Document:

Unassociated Document

    EXHIBIT
      4.01

     

    
      LOAN
        AND SECURITY AGREEMENT

      

      LOAN
        AND
        SECURITY AGREEMENT, dated as of June 27, 2007 (this “Agreement”),
        by
        and among Aduromed Industries, Inc.,
        a
        Delaware corporation (the
        “Company”)
        and
        all of the subsidiaries of the Company
        (such
        subsidiaries,
        the
“Guarantors”)
        (the
        Company and Guarantors are collectively
        referred to as the “Debtors”)
        and
        the holder or holders of the Company’s 12% Secured Promissory Notes due December
        27, 2007 in the original aggregate principal amount of $1,275,000 (the
“Notes”)
        that
        are signatory hereto and their respective endorsees, transferees and assigns
        (collectively, the “Secured
        Parties”
and
        each, a “Secured
        Party”).

      

      WITNESSETH:

      

      WHEREAS,
        pursuant to this Agreement, the Secured Parties have severally agreed to
        extend
        the loans to the Company evidenced by the Notes;

      

      WHEREAS,
        pursuant to a certain Subsidiary Guarantee, dated as of the date hereof,
        the
        Guarantors
        have
        jointly and severally agreed to guaranty and act as surety for payment of
        such
        loans; and

      

      WHEREAS,
        in order to induce the Secured Parties to extend the loans evidenced by the
        Notes, each Debtor has agreed to execute and deliver to the Secured Parties
        this
        Agreement and to grant the Secured Parties, pari passu
        with
        each other Secured Party, a perfected security interest in certain property
        of
        such Debtor to secure the prompt payment, performance and discharge in full
        of
        all of the Company’s obligations under the Notes and the other Debtors’
obligations under the Subsidiary Guarantee.

      

      NOW,
        THEREFORE, in consideration of the agreements herein contained and for other
        good and valuable consideration, the receipt and sufficiency of which is
        hereby
        acknowledged, the parties hereto hereby agree as follows:

      

      1.
         Certain
        Definitions.
        As used
        in this Agreement, the following terms shall have the meanings set forth
        in this
        Section 1. Terms used but not otherwise defined in this Agreement that are
        defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial
        tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general
        intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have
        the respective meanings given such terms in Article 9 of the UCC. All
        initially capitalized, undefined terms used herein shall have the meanings
        ascribed to such terms in the Notes, the Warrants and the other agreements
        entered into in connection therewith.

      

      (a)
         “Affiliate”
means
        any Person that, directly or indirectly through one or more intermediaries,
        controls or is controlled by or is under common control with a Person, as
        such
        terms are used in and construed under Rule 405 under the Securities
        Act.
        With
        respect to a Secured Party, any investment fund or managed account that is
        managed on a discretionary basis by the same investment manager as such Secured
        Party will be deemed to be an Affiliate of such Purchaser.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

      (b) “Collateral”
means
        the collateral in which the Secured Parties are granted a security interest
        by
        this Agreement and which shall include the following personal property of
        the
        Debtors, whether presently owned or existing or hereafter acquired or coming
        into existence, wherever situated, and all additions and accessions thereto
        and
        all substitutions and replacements thereof, and all proceeds, products and
        accounts thereof, including, without limitation, all proceeds from the sale
        or
        transfer of the Collateral and of insurance covering the same and of any
        tort
        claims in connection therewith,
        and all
        dividends, interest, cash, notes, securities, equity interest or other property
        at any time and from time to time acquired, receivable or otherwise distributed
        in respect of, or in exchange for, any or all of the Pledged Securities (as
        defined below):

      

      (i)
        All
        goods, including, without limitations, (A) all machinery, equipment, computers,
        motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
        and
        general tools, fixtures, test and quality control devices and other equipment
        of
        every kind and nature and wherever situated, together with all documents
        of
        title and documents representing the same, all additions and accessions thereto,
        replacements therefor, all parts therefor, and all substitutes for any of
        the
        foregoing and all other items used and useful in connection with any Debtor’s
        businesses and all improvements thereto; and (B) all inventory;

      

      (ii)
         All
        contract rights and other general intangibles, including, without limitation,
        all Intellectual Property, partnership interests, membership interests, stock
        or
        other securities, rights
        under any of the Organizational Documents, agreements related to the Pledged
        Securities, licenses,
        distribution and other agreements, computer software (whether “off-the-shelf”,
        licensed from any third party or developed by any Debtor), computer software
        development rights, leases, franchises, customer lists, quality control
        procedures, grants and rights, goodwill and income tax refunds; 

       

      (iii)
         All
        accounts, together with all instruments, all documents of title representing
        any
        of the foregoing, all rights in any merchandising, goods, equipment, motor
        vehicles and trucks which any of the same may represent, and all right, title,
        security and guaranties with respect to each account, including any right
        of
        stoppage in transit; 

      

      (iv)
         All
        documents, letter-of-credit rights, instruments and chattel paper;

      

      (v) All
        commercial tort claims;

      

      (vi) All
        deposit accounts and all cash (whether or not deposited in such deposit
        accounts);

      

      (vii) All
        investment property;

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

      

       (viii) All
        supporting obligations; and

      

      (ix) All
        files, records, books of account, business papers, and computer programs;
        and

      

      (x) the
        products and proceeds of all of the foregoing Collateral set forth in clauses
        (i)-(ix) above.

      

      Without
        limiting the generality of the foregoing, the “Collateral”
shall
        include all investment property and general intangibles respecting ownership
        and/or other equity interests in each Guarantor, including, without limitation,
        the shares of capital stock and the other equity interests listed on
Schedule
        H
        hereto
        (as the same may be modified from time to time pursuant to the terms hereof),
        and any other shares of capital stock and/or other equity interests of any
        other
        direct or indirect subsidiary of any Debtor obtained in the future, and,
        in each
        case, all certificates representing such shares and/or equity interests and,
        in
        each case, all rights, options, warrants, stock, other securities and/or
        equity
        interests that may hereafter be received, receivable or distributed in respect
        of, or exchanged for, any of the foregoing (all of the foregoing being referred
        to herein as the “Pledged
        Securities”)
        and
        all rights arising under or in connection with the Pledged Securities,
        including, but not limited to, all dividends, interest and cash.

       

      Notwithstanding
        the foregoing, nothing herein shall be deemed to constitute an assignment
        of any
        asset which, in the event of an assignment, becomes void by operation of
        applicable law or the assignment of which is otherwise prohibited by applicable
        law (in each case to the extent that such applicable law is not overridden
        by
        Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
        law);
provided,
        however,
        that,
        to the extent permitted by applicable law, this Agreement shall create a
        valid
        security interest in such asset and, to the extent permitted by applicable
        law,
        this Agreement shall create a valid security interest in the proceeds of
        such
        asset.

      

      (c)
         “Common
        Stock”
means
        the common stock of the Company, par value $0.0001 per share, and any other
        class of securities into which such securities may hereafter be reclassified
        or
        changed into. “Common
        Stock Equivalents”
means
        any securities of the Company or the Subsidiaries which would entitle the
        holder
        thereof to acquire at any time Common Stock, including, without limitation,
        any
        debt, preferred stock, rights, options, warrants or other instrument that
        is at
        any time convertible into or exercisable or exchangeable for, or otherwise
        entitles the holder thereof to receive, Common Stock.

       

      (d) “Company
        Counsel”
means
        Macpherson Counsel LLP, with offices located at 444 Madison Avenue, New York,
        New York 10022.

       

      (e)
         “Exchange
        Act”
means
        the Securities
        Exchange Act of 1934, as amended, and the rules and regulations promulgated
        thereunder.

       

      
        
          
          

        

        
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      (f) “FWS”
means
        Feldman Weinstein & Smith LLP with offices located at 420 Lexington Avenue,
        Suite 2620, New York, New York 10170-0002.

       

      (g) “Intellectual
        Property”
means
        the collective reference to all rights, priorities and privileges relating
        to
        intellectual property, whether arising under United States, multinational
        or
        foreign laws or otherwise, including, without limitation, (i) all copyrights
        arising under the laws of the United States, any other country or any political
        subdivision thereof, whether registered or unregistered and whether published
        or
        unpublished, all registrations and recordings thereof, and all applications
        in
        connection therewith, including, without limitation, all registrations,
        recordings and applications in the United States Copyright Office, (ii) all
        letters patent of the United States, any other country or any political
        subdivision thereof, all reissues and extensions thereof, and all applications
        for letters patent of the United States or any other country and all divisions,
        continuations and continuations-in-part thereof, (iii) all trademarks, trade
        names, corporate names, company names, business names, fictitious business
        names, trade dress, service marks, logos, domain names and other source or
        business identifiers, and all goodwill associated therewith, now existing
        or
        hereafter adopted or acquired, all registrations and recordings thereof,
        and all
        applications in connection therewith, whether in the United States Patent
        and
        Trademark Office or in any similar office or agency of the United States,
        any
        State thereof or any other country or any political subdivision thereof,
        or
        otherwise, and all common law rights related thereto, (iv) all trade secrets
        arising under the laws of the United States, any other country or any political
        subdivision thereof, (v) all rights to obtain any reissues, renewals or
        extensions of the foregoing, (vi) all licenses for any of the foregoing,
        and
        (vii) all causes of action for infringement of the foregoing.

      

      (h) “Majority
        in Interest”
shall
        mean, at any time of determination, the majority in interest (based on
        then-outstanding principal amounts of Notes at the time of such determination)
        of the Secured Parties.

      

      (i) “Necessary
        Endorsement”
shall
        mean undated stock powers endorsed in blank or other proper instruments of
        assignment duly executed and such other instruments or documents as the Agent
        (as defined below) may reasonably request.

      

      (j) “Obligations”
means
        all of the liabilities
        and obligations (primary, secondary, direct, contingent, sole, joint or several)
        due or to become due, or that are now or may be hereafter contracted or
        acquired, or owing to, of any Debtor to the Secured Parties, including, without
        limitation, all
        obligations under this Agreement, the Notes, the Subsidiary Guarantee and
        any
        other instruments, agreements or other documents executed and/or delivered
        in
        connection herewith or therewith, in each case, whether now or hereafter
        existing, voluntary or involuntary, direct or indirect, absolute or contingent,
        liquidated or unliquidated, whether or not jointly owed with others, and
        whether
        or not from time to time decreased or extinguished and later increased, created
        or incurred, and all or any portion of such obligations or liabilities that
        are
        paid, to the extent all or any part of such payment is avoided or recovered
        directly or indirectly from any of the Secured Parties as a preference,
        fraudulent transfer or otherwise as such obligations may be amended,
        supplemented, converted, extended or modified from time to time. Without
        limiting the generality of the foregoing, the term “Obligations” shall include,
        without limitation: (i) principal of, and interest on the Notes and the loans
        extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
        obligations and liabilities of the Debtors from time to time under or in
        connection with this Agreement, the Notes, the Subsidiary Guarantee and any
        other instruments, agreements or other documents executed and/or delivered
        in
        connection herewith or therewith; and (iii) all amounts (including but not
        limited to post-petition interest) in respect of the foregoing that would
        be
        payable but for the fact that the obligations to pay such amounts are
        unenforceable or not allowable due to the existence of a bankruptcy,
        reorganization or similar proceeding involving any Debtor.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      (k) “Organizational
        Documents”
means
        with respect to any Debtor, the documents by which such Debtor was organized
        (such as a certificate of incorporation, certificate of limited partnership
        or
        articles of organization, and including, without limitation, any certificates
        of
        designation for preferred stock or other forms of preferred equity) and which
        relate to the internal governance of such Debtor (such as bylaws, a partnership
        agreement or an operating, limited liability or members agreement).

      

      (l) “Person”
means
        an individual or corporation, partnership, trust, incorporated or unincorporated
        association, joint venture, limited liability company, joint stock company,
        government (or an agency or subdivision thereof) or other entity of any
        kind.

       

      (m) “Qualified
        Financing”
means
        any public or private issuance of Common Stock and/or Common Stock Equivalents
        with gross offering proceeds of not less than $1,500,000. For purposes of
        determining gross offering proceeds, the principal amount of any Notes tendered
        as payment for such Qualified Financing shall not be counted.

       

      (n) “Required
        Minimum”
means,
        as
        of any
        date, the maximum aggregate number of shares of Common Stock then issued
        or
        potentially issuable in the future pursuant to the Warrants, including any
        Warrant Shares issuable upon exercise or conversion in full of all Warrants,
        ignoring any exercise limits set forth therein.

      

      (o) “Securities
        Act”
means
        the Securities Act of 1933, as amended, and the rules and regulations
        promulgated hereunder. 

      

      (p) “Security
        Documents”
shall
        mean any documents and filing required thereunder in order to grant the Secured
        Parties a first priority security interest in the assets of the Company and
        the
        Subsidiaries as provided in this Agreement, including all UCC-1 filing
        receipts.

      

      (q) “Subscription
        Amount”
        means,
        as
        to each Secured Party, the aggregate amount to be paid for the Notes and
        Warrants purchased hereunder as specified below such Secured Party’s name on the
        signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds, and which shall
        be,
        in each case, 90% of the face principal amount of such Secured Party’s
        Note.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      (r) “Subsidiary”
means
        any subsidiary of the Company.

      

      (s) “Subsidiary
        Guarantee”
means
        the Subsidiary Guarantee, dated the date hereof, by each Subsidiary in favor
        of
        the Secured Parties, in the form of Exhibit
        C
        attached
        hereto.

      

      (t) “Trading
        Market”
means
        the following markets or exchanges on which the Common Stock is listed or
        quoted
        for trading on the date in question: the American Stock Exchange, the Nasdaq
        Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
        the
        New York Stock Exchange or the OTC Bulletin Board.

      

      (u) “Transaction
        Documents”
means
        this Agreement, the Notes, the Warrants and the Subsidiary
        Guarantee.

      

      (v)  “UCC”
means
        the Uniform Commercial Code of the applicable jurisdiction and or any other
        applicable law of any state or states which has jurisdiction with respect
        to
        all, or any portion of, the Collateral or this Agreement, from time to time.
        It
        is the intent of the parties that defined terms in the UCC should be construed
        in their broadest sense so that the term “Collateral” will be construed in its
        broadest sense. Accordingly if there are, from time to time, changes to defined
        terms in the UCC that broaden the definitions, they are incorporated herein
        and
        if existing definitions in the UCC are broader than the amended definitions,
        the
        existing ones shall be controlling.

      

      (w) “Warrants”
means,
        collectively, the Common Stock purchase warrants, which shall be exercisable
        immediately and have a term of exercise equal to five years, in the form
        of
        Exhibit D attached hereto.

      

      (x) “Warrant
        Shares”
means
        the shares of Common Stock issuable upon exercise of the Warrants.

      

      2.
        Loan.
        Upon
        the
        terms and subject to the conditions set forth herein, substantially concurrent
        with the execution and delivery of this Agreement by the parties hereto,
        the
        Secured Parties, severally and not jointly, agree to advance an aggregate
        of up
        to $1,275,000 in principal amount of Notes to the Company. Each Secured Party
        shall deliver to the Company, via wire transfer or a certified check,
        immediately available funds equal to such Secured Party’s Subscription Amount
        and the Company shall deliver to each Secured Party its respective Note and
        Warrant, and the Company and each Secured Party shall deliver the other items
        set forth below. Upon satisfaction of the conditions set forth in this Section
        2, the closing (the “Closing”)
        shall
        occur at the offices of FWS or such other location as the parties shall mutually
        agree.

       

      (a) Deliveries.

      

      (i) On
        or
        prior to the Closing, the Company shall deliver or cause to be delivered
        to each
        Secured Party the following:

       

      (A) this
        Agreement duly executed by the Company;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

      

      (B) a
        Note,
        in the form of Exhibit
        A
        attached
        hereto, with a principal amount equal to 111% of such Secured Party’s
        Subscription Amount, registered in the name of such Secured Party;

       

      (C) a
        legal
        opinion of Company Counsel, in the form of Exhibit
        B
        attached
        hereto;

       

      (D) the
        Subsidiary Guarantee duly executed by each of the Subsidiaries;

       

      (E) all
        of
        the Security Documents duly executed by the parties thereto;

       

      (F) evidence
        of the written consent of Sherleigh Associates Defined Benefit Pension Plan;
        Pequot Scout Fund, L.P.; Pequot Mariner Master Fund, L.P.; Pequot Navigator
        Offshore Fund, Inc.; Pequot Diversified Master Fund, Ltd.; and Premium Series
        PCC Limited Cell 33; to the transactions contemplated hereby; and

       

      (G) a
        Warrant
        registered in the name of such Secured Party to purchase up to 2 shares of
        Common Stock for each $1 of principal amount of such Secured Party’s Note, with
        an exercise price equal to $0.38, subject to adjustment as set forth
        therein.

       

      (ii) On
        the
        Closing Date, each Secured Party shall deliver or cause to be delivered to
        the
        Company the following:

       

      (A) this
        Agreement duly executed by such Secured Party; and

       

      (B) such
        Secured Party’s Subscription Amount by wire transfer to the account as specified
        in writing by the Company.

       

      (b)
        Closing
        Conditions. 

       

      (i) The
        obligations of the Company hereunder in connection with the Closing are subject
        to the following conditions being met:

       

      (A) the
        accuracy in all material respects when made and on the Closing Date of the
        representations and warranties of the Secured Parties contained
        herein;

       

      (B) all
        obligations, covenants and agreements of the Secured Parties required to
        be
        performed at or prior to the Closing shall have been performed; and

       

      (C) the
        delivery by the Secured Parties of the items set forth in Section 2(a)(ii)
        of
        this Agreement.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

         

      

      (ii) The
        respective obligations of the Secured Parties hereunder in connection with
        the
        Closing are subject to the following conditions being met:

       

      (A) the
        accuracy in all material respects when made and on the Closing Date of the
        representations and warranties of the Company contained herein;

       

      (B) all
        obligations, covenants and agreements of the Company required to be performed
        at
        or prior to the Closing Date shall have been performed; 

       

      (C) the
        delivery by the Company of the items set forth in Section 2(a)(i) of this
        Agreement; 

       

      (D) there
        shall have been no occurrence which could
        have or reasonably be expected to result in (i) a material adverse effect
        on the
        legality, validity or enforceability of any Transaction Document, (ii) a
        material adverse effect on the results of operations, assets, business,
        prospects or condition (financial or otherwise) of the Company and the
        Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
        Company’s or any Subsidiary’s ability to perform in any material respect on a
        timely basis its obligations under any Transaction Document (any of (i),
        (ii) or
        (iii), a “Material
        Adverse Effect”)
        with
        respect to the Company since the date hereof; and

       

      (E) from
        the
        date hereof to the Closing Date, trading in the Common Stock shall not have
        been
        suspended by the Commission or the Company’s principal Trading Market (except
        for any suspension of trading of limited duration agreed to by the Company,
        which suspension shall be terminated prior to the Closing), and, at any time
        prior to the Closing Date, trading in securities generally as reported by
        Bloomberg L.P. shall not have been suspended or limited, or minimum prices
        shall
        not have been established on securities whose trades are reported by such
        service, or on any Trading Market, nor shall a banking moratorium have been
        declared either by the United States or New York State authorities nor shall
        there have occurred any material outbreak or escalation of hostilities or
        other
        national or international calamity of such magnitude in its effect on, or
        any
        material adverse change in, any financial market which, in each case, in
        the
        reasonable judgment of each Secured Party, makes it impracticable or inadvisable
        to purchase the Notes at the Closing.

       

      3. Grant
        of Perfected First Priority Security Interest.
        As an
        inducement for the Secured Parties to extend the loans as evidenced by the
        Notes
        and to secure the complete and timely payment, performance and discharge
        in
        full, as the case may be, of all of the Obligations, each Debtor hereby
        unconditionally and irrevocably pledges, grants and hypothecates to the Secured
        Parties a continuing and perfected security interest in and to, a lien upon
        and
        a right of set-off against all of their respective right, title and interest
        of
        whatsoever kind and nature in and to, the Collateral (the “Security
        Interest”).

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

         

      

      4. Delivery
        of Certain Collateral.
        Contemporaneously or prior to the execution of this Agreement, each Debtor
        shall
        deliver or cause to be delivered to the Agent (as defined in Section 18)
        (a) any
        and all certificates and other instruments representing or evidencing the
        Pledged Securities and (b) any and all certificates and other instruments
        or
        documents representing any of the other Collateral which can only be perfected
        by possession, in each case, together with all Necessary Endorsements. The
        Debtors are, contemporaneously with the execution hereof, delivering to the
        Agent, or have previously delivered to Agent, a true and correct copy of
        each
        Organizational Document governing any of the Pledged Securities.

      

      5.  Representations,
        Warranties, Covenants and Agreements of the Debtors.
        Each
        Debtor represents and warrants to, and covenants and agrees with, the Secured
        Parties as follows:

      

      (a)
        Each
        Debtor has the requisite corporate, partnership, limited liability company
        or
        other power and authority to enter into this Agreement and otherwise to carry
        out its obligations hereunder. The execution, delivery and performance by
        each
        Debtor of this Agreement and the filings contemplated therein have been duly
        authorized by all necessary action on the part of such Debtor and no further
        action is required by such Debtor. This Agreement has been duly executed
        by each
        Debtor. This Agreement constitutes the legal, valid and binding obligation
        of
        each Debtor, enforceable against each Debtor in accordance with its terms
        except
        as such enforceability may be limited by applicable bankruptcy, insolvency,
        reorganization and similar laws of general application relating to or affecting
        the rights and remedies of creditors and by general principles of
        equity.

      

      (b)
         The
        Debtors have no place of business or offices where their respective books
        of
        account and records are kept (other than temporarily at the offices of its
        attorneys or accountants) or places where Collateral is stored or located,
        except as set forth on Schedule
        A
        attached
        hereto. Except as specifically set forth on Schedule
        A,
        each
        Debtor is the record owner of the real property where such Collateral is
        located, and there exist no mortgages or other liens on any such real property
        except for Permitted Liens (as defined in the Notes). Except as disclosed
        on
Schedule
        A,
        none of
        such Collateral is in the possession of any consignee, bailee, warehouseman,
        agent or processor.

      

      (c)
         Except
        as
        set forth on Schedule
        B
        attached
        hereto or with respect to the Company’s line of credit with Bank of America, the
        Debtors are the sole owners of the Collateral (except for non-exclusive licenses
        granted by any Debtor in the ordinary course of business), free and clear
        of any
        liens, security interests, encumbrances, rights or claims, and are fully
        authorized to grant the Security Interest. There is not on file in any
        governmental or regulatory authority, agency or recording office an effective
        financing statement, security agreement, license or transfer or any notice
        of
        any of the foregoing (other than those that will be filed in favor of the
        Secured Parties pursuant to this Agreement) covering or affecting any of
        the
        Collateral. So long as this Agreement shall be in effect, the Debtors shall
        not
        execute and shall not knowingly permit to be on file in any such office or
        agency any such financing statement or other document or instrument (except
        to
        the extent filed or recorded in favor of the Secured Parties pursuant to
        the
        terms of this Agreement).

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

         

      

      (d)
         No
        written claim has been received that any Collateral or Debtor’s use of any
        Collateral violates the rights of any third party. There has been no adverse
        decision to any Debtor's claim of ownership rights in or exclusive rights
        to use
        the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
        such Collateral in full force and effect, and there is no proceeding involving
        said rights pending or, to the best knowledge of any Debtor, threatened before
        any court, judicial body, administrative or regulatory agency, arbitrator
        or
        other governmental authority.

      

      (e)
         Each
        Debtor shall at all times maintain its books of account and records relating
        to
        the Collateral at its principal place of business and its Collateral at the
        locations set forth on Schedule
        A
        attached
        hereto and may not relocate such books of account and records or tangible
        Collateral unless it delivers to the Secured Parties at least 30 days prior
        to
        such relocation (i) written notice of such relocation and the new location
        thereof (which must be within the United States) and (ii) evidence that
        appropriate financing statements under the UCC and other necessary documents
        have been filed and recorded and other steps have been taken to perfect the
        Security Interest to create in favor of the Secured Parties a valid, perfected
        and continuing perfected first priority lien in the Collateral.

      

      (f)
         This
        Agreement creates in favor of the Secured Parties a valid, security interest
        in
        the Collateral, securing the payment and performance of the Obligations.
        Upon
        making the filings described in the immediately following paragraph, all
        security interests created hereunder in any Collateral which may be perfected
        by
        filing UCC financing statements shall have been duly perfected. Except for
        the
        filing of the UCC financing statements referred to in the immediately following
        paragraph, the
        execution and delivery of deposit account control agreements satisfying the
        requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
        account of the Debtors,
        and the
        delivery of the certificates and other instruments provided in Section
        4,
        no
        action is necessary to create, perfect or protect the security interests
        created
        hereunder. Without limiting the generality of the foregoing, except for the
        filing of said financing statements, and the execution and delivery of said
        deposit account control agreements, no consent of any third parties and no
        authorization, approval or other action by, and no notice to or filing with,
        any
        governmental authority or regulatory body is required for (i) the execution,
        delivery and performance of this Agreement, (ii) the creation or perfection
        of
        the Security Interests created hereunder in the Collateral or (iii) the
        enforcement of the rights of the Secured Parties hereunder.

      

      (g)
         Each
        Debtor hereby authorizes the Secured Parties, or any of them, to file one
        or
        more financing statements under the UCC, with respect to the Security Interest
        with the proper filing and recording agencies in any jurisdiction deemed
        proper
        by them.

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

       (h)
         The
        execution, delivery and performance of this Agreement by the Debtors does
        not
        (i) violate any of the provisions of any Organizational Documents of any
        Debtor
        or any judgment, decree, order or award of any court, governmental body or
        arbitrator or any applicable law, rule or regulation applicable to any Debtor
        or
        (ii) conflict with, or constitute a default (or an event that with notice
        or
        lapse of time or both would become a default) under, or give to others any
        rights of termination, amendment, acceleration or cancellation (with or without
        notice, lapse of time or both) of, any agreement, credit facility, debt or
        other
        instrument (evidencing any Debtor’s debt or otherwise) or other understanding to
        which any Debtor is a party or by which any property or asset of any Debtor
        is
        bound or affected. No consent (including, without limitation, from stockholders
        or creditors of any Debtor) is required for any Debtor to enter into and
        perform
        its obligations hereunder.

      

       (i)
         The
        capital stock and other equity interests listed on Schedule
        H
        hereto
        represent all of the capital stock and other equity interests of the Guarantors,
        and represent all capital stock and other equity interests owned, directly
        or
        indirectly, by the Company. All of the Pledged Securities are validly issued,
        fully paid and nonassessable, and the Company is the legal and beneficial
        owner
        of the Pledged Securities, free and clear of any lien, security interest
        or
        other encumbrance except for the security interests created by this Agreement
        and other Permitted Liens (as defined in the Note). The
        issuance and sale of the Notes will not obligate the Company to issue shares
        of
        Common Stock or other securities to any Person (other than the Secured Parties)
        and will not result in a right of any holder of Company securities to adjust
        the
        exercise, conversion, exchange or reset price under any of such
        securities.

      

      (j)
         Each
        Debtor shall at all times maintain the liens and Security Interest provided
        for
        hereunder as valid and perfected first priority liens and security interests
        in
        the Collateral in favor of the Secured Parties until this Agreement and the
        Security Interest hereunder shall be terminated pursuant to Section 14 hereof.
        Each Debtor hereby agrees to defend the same against the claims of any and
        all
        persons and entities. Each Debtor shall safeguard and protect all Collateral
        for
        the account of the Secured Parties. At the request of the Secured Parties,
        each
        Debtor will sign and deliver to the Secured Parties at any time or from time
        to
        time one or more financing statements pursuant to the UCC in form reasonably
        satisfactory to the Secured Parties and will pay the cost of filing the same
        in
        all public offices wherever filing is, or is deemed by the Secured Parties
        to
        be, necessary or desirable to effect the rights and obligations provided
        for
        herein. Without limiting the generality of the foregoing, each Debtor shall
        pay
        all fees, taxes and other amounts necessary to maintain the Collateral and
        the
        Security Interest hereunder, and each Debtor shall obtain and furnish to
        the
        Secured Parties from time to time, upon demand, such releases and/or
        subordinations of claims and liens which may be required to maintain the
        priority of the Security Interest hereunder.

      

      (k)
         No
        Debtor
        will transfer, pledge, hypothecate, encumber, license, sell or otherwise
        dispose
        of any of the Collateral (except for non-exclusive licenses granted by a
        Debtor
        in its ordinary course of business and sales of inventory by a Debtor in
        its
        ordinary course of business) without the prior written consent of a Majority
        in Interest.

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

         

      

      (l) Each
        Debtor shall keep and preserve its equipment, inventory and other tangible
        Collateral in good condition, repair and order and shall not operate or locate
        any such Collateral (or cause to be operated or located) in any area excluded
        from insurance coverage.

      

      (m) Each
        Debtor shall maintain with financially sound and reputable insurers, insurance
        with respect to the Collateral against loss or damage of the kinds and in
        the
        amounts customarily insured against by entities of established reputation
        having
        similar properties similarly situated and in such amounts as are customarily
        carried under similar circumstances by other such entities and otherwise
        as is
        prudent for entities engaged in similar businesses but in any event sufficient
        to cover the full replacement cost thereof. Each Debtor shall cause each
        insurance policy issued in connection herewith to provide, and the insurer
        issuing such policy to certify to the Agent that (a) the Agent will be named
        as
        lender loss payee and additional insured under each such insurance policy;
        (b)
        if such insurance be proposed to be cancelled for non-payment of premium,
        such
        insurer will promptly notify the Agent and such cancellation or change shall
        not
        be effective as to the Agent for at least ten (10) days after receipt by
        the
        Agent of such notice, unless the effect of such change is to extend or increase
        coverage under the policy; and (c) the Agent will have the right (but no
        obligation) at its election to remedy any default in the payment of premiums
        within ten (10) days of notice from the insurer of such default. If no Event
        of
        Default (as defined in the Note) exists and if the proceeds arising out of
        any
        claim or series of related claims do not exceed $100,000, loss payments in
        each
        instance will be applied by the applicable Debtor to the repair and/or
        replacement of property with respect to which the loss was incurred to the
        extent reasonably feasible, and any loss payments or the balance thereof
        remaining, to the extent not so applied, shall be payable to the applicable
        Debtor, provided, however, that payments received by any Debtor after an
        Event
        of Default occurs and is continuing or in excess of $100,000 for any occurrence
        or series of related occurrences shall be paid to the Agent and, if received
        by
        such Debtor, shall be held in trust for and immediately paid over to the
        Agent
        unless otherwise directed in writing by the Agent. Copies of such policies
        or
        the related certificates, in each case, naming the Agent as lender loss payee
        and additional insured shall be delivered to the Agent at least annually
        and at
        the time any new policy of insurance is issued.

      

      (n)
         Each
        Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
        the
        Secured Parties promptly, in sufficient detail, of any substantial change
        in the
        Collateral, and of the occurrence of any event which would have a Material
        Adverse Effect on the value of the Collateral or on the Secured Parties’
security interest therein.

      

      (o)
         Each
        Debtor shall promptly execute and deliver to the Secured Parties such further
        deeds, mortgages, assignments, security agreements, financing statements
        or
        other instruments, documents, certificates and assurances and take such further
        action as the Secured Parties may from time to time request and may in its
        sole
        discretion deem necessary to perfect, protect or enforce its security interest
        in the Collateral.

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

         

      

      (p)
         Each
        Debtor shall take all steps reasonably necessary to diligently pursue and
        seek
        to preserve, enforce and collect any rights, claims, causes of action and
        accounts receivable in respect of the Collateral.

      

      (q)
         Each
        Debtor shall promptly notify the Secured Parties in sufficient detail upon
        becoming aware of any attachment, garnishment, execution or other legal process
        levied against any Collateral and of any other information received by such
        Debtor that may materially affect the value of the Collateral, the Security
        Interest or the rights and remedies of the Secured Parties
        hereunder.

      

      (r)
         All
        information heretofore, herein or hereafter supplied to the Secured Parties
        by
        or on behalf of any Debtor with respect to the Collateral is accurate and
        complete in all material respects as of the date furnished.

       

      (s)
         No
        Debtor
        will change its name, type of organization, jurisdiction of organization,
        organizational identification number (if it has one), legal or corporate
        structure, or identity, or add any new fictitious name unless it provides
        at
        least 30 days prior written notice to the Secured Parties of such change
        and, at
        the time of such written notification, such Debtor provides any financing
        statements or fixture filings necessary to perfect and continue perfected
        the
        perfected security Interest granted and evidenced by this
        Agreement.

       

      (t)
         No
        Debtor
        may relocate its chief executive office to a new location without providing
        30
        days prior written notification thereof to the Secured Parties and so long
        as,
        at the time of such written notification, such Debtor provides any financing
        statements or fixture filings necessary to perfect and continue perfected
        the
        perfected security Interest granted and evidenced by this
        Agreement.

      

      (u) Each
        Debtor was organized and remains organized solely under the laws of the state
        set forth next to such Debtor’s name in the first paragraph of this Agreement.
Schedule
        D
        attached
        hereto sets forth each Debtor’s organizational identification number or, if any
        Debtor does not have one, states that one does not exist.

      

      (v) 
        (i) The
        actual name of each Debtor is the name set forth on the signature pages hereto;
        (ii) no Debtor has any trade names except as set forth on Schedule
        E
        attached
        hereto; (iii) no Debtor has used any name other than that stated in the
        signature pages hereto or as set forth on Schedule
        E
        for the
        preceding five years; and (iv) no entity has merged into any Debtor or been
        acquired by any Debtor within the past five years except as set forth on
        Schedule
        E
        or as
        previously disclosed in the periodic reports filed on EDGAR with the Securities
        and Exchange Commission.

      

      (w) At
        any
        time and from time to time that any Collateral consists of instruments,
        certificated securities or other items that require or permit possession
        by the
        secured party to perfect the security interest created hereby, the applicable
        Debtor shall deliver such Collateral to the Agent.

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

         

      

      (x) Upon
        the
        occurrence and during the continuance of any Event of Default, if there is
        any
        investment property or deposit account included as Collateral that can be
        perfected by “control” through an account control agreement, the applicable
        Debtor shall cause such an account control agreement, in form and substance
        in
        each case satisfactory to the Secured Parties, to be entered into and delivered
        to the Secured Parties at the request of the Agent.

      

      (y)
         To
        the
        extent that any Collateral is in the possession of any third party, the
        applicable Debtor shall join with the Secured Parties in notifying such third
        party of the Secured Parties’ security interest in such Collateral and shall use
        its best efforts to obtain an acknowledgement and agreement from such third
        party with respect to the Collateral, in form and substance satisfactory
        to the
        Secured Parties.

       

      (z) Each
        Debtor shall cause each subsidiary
        of such
        Debtor to immediately become a party hereto (an “Additional
        Debtor”),
        by
        executing and delivering an Additional Debtor Joinder in substantially the
        form
        of Annex
        A
        attached
        hereto and comply with the provisions hereof applicable to the Debtors.
        Concurrent therewith, the Additional Debtor shall deliver replacement schedules
        for, or supplements to all other Schedules to (or referred to in) this
        Agreement, as applicable, which replacement schedules shall supersede, or
        supplements shall modify, the Schedules then in effect. The Additional Debtor
        shall also deliver such opinions of counsel, authorizing resolutions, good
        standing certificates, incumbency certificates, organizational documents,
        financing statements and other information and documentation as the Secured
        Parties may reasonably request. Upon delivery of the foregoing to the Secured
        Parties, the Additional Debtor shall be and become a party to this Agreement
        with the same rights and obligations as the Debtors, for all purposes hereof
        as
        fully and to the same extent as if it were an original signatory hereto and
        shall be deemed to have made the representations, warranties and covenants
        set
        forth herein as of the date of execution and delivery of such Additional
        Debtor
        Joinder, and all references herein to the “Debtors” shall be deemed to include
        each Additional Debtor.

      

      (aa)
         Each
        Debtor shall vote the Pledged Securities to comply with the covenants and
        agreements set forth herein and in the Notes.

      

      (bb) Each
        Debtor shall register the pledge of the applicable Pledged Securities on
        the
        books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
        to register the pledge of the applicable Pledged Securities in the name of
        the
        Secured Parties on the books of such issuer. Further, except with respect
        to
        certificated securities delivered to the Agent, the applicable Debtor shall
        deliver to Agent an acknowledgement of pledge (which, where appropriate,
        shall
        comply with the requirements of the relevant UCC with respect to perfection
        by
        registration) signed by the issuer of the applicable Pledged Securities,
        which
        acknowledgement shall confirm that: (a) it has registered the pledge on its
        books and records; and (b) at any time directed by Agent during the continuation
        of an Event of Default, such issuer will transfer the record ownership of
        such
        Pledged Securities into the name of any designee of Agent, will take such
        steps
        as may be necessary to effect the transfer, and will comply with all other
        instructions of Agent regarding such Pledged Securities without the further
        consent of the applicable Debtor.

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

         

      

      (cc)
        In
        the
        event that, upon an occurrence of an Event of Default, Agent shall sell all
        or
        any of the Pledged Securities to another party or parties (herein called
        the
“Transferee”)
        or
        shall purchase or retain all or any of the Pledged Securities, each Debtor
        shall, to the extent applicable: (i) deliver to Agent or the Transferee,
        as the
        case may be, the articles of incorporation, bylaws, minute books, stock
        certificate books, corporate seals, deeds, leases, indentures, agreements,
        evidences of indebtedness, books of account, financial records and all other
        Organizational Documents and records of the Debtors and their direct and
        indirect subsidiaries; (ii) use its best efforts to obtain resignations of
        the
        persons then serving as officers and directors of the Debtors and their direct
        and indirect subsidiaries, if so requested; and (iii) use its best efforts
        to
        obtain any approvals that are required by any governmental or regulatory
        body in
        order to permit the sale of the Pledged Securities to the Transferee or the
        purchase or retention of the Pledged Securities by Agent and allow the
        Transferee or Agent to continue the business of the Debtors and their direct
        and
        indirect subsidiaries.

       

      (dd) Each
        Debtor will from time to time, at the joint and several expense of the Debtors,
        promptly execute and deliver all such further instruments and documents,
        and
        take all such further action as may be necessary or desirable, or as the
        Secured
        Parties may reasonably request, in order to perfect and protect any security
        interest granted or purported to be granted hereby or to enable the Secured
        Parties to exercise and enforce their rights and remedies hereunder and with
        respect to any Collateral or to otherwise carry out the purposes of this
        Agreement.

      

      (ee) Schedule
        F
        attached
        hereto lists all of the patents, patent applications, trademarks, trademark
        applications, registered copyrights, and domain names owned by any of the
        Debtors as of the date hereof. Schedule
        F
        lists
        all material licenses in favor of any Debtor for the use of any patents,
        trademarks, copyrights and domain names as of the date hereof. All material
        patents and trademarks of the Debtors have been duly recorded at the United
        States Patent and Trademark Office and all material copyrights of the Debtors
        have been duly recorded at the United States Copyright Office.

      

      (ff) Except
        as
        set forth on Schedule
        G
        attached
        hereto, none of the account debtors or other persons or entities obligated
        on
        any of the Collateral is a governmental authority covered by the Federal
        Assignment of Claims Act or any similar federal, state or local statute or
        rule
        in respect of such Collateral.

      

      (gg) Schedule
        H
        hereto
        sets forth the expected use of proceeds from this financing.

      

      (hh) The
        Company shall, by 8:30 a.m. (New York City time) on or before the 4th
        business
        day following the date hereof, issue a Current Report on Form 8-K disclosing
        the
        material terms of the transactions contemplated hereby. The Company and each
        Secured Party shall consult with each other in issuing any other press releases
        with respect to the transactions contemplated hereby, and neither the Company
        nor any Secured Party shall issue any such press release or otherwise make
        any
        such public statement without the prior consent of the Company, with respect
        to
        any press release of any Secured Party, or without the prior consent of each
        Secured Party, with respect to any press release of the Company, which consent
        shall not unreasonably be withheld or delayed, except if such disclosure
        is
        required by law, in which case the disclosing party shall promptly provide
        the
        other party with prior notice of such public statement or
        communication.

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

         

      

      (ii) The
        Company and the Subsidiaries, severally and jointly, will indemnify and hold
        each Secured Party and its directors, officers, shareholders, members, partners,
        employees and agents (and any other Persons with a functionally equivalent
        role
        of a Person holding such titles notwithstanding a lack of such title or any
        other title), each Person who controls such Secured Party (within the meaning
        of
        Section 15 of the Securities Act and Section 20 of the Exchange Act), and
        the
        directors, officers, shareholders, agents, members, partners or employees
        (and
        any other Persons with a functionally equivalent role of a Person holding
        such
        titles notwithstanding a lack of such title or any other title) of such
        controlling person (each, a “Indemnified
        Party”)
        harmless from any and all losses, liabilities, obligations, claims,
        contingencies, damages, costs and expenses, including all judgments, amounts
        paid in settlements, court costs and reasonable attorneys’ fees and costs of
        investigation that any such Indemnified Party may suffer or incur as a result
        of
        or relating to (a) any breach of any of the representations, warranties,
        covenants or agreements made by the Company in this Agreement or in the other
        Transaction Documents or (b) any action instituted against a Secured Party,
        or
        any of them or their respective Affiliates, by any stockholder of the Company
        who is not an Affiliate of such Secured Party, with respect to any of the
        transactions contemplated by the Transaction Documents (unless such action
        is
        based upon a breach of such Secured Party’s representations, warranties or
        covenants under the Transaction Documents or any agreements or understandings
        such Secured Party may have with any such stockholder or any violations by
        the
        Secured Party of state or federal securities laws or any conduct by such
        Secured
        Party which constitutes fraud, gross negligence, willful misconduct or
        malfeasance). If any action shall be brought against any Indemnified Party
        in
        respect of which indemnity may be sought pursuant to this Agreement, such
        Indemnified Party shall promptly notify the Company in writing, and the Company
        shall have the right to assume the defense thereof with counsel of its own
        choosing reasonably acceptable to the Indemnified Party. Any Indemnified
        Party
        shall have the right to employ separate counsel in any such action and
        participate in the defense thereof, but the fees and expenses of such counsel
        shall be at the expense of such Indemnified Party except to the extent that
        (i)
        the employment thereof has been specifically authorized by the Company in
        writing, (ii) the Company has failed after a reasonable period of time to
        assume
        such defense and to employ counsel or (iii) in such action there is, in the
        reasonable opinion of such separate counsel, a material conflict on any material
        issue between the position of the Company and the position of such Indemnified
        Party, in which case the Company shall be responsible for the reasonable
        fees
        and expenses of no more than one such separate counsel. The Company will
        not be
        liable to any Indemnified Party under this Agreement (i) for any settlement
        by a
        Indemnified Party effected without the Company’s prior written consent, which
        shall not be unreasonably withheld or delayed or (ii) to the extent, but
        only to
        the extent, that a loss, claim, damage or liability is attributable to any
        Indemnified Party’s breach of any of the representations, warranties, covenants
        or agreements made by such Indemnified Party in this Agreement or in the
        other
        Transaction Documents.

      

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

         

      

      (jj) To
        the
        extent that the Company or any Subsidiary makes a payment or payments to
        any
        Secured Party pursuant to any Transaction Document or a Secured Party enforces
        or exercises its rights thereunder, and such payment or payments or the proceeds
        of such enforcement or exercise or any part thereof are subsequently
        invalidated, declared to be fraudulent or preferential, set aside, recovered
        from, disgorged by or are required to be refunded, repaid or otherwise restored
        to the Company or any Subsidiary, a trustee, receiver or any other person
        under
        any law (including, without limitation, any bankruptcy law, state or federal
        law, common law or equitable cause of action), then to the extent of any
        such
        restoration the obligation or part thereof originally intended to be satisfied
        shall be revived and continued in full force and effect as if such payment
        had
        not been made or such enforcement or setoff had not occurred.

      

      (kk)To
        the
        extent it may lawfully do so, the Company and the Subsidiaries hereby agrees
        not
        to insist upon or plead or in any manner whatsoever claim, and will resist
        any
        and all efforts to be compelled to take the benefit or advantage of, usury
        laws
        wherever enacted, now or at any time hereafter in force, in connection with
        any
        claim, action or proceeding that may be brought by any Secured Party in order
        to
        enforce any right or remedy under this Agreement or the Note. Notwithstanding
        any provision to the contrary contained in this Agreement or the Note, it
        is
        expressly agreed and provided that the total liability of the Company under
        this
        Agreement or the Note for payments in the nature of interest shall not exceed
        the maximum lawful rate authorized under applicable law (the “Maximum
        Rate”),
        and,
        without limiting the foregoing, in no event shall any rate of interest or
        default interest, or both of them, when aggregated with any other sums in
        the
        nature of interest that the Company or any Subsidiary may be obligated to
        pay
        under this Agreement or the Note exceed such Maximum Rate. It is agreed that
        if
        the maximum contract rate of interest allowed by law and applicable to this
        Agreement or the Note is increased or decreased by statute or any official
        governmental action subsequent to the date hereof, the new maximum contract
        rate
        of interest allowed by law will be the Maximum Rate applicable to this Agreement
        or the Note from the effective date forward, unless such application is
        precluded by applicable law. If under any circumstances whatsoever, interest
        in
        excess of the Maximum Rate is paid by the Company or any Subsidiary to any
        Secured Party with respect to indebtedness evidenced by this Agreement or
        the
        Note, such excess shall be applied by such Secured Party to the unpaid principal
        balance of any such indebtedness or be refunded to the Company or any
        Subsidiary, the manner of handling such excess to be at such Secured Party’s
        election.

      

      (ll) The
        Warrants are duly authorized and, upon the execution of this Agreement by
        a
        Secured Party will be duly and validly issued, fully paid and nonassessable,
        free and clear of all liens imposed by the Company other than restrictions
        on
        transfer provided for in the Purchase Agreement. The Warrant Shares, when
        issued
        in accordance with the terms of the Warrants, will be validly issued, fully
        paid
        and nonassessable, free and clear of all liens imposed by the Company. The
        Company has reserved from its duly authorized capital stock a number of shares
        of Common Stock for issuance of the Warrant Shares at least equal to the
        Required Minimum. 

      

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

         

      

      (mm) Based
        on
        the financial condition of the Company following its receipt of payment for
        the
        Notes, (i) the Company's fair saleable value of its assets exceeds the amount
        that will be required to be paid on or in respect of the Company's existing
        debts and other liabilities (including known contingent liabilities) as they
        mature; (ii) the Company's assets do not constitute unreasonably small capital
        to carry on its business for the current fiscal year as now conducted and
        as
        proposed to be conducted including its capital needs taking into account
        the
        particular capital requirements of the business conducted by the Company,
        and
        projected capital requirements and capital availability thereof; and (iii)
        the
        current cash flow of the Company, together with the proceeds the Company
        would
        receive, were it to liquidate all of its assets, after taking into account
        all
        anticipated uses of the cash, would be sufficient to pay all amounts on or
        in
        respect of its debt when such amounts are required to be paid. The Company
        does
        not intend to incur debts beyond its ability to pay such debts as they mature
        (taking into account the timing and amounts of cash to be payable on or in
        respect of its debt).

      

      (nn) At
        the
        Closing, the Company has agreed to reimburse Carter Securities, Inc. the
        non-accountable sum of $15,000, for its expenses, $5,000 of which has been
        previously paid. Except as expressly set forth in this Agreement to the
        contrary, each party shall pay the fees and expenses of its advisers, counsel,
        accountants and other experts, if any, and all other expenses incurred by
        such
        party incident to the negotiation, preparation, execution, delivery and
        performance of this Agreement.

      

      6. Effect
        of Pledge on Certain Rights. If
        any of
        the Collateral subject to this Agreement consists of nonvoting equity or
        ownership interests (regardless of class, designation, preference or rights)
        that may be converted into voting equity or ownership interests upon the
        occurrence of certain events (including, without limitation, upon the transfer
        of all or any of the other stock or assets of the issuer), it is agreed that
        the
        pledge of such equity or ownership interests pursuant to this Agreement or
        the
        enforcement of any of Agent’s rights hereunder shall not be deemed to be the
        type of event which would trigger such conversion rights notwithstanding
        any
        provisions in the Organizational Documents or agreements to which any Debtor
        is
        subject or to which any Debtor is party.

      

      7.
         Defaults.
        The
        following events shall be “Events
        of Default”:

      

      (a)
        The
        occurrence of an Event of Default (as defined in the Note) under the
        Note;

      

      (b)
        Any
        representation or warranty of any Debtor in this Agreement shall prove to
        have
        been incorrect in any material respect when made;

      

      (c)
        The
        failure by any Debtor to observe or perform any of its obligations hereunder
        for
        ten (10) days after delivery to such Debtor of notice of such failure by
        or on
        behalf of a Secured Party unless such default is capable of cure but cannot
        be
        cured within such time frame and such Debtor is using best efforts to cure
        same
        in a timely fashion; or

      

      
        
          
          

        

        
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      (d)
        If
        any provision of this Agreement shall at any time for any reason be declared
        to
        be null and void, or the validity or enforceability thereof shall be contested
        by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
        governmental authority having jurisdiction over any Debtor, seeking to establish
        the invalidity or unenforceability thereof, or any Debtor shall deny that
        any
        Debtor has any liability or obligation purported to be created under this
        Agreement.

      

      8.  Duty
        To Hold In Trust.
        

      

      (a) Upon
        the
        occurrence of any Event of Default and at any time thereafter, each Debtor
        shall, upon receipt of any revenue, income,
        dividend, interest
        or other
        sums subject to the Security Interest, whether payable pursuant to the Note
        or
        otherwise, or of any check, draft, note, trade acceptance or other instrument
        evidencing an obligation to pay any such sum, hold the same in trust for
        the
        Secured Parties and shall forthwith endorse and transfer any such sums or
        instruments, or both, to the Secured Parties, pro-rata in proportion to their
        initial purchases of Notes for application to the satisfaction of the
        Obligations (and if any Note is not outstanding, pro rata
        in
        proportion to the initial purchases of the remaining Notes). 

      

      (b) If
        any
        Debtor shall become entitled to receive or shall receive any securities or
        other
        property (including, without limitation, shares of Pledged Securities or
        instruments representing Pledged Securities acquired after the date hereof,
        or
        any options, warrants, rights or other similar property or certificates
        representing a dividend, or any distribution in connection with any
        recapitalization, reclassification or increase or reduction of capital, or
        issued in connection with any reorganization of such Debtor or any of its
        direct
        or indirect subsidiaries) in respect of the Pledged Securities (whether as
        an
        addition to, in substitution of, or in exchange for, such Pledged Securities
        or
        otherwise), such Debtor agrees to (i) accept the same as the agent of the
        Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
        of
        the Secured Parties; and (iii) to deliver any and all certificates or
        instruments evidencing the same to Agent on or before the close of business
        on
        the fifth business day following the receipt thereof by such Debtor, in the
        exact form received together with the Necessary Endorsements, to be held
        by
        Agent subject to the terms of this Agreement as Collateral.

      

      9.  Rights
        and Remedies Upon Default.
        

      

      (a) Upon
        the
        occurrence of any Event of Default and at any time thereafter, the Secured
        Parties, acting through any agent appointed by them for such purpose, shall
        have
        the right to exercise all of the remedies conferred hereunder and under the
        Notes, and the Secured Parties shall have all the rights and remedies of
        a
        secured party under the UCC. Without limitation, the Secured Parties shall
        have
        the following rights and powers:

      

      (i)
        The
        Secured Parties shall have the right to take possession of the Collateral
        and,
        for that purpose, enter, with the aid and assistance of any person, any premises
        where the Collateral, or any part thereof, is or may be placed and remove
        the
        same, and each Debtor shall assemble the Collateral and make it available
        to the
        Secured Parties at places which the Secured Parties shall reasonably select,
        whether at such Debtor's premises or elsewhere, and make available to the
        Secured Parties, without rent, all of such Debtor’s respective premises and
        facilities for the purpose of the Secured Parties taking possession of, removing
        or putting the Collateral in saleable or disposable form.

      

      
        
          
          

        

        
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      (ii) Upon
        notice to the Debtors by Agent, all rights of each Debtor to exercise the
        voting
        and other consensual rights which it would otherwise be entitled to exercise
        and
        all rights of each Debtor to receive the dividends and interest which it
        would
        otherwise be authorized to receive and retain, shall cease. Upon such notice,
        Agent shall have the right to receive any interest, cash dividends or other
        payments on the Collateral and, at the option of Agent, to exercise in such
        Agent’s discretion all voting rights pertaining thereto. Without limiting the
        generality of the foregoing, Agent shall have the right (but not the obligation)
        to exercise all rights with respect to the Collateral as it were the sole
        and
        absolute owners thereof, including, without limitation, to vote and/or to
        exchange, at its sole discretion, any or all of the Collateral in connection
        with a merger, reorganization, consolidation, recapitalization or other
        readjustment concerning or involving the Collateral or any Debtor or any
        of its
        direct or indirect subsidiaries.

      

      (iii)
        The
        Secured Parties shall have the right to operate the business of each Debtor
        using the Collateral and shall have the right to assign, sell, lease or
        otherwise dispose of and deliver all or any part of the Collateral, at public
        or
        private sale or otherwise, either with or without special conditions or
        stipulations, for cash or on credit or for future delivery, in such parcel
        or
        parcels and at such time or times and at such place or places, and upon such
        terms and conditions as the Secured Parties may deem commercially reasonable,
        all without (except as shall be required by applicable statute and cannot
        be
        waived) advertisement or demand upon or notice to any Debtor or right of
        redemption of a Debtor, which are hereby expressly waived. Upon each such
        sale,
        lease, assignment or other transfer of Collateral, the Secured Parties may,
        unless prohibited by applicable law which cannot be waived, purchase all
        or any
        part of the Collateral being sold, free from and discharged of all trusts,
        claims, right of redemption and equities of any Debtor, which are hereby
        waived
        and released.

      

      (iv) The
        Secured Parties shall have the right (but not the obligation) to notify any
        account debtors and any obligors under instruments or accounts to make payments
        directly to the Secured Parties and to enforce the Debtors’ rights against such
        account debtors and obligors.

      

      
        
          
          

        

        
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      (v) The
        Secured Parties may (but are not obligated to) direct any financial intermediary
        or any other person or entity holding any investment property to transfer
        the
        same to the Secured Parties or their designee.

      

      (vi) The
        Secured Parties may (but are not obligated to) transfer any or all Intellectual
        Property registered in the name of any Debtor at the United States Patent
        and
        Trademark Office and/or Copyright Office into the name of the Secured Parties
        or
        any designee or any purchaser of any Collateral.

      

      (b) The
        Agent
        may comply with any applicable law in connection with a disposition of
        Collateral and such compliance will not be considered adversely to affect
        the
        commercial reasonableness of any sale of the Collateral. The Agent may sell
        the
        Collateral without giving any warranties and may specifically disclaim such
        warranties. If the Agent sells any of the Collateral on credit, the Debtors
        will
        only be credited with payments actually made by the purchaser. In addition,
        each
        Debtor waives any and all rights that it may have to a judicial hearing in
        advance of the enforcement of any of the Agent’s rights and remedies hereunder,
        including, without limitation, its right following an Event of Default to
        take
        immediate possession of the Collateral and to exercise its rights and remedies
        with respect thereto.

       

      (c) For
        the
        purpose of enabling the Agent to further exercise rights and remedies under
        this
        Section 9 or elsewhere provided by agreement or applicable law, each Debtor
        hereby grants to the Agent, for the benefit of the Agent and the Secured
        Parties, an irrevocable, nonexclusive license (exercisable without payment
        of
        royalty or other compensation to such Debtor) to use, license or sublicense
        following an Event of Default, any Intellectual Property now owned or hereafter
        acquired by such Debtor, and wherever the same may be located, and including
        in
        such license access to all media in which any of the licensed items may be
        recorded or stored and to all computer software and programs used for the
        compilation or printout thereof.

      

      10.  Applications
        of Proceeds.
        The
        proceeds of any such sale, lease or other disposition of the Collateral
        hereunder shall be applied first, to the expenses of retaking, holding, storing,
        processing and preparing for sale, selling, and the like (including, without
        limitation, any taxes, fees and other costs incurred in connection therewith)
        of
        the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
        Secured Parties in enforcing their rights hereunder and in connection with
        collecting, storing and disposing of the Collateral, and then to satisfaction
        of
        the Obligations pro rata among the Secured Parties (based on then outstanding
        principal amounts of Notes at the time of any such determination), and to
        the
        payment of any other amounts required by applicable law, after which the
        Secured
        Parties shall pay to the applicable Debtor any surplus proceeds. If, upon
        the
        sale, license or other disposition of the Collateral, the proceeds thereof
        are
        insufficient to pay all amounts to which the Secured Parties are legally
        entitled, the Debtors will be liable for the deficiency, together with interest
        thereon, at the rate of 15% per annum or the lesser amount permitted by
        applicable law (the “Default
        Rate”),
        and
        the reasonable fees of any attorneys employed by the Secured Parties to collect
        such deficiency. To the extent permitted by applicable law, each Debtor waives
        all claims, damages and demands against the Secured Parties arising out of
        the
        repossession, removal, retention or sale of the Collateral, unless due solely
        to
        the gross negligence or willful misconduct of the Secured Parties as determined
        by a final judgment (not subject to further appeal) of a court of competent
        jurisdiction.

      

      
        
          
          

        

        
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      11. Securities
        Law Provision.
        Each
        Debtor recognizes that Agent may be limited in its ability to effect a sale
        to
        the public of all or part of the Pledged Securities by reason of certain
        prohibitions in the Securities Act of 1933, as amended, or other federal
        or
        state securities laws (collectively, the “Securities
        Laws”),
        and
        may be compelled to resort to one or more sales to a restricted group of
        Secured
        Parties who may be required to agree to acquire the Pledged Securities for
        their
        own account, for investment and not with a view to the distribution or resale
        thereof. Each Debtor agrees that sales so made may be at prices and on terms
        less favorable than if the Pledged Securities were sold to the public, and
        that
        Agent has no obligation to delay the sale of any Pledged Securities for the
        period of time necessary to register the Pledged Securities for sale to the
        public under the Securities Laws. Each Debtor shall cooperate with Agent
        in its
        attempt to satisfy any requirements under the Securities Laws (including,
        without limitation, registration thereunder if requested by Agent) applicable
        to
        the sale of the Pledged Securities by Agent.

       

      12.  Costs
        and Expenses.
        Each
        Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
        incurred in connection with any filing required hereunder, including without
        limitation, any financing statements pursuant to the UCC, continuation
        statements, partial releases and/or termination statements related thereto
        or
        any expenses of any searches reasonably required by the Secured Parties.
        The
        Debtors shall also pay all other claims and charges which in the reasonable
        opinion of the Secured Parties might prejudice, imperil or otherwise affect
        the
        Collateral or the Security Interest therein. The Debtors will also, upon
        demand,
        pay to the Secured Parties the amount of any and all reasonable expenses,
        including the reasonable fees and expenses of its counsel and of any experts
        and
        agents, which the Secured Parties may incur in connection with (i) the
        enforcement of this Agreement, (ii) the custody or preservation of, or the
        sale
        of, collection from, or other realization upon, any of the Collateral, or
        (iii)
        the exercise or enforcement of any of the rights of the Secured Parties under
        the Notes. Until so paid, any fees payable hereunder shall be added to the
        principal amount of the Notes and shall bear interest at the Default
        Rate.

      

      13.  Responsibility
        for Collateral.
        The
        Debtors assume all liabilities and responsibility in connection with all
        Collateral, and the Obligations shall in no way be affected or diminished
        by
        reason of the loss, destruction, damage or theft of any of the Collateral
        or its
        unavailability for any reason. Without limiting the generality of the foregoing,
        (a) neither the Agent nor any Secured Party (i) has any duty (either before
        or
        after an Event of Default) to collect any amounts in respect of the Collateral
        or to preserve any rights relating to the Collateral, or (ii) has any obligation
        to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor
        shall remain obligated and liable under each contract or agreement included
        in
        the Collateral to be observed or performed by such Debtor thereunder. Neither
        the Agent nor any Secured Party shall have any obligation or liability under
        any
        such contract or agreement by reason of or arising out of this Agreement
        or the
        receipt by the Agent or any Secured Party of any payment relating to any
        of the
        Collateral, nor shall the Agent or any Secured Party be obligated in any
        manner
        to perform any of the obligations of any Debtor under or pursuant to any
        such
        contract or agreement, to make inquiry as to the nature or sufficiency of
        any
        payment received by the Agent or any Secured Party in respect of the Collateral
        or as to the sufficiency of any performance by any party under any such contract
        or agreement, to present or file any claim, to take any action to enforce
        any
        performance or to collect the payment of any amounts which may have been
        assigned to the Agent or to which the Agent or any Secured Party may be entitled
        at any time or times.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

         

      

      14.
         Term
        of Agreement.
        The
        Security Interest shall terminate on the date on which all payments under
        the
        Notes have been indefeasibly paid in full and all other Obligations have
        been
        paid or discharged.

      

      15.
         Power
        of Attorney; Further Assurances.

      

      (a)
         Each
        Debtor authorizes the Secured Parties, and does hereby make, constitute and
        appoint the Secured Parties and their respective officers, agents, successors
        or
        assigns with full power of substitution, as such Debtor’s true and lawful
        attorney-in-fact, with power, in the name of the various Secured Parties
        or such
        Debtor, to, after the occurrence and during the continuance of an Event of
        Default, (i) endorse any note, checks, drafts, money orders or other instruments
        of payment (including payments payable under or in respect of any policy
        of
        insurance) in respect of the Collateral that may come into possession of
        the
        Secured Parties; (ii) to sign and endorse any financing statement pursuant
        to
        the UCC or any invoice, freight or express bill, bill of lading, storage
        or
        warehouse receipts, drafts against debtors, assignments, verifications and
        notices in connection with accounts, and other documents relating to the
        Collateral; (iii) to pay or discharge taxes, liens, security interests or
        other
        encumbrances at any time levied or placed on or threatened against the
        Collateral; (iv) to demand, collect, receipt for, compromise, settle and
        sue for
        monies due in respect of the Collateral; (v) to transfer any Intellectual
        Property or provide licenses respecting any Intellectual Property; and (vi)
        generally, at the option of the Secured Parties, and at the expense of the
        Debtors, at any time, or from time to time, to execute and deliver any and
        all
        documents and instruments and to do all acts and things which the Secured
        Parties deem necessary to protect, preserve and realize upon the Collateral
        and
        the Security Interest granted therein in order to effect the intent of this
        Agreement and the Notes all as fully and effectually as the Debtors might
        or
        could do; and each Debtor hereby ratifies all that said attorney shall lawfully
        do or cause to be done by virtue hereof. This power of attorney is coupled
        with
        an interest and shall be irrevocable for the term of this Agreement and
        thereafter as long as any of the Obligations shall be outstanding. The
        designation set forth herein shall be deemed to amend and supersede any
        inconsistent provision in the Organizational Documents or other documents
        or
        agreements to which any Debtor is subject or to which any Debtor is a party.
        Without
        limiting the generality of the foregoing, after the occurrence and during
        the
        continuance of an Event of Default, each Secured Party is specifically
        authorized to execute and file any applications for or instruments of transfer
        and assignment of any patents, trademarks, copyrights or other Intellectual
        Property with the United States Patent and Trademark Office and the United
        States Copyright Office.

      

      (b)
         On
        a
        continuing basis, each Debtor will make, execute, acknowledge, deliver, file
        and
        record, as the case may be, with the proper filing and recording agencies
        in any
        jurisdiction, including, without limitation, the jurisdictions indicated
        on
Schedule
        C
        attached
        hereto, all such instruments, and take all such action as may reasonably
        be
        deemed necessary or advisable, or as reasonably requested by the Secured
        Parties, to perfect the Security Interest granted hereunder and otherwise to
        carry out the intent and purposes of this Agreement, or for assuring and
        confirming to the Secured Parties the grant or perfection of a perfected
        security interest in all the Collateral under the UCC.

      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

         

      

      (c)
         Each
        Debtor hereby irrevocably appoints the Secured Parties as such Debtor’s
        attorney-in-fact, with full authority in the place and instead of such Debtor
        and in the name of such Debtor, from time to time in the Secured Parties’
discretion, to take any action and to execute any instrument which the Secured
        Parties may deem necessary or advisable to accomplish the purposes of this
        Agreement, including the filing, in its sole discretion, of one or more
        financing or continuation statements and amendments thereto, relative to
        any of
        the Collateral without the signature of such Debtor where permitted by law,
        which financing statements may (but need not) describe the Collateral as
“all
        assets” or “all personal property” or words of like import, and ratifies all
        such actions taken by the Secured Parties. This power of attorney is coupled
        with an interest and shall be irrevocable for the term of this Agreement
        and
        thereafter as long as any of the Obligations shall be outstanding.

      

      16.  Notices.
        All
        notices, requests, demands and other communications hereunder shall be subject
        to the notice provision of the Notes.

      

      17.  Other
        Security.
        To the
        extent that the Obligations are now or hereafter secured by property other
        than
        the Collateral or by the guarantee, endorsement or property of any other
        person,
        firm, corporation or other entity, then the Secured Parties shall have the
        right, in its sole discretion, to pursue, relinquish, subordinate, modify
        or
        take any other action with respect thereto, without in any way modifying
        or
        affecting any of the Secured Parties’ rights and remedies
        hereunder.

      

      18. Appointment
        of Agent.
        The
        Secured Parties hereby appoint Anthony Polak to act as their agent
        (“Agent”)
        for
        purposes of exercising any and all rights and remedies of the Secured Parties
        hereunder. Such appointment shall continue until revoked in writing by a
        Majority
        in Interest, at which time a Majority in Interest
        shall
        appoint a new Agent, provided that Anthony Polak may not be removed as Agent
        unless Agent shall then hold less than $50,000 in principal amount of
        Notes.
        The
        Agent
        shall have the rights, responsibilities and immunities set forth in Annex
        B
        hereto.

      

      19. Representations
        and Warranties of the Secured Parties.
        Each
        Secured Party hereby, for itself and for no other Secured Party, represents
        and
        warrants as of the date hereof to the Company as follows:

      

      (a) Authority.
        The
        execution, delivery and performance by such Secured Party of the transactions
        contemplated by this Agreement have been duly authorized by all necessary
        corporate or similar action on the part of such Secured Party. This Agreement
        has been duly executed by such Secured Party, and when delivered by such
        Secured
        Party in accordance with the terms hereof, will constitute the valid and
        legally
        binding obligation of such Secured Party, enforceable against it in accordance
        with its terms, except (i) as limited by general equitable principles and
        applicable bankruptcy, insolvency, reorganization, moratorium and other laws
        of
        general application affecting enforcement of creditors’ rights generally, (ii)
        as limited by laws relating to the availability of specific performance,
        injunctive relief or other equitable remedies and (iii) insofar as
        indemnification and contribution provisions may be limited by applicable
        law.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

         

      

      (b) Own
        Account.
        Such
        Secured Party understands that the Warrants are “restricted securities” and have
        not been registered under the Securities Act or any applicable state securities
        law and is acquiring the Warrant as principal for its own account and not
        with a
        view to or for distributing or reselling such Warrants or any part thereof
        in
        violation of the Securities Act or any applicable state securities law, has
        no
        present intention of distributing the Warrant in violation of the Securities
        Act
        or any applicable state securities law and has no arrangement or understanding
        with any other persons regarding the distribution of such Warrants (this
        representation and warranty not limiting such Secured Party’s right to sell the
        Warrant Shares pursuant to a registration statement or otherwise in compliance
        with applicable federal and state securities laws) in violation of the
        Securities Act or any applicable state securities law. Such Secured Party
        is
        acquiring the Warrants hereunder in the ordinary course of its business.
        Such
        Secured Party does not have any agreement or understanding, directly or
        indirectly, with any person to distribute any of the Warrants or Warrant
        Shares.

       

      (c) Secured
        Party Status.
        Such
        Secured Party is an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
        (a)(3), (a)(7) or (a)(8) under the Securities Act. Such Secured Party is
        not
        required to be registered as a broker-dealer under Section 15 of the Exchange
        Act.

       

      (d) General
        Solicitation.
        Such
        Secured Party is not acquiring the Notes or Warrants as a result of any
        advertisement, article, notice or other communication regarding the Notes
        or
        Warrants published in any newspaper, magazine or similar media or broadcast
        over
        television or radio or presented at any seminar or any other general
        solicitation or general advertisement.

       

      20. Right
        to Exchange for Qualified Financing. Each
        Secured Party shall have the right, but not the obligation, to purchase the
        securities offered by the Company in its next Qualified Financing by delivering
        such Secured Party’s Note to the Company (together with any subscription
        documents which may be otherwise necessary to participate in such Qualified
        Financing) as payment in full for such subscription, at the face principal
        amount of such Secured Party’s Note. The Company shall provide each Secured
        Party with not less than 7 business days’ written notice of such Qualified
        Financing, and the material terms thereof.

      

      21.  Miscellaneous.

      

      (a)
         No
        course
        of dealing between the Debtors and the Secured Parties, nor any failure to
        exercise, nor any delay in exercising, on the part of the Secured Parties,
        any
        right, power or privilege hereunder or under the Notes shall operate as a
        waiver
        thereof; nor shall any single or partial exercise of any right, power or
        privilege hereunder or thereunder preclude any other or further exercise
        thereof
        or the exercise of any other right, power or privilege.

      

      
        
          
          

        

        
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      (b)
         All
        of
        the rights and remedies of the Secured Parties with respect to the Collateral,
        whether established hereby or by the Notes or by any other agreements,
        instruments or documents or by law shall be cumulative and may be exercised
        singly or concurrently.

      

      (c)
         This
        Agreement constitutes the entire agreement of the parties with respect to
        the
        subject matter hereof and is intended to supersede all prior negotiations,
        understandings and agreements with respect thereto. Except as specifically
        set
        forth in this Agreement, no provision of this Agreement may be modified or
        amended except by a written agreement specifically referring to this Agreement
        and signed by the parties hereto.

      

      (d)
         In
        the
        event any provision of this Agreement is held to be invalid, prohibited or
        unenforceable in any jurisdiction for any reason, unless such provision is
        narrowed by judicial construction, this Agreement shall, as to such
        jurisdiction, be construed as if such invalid, prohibited or unenforceable
        provision had been more narrowly drawn so as not to be invalid, prohibited
        or
        unenforceable. If, notwithstanding the foregoing, any provision of this
        Agreement is held to be invalid, prohibited or unenforceable in any
        jurisdiction, such provision, as to such jurisdiction, shall be ineffective
        to
        the extent of such invalidity, prohibition or unenforceability without
        invalidating the remaining portion of such provision or the other provisions
        of
        this Agreement and without affecting the validity or enforceability of such
        provision or the other provisions of this Agreement in any other
        jurisdiction.

      

      (e)
         No
        waiver
        of any breach or default or any right under this Agreement shall be considered
        valid unless in writing and signed by the party giving such waiver, and no
        such
        waiver shall be deemed a waiver of any subsequent breach or default or right,
        whether of the same or similar nature or otherwise.

      

      (f)
         This
        Agreement shall be binding upon and inure to the benefit of each party hereto
        and its successors and assigns.

      

      (g)
         Each
        party shall take such further action and execute and deliver such further
        documents as may be necessary or appropriate in order to carry out the
        provisions and purposes of this Agreement.

      

      (h)
        All
        questions concerning the construction, validity, enforcement and interpretation
        of the Transaction Documents shall be governed by and construed and enforced
        in
        accordance with the internal laws of the State of New York, without regard
        to
        the principles of conflicts of law thereof. Each party agrees that all legal
        proceedings concerning the interpretations, enforcement and defense of the
        transactions contemplated by this Agreement and any other Transaction Documents
        (whether brought against a party hereto or its respective affiliates, directors,
        officers, shareholders, employees or agents) shall be commenced exclusively
        in
        the state and federal courts sitting in the City of New York. Each party
        hereby
        irrevocably submits to the exclusive jurisdiction of the state and federal
        courts sitting in the City of New York, borough of Manhattan for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein (including with respect
        to
        the enforcement of any of the Transaction Documents), and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        that
        such suit, action or proceeding is improper or is an inconvenient venue for
        such
        proceeding. Each party hereby irrevocably waives personal service of process
        and
        consents to process being served in any such suit, action or proceeding by
        mailing a copy thereof via registered or certified mail or overnight delivery
        (with evidence of delivery) to such party at the address in effect for notices
        to it under this Agreement and agrees that such service shall constitute
        good
        and sufficient service of process and notice thereof. Nothing contained herein
        shall be deemed to limit in any way any right to serve process in any other
        manner permitted by law. If either party shall commence an action or proceeding
        to enforce any provisions of the Transaction Documents, then the prevailing
        party in such action or proceeding shall be reimbursed by the other party
        for
        its reasonable attorneys’ fees and other costs and expenses incurred with the
        investigation, preparation and prosecution of such action or
        proceeding.

      

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

         

      

      (i)
         This
        Agreement may be executed in two or more counterparts, all of which when
        taken
        together shall be considered one and the same agreement and shall become
        effective when counterparts have been signed by each party and delivered
        to the
        other party, it being understood that both parties need not sign the same
        counterpart. In the event that any signature is delivered by facsimile
        transmission or by e-mail delivery of a “.pdf” format data file, such signature
        shall create a valid and binding obligation of the party executing (or on
        whose
        behalf such signature is executed) with the same force and effect as if such
        facsimile or “.pdf” signature page were an original thereof.

      

      (j) All
        Debtors shall jointly and severally be liable for the obligations of each
        Debtor
        to the Secured Parties hereunder.

       

      (k) Nothing
        in this Agreement shall be construed to subject Agent or any Secured Party
        to
        liability as a partner in any Debtor or any if its direct or indirect
        subsidiaries that is a partnership or as a member in any Debtor or any of
        its
        direct or indirect subsidiaries that is a limited liability company, nor
        shall
        Agent or any Secured Party be deemed to have assumed any obligations under
        any
        partnership agreement or limited liability company agreement, as applicable,
        of
        any such Debtor or any if its direct or indirect subsidiaries or otherwise,
        unless and until any such Secured Party exercises its right to be substituted
        for such Debtor as a partner or member, as applicable, pursuant
        hereto.

      

      (l) To
        the
        extent that the grant of the security interest in the Collateral and the
        enforcement of the terms hereof require the consent, approval or action of
        any
        partner or member, as applicable, of any Debtor or any direct or indirect
        subsidiary of any Debtor or compliance with any provisions of any of the
        Organizational Documents, the Debtors hereby grant such consent and approval
        and
        waive any such noncompliance with the terms of said documents.

      

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

         

      

      (m) The
        obligations of each Secured Party under this Agreement are several and not
        joint
        with the obligations of any other Secured Party, and no Secured Party shall
        be
        responsible in any way for the performance of the obligations of any other
        Secured Party under this Agreement. Nothing contained herein or in this
        Agreement, and no action taken by any Secured Party pursuant thereto, shall
        be
        deemed to constitute the Secured Parties as a partnership, an association,
        a
        joint venture or any other kind of entity, or create a presumption that the
        Secured Parties are in any way acting in concert or as a group with respect
        to
        such obligations or the transactions contemplated by this Agreement. Each
        Secured Party shall be entitled to independently protect and enforce its
        rights,
        including without limitation the rights arising out of this Agreement, and
        it
        shall not be necessary for any other Secured Party to be joined as an additional
        party in any proceeding for such purpose. Each Secured Party has been
        represented by its own separate legal counsel in their review and negotiation
        of
        this Agreement. For reasons of administrative convenience only, Secured Parties
        and their respective counsel have chosen to communicate with the Company
        through
        FWS. FWS does not represent all of the Secured Parties but only Carter
        Securities, Inc. The Company has elected to provide all Secured Parties with
        the
        same terms under this Agreement for the convenience of the Company and not
        because it was required or requested to do so by the Secured
        Parties.

      

      [SIGNATURE
        PAGES FOLLOW]

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      

       

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

       

      
        	
                ADUROMED
                  INDUSTRIES, INC., a
                  Delaware corporation

                 

                 

              	 	 	 
	
                By: 
                  /s/
                  Kevin T. Dunphy

              	 	 	
              
	
                
                  

                

                Name:
                  Kevin T. Dunphy

                Title:
                  Treasurer and Chief Financial Officer

              	 	 	
              
	
                 

                Address
                  for Notice:

                3
                  Trowbridge Drive

                Bethel,
                  CT 06801

              	 	 	
              

      

      
         

         

        
          	
                  
                    ADUROMED
                      CORPORATION, a
                      Delaware corporation

                     

                  

                   

                	 	 	 
	
                  By: 
                    /s/
                    Kevin T. Dunphy

                	 	 	
                
	
                  
                    

                  

                  
                    Name:
                      Kevin T. Dunphy

                    Title:
                      Treasurer and Chief Financial Officer

                  

                	 	 	
                
	
                   

                  
                    Address
                      for Notice:

                    3
                      Trowbridge Drive

                    Bethel,
                      CT 06801

                  

                	 	 	
                

        

         

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO FOLLOW]

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Norton
        F.
        Hight

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Norton F. Hight

       

      Name
        of
        Authorized Signatory: Norton
        F.
        Hight

       

      Title
        of
        Authorized Signatory: __________________________

      
        
           

        

        
          
            	Address for Notice:
	
                    118 E. 60th
                      Street, #23C

                    New York, New York
                      10022

                  

          

        

         

      

      Address
        for Delivery of Note (if different from address for notice):

      

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      Warrants:
        50,000

      

      Please
        check here to receive a Warrant that does NOT include the limitation on exercise
        contained in Section 2(c) of the Warrant /___/ 

       

      [SIGNATURE
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          30

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Randall
        Hight

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Randall Hight

       

      Name
        of
        Authorized Signatory: Randall
        Hight

       

      Title
        of
        Authorized Signatory: __________________________

      
         

      

      
        
          	
                  Address
                    for Notice: c/o Maxim Group attn: 

                	Tony Polak
                  405
                    Lexington Avenue, New York, NY
                    10174

                

        

      

       

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      [SIGNATURE
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          31

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Marc
        Engelbert

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Marc
        Engelbert

       

      Name
        of
        Authorized Signatory: Marc
        Engelbert

       

      Title
        of
        Authorized Signatory: __________________________

      
         

        
          
            	
                    Address
                      for Notice: 

                  	
                    
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

                  

          

        

         

      

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      Subscription
        Amount: $22,500

      

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        50,000

      

      Please
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        contained in Section 2(c) of the Warrant /___/ 

       

      [SIGNATURE
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          32

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Double
        U
        Master Fund LP

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Sheldon S. Traube

       

      Name
        of
        Authorized Signatory: Sheldon
        S. Traube

       

      Title
        of
        Authorized Signatory: Navigator
        Management Ltd

      
        
           

          
            
              	
                      Address
                        for Notice:

                    	
                      
                        Beacon
                          Capital Management

                        Harbour
                          House, Waterfront Drive, PO Box 972

                        Road
                          Town, Tortola, British Virgin
                          Islands

                      

                    

            

          

           

        

      

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      [SIGNATURE
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          33

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Domaco
        Venture Capital Fund

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Jack
        Polak

       

      Name
        of
        Authorized Signatory: Jack
        Polak

       

      Title
        of
        Authorized Signatory: General
        Partner

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	c/o Maxim Group attn: Tony Polak
                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          34

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: J.
        Polak,
        Trustee, C. Polak, Trustee, C. Polak #1, Trustee

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Jack
        Polak

       

      Name
        of
        Authorized Signatory: Jack
        Polak

       

      Title
        of
        Authorized Signatory: Trustee

      
        
          
             

          

          
            
              	
                      Address
                        for Notice: 

                    	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

      Address
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      Subscription
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        50,000

      

      Please
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        contained in Section 2(c) of the Warrant /___/ 

       

      [SIGNATURE
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          35

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Equity
        Interest, Inc.

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Jack
        Polak

       

      Name
        of
        Authorized Signatory: Jack
        Polak

       

      Title
        of
        Authorized Signatory: ______________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	c/o Maxim Group attn: Tony Polak
                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      Please
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      [SIGNATURE
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          36

          
            

          

        

        
          
          

        

      

       

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Robert
        and Sandra Shapiro, jt ten

       

      Signature
        of Authorized Signatory of Investing entity:
        /s/
        Sandra Shapiro

       

      Name
        of
        Authorized Signatory: Sandra
        Shapiro

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice: 

                    	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

      Address
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      [SIGNATURE
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          37

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Edward
        Moss and Adena Moss jt ten

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Edward Moss and Adena Moss 

       

      Name
        of
        Authorized Signatory: Edward
        Moss and Adena Moss

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

      Address
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        50,000

      

      Please
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      [SIGNATURE
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          38

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Suellyn
        Tornay

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Suellyn Tornay

       

      Name
        of
        Authorized Signatory: Suellyn
        Tornay

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	c/o Maxim Group attn: Tony Polak
                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          1

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Maura
        Kelly

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Maura
        Kelly

       

      Name
        of
        Authorized Signatory: Maura
        Kelly

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          1

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: John
        Gross

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        John
        Gross

       

      Name
        of
        Authorized Signatory: John
        Gross

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	c/o Maxim Group attn: Tony Polak
                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          2

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Anthony
        G. Polak

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Anthony G. Polak

       

      Name
        of
        Authorized Signatory: Anthony
        G. Polak

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	Address for Notice:	c/o Maxim Group attn: Tony Polak
                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          3

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Frederick
        B. Polak

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Frederick B. Polak

       

      Name
        of
        Authorized Signatory: Frederick
        B. Polak

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	
                      Address
                        for Notice: 

                    	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

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      [SIGNATURE
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          4

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: IRA
        FBO
        Ronald M. Lazar, Pershing LLC as Custodian

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Ronald M. Lazar

       

      Name
        of
        Authorized Signatory: Ronald
        M.
        Lazar

       

      Title
        of
        Authorized Signatory: Custodian

      
        
          
             

          

          
            
              	
                      Address
                        for Notice: 

                    	
                      200
                        Winston Drive, #2614

                      Cliffside
                        Park, NJ 07010

                    

            

          

           

        

      

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      [SIGNATURE
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          5

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: RL
        Capital Partners

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Ronald M. Lazar

       

      Name
        of
        Authorized Signatory: Ronald
        M.
        Lazar

       

      Title
        of
        Authorized Signatory: Managing
        Partner

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	Maxim Group
                      405
                        Lexington Avenue, 2nd
                        Floor

                      New
                        York, NY 10174

                    

            

          

           

        

      

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      [SIGNATURE
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          6

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Heller
        Capital Investments

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Ronald I. Heller

       

      Name
        of
        Authorized Signatory: Ronald
        I.
        Heller

       

      Title
        of
        Authorized Signatory: CIO

      
        
          
             

          

          
            
              	
                      Address
                        for Notice:

                    	700 East Palisade Avenue
                      Englewood
                        Cliffs, NJ 07632

                    

            

          

           

        

      

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      [SIGNATURE
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          7

          
            

          

        

        
          
          

        

      

      [SIGNATURE
        PAGE OF SECURED PARTIES TO ADRM LSA]

       

       

      Name
        of
        Investing Entity: Barbara
        Scharf

       

      Signature
        of Authorized Signatory of Investing entity: /s/
        Barbara Scharf

       

      Name
        of
        Authorized Signatory: Barbara
        Scharf

       

      Title
        of
        Authorized Signatory: __________________________

      
        
          
             

          

          
            
              	Address for Notice:
	
                      c/o
                        Maxim Group attn: Tony Polak

                      405
                        Lexington Avenue, New York, NY
                        10174

                    

            

          

           

        

      

      Address
        for Delivery of Note (if different from address for notice):

      
        
          
             

          

          
            
              	
                    	
                      8
                        Condy Lane

                      Rye
                        Brook, New York, NY 10573

                    

            

          

           

        

      

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      [SIGNATURE
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          8

          
            

          

        

        
          
          

        

      

      ANNEX
        A

      to

      SECURITY

      AGREEMENT

      

      FORM
        OF ADDITIONAL DEBTOR JOINDER

      

      Loan
        and
        Security Agreement dated as of June 27, 2007 made by

      Aduromed
        Industries, Inc.

      and
        its
        subsidiaries party thereto from time to time, as Debtors

      to
        and in
        favor of

      the
        Secured Parties identified therein (the “Security
        Agreement”)

      

      Reference
        is made to the Security Agreement as defined above; capitalized terms used
        herein and not otherwise defined herein shall have the meanings given to
        such
        terms in, or by reference in, the Security Agreement.

      

      The
        undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
        to the Secured Parties referred to above, the undersigned shall (a) be an
        Additional Debtor under the Security Agreement, (b) have all the rights and
        obligations of the Debtors under the Security Agreement as fully and to the
        same
        extent as if the undersigned was an original signatory thereto and (c) be
        deemed
        to have made the representations and warranties set forth therein as of the
        date
        of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING
        THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE
        SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH
        IN
        THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY
        TRIAL
        PROVISIONS SET FORTH THEREIN.

      

      Attached
        hereto are supplemental and/or replacement Schedules to the Security Agreement,
        as applicable.

      

      An
        executed copy of this Joinder shall be delivered to the Secured Parties,
        and the
        Secured Parties may rely on the matters set forth herein on or after the
        date
        hereof. This Joinder shall not be modified, amended or terminated without
        the
        prior written consent of the Secured Parties.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
        the
        name and on behalf of the undersigned.

      
        	 	 	 
	 	[Name of Additional Debtor]
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Name:

              
	 	Title:
	 	 
	 	Address: 

      

       

       

      Date:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ANNEX
        B

      to

      LOAN
        AND SECURITY

      AGREEMENT

      

      THE
        AGENT

      

      1.
        Appointment. The
        Secured Parties (all capitalized terms used herein and not otherwise defined
        shall have the respective meanings provided in the Loan and Security Agreement
        to which this Annex B is attached (the "Agreement")),
        by
        their acceptance of the benefits of the Agreement, hereby designate Anthony
        Polak (“Agent”)
        as the
        Agent to act as specified herein and in the Agreement. Each Secured Party
        shall
        be deemed irrevocably to authorize the Agent to take such action on its behalf
        under the provisions of the Agreement and any other Transaction Document
        (as
        such term is defined in the Agreement) and to exercise such powers and to
        perform such duties hereunder and thereunder as are specifically delegated
        to or
        required of the Agent by the terms hereof and thereof and such other powers
        as
        are reasonably incidental thereto. The Agent may perform any of its duties
        hereunder by or through its agents or employees.

      

      2.
        Nature
        of Duties.
        The
        Agent shall have no duties or responsibilities except those expressly set
        forth
        in the Agreement. Neither the Agent nor any of its partners, members,
        shareholders, officers, directors, employees or agents shall be liable for
        any
        action taken or omitted by it as such under the Agreement or hereunder or
        in
        connection herewith or therewith, be responsible for the consequence of any
        oversight or error of judgment or answerable for any loss, unless caused
        solely
        by its or their gross negligence or willful conduct as determined by a final
        judgment (not subject to further appeal) of a court of competent jurisdiction.
        The duties of the Agent shall be mechanical and administrative in nature;
        the
        Agent shall not have by reason of the Agreement or any other Transaction
        Document a fiduciary relationship in respect of any Debtor or any Secured
        Party;
        and nothing in the Agreement or any other Transaction Document, expressed
        or
        implied, is intended to or shall be so construed as to impose upon the Agent
        any
        obligations in respect of the Agreement or any other Transaction Document
        except
        as expressly set forth herein and therein.

      

      3.
        Lack
        of Reliance on the Agent.
        Independently and without reliance upon the Agent, each Secured Party, to
        the
        extent it deems appropriate, has made and shall continue to make (i) its own
        independent investigation of the financial condition and affairs of the Company
        and its subsidiaries in connection with such Secured Party’s investment in the
        Debtors, the creation and continuance of the Obligations, the transactions
        contemplated by the Transaction Documents, and the taking or not taking of
        any
        action in connection therewith, and (ii) its own appraisal of the
        creditworthiness of the Company and its subsidiaries, and of the value of
        the
        Collateral from time to time, and the Agent shall have no duty or
        responsibility, either initially or on a continuing basis, to provide any
        Secured Party with any credit, market or other information with respect thereto,
        whether coming into its possession before any Obligations are incurred or
        at any
        time or times thereafter. The Agent shall not be responsible to the Debtors
        or
        any Secured Party for any recitals, statements, information, representations
        or
        warranties herein or in any document, certificate or other writing delivered
        in
        connection herewith, or for the execution, effectiveness, genuineness, validity,
        enforceability, perfection, collectibility, priority or sufficiency of the
        Agreement or any other Transaction Document, or for the financial condition
        of
        the Debtors or the value of any of the Collateral, or be required to make
        any
        inquiry concerning either the performance or observance of any of the terms,
        provisions or conditions of the Agreement or any other Transaction Document,
        or
        the financial condition of the Debtors, or the value of any of the Collateral,
        or the existence or possible existence of any default or Event of Default
        under
        the Agreement, the Notes or any of the other Transaction Documents.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      4.
        Certain
        Rights of the Agent.
        The
        Agent shall have the right to take any action with respect to the Collateral,
        on
        behalf of all of the Secured Parties. The Agent shall not be obligated to
        consult with or receive any consent from any other Secured Party in connection
        with any action taken by the Agent under the Transaction Documents. Without
        limiting the foregoing, (a) no Secured Party shall have any right of action
        whatsoever against the Agent as a result of the Agent acting or refraining
        from
        acting hereunder in accordance with the terms of the Agreement or any other
        Transaction Document, and the Debtors shall have no right to question or
        challenge the authority of, or the instructions given to, the Agent pursuant
        to
        the foregoing and (b) the Agent shall not be required to take any action
        which
        the Agent believes (i) could reasonably be expected to expose it to personal
        liability or (ii) is contrary to this Agreement, the Transaction Documents
        or
        applicable law.

      

      5.
        Reliance.
        The
        Agent shall be entitled to rely, and shall be fully protected in relying,
        upon
        any writing, resolution, notice, statement, certificate, telex, teletype
        or
        telecopier message, cablegram, radiogram, order or other document or telephone
        message signed, sent or made by the proper person or entity, and, with respect
        to all legal matters pertaining to the Agreement and the other Transaction
        Documents and its duties thereunder, upon advice of counsel selected by it
        and
        upon all other matters pertaining to this Agreement and the other Transaction
        Documents and its duties thereunder, upon advice of other experts selected
        by
        it.

      

      6.
        Indemnification.
        To the
        extent that the Agent is not reimbursed and indemnified by the Debtors, the
        Secured Parties will jointly and severally reimburse and indemnify the Agent,
        in
        proportion to their initially purchased respective principal amounts of Notes,
        from and against any and all liabilities, obligations, losses, damages,
        penalties, actions, judgments, suits, costs, expenses or disbursements of
        any
        kind or nature whatsoever which may be imposed on, incurred by or asserted
        against the Agent in performing its duties hereunder or under the Agreement
        or
        any other Transaction Document, or in any way relating to or arising out
        of the
        Agreement or any other Transaction Document except for those determined by
        a
        final judgment (not subject to further appeal) of a court of competent
        jurisdiction to have resulted solely from the Agent's own gross negligence
        or
        willful misconduct. Prior to taking any action hereunder as Agent, the Agent
        may
        require each Secured Party to deposit with it sufficient sums as it determines
        in good faith is necessary to protect the Agent for costs and expenses
        associated with taking such action.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      7.
        Resignation
        by the Agent. 

       

      (a)
        The
        Agent may resign from the performance of all its functions and duties under
        the
        Agreement and the other Transaction Documents at any time by giving 30 days'
        prior written notice (as provided in the Agreement) to the Debtors and the
        Secured Parties. Such resignation shall take effect upon the appointment
        of a
        successor Agent pursuant to clauses (b) and (c) below.

      

      (b)
        Upon
        any such notice of resignation, the Secured Parties, acting by a Majority
        in Interest,
        shall
        appoint a successor Agent hereunder.

      

      (c)
        If a
        successor Agent shall not have been so appointed within said 30-day period,
        the
        Agent shall then appoint a successor Agent who shall serve as Agent until
        such
        time, if any, as the Secured Parties appoint a successor Agent as provided
        above. If a successor Agent has not been appointed within such 30-day period,
        the Agent may petition any court of competent jurisdiction or may interplead
        the
        Debtors and the Secured Parties in a proceeding for the appointment of a
        successor Agent, and all fees, including, but not limited to, extraordinary
        fees
        associated with the filing of interpleader and expenses associated therewith,
        shall be payable by the Debtors on demand.

      

      8.
        Rights
        with respect to Collateral.
        Each
        Secured Party agrees with all other Secured Parties and the Agent (i) that
        it
        shall not, and shall not attempt to, exercise any rights with respect to
        its
        security interest in the Collateral, whether pursuant to any other agreement
        or
        otherwise (other than pursuant to this Agreement), or take or institute any
        action against the Agent or any of the other Secured Parties in respect of
        the
        Collateral or its rights hereunder (other than any such action arising from
        the
        breach of this Agreement) and (ii) that such Secured Party has no other rights
        with respect to the Collateral other than as set forth in this Agreement
        and the
        other Transaction Documents.EXHIBIT
      4.02

     

    THIS
      SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR
      THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

    

    ADUROMED
      INDUSTRIES, INC.

    

    12%
      SECURED PROMISSORY NOTE

    

    
      	$__________	
              June
                27,
                2007

            

    

     

    FOR
      VALUE
      RECEIVED, Aduromed Industries, Inc., a Delaware corporation (the “Maker”),
      with
      its principal offices located at 3 Trowbridge Drive, Bethel, CT 06801, promises
      to pay to the order of __________, or its registered assigns (the “Payee”),
      upon
      the terms set forth below, the principal sum of _______ dollars ($________)
      plus
      interest on the unpaid principal sum outstanding at the rate of 12% per annum
      (this “Note”).
      Terms
      used herein but not otherwise defined herein shall have the meanings given
      to
      such terms in the Loan and Security Agreement, dated as of June 27, 2007,
      between the Maker, the Guarantors and the Secured Parties (as such terms are
      defined in such Loan and Security Agreement) (“the
      Loan and Security Agreement”).

    

    1. Payments.

    

    (a)
       The
      full
      amount of principal and accrued interest under this Note shall be due on
      December 27, 2007 (the “Maturity
      Date”),
      unless due earlier in accordance with the terms of this Note.

    

    (b)
       The
      Maker
      shall pay interest to the Payee on the aggregate then outstanding principal
      amount of this Note at the rate of 12% per annum, accrued daily and payable
      monthly on the first calendar day of each month commencing on August 1, 2007
      and
      on the Maturity Date (collectively, “Interest
      Payment Dates”).
      The
      Payee may, upon written notice to the Maker at least 3 business days prior
      to
      any scheduled Interest Payment Date, require the Maker to make such next due
      payment of interest in the form of an additional Note identical to this Note,
      except that the principal amount of such additional Note shall be the amount
      of
      such interest payment. Payee may state in any such notice that its election
      to
      receive payment in the form of additional Notes shall continue until Payee
      delivers a further notice stating that Payee thereafter desires payments of
      interest in the form of cash.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c)
       All
      overdue accrued and unpaid principal and interest to be paid hereunder shall
      entail a late fee at the rate of 22% per annum (or such lower maximum amount
      of
      interest permitted to be charged under applicable law) which will accrue daily,
      from the date such principal and/or interest is due hereunder through and
      including the date of payment.

    

    (d) The
      Maker
      hereby agrees to prepay this Note from funds received by the Maker upon the
      sale
      of any debt (including any lines of credit) or Common Stock or Common Stock
      Equivalents of the Maker (“Sale
      of Securities Proceeds”)
      so
      long as such sale results in gross proceeds to the Maker of $1,500,000 or
      more.

    All
      funds
      received pursuant to this Section 1(d) shall be paid by the Maker to the Payee
      within 5 business days of their receipt.

    

    2.
       Secured
      Obligation.
      The
      obligations of the Maker under this Note are secured by all of the assets of
      the
      Maker and its subsidiaries pursuant to the Loan and Security
      Agreement.

    

    3.
       Prepayment.
      The
      Maker may prepay any portion of the principal amount of this Note upon at least
      3 business days’ notice to the Payee. Any such prepayments shall be pro rata
      among all holders of the series of Notes of which this Note is a
      part.

    

    4. Events
      of Default.

    

    (a)
      “Event
      of Default”,
      wherever used herein, means any one of the following events (whatever the reason
      and whether it shall be voluntary or involuntary or effected by operation of
      law
      or pursuant to any judgment, decree or order of any court, or any order, rule
      or
      regulation of any administrative or governmental body):

    

    (i)
       any
      default in the payment of the principal of, or the interest on, this Note,
      as
      and when the same shall become due and payable;

    

    (ii)
       Maker
      shall fail to observe or perform any obligation or shall breach any term or
      provision of this Note and such failure or breach shall not have been remedied
      within 10 days after the date on which notice of such failure or breach shall
      have been delivered;

    

    (iii)
       Maker
      or
      any of its subsidiaries shall fail to observe or perform any of their respective
      obligations owed to Payee or any other covenant, agreement, representation
      or
      warranty contained in, or otherwise commit any breach hereunder or in any of
      the
      Transaction Documents or any other agreement executed in connection herewith
      and
      such failure or breach shall not have been remedied within 10 days after the
      date on which notice of such failure or breach shall have been
      delivered;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (iv)
       Maker
      or
      any of its subsidiaries shall commence, or there shall be commenced against
      Maker or any subsidiary a case under any applicable bankruptcy or insolvency
      laws as now or hereafter in effect or any successor thereto, or Maker or any
      subsidiary commences any other proceeding under any reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction whether now or hereafter in effect relating
      to
      Maker or any subsidiary, or there is commenced against Maker or any subsidiary
      any such bankruptcy, insolvency or other proceeding which remains undismissed
      for a period of 60 days; or Maker or any subsidiary is adjudicated insolvent
      or
      bankrupt; or any order of relief or other order approving any such case or
      proceeding is entered; or Maker or any subsidiary suffers any appointment of
      any
      custodian or the like for it or any substantial part of its property which
      continues undischarged or unstayed for a period of 60 days; or Maker or any
      subsidiary makes a general assignment for the benefit of creditors; or Maker
      or
      any subsidiary shall fail to pay, or shall state that it is unable to pay,
      or
      shall be unable to pay, its debts generally as they become due; or Maker or
      any
      subsidiary shall call a meeting of its creditors with a view to arranging a
      composition, adjustment or restructuring of its debts; or Maker or any
      subsidiary shall by any act or failure to act expressly indicate its consent
      to,
      approval of or acquiescence in any of the foregoing; or any corporate or other
      action is taken by Maker or any subsidiary for the purpose of effecting any
      of
      the foregoing;

    

    (v)
       Maker
      or
      any subsidiary shall default in any of its respective obligations under any
      other note or any mortgage, credit agreement or other facility, indenture
      agreement, factoring agreement or other instrument under which there may be
      issued, or by which there may be secured or evidenced any indebtedness for
      borrowed money or money due under any long term leasing or factoring arrangement
      of Maker or any subsidiary, whether such indebtedness now exists or shall
      hereafter be created and such default shall result in such indebtedness becoming
      or being declared due and payable prior to the date on which it would otherwise
      become due and payable; or

    

    (vi)
       Maker
      (a)
      shall be a party to any Change of Control Transaction (as defined below), (b)
      shall agree to sell or dispose all or in excess of 33% of its assets in one
      or
      more transactions (whether or not such sale would constitute a Change of Control
      Transaction), (c) shall redeem or repurchase more than a de minimis
      number
      of shares of Common Stock or other equity securities of Maker, or (d) shall
      make
      any distribution or declare or pay any dividends (in cash or other property,
      other than Common Stock) on, or purchase, acquire, redeem, or retire any of
      Maker's capital stock, of any class, whether now or hereafter outstanding.
      “Change
      of Control Transaction”
means
      the occurrence of any of: (i) an acquisition after the date hereof by an
      individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
      promulgated under the Securities Exchange Act of 1934, as amended) of effective
      control (whether through legal or beneficial ownership of capital stock of
      Maker, by contract or otherwise) of in excess of 33% of the voting securities
      of
      Maker, (ii) a replacement at one time or over time of more than one-half of
      the
      members of Maker's board of directors which is not approved by a majority of
      those individuals who are members of the board of directors on the date hereof
      (or by those individuals who are serving as members of the board of directors
      on
      any date whose nomination to the board of directors was approved by a majority
      of the members of the board of directors who are members on the date hereof),
      (iii) the merger of Maker with or into another entity that is not wholly-owned
      by Maker or the consolidation or sale of 33% or more of the assets of Maker
      in
      one or a series of related transactions, or (iv) the execution by Maker of
      an
      agreement to which Maker is a party or by which it is bound, providing for
      any
      of the events set forth above in (i), (ii) or (iii); or

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    (vii)
      trading in the Common Stock shall have been suspended by the Securities an
      Exchange Commission, the National Association of Securities Dealers, Inc.,
      or
      the Company’s principal Trading Market for any period in excess of 5 Trading
      Days.

    

    (b)
      If
      any Event of Default occurs, the full principal amount of this Note, together
      with all accrued interest thereon, shall become, at the Payee's election,
      immediately due and payable in cash. Commencing 5 days after the occurrence
      of
      any Event of Default that results in the acceleration of this Note, the interest
      rate on this Note shall accrue at the rate of 22% per annum, or such lower
      maximum amount of interest permitted to be charged under applicable law. The
      Payee need not provide and Maker hereby waives any presentment, demand, protest
      or other notice of any kind, and the Payee may immediately and without
      expiration of any grace period enforce any and all of its rights and remedies
      hereunder and all other remedies available to it under applicable law. Such
      declaration may be rescinded and annulled by Payee at any time prior to payment
      hereunder. No such rescission or annulment shall affect any subsequent Event
      of
      Default or impair any right consequent thereon.

    

    5. Negative
      Covenants.
       So
      long
      as any portion of this Note is outstanding, the Maker will not and will not
      permit any of its Subsidiaries to directly or indirectly:

    

    a) other
      than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
      suffer to exist any indebtedness for borrowed money of any kind, including
      but
      not limited to, a guarantee, on or with respect to any of its property or assets
      now owned or hereafter acquired or any interest therein or any income or profits
      therefrom;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    b) other
      than Permitted Liens, enter into, create, incur, assume or suffer to exist
      any
      liens of any kind, on or with respect to any of its property or assets now
      owned
      or hereafter acquired or any interest therein or any income or profits
      therefrom;

    

    c) amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      adversely affect any rights of the Payee;

    

    d) except
      as
      contractually required by the Maker as of the date of issuance of this Note,
      repay, repurchase or offer to repay, repurchase or otherwise acquire more than
      a
de minimis
      number
      of securities;

    

    e) enter
      into any agreement with respect to any of the foregoing;

    

    f) pay
      any
      accrued salaries for any officer or director of the Company or any subsidiary
      accrued prior to the date hereof; or

    

    g) pay
      cash
      dividends or distributions on any equity securities of the Maker.

    

    “Permitted
      Indebtedness”
shall
      mean (a) the indebtedness evidenced by this Note, and (b) the indebtedness
      of
      the Maker existing on the date of issuance of this Note, including any
      indebtedness under the Maker’s line of credit with Bank of America, whether
      drawn prior to the date of this Note or thereafter.

    

    “Permitted
      Lien”
shall
      mean the individual and collective reference to the following: (a) liens in
      connection with this Note; (b) liens for taxes, assessments and other
      governmental charges or levies not yet due or liens for taxes, assessments
      and
      other governmental charges or levies being contested in good faith and by
      appropriate proceedings for which adequate reserves (in the good faith judgment
      of the management of the Maker) have been established in accordance with
      generally accepted accounting procedures; and (c) liens imposed by law which
      were incurred in the ordinary course of business, such as carriers’,
      warehousemen’s and mechanics’ liens, statutory landlords’ liens, and other
      similar liens arising in the ordinary course of business, and (x) which do
      not
      individually or in the aggregate materially detract from the value of such
      property or assets or materially impair the use thereof in the operation of
      the
      business of the Maker and its consolidated subsidiaries or (y) which are being
      contested in good faith by appropriate proceedings, which proceedings have
      the
      effect of preventing the forfeiture or sale of the property or asset subject
      to
      such lien.

    

    6. No
      Waiver of Payee's Rights.
      All
      payments of principal and interest shall be made without setoff, deduction
      or
      counterclaim. No delay or failure on the part of the Payee in exercising any
      of
      its options, powers or rights, nor any partial or single exercise of its
      options, powers or rights shall constitute a waiver thereof or of any other
      option, power or right, and no waiver on the part of the Payee of any of its
      options, powers or rights shall constitute a waiver of any other option, power
      or right. Maker hereby waives presentment of payment, protest, and all notices
      or demands in connection with the delivery, acceptance, performance, default
      or
      endorsement of this Note. Acceptance by the Payee of less than the full amount
      due and payable hereunder shall in no way limit the right of the Payee to
      require full payment of all sums due and payable hereunder in accordance with
      the terms hereof.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    7.
       Modifications.
      No term
      or provision contained herein may be modified, amended or waived except by
      written agreement or consent signed by the party to be bound
      thereby.

    

    8.
       Cumulative
      Rights and Remedies; Usury.
      The
      rights and remedies of Payee expressed herein are cumulative and not exclusive
      of any rights and remedies otherwise available under this Note, the Loan and
      Security Agreement, or applicable law (including at equity). The election of
      Payee to avail itself of any one or more remedies shall not be a bar to any
      other available remedies, which Maker agrees Payee may take from time to time.
      If it shall be found that any interest due hereunder shall violate applicable
      laws governing usury, the applicable rate of interest due hereunder shall be
      reduced to the maximum permitted rate of interest under such law.

    

    9.
       Use
      of
      Proceeds.
      Maker
      shall use the proceeds from the sale of this Note to the Payee for working
      capital purposes and shall not use such proceeds for (a) the satisfaction of
      any
      portion of Maker’s or subsidiary’s debt (other than payment of trade payables in
      the ordinary course of Maker's business and prior practices), (b) the redemption
      of any of Maker’s or subsidiary’s equity or equity-equivalent securities, (c)
      the settlement of any outstanding litigation or (d) the payment of the
      previously earned salary or bonus of any director or officer of the
      Maker.

    

    10.
       Collection
      Expenses.
      If
      Payee shall commence an action or proceeding to enforce this Note, then Maker
      shall reimburse Payee for its costs of collection and reasonable attorneys
      fees
      incurred with the investigation, preparation and prosecution of such action
      or
      proceeding.

    

    11.
       Severability.
      If any
      provision of this Note is declared by a court of competent jurisdiction to
      be in
      any way invalid, illegal or unenforceable, the balance of this Note shall remain
      in effect, and if any provision is inapplicable to any person or circumstance,
      it shall nevertheless remain applicable to all other persons and circumstances.
      If it shall be found that any interest or other amount deemed interest due
      hereunder shall violate applicable laws governing usury, the applicable rate
      of
      interest due hereunder shall automatically be lowered to equal the maximum
      permitted rate of interest.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    12.
       Successors
      and Assigns.
      This
      Note shall be binding upon Maker and its successors and shall inure to the
      benefit of the Payee and its successors and assigns. The term “Payee” as used
      herein, shall also include any endorsee, assignee or other holder of this
      Note.

    

    13.
       Lost
      or Stolen Promissory Note.
      If this
      Note is lost, stolen, mutilated or otherwise destroyed, Maker shall execute
      and
      deliver to the Payee a new promissory note containing the same terms, and in
      the
      same form, as this Note. In such event, Maker may require the Payee to deliver
      to Maker an affidavit of lost instrument and customary indemnity in respect
      thereof as a condition to the delivery of any such new promissory
      note.

    

    14.
       Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Note shall be governed by and construed and enforced in accordance
      with
      the internal laws of the State of New York, without regard to the principles
      of
      conflicts of law thereof. Each party agrees that all legal proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Note and any other Transaction Documents (whether brought
      against a party hereto or its respective affiliates, directors, officers,
      shareholders, employees or agents) shall be commenced exclusively in the state
      and federal courts sitting in the City of New York. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of New York, borough of Manhattan for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or is an inconvenient venue for
      such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any other
      manner permitted by law. If either party shall commence an action or proceeding
      to enforce any provisions of the Transaction Documents, then the prevailing
      party in such action or proceeding shall be reimbursed by the other party for
      its reasonable attorneys’ fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

    

    15. Notice. 
      Any and
      all notices or other communications or deliveries to be provided by the Payee
      hereunder, including, without limitation, any conversion notice, shall be in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service or sent by certified or registered mail, postage
      prepaid, addressed to the Maker, Aduromed
      Industries, Inc., 3 Trowbridge Drive, Bethel, CT 06801 or
      such
      other address or facsimile number as the Maker may specify for such purposes
      by
      notice to the Payee delivered in accordance with this paragraph. Any and all
      notices or other communications or deliveries to be provided by the Maker
      hereunder shall be in writing and delivered personally, by facsimile, sent
      by a
      nationally recognized overnight courier service or sent by certified or
      registered mail, postage prepaid, addressed to the Payee at the address of
      the
      Payee appearing on the books of the Maker (as set forth in the Loan and Security
      Agreement), or if no such address appears, at the principal place of business
      of
      the Payee. Any notice or other communication or deliveries hereunder shall
      be
      deemed given and effective on the earliest of (i) the date of transmission
      if
      delivered by
      hand
      or by telecopy that has been confirmed as received by 5:00 p.m. on a business
      day,
      (ii)
one
      business day after being sent by nationally recognized overnight courier or
      received by telecopy after 5:00 p.m. on any day,
      or
      (iii) five
      business
      days
      after being sent by certified or registered mail, postage and charges prepaid,
      return receipt requested.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    16. Required
      Notice to Payee. The
      Payee
      is to be immediately notified by the Maker, in accordance with Section 16,
      of
      the existence or occurrence of any Event of Default.

    17. Capacity
      of Agent. Maker
      acknowledges that the Payee has appointed an Agent to act on its behalf under
      certain circumstances as set forth in the Loan and Security
      Agreement.

    

    18. Transferability
      of Note. Subject
      to compliance with any applicable securities laws and the prior written consent
      of the Maker, which consent shall not be unreasonably withheld, this Note and
      all rights hereunder are transferable, in whole or in part, upon surrender
      of
      this Note at the principal office of the Maker, together with a written
      assignment or endorsement of this Note duly executed by the Payee or its agent
      or attorney and funds sufficient to pay any transfer taxes payable upon the
      making of such transfer. Upon such surrender and, if required, such payment,
      the
      Maker shall execute and deliver a new Note or Notes in the name of the assignee
      or assignees and in the denomination or denominations specified in such
      instrument of assignment, and shall issue to the assignor a new Note evidencing
      the portion of this Note not so assigned, and this Note shall promptly be
      cancelled. 

    

      The
      undersigned signs this Note as a maker and not as a surety or guarantor or
      in
      any other capacity.

     

    
      	 	 	 
	 	
              ADUROMED
                INDUSTRIES, INC.,

              a
                Delaware corporation

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:

            
	 	
              Title:

            

    

     

    
      
        
        

      

      
        8

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