor shall promptly assemble the
          Collateral and make it available to Secured Party at a place to be
          designated by Secured Party, which is reasonably convenient to both
          parties. If Debtor is in default, Secured Party may also render any or
          all of the Collateral unusable at the Debtor's premises and may
          dispose of such Collateral on such premises without liability for rent
          or costs. Any notice that Secured Party is required to give to Debtor
          under the Uniform Commercial Code of the time and place of any public
          sale or the time after which any private sale or other intended
          disposition of the Collateral is to be made shall be deemed to
          constitute reasonable notice if such notice is given to the last known
          address of Debtor at least five (5) days prior to such action. Upon
          the occurrence and during the continuation of a default, Debtor hereby
          appoints Secured Party as Debtor's attorney-in-fact, with full
          authority in Debtor's place and stead and in Debtor's name or
          otherwise, from time to time in Secured Party's sole and arbitrary
          discretion, to take any action and to execute any instrument which
          Secured Party may deem necessary or advisable to accomplish the
          purpose of this Agreement. Secured Party is granted a non-exclusive
          royalty free license to use Debtor's Intellectual Property in
          connection with Secured Party's disposition of Collateral in the
          exercise of Secured Party's rights or remedies hereunder.

     (d)  Application of Proceeds. The proceeds and/or avails of the Collateral,
          or any part thereof, and the proceeds and the avails of any remedy
          hereunder (as well as any other amounts of any kind held by Secured
          Party, at the time of or received by Secured Party after the
          occurrence of a default hereunder) shall be paid to and applied as
          follows:

          a.   First, to the payment of out-of-pocket costs and expenses,
               including all amounts expended to preserve the value of the
               Collateral, all costs of repossession, storage, and disposition
               including without limitation reasonable attorneys', appraisers',
               and auctioneers' fees, of foreclosure or suit, if any, and of
               such sale and the exercise of any other rights or remedies, and
               of all proper fees, expenses, liability and advances, including
               reasonable legal expenses and reasonable attorneys' fees,
               incurred or made hereunder by Secured Party, including without
               limitation, Secured Party's Expenses;

          b.   Second, to the payment to Secured Party of the amount then owing
               or unpaid on the Loans for scheduled payments, any accrued and
               unpaid interest, and all other Indebtedness (provided, however,
               if such proceeds shall be insufficient to pay in full the whole
               amount so due, owing or unpaid upon the Loans, then to the unpaid
               interest thereon, then to the outstanding principal amount of the
               Loans, and then to the payment of other amounts then payable to
               Secured Party under any of the Debt Documents or otherwise); and

          c.   Third, to the payment of the surplus, if any, to Debtor, its
               successors and assigns, or to whomsoever may be lawfully entitled
               to receive the same.

     (e)  Fees and Costs. Debtor agrees to pay all reasonable attorneys' fees
          and other costs incurred by Secured Party in connection with the
          enforcement, assertion, defense or preservation of Secured Party's
          rights and remedies under this Agreement, or if prohibited by law,
          such lesser sum as may be permitted. Debtor further agrees that such
          fees and costs shall constitute Indebtedness.

     (f)  Remedies Cumulative. Secured Party's rights and remedies under this
          Agreement or otherwise arising are cumulative and may be exercised
          singularly or concurrently. Neither the failure nor any delay on the
          part of the Secured Party to exercise any right, power or privilege
          under this Agreement shall operate as a waiver, nor shall any single
          or partial exercise of any right, power or privilege preclude any
          other or further exercise of that or any other right, power or
          privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
          RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT
          OR PAPER SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING
          AND SIGNED BY SECURED PARTY. A waiver on any one occasion shall not be
          construed as a bar to or waiver of any right or remedy on any future
          occasion.

     (g)  WAIVER OF JURY TRIAL. DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE
          THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
          UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT
          DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS
          BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT MATTER OF
          THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
          THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE
          OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL
          DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE.
          THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE
          WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
          SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT
          DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
          TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS
          A WRITTEN CONSENT TO A TRIAL BY THE COURT.

8. MISCELLANEOUS.

     (a)  Assignment. This Agreement, any Note and/or any of the other Debt
          Documents may be assigned, in whole or in part, by Secured Party
          without notice to Debtor, and Debtor agrees not to assert against any
          such assignee, or assignee's assigns, any defense, set-off, recoupment
          claim or counterclaim which Debtor has or may at any time have against
          Secured Party for any reason whatsoever. Debtor agrees that if Debtor
          receives

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          written notice of an assignment from Secured Party, Debtor will pay
          all amounts payable under any assigned Debt Documents to such assignee
          or as instructed by Secured Party. Debtor also agrees to confirm in
          writing receipt of the notice of assignment as may be reasonably
          requested by Secured Party or assignee.

     (b)  Notices. All notices to be given in connection with this Agreement
          shall be in writing, shall be addressed to the parties at their
          respective addresses set forth in this Agreement (unless and until a
          different address may be specified in a written notice to the other
          party), and shall be deemed given (i) on the date of receipt if
          delivered in hand or by facsimile transmission, (ii) on the next
          business day after being sent by express mail, and (iii) on the fourth
          business day after being sent by regular, registered or certified
          mail. As used herein, the term "business day" shall mean and include
          any day other than Saturdays, Sundays, or other days on which
          commercial banks in New York, New York are required or authorized to
          be closed.

     (c)  Correction of Errors. Upon written notice to Debtor, Secured Party may
          correct patent errors and fill in all blanks in this Agreement or in
          any Note consistent with the agreement of the parties.

     (d)  Time is of the Essence. Time is of the essence of this Agreement. This
          Agreement shall be binding, jointly and severally, upon all parties
          described as the "Debtor" and their respective heirs, executors,
          representatives, successors and assigns, and shall inure to the
          benefit of Secured Party, its successors and assigns.

     (e)  Entire Agreement. This Agreement and the Debt Documents constitute the
          entire agreement between the parties with respect to the subject
          matter of this Agreement and supersede all prior understandings
          (whether written, verbal or implied) with respect to such subject
          matter. THIS AGREEMENT AND THE DEBT DOCUMENTS SHALL NOT BE CHANGED OR
          TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY A WRITING
          SIGNED BY BOTH PARTIES. Section headings contained in this Agreement
          have been included for convenience only, and shall not affect the
          construction or interpretation of this Agreement. This Agreement is
          the result of negotiations between and has been reviewed by each of
          Debtor and Secured Party executing this Agreement as of the date
          hereof and their respective counsel; accordingly, this Agreement shall
          be deemed to be the product of the parties hereto, and no ambiguity
          shall be construed in favor of or against Debtor or Secured Party.

     (f)  Termination of Agreement. This Agreement shall continue in full force
          and effect until all of the Indebtedness has been indefeasibly paid in
          full to Secured Party or its assignee; provided, that Debtor's
          indemnity obligations set forth in Section 6(c) shall survive until
          all applicable statute of limitations periods with respect to actions
          that may be brought against Secured Party have run ; provided further
          that, Debtor's obligations under Section 2(v) shall survive
          indefinitely until, by their terms, they are no longer operative. The
          surrender, upon payment or otherwise, of any Note or any of the other
          documents evidencing any of the Indebtedness shall not affect the
          right of Secured Party to retain the Collateral for such other
          Indebtedness as may then exist or as it may be reasonably contemplated
          will exist in the future. This Agreement shall automatically be
          reinstated if Secured Party is ever required to return or restore the
          payment of all or any portion of the Indebtedness (all as though such
          payment had never been made). Secured Party shall, at Debtor's sole
          cost and expense, execute such further documents and take such further
          actions as may be reasonably necessary to effect the release of its
          security interests contemplated by this paragraph, including duly
          executing and delivering termination statements for filing in all
          relevant jurisdictions under the Code.

     (g)  CHOICE OF LAW. DEBTOR AGREES THAT SECURED PARTY AND/OR ITS SUCCESSORS
          AND ASSIGNS SHALL HAVE THE OPTION BY WHICH STATE LAWS THIS AGREEMENT
          SHALL BE GOVERNED AND CONSTRUED: (A) THE LAWS OF THE COMMONWEALTH OF
          VIRGINIA; OR (B) IF COLLATERAL HAS BEEN PLEDGED TO SECURE THE
          LIABILITIES, THEN BY THE LAWS OF THE STATE OR STATES WHERE THE
          COLLATERAL IS LOCATED, AT SECURED PARTY'S OPTION. THIS CHOICE OF STATE
          LAWS IS EXCLUSIVE TO THE SECURED PARTY. DEBTOR SHALL NOT HAVE ANY
          OPTION TO CHOOSE THE LAWS BY WHICH THIS AGREEMENT SHALL BE GOVERNED.
          DEBTOR ACKNOWLEDGES THAT THIS AGREEMENT IS BEING SIGNED BY THE SECURED
          PARTY IN PARTIAL CONSIDERATION OF SECURED PARTY'S RIGHT TO ENFORCE IN
          THE JURISDICTION STATED ABOVE. DEBTOR CONSENTS TO JURISDICTION IN THE
          COMMONWEALTH OF VIRGINIA OR THE STATE IN WHICH ANY COLLATERAL IS
          LOCATED AND VENUE IN ANY FEDERAL OR STATE COURT IN THE COMMONWEALTH OF
          VIRGINIA OR THE STATE IN WHICH COLLATERAL IS LOCATED FOR SUCH PURPOSES
          AND WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND VENUE
          AND ANY OBJECTION THAT SAID COUNTY IS NOT CONVENIENT. DEBTOR WAIVES
          ANY RIGHTS TO COMMENCE ANY ACTION AGAINST SECURED PARTY IN ANY
          JURISDICTION EXCEPT VIRGINIA, OR IF SECURED PARTY CHOOSES TO LITIGATE
          IN A STATE WHERE COLLATERAL IS LOCATED THEN IN SUCH COUNTY AND STATE.

     (h)  Limitation of Liability. The Secured Party shall not, under any
          circumstances, be liable for any error or omission or delay of any
          kind occurring in the settlement, collection or payment of any
          Receivables or any instrument received in payment thereof or for any
          damage resulting therefrom. The Secured Party is authorized to accept
          the return of the goods represented by any of the Receivables, without
          notice to or consent by the Debtor, or without discharging or in any
          manner affecting the Loan.

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<PAGE>

     (i)  Notification to Account Debtors. Secured Party shall have the right at
          any time to notify any Account Debtor of the Secured Party's security
          interest in the Receivables and, after an event of default by Debtor,
          to require payments to be made directly to the Secured Party. To
          facilitate direct collection, the Debtor hereby appoints the Secured
          Party and any officer or employee of the Secured Party, as the Secured
          Party may from time to time designate, as attorney-in-fact for the
          Debtor to, upon an event of default, (a) receive, open and dispose of
          all mail addressed to the Debtor and take therefrom any payments on or
          proceeds of Receivables; (b) take over the Debtor's post office boxes
          or make such other arrangements, in which the Debtor shall cooperate,
          to receive the Debtor's mail, including notifying the post office
          authorities to change the address for delivery of mail addressed to
          the Debtor to such address as the Secured Party shall designate; (c)
          endorse the name of the Debtor in favor of the Secured Party upon any
          and all checks, drafts, money orders, notes, acceptances or other
          evidences of payment or Collateral that may come into the Secured
          Party's possession; (d) sign and endorse the name of the Debtor on any
          invoice or bill of lading relating to any of the Receivables, on
          verifications of Receivables sent to any Account Debtor, to drafts
          against any Account Debtor, to assignments of Receivables, and to
          notices to any Account Debtor; and (e) do all acts and things
          necessary to carry out this Agreement and the transactions
          contemplated hereby, including signing the name of the Debtor on any
          instruments required by law in connection with the transactions
          contemplated hereby and on financing statements as permitted by the
          Virginia Uniform Commercial Code. The Debtor hereby ratifies and
          approves all acts of such attorneys-in-fact, and neither the Secured
          Party nor any other such attorney-in-fact shall be liable for any acts
          of commission or omission, or for any error of judgment or mistake of
          fact or law of any such attorney-in-fact. This power, being coupled
          with an interest, is irrevocable so long as the Loan remains
          unsatisfied, or any Debt Document remains effective, as solely
          determined by the Secured Party.

     (j)  Loss, Depreciation or Other Damage. The Secured Party shall not be
          liable for or prejudiced by any loss, depreciation or other damage to
          Receivables or other Collateral unless caused by the Secured Party's
          willful and malicious act, and the Secured Party shall have no duty to
          take any action to preserve or collect any Receivable or other
          Collateral.

     (k)  Demand; Protest. Debtor waives demand, protest, notice of protest,
          notice of default or dishonor, notice of payment and nonpayment,
          notice of any default, nonpayment at maturity, release, compromise,
          settlement, extension, or renewal of accounts, documents, instruments,
          chattel paper, and guarantees at any time held by Secured Party on
          which Debtor may in any way be liable.

9.   DEFINITIONS.

     As used herein, the following terms, when initial capital letters are used,
shall have the respective meanings set forth below. In addition, all terms
defined in the Code shall have the meanings given therein unless otherwise
defined herein.

Defined Terms. As used in this Agreement, the following terms shall have the
following meanings, unless the context otherwise requires:

          "ACCOUNT COLLATERAL" has the meaning given such capitalized term in
          Section 1.

          "ACCOUNT DEBTOR" shall mean the Account Debtor or any customer of the
          Debtor who is obligated or indebted to the Debtor with respect to any
          of the Receivables and/or the prospective purchaser with respect to
          any contract right, and/or any party or organization who enters into
          or proposes to enter into any contract or other arrangement with the
          Debtor pursuant to which the Debtor is to deliver any personal
          property or perform any service.

          "ADDITIONAL INDEBTEDNESS" means, with respect to Debtor or any of its
          subsidiaries, the aggregate amount of, without duplication, (a) all
          obligations of such Person for borrowed money, (b) all obligations of
          such Person evidenced by bonds, debentures, notes or other similar
          instruments, (c) all obligations of such Person to pay the deferred
          purchase price of property or services (excluding trade payables aged
          less than one hundred eighty (180) days), (d) all capital lease
          obligations of such Person, (e) all obligations or liabilities of
          others secured by a Lien on any asset of such Person, whether or not
          such obligation or liability is assumed, (f) all obligations or
          liabilities of others guaranteed by such Person, and (g) any other
          obligations or liabilities which are required by GAAP to be shown as
          debt on the balance sheet of such Person. Unless otherwise indicated,
          the term "ADDITIONAL INDEBTEDNESS" shall include all Indebtedness of
          Debtor and all of its subsidiaries.

          "AFFILIATE" of a Person is a Person that owns or controls directly or
          indirectly the Person, any Person that controls or is controlled by or
          is under common control with the Person, and each of that Person's
          senior executive officers, directors, partners and, for any Person
          that is a limited liability company, that Person's managers and
          members.

          A/R FACILITY" has the meaning given such capitalized term in Section
          1.

          "CASH EQUIVALENTS" means the sum outstanding, at any one time, of (i)
          all cash (in United States dollars) owned by Debtor at such time plus
          (ii) the fair market value of all cash equivalents and short term
          investments (as those terms are defined by GAAP) owned by Debtor at
          such time.

          "CODE" means the Virginia Uniform Commercial Code (including revised
          Article 9 thereof).

          "COLLATERAL" shall mean all personal property and fixtures of the
          Debtor, including, but not limited to all of the Receivables,
          Payments, accounts, the Deposit Account or accounts holding
          securities, contract rights, instruments, documents, chattel paper
          (including tangible and electronic chattel paper), payment
          intangibles, commercial tort claims, health-care-insurance
          receivables, instruments, investment property, supporting obligations
          and general intangibles now owned or hereafter acquired by the Debtor
          and all goods, equipment, general intangibles and property of the
          Debtor described below which is now owned or hereafter acquired by the
          Debtor, wherever located (including items of Collateral located
          outside the

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          continental United States); all deposit accounts (including all
          signature cards, account agreements and other documents relating to
          deposit accounts) and other obligations or indebtedness owed to the
          Debtor from whatever source arising; letter of credit rights; all
          rights of the Debtor to receive any payment in money or kind; all
          Inventory; all Equipment; all of the Debtor's rights as an unpaid
          seller, including stoppage in transit, detinue and reclamation; all
          guarantees, or other agreements or property securing or relating to
          any of the items referred to above, or acquired for the purpose of
          securing and enforcing any of such items; all books of account and
          documents related thereto; all customer lists and other documents
          containing the names, addresses and other information regarding the
          Debtor's customers, subscribers or those to whom the Debtor provides
          any services; computer tapes, programs, discs and other material,
          media or documents relating to the recording, billing or analyzing of
          any of the above; all computers, word processors, printers, switches,
          interfaces, source codes, mask works, software, web servers, website
          service contracts, internet connection contract or line lease, website
          hosting service contract, website license agreements, back-up copies
          of website content, contracts with website advertisers, scripts, codes
          or Active-X controls, technology escrow agreements, website content
          development agreements, all rights, of whatever form, in and to domain
          names, instructional material, and connectors and all parts,
          accessories, additions, substitutions, or options together with all
          property or equipment used in connection with any of the above or
          which are used to operate or cause to operate any features, special
          applications, format controls, options or software of any or all of
          the above-mentioned items; whether now owned or existing or hereafter
          acquired or arising, all income, royalties and other proceeds;
          contractual rights, literary rights, all amounts received as an award
          in or settlement of a suit in damages, proceeds of loans, interests in
          joint ventures or general or limited partnerships, the sale by the
          Debtor of any of the foregoing and all proceeds (cash and non-cash) of
          the foregoing; proceeds of property received wholly or partly in trade
          or exchange for the Collateral and all rents, revenues, issues,
          profits and proceeds in any form, including cash, insurance proceeds,
          distributions on stock, negotiable instruments and other evidences of
          indebtedness, chattel paper, security agreements and other documents
          arising from the sale, lease, license, encumbrance, collection of, or
          any other temporary or permanent disposition of, the Collateral or any
          interest therein. Notwithstanding the foregoing, the term Collateral
          shall not include any Intellectual Property; provided, however, the
          Collateral shall include all accounts, license and royalty fees and
          other revenues, proceeds, or income arising out of or relating to the
          Intellectual Property (the "EXCLUDED PROPERTY"). The Debtor
          acknowledges and agrees that, in applying the law of any jurisdiction
          that at any time enacts all or substantially all of the uniform
          provisions of Revised Article 9 of the Uniform Commercial Code (1999
          Official Text), the foregoing Collateral description covers all assets
          of the Debtor other than the Excluded Property. The Secured Party may
          at any time and from time to time file, pursuant to the provisions of
          this Agreement, financing and continuation statements and amendments
          thereto reflecting the same. Notwithstanding the foregoing, the
          Collateral shall not include an escrow deposit for Zeilstra Beheer
          B.V. in the approximate amount of 6,000 Euros, which amount may be
          increased annually, but shall in no event exceed 10,000 Euros

          "CONSIGNEE" has the meaning given such capitalized term in Section
          3(k).

          "DEBT DOCUMENTS" has the meaning given such capitalized term in
          Section 2(b).

          "DEFAULT RATE" is the lower of eighteen percent (18%) per annum or the
          maximum rate not prohibited by applicable law.

          "DEPOSIT ACCOUNT" means a demand, time, savings, passbook, or similar
          account maintained with a bank.

          "EQUIPMENT" shall mean (a) all goods and equipment of the Debtor of
          every type and description, now owned and hereafter acquired and
          wherever located, including, without limitation, all imbedded
          software, machinery, motor vehicles and other rolling stock,
          furniture, furnishings, tools, dies, fittings, accessories, all
          substitutions therefor, leasehold improvements, fixtures, and
          materials and supplies relating to any of the foregoing; (b) all
          present and future documents of title and trust receipts relating to
          any of the foregoing; (c) all present and future rights, claims and
          causes of action of Debtor in connection with purchases of (or
          contracts for the purchase of), or warranties relating to, or damages
          to, goods held or to be held by the Debtor as equipment; (d) all
          present and future warranties, manuals and other written materials
          (and packaging thereof or relating thereto) relating to any of the
          foregoing; and (e) all present and future general intangibles of the
          Debtor in any way relating to any of the foregoing.

          "GOVERNMENT ACCOUNTS" shall mean all accounts arising out of any
          Government Contract.

          "GOVERNMENT CONTRACT" shall mean any contract between the Debtor and
          the United States Government, any state or local government or any
          agency thereof, and all amendments thereto.

          "INDEBTEDNESS" has the meaning given such capitalized term in Section
          1.

          "INTELLECTUAL PROPERTY" shall mean (a) all of the Debtor's right,
          title and interest, whether now owned or existing or hereafter
          acquired or arising, in and to all domestic and foreign copyrights,
          copyright registrations and copyright applications, whether or not
          registered or filed with any governmental authority, together with (i)
          all renewals thereof, (ii) all present and future rights of the Debtor
          under all present and future license agreements relating thereto,
          whether the Debtor is licensee or licensor thereunder, (iii) all
          income, royalties, damages and payments now or hereafter due and/or
          payable to the Debtor thereunder or with respect thereto, including,
          without limitation, damages and payments for past, present or future
          infringements thereof, (iv) all of the Debtor's present and future
          claims, causes of action and rights to sue for past, present or future
          infringements thereof, and (v) all rights corresponding thereto
          throughout the world (collectively "COPYRIGHT RIGHTS"); (b) all of the
          Debtor's right, title and interest, whether now owned or existing or
          hereafter acquired or arising, in and to all United States and foreign
          patents, and pending and abandoned United States and foreign patent
          applications, including, without limitation, the inventions and
          improvements described or claimed therein, together with(i) any
          reissues, divisions, continuations, certificates of re-examination,
          extensions and continuations-in-part thereof, (ii) all present and
          future rights of the Debtor under all present and future license
          agreements relating thereto, whether the Debtor is licensee or
          licensor thereunder, (iii) all income, royalties, damages and payments
          now or hereafter due and/or payable to the Debtor thereunder or with
          respect thereto, including, without limitation, damages and payments
          for past, present or future infringements thereof, (iv) all of the
          Debtor's present and future claims, causes of action and rights to sue
          for past, present or future infringements thereof, and (v) all rights
          corresponding thereto throughout the world (collectively "PATENT
          RIGHTS"); (c) all of the Debtor's right, title and interest, whether
          now owned or existing or hereafter acquired or arising, in and to all
          domestic and foreign trademarks, trademark registrations, trademark
          applications and trade names, whether or not registered or filed with
          any governmental authority, together with (i) all renewals thereof,
          (ii) all present and future rights of the Debtor under all present and
          future license agreements relating thereto, whether the Debtor is
          licensee or licensor thereunder, (iii) all income, royalties, damages
          and payments now or hereafter due and/or payable to the Debtor
          thereunder or with respect thereto, including, without limitation,
          damages and payments for past, present or future infringements
          thereof, (iv) all of the Debtor's present and future claims, causes of
          action and rights to sue for past, present or future infringements
          thereof, and (v) all rights corresponding thereto throughout the world
          (collectively "TRADEMARK RIGHTS"); (d) all present and future licenses
          and license agreements of the Debtor, and all rights of the Debtor
          under or in connection therewith, whether the Debtor is licensee or
          licensor thereunder, including, without limitation, any present or
          future franchise agreements under which the Debtor is franchisee or
          franchisor, together with (i) all renewals thereof, (ii) all income,
          royalties, damages and payments now or hereafter due and/or payable to
          the Debtor thereunder or with

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          respect thereto, including, without limitation, damages and payments
          for past, present or future infringements thereof, (iii) all claims,
          causes of action and rights to sue for past, present or future
          infringements thereof, and (iv) all rights corresponding thereto
          throughout the world (collectively "LICENSE RIGHTS"); (e) all present
          and future trade secrets of the Debtor; and (f) all other present and
          future intellectual property of the Debtor.

          "INVENTORY" shall mean and include (a) all goods now owned or
          hereafter acquired by the Debtor, which are held for sale or lease by
          the Debtor or are furnished or to be furnished by the Debtor under
          contracts of service, (b) all raw materials, work in process, finished
          goods, packaging materials, and other materials and supplies of every
          kind used or consumed in connection with the manufacture, production,
          packing, shipping, advertising or sale of such goods, (c) all proceeds
          and products from the sale or other disposition of such goods,
          including all goods returned, repossessed, or acquired by the Debtor
          by way of substitution or replacement, and all additions and
          accessions thereto, and all documents and instruments (as those terms
          are defined in the Uniform Commercial Code) covering such goods; (d)
          all the Debtor's rights as an unpaid seller, including stoppage in
          transit, detinue and reclamation; and (e) all of the above owned by
          the Debtor or in which the Debtor now has or in which the Debtor may
          hereafter acquire an interest, whether in transit or in the Debtor's
          constructive or actual possession or held by the Debtor or others for
          the Debtor's account (including any of the above held on consignment),
          including, without limitation, all of the above which may be located
          on the Debtor's premises or upon the premises of any carriers,
          forwarding agents, truckers, warehousemen, vendors, selling agents,
          finishers, converters or other third parties who may have possession,
          temporary or otherwise, thereof.

          "LIEN(S)" shall mean any voluntary or involuntary mortgage, pledge,
          deed of trust, assignment, security interest, encumbrance,
          hypothecation, lien, or charge of any kind (including any conditional
          sale or other title retention agreement, any financing lease having
          substantially the same economic effect as any of the foregoing, and
          the filing of, or agreement to give, any financing statement under the
          Uniform Commercial Code or comparable law of any jurisdiction).

          "LOAN" means an advance of credit by Secured Party to Debtor.

          "NOTE" has the meaning given such capitalized term in Section 1.

          "PAYMENT" or "PAYMENTS" shall mean any check, draft, cash or any other
          remittance or credit in payment or on account of any or all of the
          Receivables and the cash proceeds of any returned, rejected or
          repossessed goods, the sale or lease of which gave rise to a
          Receivable.

          "PERMITTED INDEBTEDNESS" means and includes: (i) Indebtedness of
          Debtor to Secured Party, (ii) Additional Indebtedness arising from the
          endorsement of instruments in the ordinary course of business, (iii)
          Additional Indebtedness existing on the date hereof and set forth in
          Schedule B, (iv) Subordinated Indebtedness, and (v) Additional
          Indebtedness in the form of the A/R Facility under the terms as set
          forth in Section 1 and which is secured solely by Debtor's Account
          Collateral, up to $500,000 cumulative aggregate Indebtedness in the
          first 24 months and up to $600,000 cumulative aggregate Indebtedness
          thereafter for Debtor to incur debt from third parties to purchase
          equipment or other goods that is secured only by the equipment or
          other goods.

          "PERMITTED LIENS" means: (i) liens in favor of Secured Party, (ii)
          liens for taxes not yet due or for taxes being contested in good faith
          and which do not involve, in the judgment of Secured Party, any risk
          of the sale, forfeiture or loss of any of the Collateral, (iii)
          inchoate material men's, mechanic's, repairmen's and similar liens
          arising by operation of law in the normal course of business for
          amounts which are not delinquent, (iv) Liens existing on the date
          hereof and set forth in Schedule B, and (v) Liens on Account
          Collateral to secure the A/R Facility under the terms set forth in
          Section 1.

          "PERSON" is any individual, sole proprietorship, partnership, limited
          liability company, joint venture, company association, trust,
          unincorporated organization, association, corporation, institution,
          public benefit corporation, firm, joint stock company, estate, entity
          or government agency.

          "PMSI COLLATERAL" has the meaning given such capitalized term in
          Section 1.

          "PMSI INDEBTEDNESS" has the meaning given such capitalized term in
          Section 1.

          "PRIMARY OPERATING ACCOUNT" has the meaning given such capitalized
          term in Section 2(u).

          "RECEIVABLES" shall mean in addition to the definition of account as
          contained in the Uniform Commercial Code (a) all of the Debtor's
          present and future accounts, contract rights, receivables, promissory
          notes and other instruments, chattel paper (including tangible and
          electronic chattel paper), tax refunds, general intangibles (excluding
          the Intellectual Property) and all rights to receive the payment of
          money or other consideration under present or future contracts
          including, without limitation, all of the Debtor's rights under each
          Government Contract and all related Government Accounts now owned or
          hereafter acquired by the Debtor; (b) all present and future cash of
          the Debtor; (c) all present and future judgments, orders, awards and
          decrees in favor of the Debtor and causes of action in favor of the
          Debtor; (d) all present and future contingent and noncontingent rights
          of the Debtor to the payment of money for any reason whatsoever,
          whether arising in contract, tort or otherwise including, without
          limitation, all rights to receive payments under presently existing or
          hereafter acquired or created letters of credit; (e) all present and
          future claims, rights of indemnification and other rights of the
          Debtor under or in connection with any contracts or agreements to
          which the Debtor is or becomes a party or third party beneficiary; (f)
          all goods previously or hereafter returned, repossessed or stopped in
          transit, the sale, lease or other disposition of which contributed to
          the creation of any account, instrument or chattel paper of the
          Debtor; (g) all present and future rights of the Debtor as an unpaid
          seller of goods, including rights of stoppage in transit, detinue and
          reclamation; (h) all rights which the Debtor may now or at any time
          hereafter have, by law or agreement, against any Account Debtor or
          other obligor of the Debtor, and all rights, liens and security
          interests which the Debtor may now or at any time hereafter have, by
          law or agreement, against any property of any Account Debtor or other
          obligor of the Debtor; (i) all invoices and shipping documents; and
          (j) all present and future interests and rights of the Debtor,
          including rights to the payment of money, under or in connection with
          all present and future leases and subleases of real or personal
          property to which the Debtor is a party, as lessor, sublessor, lessee
          or sublessee.

          "SECURED PARTY'S EXPENSES" means all reasonable costs or expenses
          (including reasonable attorneys' fees and expenses) incurred in
          connection with the preparation, negotiation, documentation,
          administration and funding of the Debt Documents; and Secured Party's
          reasonable attorneys' fees, costs and expenses incurred in amending,
          modifying, enforcing or defending the Debt Documents (including fees
          and expenses of appeal or review), including the exercise of any
          rights or remedies afforded hereunder or under applicable law, whether
          or not suit is brought, whether before or after bankruptcy or
          insolvency, including without limitation all fees and costs incurred
          by Secured Party in connection with Secured Party's enforcement of its
          rights in a bankruptcy or insolvency proceeding filed by or against
          Debtor or its property.

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          "SUBORDINATED INDEBTEDNESS" means Additional Indebtedness subordinated
          to the Indebtedness of Debtor to Secured Party on terms and conditions
          acceptable to Secured Party in its sole discretion.

          "SUBSEQUENT FINANCING" has the meaning given such capitalized term in
          Section 2(v).

          "THIRD PARTY INSTITUTION" has the meaning given such capitalized term
          in Section 3(v).

     IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound
hereby, have duly executed this Agreement in one or more counterparts, each of
which shall be deemed to be an original, as of the day and year first aforesaid.

SECURED PARTY:                          DEBTOR:

OXFORD FINANCE CORPORATION              ALSIUS CORPORATION

By: /s/ Michael J. Allenburger          By: /s/ William Worthen
    ---------------------------------       ------------------------------------
Name: Michael J. Allenburger            Name: William Worthen
      -------------------------------         ----------------------------------
Title: Chief Financial Officer          Title: President & CEO
       ------------------------------          ---------------------------------

                                 Page 15 of 15

<PAGE>

                                     [Logo]

                                  May 31, 2005

Mr. William Worthen
President and Chief Executive Officer
Alsius Corporation
15770 Laguna Canyon Road
Suite 150
Irvine, California 92618

Dear Mr. Worthen:

     This letter sets forth additional terms related to that certain credit
arrangement whereby Oxford Finance Corporation (the "Lender") has agreed to loan
Five Million Dollars ($5,000,000.00) to Alsius Corporation (the "Borrower")
pursuant to the terms contained in the Debt Documents [as such term is defined
in that certain Master Security Agreement (the "Loan Agreement"), between Lender
and Borrower, dated May 31, 2005], and has agreed to negotiate lending an
additional amount (the "Additional Advance") to the Borrower as provided in that
certain term sheet dated as of March 25, 2005 received by the Borrower from the
Lender. The Borrower shall have the option to the Additional Advance during 2006
in an amount equal to the principal paid down at that time on the original
$5,000,000.00. The Additional Advance will be on the same terms as in the Loan
Agreement for the original $5,000,000.00 amount, including the collateral,
interest rate, term, covenants and additional warrants (which will be calculated
based on 7% of the Additional Advance and which will cover the most recent
preferred stock then issued by the Borrower). However, in no event will the
Lender be obligated to allow the Borrower to draw down the Additional Advance,
and such Additional Advance shall be subject to approval by Lender's Credit
Committee at such time.

                [remainder of the page intentionally left blank]

                      [signatures only appear on next page]

                                        OXFORD FINANCE CORPORATION

133 North Fairfax Street
Alexandria, Virginia 22314
Tel: 703-519-4900 Fax: 703-519-4910
WWW.OXFORDFINANCE.COM

<PAGE>

                                        Sincerely,
                                        /s/ Michael J. Altenburger
                                        Chief Financial Officer

                                        OXFORD FINANCE CORPORATION
                                        Michael J. Altenburger
                                        Chief Financial Officer

ACKNOWLEDGED AND AGREED:

Alsius Corporation

/s/ William Worthen
-------------------------------------

By: William Worthen
    ---------------------------------
Its: President & CEO
     --------------------------------

<PAGE>

                                 PROMISSORY NOTE

                    TO MASTER SECURITY AGREEMENT NO. 5051091
                                  May 31, 2005
                                  ------------
                                     (DATE)

FOR VALUE RECEIVED, Alsius Corporation, a California corporation, located at the
address stated below ("MAKER") promises, jointly and severally if more than one,
to pay to the order of OXFORD FINANCE CORPORATION or any subsequent holder
hereof (each, a "PAYEE") at its office located at 133 N. FAIRFAX STREET,
ALEXANDRIA, VA 22314 or at such other place as Payee or the holder hereof may
designate, the principal sum of FIVE MILLION DOLLARS ($5,000,000.00), with
interest on the unpaid principal balance, from the date hereof through and
including the dates of payment, at a fixed interest rate of ten and sixty-five
one-hundredths percent (10.65%) per annum. Beginning on July 1, 2005, and
continuing on the first day of August and September, 2005 (each, a "Payment
Date"), Maker shall make three (3) consecutive monthly payments of interest only
as follows:

<TABLE>
<CAPTION>
  Periodic
Installment        Amount
-----------   ---------------
<S>           <C>
1-3           $44,375.00 each
</TABLE>

Thereafter, commencing on October 1, 2005, and continuing on the first day of
each succeeding month thereafter (each, a "Payment Date"), maker shall make
payments of principal and interest in thirty-six (36) consecutive monthly
installments of principal and interest as follows:

<TABLE>
<CAPTION>
 Periodic
Installment        Amount
-----------   ----------------
<S>           <C>
4-39          $162,866.09 each
</TABLE>

(each payment of interest only and principal and interest being a "PERIODIC
INSTALLMENT"), with the final installment which shall be in the amount of the
total outstanding principal and interest, if any. Such installments have been
calculated on the basis of a 360-day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date. Maker agrees to pay any initial
partial month interest payment from the date of this Note to the first day of
the following month ("Interim Interest").

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT" AND ANY SECURITY AGREEMENT, THIS NOTE AND ANY OTHER DOCUMENT
EVIDENCING OR SECURING THIS LOAN IS HEREINAFTER CALLED A "DEBT DOCUMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received when due, the Maker agrees
to pay, in addition to the amount of each such installment or other sum, a late
payment charge of five percent (5%) of the amount of said installment or other
sum, but not exceeding any lawful maximum. If (i) Maker fails to make payment of
any amount due hereunder; or (ii) Maker is in default under, or fails to perform
under any term or condition contained in any Security Agreement, then the entire
principal sum remaining unpaid, together with all accrued interest thereon and
any other sum payable under this Note or any Security Agreement, at the election
of Payee, shall immediately become due and payable, with interest thereon at the
lesser of eighteen percent (18%) per annum or the highest rate not prohibited by
applicable law from the date of such accelerated maturity until paid (both
before and after any judgment).

Notwithstanding anything to the contrary contained herein or in the Security
Agreement, Maker may prepay in full, but not in part, and only after the first
annual anniversary date of this Note, its entire Indebtedness hereunder, as of
the date of prepayment, by payment of the entire Indebtedness plus an additional
sum as a premium equal to the following percentages of the remaining principal
balance for the indicated period:

IMPORTANT NOTICE:

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

                                  PAGE 1 OF 4

<PAGE>

     After the first annual anniversary date of this Note, and prior to the
     second annual anniversary date of this Note: Four percent (4%)

     After the second annual anniversary date of this Note, and prior to the
     third annual anniversary date of this Note: Three percent (3%)

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "OBLIGOR") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if and to the
extent permitted by law) all expenses incurred in collection, including Payee's
actual attorneys' fees. Maker and each Obligor agrees that fees not in excess of
ten percent (10%) of the amount then due shall be deemed reasonable.

Maker and Payee intend to strictly comply with all applicable federal and
Virginia laws, including applicable usury laws (or the usury laws of any
jurisdiction whose usury laws are deemed to apply to the Note or any other Debt
Document despite the intention and desire of the parties to apply the usury laws
of the Commonwealth of Virginia). Accordingly, the provisions of this paragraph
shall govern and control over every other provision of this Note or any other
Debt Document which conflicts or is inconsistent with this Section, even if such
provision declares that it controls. As used in this paragraph, the term
"INTEREST" includes the aggregate of all charges, fees, benefits or other
compensation which constitute interest under applicable law, provided that, to
the maximum extent permitted by applicable law, (a) any non-principal payment
shall be characterized as an expense or as compensation for something other than
the use, forbearance or detention of money and not as interest, and (b) all
interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term
of the obligations. In no event shall Maker or any other person be obligated to
pay, or Payee have any right or privilege to reserve, receive or retain, (a) any
interest in excess of the maximum amount of non-usurious interest permitted
under the laws of the Commonwealth of Virginia or the applicable laws (if any)
of the United States or of any other state, or (b) total interest in excess of
the amount which Payee could lawfully have contracted for, reserved, received,
retained or charged had the interest been calculated for the full term of the
obligations. On each day, if any, that the interest rate (the "Stated Rate")
called for under this Note or any other Debt Document exceeds the maximum
non-usurious rate, the rate at which interest shall accrue shall automatically
be fixed by operation of this sentence at the maximum non-usurious rate for that
day. Thereafter, interest shall accrue at the Stated Rate unless and until the
Stated Rate again exceeds the maximum non-usurious rate, in which case, the
provisions of the immediately preceding sentence shall again automatically
operate to limit the interest accrual rate to the maximum non-usurious rate. The
daily interest rates to be used in calculating interest at the maximum
non-usurious rate shall be determined by dividing the applicable maximum
non-usurious rate by the number of days in the calendar year for which such
calculation is being made. None of the terms and provisions contained in this
Note or in any other Debt Document which directly or indirectly relate to
interest shall ever be construed without reference to this paragraph, or be
construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the maximum non-usurious rate. If the
term of any obligation is shortened by reason of acceleration of maturity as a
result of any Default or by any other cause, or by reason of any required or
permitted prepayment, and if for that (or any other) reason Payee at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the maximum
non-usurious rate, then and in any such event all of any such excess interest
shall be canceled automatically as of the date of such acceleration, prepayment
or other event which produces the excess, and, if such excess interest has been
paid to Payee, it shall be credited pro tanto against the then-outstanding
principal balance of Maker's obligations to Payee, effective as of the date or
dates when the event occurs which causes it to be excess interest, until such
excess is exhausted or all of such principal has been fully paid and satisfied,
whichever occurs first, and any remaining balance of such excess shall be
promptly refunded to its payor.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

IMPORTANT NOTICE:

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

                                  PAGE 2 OF 4

<PAGE>

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

Upon receipt of an affidavit of an officer of Payee as to the loss, theft,
destruction or mutilation of this Note or any Debt Document which is not of
public record, and, in the case of any such loss, theft, destruction or
mutilation, upon surrender and cancellation of such Note or other Debt Document,
Maker will issue, in lieu thereof, a replacement Note or other Debt Document in
the same principal amount thereof and otherwise of like tenor.

It is understood and agreed that this Note and all of the Debt Documents were
negotiated and have been or will be delivered to Payee in the Commonwealth of
Virginia, which State the parties agree has a substantial relationship to the
parties and to the underlying transactions embodied by this Note and the Debt
Documents. Maker agrees to furnish to Payee at Payee's office in Alexandria, VA,
all further instruments, certifications and documents to be furnished hereunder.
The parties also agree that if collateral is pledged to secure the debt
evidenced by this Note, that the state or states in which such collateral is
located each have a substantial relationship to the parties and to the
underlying transaction embodied by this Note and the Debt Documents.

MAKER AGREES THAT THE PAYEE OF THIS NOTE SHALL HAVE THE OPTION BY WHICH STATE
LAWS THIS NOTE SHALL BE GOVERNED AND CONSTRUED: (A) THE LAWS OF THE COMMONWEALTH
OF VIRGINIA; OR (B) IF COLLATERAL HAS BEEN PLEDGED TO SECURE THE DEBT EVIDENCED
BY THIS NOTE, THEN BY THE LAWS OF THE STATE OR STATES WHERE THE COLLATERAL IS
LOCATED, AT PAYEE'S OPTION. THIS CHOICE OF STATE LAWS IS EXCLUSIVE TO THE PAYEE
OF THIS NOTE. MAKER SHALL NOT HAVE ANY OPTION TO CHOOSE THE LAWS BY WHICH THIS
NOTE SHALL BE GOVERNED. MAKER AND GUARANTORS HEREBY CONSENT TO THE EXERCISE OF
JURISDICTION OVER IT BY ANY FEDERAL COURT SITTING IN VIRGINIA OR ANY VIRGINIA
COURT SELECTED BY PAYEE, FOR THE PURPOSES OF ANY AND ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THE NOTE, THE LOAN AGREEMENT AND ALL OTHER
DOCUMENTS. MAKER AND GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT, ANY CLAIM BASED ON
THE CONSOLIDATION OF PROCEEDINGS IN SUCH COURTS IN WHICH PROPER VENUE MAY LIE IN
DIVERGENT JURISDICTIONS, AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. MAKER AND GUARANTORS
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE, THE OTHER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

Confession of Judgment. In the event that this Note or any installment under
this Note is not paid when due, whether by maturity or acceleration, Maker
hereby appoints and constitutes Mary Zinsner and David J. Lawson, either of whom
may act (a Virginia attorney) Maker's duly constituted attorney-in-fact to
confess judgment pursuant to the provisions of Section 8.01-431 et seq. of the
Code of Virginia of 1950, as amended, against Maker for all principal and
interest due and payable under this Note, together with attorneys' fees and
collection fees as provided in this Note (to the extent permitted by law), which
judgment shall be confessed in the Clerk's Office of the Circuit Court of the
City of Alexandria and/or Fairfax and/or Arlington Counties, Virginia. Maker
shall, upon Payee's request, name such additional or alternative persons
designated by Payee as Maker's duly constituted attorney-in-fact to confess
judgment against Maker pursuant to the above Section. Upon request of Payee,
Maker also shall agree to the designation of any additional circuit courts in
the Commonwealth of Virginia in which judgment may be confessed against Maker.
No single exercise of the power to confess judgment shall be deemed to exhaust
the power and no judgment against fewer than all the persons constituting Maker
shall bar any subsequent action or judgment against any one or more of such
persons against whom judgment has not been obtained on this Note.

IMPORTANT NOTICE:

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

                                  PAGE 3 OF 4

<PAGE>

                                        ALSIUS CORPORATION

/s/ Dawn Steele                         By: /s/ William Worthen
-------------------------------------       ------------------------------------
(Witness)
Dawn Steele                             Name: William Worthen
-------------------------------------         ----------------------------------
(Print name)
650 Town Center Drive, 7th Floor        Title: President & CEO
Costa Mesa, CA 92626                           ---------------------------------
-------------------------------------
(Address)

                                        Federal Tax ID #:33-0493151

                                        Address: 15770 Laguna Canyon Road,
                                                 Suite 150 Irvine,
                                                 California 92618

IMPORTANT NOTICE:

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

                                  PAGE 4 OF 4FLUSHING FINANCIAL CORPORATION

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 15th day of May 2006, by and between Flushing Financial Corporation, a Delaware corporation having its executive offices at 1979 Marcus Avenue Suite E140, Lake Success, New York  11042 (the “Holding Company”), and Maria A. Grasso residing at <Address on file> (“Officer”).

W I T N E S S E T H:

WHEREAS, the Holding Company considers the availability of the Officer’s services to be important to the successful management and conduct of the Holding Company’s business and desires to secure for itself the availability of her services; and

WHEREAS, for purposes of securing for the Holding Company the Officer’s continued services, the Board of Directors of the Holding Company (“Board”) has authorized the proper officers of the Holding Company to enter into an employment agreement with the Officer on the terms and conditions set forth herein; and

WHEREAS, the Officer is willing to make her services available to the Holding Company on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations hereinafter set forth, the Holding Company and the Officer hereby agree as follows:

	
             
 	
            Section 1.
 	
            Employment.
 

The Holding Company hereby agrees to employ the Officer, and the Officer hereby agrees to accept such employment, during the period and upon the terms and conditions set forth in this Agreement.

	
             
 	
            Section 2.
 	
            Employment Period.
 

(a)          Except as otherwise provided in this Agreement to the contrary, the terms and conditions of this Agreement shall be and remain in effect during the period of employment (“Employment Period”) established under this section 2.  The Employment Period under this Agreement shall be for a term commencing on May 15, 2006 and ending on November 21, 2008, plus such extensions as are provided pursuant to section 2(b) of this Agreement.

(b)          On or as of July 1, 2006, and on or as of each July 1 thereafter, the Employment Period shall be extended for one additional year if and only if the Board shall have authorized the extension of the Employment Period prior to July 1 of such year and the Officer 

 

2

 

shall not have notified the Holding Company prior to July 1 of such year that the Employment Period shall not be so extended.  If the Board shall not have authorized the extension of the Employment Period prior to July 1 of any such year, or if the Officer shall have given notice of nonextension to the Holding Company prior to July 1 of such year, then the Employment Period shall not be extended pursuant to this section 2(b) at any time thereafter and shall end on the last day of its term as then in effect.

(c)          Upon the termination of the Officer’s employment with the Holding Company, the extensions provided pursuant to section 2(b) shall cease (if such extensions have not previously ceased).

	
             
 	
            Section 3.
 	
            Title and Duties.
 

On the date on which the Employment Period commences, the Officer shall hold the position of Executive Vice President/Chief Operating Officer of the Holding Company with all of the powers and duties incident to such position under law and under the by-laws of the Holding Company.  During the Employment Period, the Officer shall:  (a) devote her full business time and attention (other than during weekends, holidays, vacation periods and periods of illness or approved leaves of absence) to the business and affairs of the Holding Company and its subsidiaries and use her best efforts to advance the interests of the Holding Company and its subsidiaries, including reasonable periods of service as an officer and/or board member of trade associations, their related entities and charitable organizations; and (b) perform such reasonable additional duties as may be assigned to him by or
under the authority of the Board.  The Officer shall also serve as an officer of Flushing Savings Bank, FSB (the “Bank”) pursuant to the Amended and Restated Employment Agreement between the Officer and the Bank dated as of the date hereof (“Bank Employment Agreement”).  The Holding Company hereby acknowledges that the Officer’s service under this Agreement shall not be deemed to materially interfere with the Officer’s performance under the Bank Employment Agreement or otherwise result in a breach of the Bank Employment Agreement.  The Officer shall have such authority as is necessary or appropriate to carry out her duties under this Agreement.

	
             
 	
            Section 4.
 	
            Compensation.
 

In consideration for services rendered by the Officer under this Agreement:

(a)          The Holding Company shall pay to the Officer a salary at an annual rate equal to the greater of (i) $250,000 or (ii) such higher annual rate as may be prescribed by or under the authority of the Board (the “Current Salary”).  The Officer will undergo an annual salary and performance review on or about June 30 of each year commencing in 2006 The Current Salary payable under this section 4 shall be paid in approximately equal installments in accordance with the Holding Company’s customary payroll practices.

(b)          The Officer shall be eligible to participate in any bonus plan maintained by the Holding Company for its officers and employees.  If the Officer shall earn any bonus under any bonus plan of the Bank but such bonus shall not be paid by the Bank, the Holding Company shall pay such bonus to the Officer.

 

 

3

 

 

	
             
 	
            Section 5.
 	
            Employee Benefits and Other Compensation.
 

(a)          Except as otherwise provided in this Agreement, the Officer shall, during the Employment Period, be treated as an employee of the Holding Company and be entitled to participate in and receive benefits under the Holding Company’s employee benefit plans and programs, as well as such other compensation plans or programs (whether or not employee benefit plans or programs), as the Holding Company may maintain from time to time, in accordance with the terms and conditions of such employee benefit plans and programs and compensation plans and programs and with the Holding Company’s customary practices.

(b)          The Holding Company shall provide the Officer with a suitable automobile for use in the performance of the Officer’s duties hereunder and shall reimburse the Officer for all expenses incurred in connection therewith.

(c)          The Officer shall be entitled, without loss of pay, to vacation time in accordance with the policies periodically established by the Board for senior management officials of the Holding Company, which shall in no event be less than four weeks in each calendar year.  Except as provided in section 7(b), the Officer shall not be entitled to receive any additional compensation from the Holding Company on account of her failure to take a vacation, nor shall she be entitled to accumulate unused vacation from one calendar year to the next except to the extent authorized by the Board for senior management officials of the Holding Company.

	
             
 	
            Section 6.
 	
            Working Facilities and Expenses.
 

The Officer’s principal place of employment shall be at the offices of the Holding Company in Nassau County, New York or at such other location upon which the Holding Company and the Officer may mutually agree.  The Holding Company shall provide the Officer, at her principal place of employment, with a private office, stenographic services and other support services and facilities consistent with her position with the Holding Company and necessary or appropriate in connection with the performance of her duties under this Agreement.  The Holding Company shall reimburse the Officer for her ordinary and necessary business expenses, including, without limitation, travel and entertainment expenses, incurred in connection with the performance of her duties under this Agreement, upon presentation to the Holding Company of an itemized account of such expenses in such form as the Holding
Company may reasonably require.

	
             
 	
            Section 7.
 	
            Termination with Holding Company Liability.
 

(a)          In the event that the Officer’s employment with the Bank and/or the Holding Company shall terminate during the Employment Period on account of:

(i)           the Officer’s voluntary resignation from employment with the Bank and the Holding Company within one year following an event that constitutes “Good Reason,” which is defined as:

 

 

4

 

 

(A)         the failure of the Bank to elect or to reelect the Officer to serve as its Executive Vice President/Chief Operating Officer or such other position as the Officer consents to hold, or the failure of the Holding Company to elect or reelect the Officer to serve as its Executive Vice President/Chief Operating Officer or such other position as the Officer consents to hold;

(B)         the failure of the Bank or the Holding Company to cure a material adverse change made by it in the Officer’s functions, duties, or responsibilities in her position with the Bank or the Holding Company, respectively, within sixty days following written notice thereof from the Officer;

(C)         the failure of the Bank or the Holding Company to maintain the Officer’s principal place of employment at its offices in Nassau County, New York or at such other location upon which the Bank or the Holding Company and the Officer may mutually agree;

(D)         the failure of the Board to extend the Employment Period within the times provided in section 2(b) or the failure of the Bank’s board of directors to extend the Employment Period under the Bank Employment Agreement within the times provided in section 2(b) of such Agreement; provided, however, that such failure shall not constitute Good Reason until the earlier of 30 days after any determination by the Board or the Bank’s board of directors that the Employment Period shall not be so extended or August 1 of such year; 

(E)         the failure of the Bank or the Holding Company to cure a material breach of the Bank Employment Agreement or this Agreement by the Bank or the Holding Company, respectively, within sixty days following written notice thereof from the Officer; or

(F)          after a Change of Control (as defined in section 10), the failure of any successor company to the Bank to assume the Bank Employment Agreement or of any successor company to the Holding Company to assume this Agreement. 

(ii)          the discharge of the Officer by the Bank or the Holding Company for any reason other than (A) for “Cause” as defined in section 8(b) of this Agreement or (B) the Officer’s death or “Disability” as defined in section 9(a) of this Agreement; or 

(iii)        the Officer’s voluntary resignation from employment with the Bank and the Holding Company for any reason within the sixty-day period commencing six months following a Change of Control, as defined in section 10;

then the Holding Company shall provide the benefits and pay to the Officer as liquidated damages the amounts provided for under section 7(b).

 

 

5

 

 

(b)          Upon the termination of the Officer’s employment with the Bank and/or the Holding Company under circumstances described in section 7(a), the Holding Company shall pay and provide to the Officer:

(i)           her earned but unpaid Current Salary as of the date of termination, plus an amount representing any accrued but unpaid vacation time and floating holidays;

(ii)          if the Officer’s termination of employment occurs after a Change of Control, a pro rata portion of her bonus for the year of termination, determined by multiplying the amount of the bonus earned by the Officer for the preceding calendar year by the number of full months of employment during the year of termination, and dividing by 12.  If the Officer’s termination of employment occurs prior to a Change of Control, the Compensation Committee of the Bank or of the Holding Company may, in its sole discretion, award the Officer a bonus for the year of termination, in an amount determined by such Committee either at the time of termination of employment or at the time bonuses to active employees are awarded, which the
Holding Company shall pay to the Officer promptly after it has been awarded;

(iii)        the benefits, if any, to which she is entitled as a former employee under the Bank’s and the Holding Company’s employee benefit plans and programs and compensation plans and programs;

(iv)         continued health and welfare benefits (including group life, disability, medical and dental benefits), in addition to that provided pursuant to section 7(b)(iii), to the extent necessary to provide coverage for the Officer for the Severance Period (as defined in section 7(c)).  Such benefits shall be provided through the purchase of insurance, and shall be equivalent to the health and welfare benefits (including cost-sharing percentages) provided to active employees of the Bank and the Holding Company (or any successor thereof) as from time to time in effect during the Severance Period.  Where the amount of such benefits is based on salary, they shall be provided to the Officer based on the highest annual rate of Current Salary
achieved by the Officer during the Employment Period.  If the Officer had dependent coverage in effect at the time of her termination of employment, she shall have the right to elect to continue such dependent coverage for the Severance Period.  The benefits to be provided under this paragraph (iv) shall cease to the extent that substantially equivalent benefits are provided to the Officer (and/or her dependents) by a subsequent employer of the Officer;

(v)          if the Officer is age 55 or older at the end of the Severance Period, she shall be entitled to elect coverage for himself and her dependents under the Bank’s and the Holding Company’s retiree medical and retiree life insurance programs.  Such coverage, if elected, shall commence upon the expiration of the Severance Period, without regard to whether the Officer commences her pension benefit at such time, and shall continue for the life of each of the Officer and her spouse and for so long as any other of her covered dependents remain eligible.  The coverage and cost-sharing percentage of the Officer and her dependents under such programs shall be those in effect under such programs on the date of the Officer’s termination of employment with the 

 

6

 

Bank or the Holding Company, and shall not be adversely modified without the Officer’s written consent; and

(vi)         within thirty days following her termination of employment with the Bank or the Holding Company, a cash lump sum payment in an amount equal to the Current Salary and bonus that the Officer would have earned pursuant to sections 4(a) and 4(b), respectively, if she had continued working for the Holding Company and the Bank for the Severance Period (basing such bonus on the highest bonus, if any, paid to the Officer by the Bank or the Holding Company under section 4(b) of the Bank Employment Agreement or this Agreement within the three-year period prior to the date of termination).

The lump sum payable pursuant to clause (vi) of this section 7(b) is to be paid in lieu of all other payments of Current Salary and bonus provided for under this Agreement relating to the period following any such termination and shall be payable without proof of damages and without regard to the Officer’s efforts, if any, to mitigate damages.  The Holding Company and the Officer hereby stipulate that the damages which may be incurred by the Officer following any such termination of employment are not capable of accurate measurement as of the date first above written and that the payments and benefits provided under this section 7(b) are reasonable under the circumstances as a combination of liquidated damages and severance benefits.  The Officer shall not be entitled to any payment under this Agreement to make up for benefits that would have been earned under the Bank’s Retirement
Plan, 401(k) Savings Plan, and Supplemental Savings Incentive Plan (SSIP), and the Flushing Financial Corporation (“Holding Company”) Stock-Based Profit Sharing Plan had she continued working for the Bank for the Severance Period.

	
             
 	
            (c)
 	
            For purposes of section 7, the Severance Period means:
 

	
             
 	
            (i)
 	
            in the case of termination of employment prior to November 15, 2006, a period of 6 months;
 

	
             
 	
            (ii)
 	
            in the case of termination of employment on or after November 15, 2006, but prior  to the second anniversary of this Agreement, a period of 12 months;
 

	
             
 	
            (iii)
 	
            in the case of termination of employment on or after the second anniversary of this Agreement, a period of 24 months; and
 

	
             
 	
            (iv)
 	
            notwithstanding clauses (i), (ii), and (iii) of this section 7(c), in the   case of termination of employment after a Change of Control, a period of 24 months, without regard to the date of such termination of employment.
 

(d)          Notwithstanding any contrary provision in this section 7 or in section 8 or 9, to the extent necessary in order to avoid penalties under Section 409A of the Internal Revenue 

 

7

 

Code of 1986, as amended (the “Code”), payments scheduled to be paid upon termination of employment shall instead be paid six (6) months after termination of employment.

 

	
             
 	
            Section 8.
 	
            Termination for Cause or Voluntary

 Resignation Without Good Reason.
 

(a)          In the event that the Officer’s employment with the Holding Company shall terminate during the Employment Period on account of:

	
             
 	
            (i)
 	
            the discharge of the Officer by the Holding Company for Cause; or
 

	
             
 	
            (ii)
 	
            the Officer’s voluntary resignation from employment with the Holding Company for reasons other than those constituting a Good Reason;
 

then the Holding Company shall have no further obligations under this Agreement, other than (A) the payment to the Officer of her earned but unpaid Current Salary as of the date of the termination of her employment; and (B) the provision of such other benefits, if any, to which she is entitled as a former employee under the Bank’s and the Holding Company’s employee benefit plans and programs and compensation plans and programs.

(b)          For purposes of this Agreement, the term “Cause” means the Officer’s (i) willful failure to perform her duties under this Agreement or under the Bank Employment Agreement and failure to cure such failure within sixty days following written notice thereof from the Holding Company or the Bank, or (ii) intentional engagement in dishonest conduct in connection with her performance of services for the Holding Company or the Bank or conviction of a felony.

	
             
 	
            Section 9.
 	
            Disability or Death.
 

(a)          The Officer’s employment with the Holding Company may be terminated for “Disability” if the Officer shall become disabled or incapacitated during the Employment Period to the extent that she has been unable to perform the essential functions of her employment for 270 consecutive days, subject to the Officer’s right to receive from the Holding Company following her termination due to Disability the following percentages of her Current Salary under section 4 of this Agreement:  100% for the first six months, 75% for the next six months and 60% thereafter for the remaining term of the Employment Period (less in each case any benefits which may be payable to the Officer under the provisions of disability insurance coverage in effect for Bank and/or Holding Company employees).  

(b)          In the event that the Officer’s employment with the Holding Company shall terminate during the Employment Period on account of death, the Holding Company shall promptly pay the Officer’s designated beneficiaries or, failing any designation, her estate a cash lump sum payment equal to her earned but unpaid Current Salary.

(c)          In the event of the Officer’s termination of employment on account of death or Disability prior to a Change of Control, the Compensation Committee of the Bank or of 

 

8

 

the Holding Company may, in its sole discretion, award the Officer a bonus for the year of termination, in an amount determined by such Committee either at the time of termination of employment or at the time bonuses to active employees are awarded, in which case the Holding Company shall pay such bonus to the Officer or, in the event of death, her designated beneficiaries or estate, as the case may be, promptly after it is awarded.  In the event of the Officer’s termination of employment on account of death or Disability after a Change of Control, the Holding Company shall promptly pay the Officer, or in the event of death, her designated beneficiaries or estate, as the case may be, a pro rata portion of her bonus for the year of termination, determined by multiplying the amount of the bonus earned by the Officer for the preceding calendar year by the number of full
months of employment during the year of termination, and dividing by 12.

	
             
 	
            Section 10.
 	
            Change of Control.
 

For purposes of this Agreement, the term “Change of Control” means:

(a)          the acquisition of all or substantially all of the assets of the Bank or the Holding Company by any person or entity, or by any persons or entities acting in concert;

(b)          the occurrence of any event if, immediately following such event, a majority of the members of the Board of Directors of the Bank or the Holding Company or of any successor corporation shall consist of persons other than Current Members (for these purposes, a “Current Member” shall mean any member of the Board of Directors of the Bank or the Holding Company as of July 18, 2000 and any successor of a Current Member whose nomination or election has been approved by a majority of the Current Members then on the Board of Directors);

(c)          the acquisition of beneficial ownership, directly or indirectly (as provided in Rule 13d-3 of the Securities Exchange Act of 1934 (the “Act”), or any successor rule), of 25% or more of the total combined voting power of all classes of stock of the Bank or the Holding Company by any person or group deemed a person under Section 13(d)(3) of the Act; or

(d)          approval by the stockholders of the Bank or the Holding Company of an agreement providing for the merger or consolidation of the Bank or the Holding Company with another corporation where the stockholders of the Bank or the Holding Company, immediately prior to the merger or consolidation, would not beneficially own, directly or indirectly, immediately after the merger or consolidation, shares entitling such stockholders to 50% or more of the total combined voting power of all classes of stock of the surviving corporation.

Section 11.  Excise Tax Gross-up.

In the event that the Officer becomes entitled to one or more payments (with a “payment” including, without limitation, the vesting of an option or other non-cash benefit or property, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Bank or the Holding Company or any affiliated company or from or pursuant to the terms of the Flushing Financial Corporation Employee Benefit Trust) (the “Total 

 

9

 

Payments”), which are or become subject to the tax imposed by Section 4999 of the Code (or any similar tax that may hereafter be imposed) (the “Excise Tax”), the Holding Company shall pay to the Officer at the time specified below an additional amount (the “Gross-up Payment”) (which shall include, without limitation, reimbursement for any penalties and interest that may accrue in respect of such Excise Tax) such that the net amount retained by the Officer, after reduction for any Excise Tax (including any penalties or interest thereon) on the Total Payments and any federal, state and local income or employment tax and Excise Tax on the Gross-up Payment provided for by this section 11, but before reduction for any federal, state or local income or employment tax on the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b) an amount equal to
the product of any deductions disallowed for federal, state or local income tax purposes because of the inclusion of the Gross-up Payment in the Officer’s adjusted gross income multiplied by the highest applicable marginal rate of federal, state or local income taxation, respectively, for the calendar year in which the Gross-up Payment is to be made.

For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax,

(i)           the Total Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the written opinion of independent compensation consultants or auditors of nationally recognized standing selected by the Holding Company and reasonably acceptable to the Officer (“Independent Auditors”), the Total Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax,

(ii)          the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i) above), and

(iii)        the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Holding Company’s Independent Auditors appointed pursuant to clause (i) above in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

For purposes of determining the amount of the Gross-up Payment, the Officer shall be deemed (A) to pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made; (B) to pay any applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the 

 

10

 

Officer’s adjusted gross income); and (C) to have otherwise allowable deductions for federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-up Payment in the Officer’s adjusted gross income.  In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, the Officer shall repay to the Holding Company at the time that the amount of such reduction in Excise Tax is finally determined (but, if previously paid to the taxing authorities, not prior  to the time the amount of such reduction is refunded to the Officer or otherwise realized as a benefit by the Officer) the portion of the Gross-up Payment that would not have been paid if such Excise Tax had been applied in initially calculating the Gross-up Payment, plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-up Payment), the Holding Company shall make an additional Gross-up Payment in respect of such excess (plus any interest and penalties payable with respect to such excess) at the time that the amount of such excess is finally determined.

The Gross-up Payment provided for above shall be paid on the thirtieth day (or such earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that the Total Payments (or any portion thereof) are subject to the Excise Tax; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Holding Company shall pay to the Officer on such day an estimate, as determined by the Holding Company’s Independent Auditors appointed pursuant to clause (i) above, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as the amount thereof can be
determined.  In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess (amount together with interest at the rate provided in Section 1274(b)(2)(B) of the Code), shall be repaid by the Officer to the Holding Company within five (5) days after notice from the Holding Company of such determination.  If more than one Gross-up Payment is made, the amount of each Gross-up Payment shall be computed so as not to duplicate any prior Gross-up Payment.  The Holding Company shall have the right to control all proceedings with the Internal Revenue Service that may arise in connection with the determination and assessment of any Excise Tax and, at its sole option, the Holding Company may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any taxing authority in respect of such Excise Tax (including any interest or penalties thereon); provided, however, that the Holding Company’s control over any such proceedings shall be limited to issues with respect to which a Gross-up Payment would be payable hereunder and the Officer shall be entitled to settle or contest any other issue raised by the Internal Revenue Service or any other taxing authority.  The Officer shall cooperate with the Holding Company in any proceedings relating to the determination and assessment of any Excise Tax and shall not take any position or action that would materially increase the amount of any Gross-up Payment hereunder.

Notwithstanding any contrary provision in this section 11 to the extent necessary in order to avoid penalties under Section 409A of the Code, payments scheduled to be paid upon termination of employment shall instead be paid six (6) months after termination of employment.

 

 

11

 

 

	
             
 	
            Section 12.
 	
            No Effect on Employee Benefit

 Plans or Compensation Programs
 

Except as expressly provided in this Agreement, the termination of the Officer’s employment during the term of this Agreement or thereafter, whether by the Holding Company or by the Officer, shall have no effect on the rights and obligations of the parties hereto under the Holding Company’s employee benefit plans or programs or compensation plans or programs (whether or not employee benefit plans or programs) that the Holding Company may maintain from time to time.

	
             
 	
            Section 13.
 	
            Successors and Assigns.
 

This Agreement will inure to the benefit of and be binding upon the Officer, her legal representatives and estate or intestate distributees, and the Holding Company and its successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of the Holding Company may be sold or otherwise transferred.

	
             
 	
            Section 14.
 	
            Notices.
 

Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party:

If to the Officer:

Maria A. Grasso

<Address on file>

 

If to the Holding Company:

Flushing Financial Corporation

1979 Marcus Avenue  Suite E140

Lake Success, New York 11042

Attention:  Corporate Secretary

 

12

	
             
 	
            Section 15.
 	
            Severability.
 

A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

 

	
             
 	
            Section 16.
 	
            Waiver.
 

Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant, or condition.  A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought.  Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

	
             
 	
            Section 17.
 	
            Counterparts.
 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

	
             
 	
            Section 18.
 	
            Governing Law.
 

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without reference to conflicts of law principles.

	
             
 	
            Section 19.
 	
            Headings.
 

The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.  Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

	
             
 	
            Section 20.
 	
            Entire Agreement; Modifications.
 

This instrument contains the entire agreement of the parties relating to the subject matter hereof and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof, other than the Bank Employment Agreement.  No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto.

	
             
 	
            Section 21.
 	
            Funding.
 

The Holding Company may elect in its sole discretion to fund all or part of its obligations to the Officer under this Agreement; provided, however, that should it elect to do so, all assets acquired by the Holding Company to fund its obligations shall be part of the general assets of the Holding Company and shall be subject to all claims of the Holding Company’s creditors.

 

13

 

 

	
             
 	
            Section 22.
 	
            Guarantee.
 

The Holding Company guarantees the payment by the Bank of any and all benefits and compensation to which the Officer is entitled under the Bank Employment Agreement.

 

	
             
 	
            Section 23.
 	
            Non-duplication.
 

In the event that the Officer shall perform services for the Bank or any other direct or indirect subsidiary of the Holding Company, any compensation or benefits provided to the Officer by such other employer shall be applied to offset the obligations of the Holding Company hereunder, it being intended that this Agreement set forth the aggregate compensation and benefits payable to the Officer for all services to the Holding Company and all of its direct or indirect subsidiaries.  The Officer hereby acknowledges that if any payment made or benefit provided by the Holding Company under this Agreement is also required to be made or provided by the Bank under the Bank Employment Agreement, such payment or benefit by the Holding Company under this Agreement shall offset the payment required to be made or benefit required to be provided by the Bank under the Bank Employment Agreement.

	
             
 	
            Section 24.
 	
            Required Regulatory Provisions.
 

Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Officer pursuant to this Agreement or otherwise are subject to and conditioned upon their compliance with 12 U.S.C. section 1828(k) and any regulations promulgated thereunder.

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

FLUSHING FINANCIAL CORPORATION

 

By:                                          
                      

Name:  John R. Buran

	
             
 	
            Title:  
 	
            President and CEO
 

 

 

___________________________________

Maria A. Grasso

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