Document:

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Exhibit 10.1

                                 LOAN AGREEMENT

                                     BETWEEN

                            IVIVI TECHNOLOGIES, INC.

                                       AND

                             EMIGRANT CAPITAL CORP.

                            DATED AS OF APRIL 7, 2009

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                                                 TABLE OF CONTENTS

                                                                                                             PAGE
1.       DEFINITIONS.............................................................................................1

2.       BORROWINGS; ISSUANCE OF NOTE AND WARRANT................................................................6

         2.1      The Loans......................................................................................6

         2.2      Use of Proceeds................................................................................6

         2.3      Borrowings.....................................................................................6

         2.4      No Voluntary Prepayment........................................................................7

         2.5      Mandatory Prepayment...........................................................................7

         2.6      Repayment at Maturity..........................................................................7

         2.7      Issuance of the Note and Warrant...............................................................8

         2.8      Optional Loan Advance in Connection with Conversion............................................8

3.       THE CLOSING.............................................................................................8

4.       CONDITION TO THE OBLIGATIONS OF THE COMPANY TO ISSUE THE NOTE AND THE WARRANT...........................8

         4.1      This Agreement.................................................................................8

5.       REPRESENTATIONS OF THE COMPANY..........................................................................8

         5.1      Organization and Corporate Power...............................................................9

         5.2      Capitalization.................................................................................9

         5.3      Subsidiaries, Etc..............................................................................9

         5.4      Issuance and Delivery of the Note and Warrant; Issuance, Sale and Delivery of the
                  Conversion Shares and Warrant Shares...........................................................9

         5.5      Authority for Agreement; Effect of Transactions...............................................10

         5.6      Litigation....................................................................................11

         5.7      Title to Assets...............................................................................12

         5.8      Company Reports; Financial Statements.........................................................12

         5.9      Material Changes..............................................................................13

         5.10     Tax Matters...................................................................................14

         5.11     Loans and Advances............................................................................14

         5.12     Assumptions, Guaranties, etc. of Indebtedness of Other Persons................................14

         5.13     Transactions with Affiliates..................................................................14

         5.14     Proprietary Rights; Employee Restrictions.....................................................15

         5.15     Proprietary Information of Third Parties......................................................15

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                                                 TABLE OF CONTENTS
                                                    (continued)

         5.16     Business; Compliance with Laws................................................................15

         5.17     Environmental Compliance......................................................................16

         5.18     Contracts.....................................................................................16

         5.19     Brokerage.....................................................................................16

         5.20     Employee Benefit Plans........................................................................16

         5.21     Employees.....................................................................................17

         5.22     Nasdaq Capital Market.........................................................................17

         5.23     No Solicitation or Advertisement..............................................................17

         5.24     No Manipulation of Stock......................................................................17

         5.25     Securities Act Registration...................................................................18

         5.26     Solvency......................................................................................18

         5.27     Security Agreement............................................................................18

         5.28     No Default or Event of Default................................................................19

         5.29     Investment Company Act........................................................................19

         5.30     Acknowledgment Regarding Lender's Status......................................................19

         5.31     U.S. Real Property Holding Corporation........................................................19

         5.32     Disclosure....................................................................................19

6.       REPRESENTATIONS OF THE LENDER..........................................................................19

         6.1      Authority.....................................................................................19

         6.2      Validity; No Conflicts........................................................................19

         6.3      Purchase Entirely for Own Account.............................................................20

         6.4      Reliance Upon Lender's Representations........................................................20

         6.5      Restricted Securities.........................................................................20

         6.6      Economic Risk; Sophistication; No General Solicitation........................................21

         6.7      Accredited Investor...........................................................................21

         6.8      Brokerage.....................................................................................21

         6.9      Access to Information.........................................................................21

         6.10     Certain Trading Activities....................................................................22

         6.11     Independent Investment Decision...............................................................22

         6.12     No Governmental Review........................................................................22

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                                                 TABLE OF CONTENTS
                                                    (
continued)

         6.13     Regulation M..................................................................................22

         6.14     Residency.....................................................................................22

7.       CONDITIONS TO THE OBLIGATIONS OF THE LENDER TO MAKE LOANS..............................................22

         7.1      Conditions to the Obligations of the Lender to Make a Loan on the Initial Advance Date........23

         7.2      Conditions to the Obligations of the Lender to Make a Loan on any Subsequent Advance
                  Date..........................................................................................25

8.       COVENANTS OF THE COMPANY...............................................................................25

         8.1      Covenants With Respect to the Loans...........................................................25

         8.2      Covenants With Respect to the Warrant.........................................................30

         8.3      General Covenants.............................................................................30

         8.4      Indemnification of the Lender.................................................................31

9.       EVENTS OF DEFAULT AND REMEDIES.........................................................................32

         9.1      Events of Default.............................................................................32

         9.2      Remedies......................................................................................34

10.      MISCELLANEOUS..........................................................................................34

         10.1     Expenses......................................................................................34

         10.2     Survival of Representations and Warranties....................................................34

         10.3     Notices.......................................................................................35

         10.4     Successor and Assigns.........................................................................35

         10.5     Entire Agreement..............................................................................36

         10.6     Amendments and Waivers........................................................................36

         10.7     Counterparts; Facsimile Signatures............................................................36

         10.8     Section Headings..............................................................................36

         10.9     Severability..................................................................................36

         10.10    Governing Law.................................................................................36

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                                 LOAN AGREEMENT

         This Loan Agreement (the "AGREEMENT"), dated as of April 7, 2009, is
entered into by and between Ivivi Technologies, Inc., a New Jersey corporation
(the "COMPANY"), and Emigrant Capital Corp., a Delaware corporation (the
"LENDER"). The Company and the Lender are each referred to herein as a "PARTY"
or collectively as the "PARTIES". In consideration of the mutual promises and
covenants contained in this Agreement, the parties hereto agree as follows:

      1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings set forth below:

            1.1 "ACCELERATION NOTICE" shall have the meaning ascribed to such
term in SECTION 9.2(B).

            1.2 "ACTION" shall mean any action, suit, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company or any of its properties before or
by any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign).

            1.3 "ADVANCE DATE" shall mean the Initial Advance Date and each
Subsequent Advance Date.

            1.4 "AFFILIATE" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
Person specified; PROVIDED, however, that, the term "Affiliate" shall also
include any Person that directly or indirectly owns 10% or more of any class of
equity interests of the Person specified or that is an officer or director of
the Person specified.

            1.5 "AGREEMENT" shall have the meaning ascribed to such term in the
preamble to this Agreement.

            1.6 "APPLICABLE EMPLOYMENT AGREEMENT" shall mean, with respect to
each Subject Employee, such Subject Employee's employment agreement with the
Company.

            1.7 "APPLICABLE SUBSEQUENT ADVANCE AMOUNT" shall mean, with respect
to any Subsequent Advance Date, the sum of $500,000 plus an amount equal to the
excess (if any) of:

                  (a) the sum of (x) $1,000,000, plus (y) the product of (i)
$500,000 and (ii) the number of Subsequent Advance Dates preceding such
Subsequent Advance Date, over

                  (b) the aggregate principal amount of Loans made pursuant to
this Agreement prior to such Subsequent Advance Date.

            1.8 "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or day on which banks in New York City are authorized or required by law to
close.

            1.9 "CLOSING" shall have the meaning ascribed to such term in
SECTION 3.

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            1.10 "CLOSING DATE" shall have the meaning ascribed to such term in
SECTION 3.

            1.11 "COLLATERAL" shall mean all of the property, assets, rights and
interests of the Company that are or are intended to be subject to the Liens
created by the Security Documents.

            1.12 "COMMISSION" shall mean the Securities and Exchange Commission.

            1.13 "COMMON STOCK" shall mean the Company's common stock, no par
value per share.

            1.14 "COMPANY" shall have the meaning ascribed to such term in the
preamble to this Agreement.

            1.15 "COMPANY ACCOUNT" shall mean the account specified on ANNEX 1.

            1.16 "COMPANY REPORTS" shall have the meaning ascribed to such term
in SECTION 5.8(A).

            1.17 "CONVERSION DATE" shall mean the date on which the entire
aggregate outstanding principal balance of the Loans and all accrued and unpaid
interest thereon is converted into shares of Conversion Shares in accordance
with the terms of the Note.

            1.18 "CONVERSION SHARES" shall have the meaning ascribed to such
term in SECTION 5.5(A).

            1.19 "DEFAULT" shall mean any event which is, or after notice or
passage of time or both would be, an Event of Default.

            1.20 "DISCLOSURE SCHEDULES" shall have the meaning ascribed to such
term in SECTION 5.

            1.21 "DRAWDOWN NOTICE" shall have the meaning ascribed to such term
in SECTION 2.3(B).

            1.22 "ENVIRONMENTAL LAWS" shall have the meaning ascribed to such
term in SECTION 5.17.

            1.23 "EVENT OF DEFAULT" shall have the meaning ascribed to such term
in SECTION 9.1.

            1.24 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

            1.25 "FORGONE INTEREST AMOUNT" shall mean, in respect of any
mandatory prepayment of the Loans pursuant to SECTION 2.5, an amount equal to
the aggregate amount of interest that would have accrued at a rate of 12% per
annum on the entire aggregate outstanding principal balance of the Loans
pursuant to the Note during the period from and including the date of such
mandatory prepayment though the Maturity Date had such outstanding principal
balance remained outstanding through the Maturity Date.

            1.26 "GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time.

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            1.27 "HAZARDOUS MATERIALS" shall have the meaning ascribed to such
term in SECTION 5.17.

            1.28 "INDEBTEDNESS" of any Person shall mean, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person, (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding (x) trade accounts payable and accrued
obligations incurred in the ordinary course of business and (y) amounts
representing delayed or deferred compensation in respect of employment
services), which purchase price is due more than 90 days after the purchase of
such property or service, (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed (with
the amount of any such Indebtedness that is not assumed by such person being
deemed to be equal to the lesser of the fair market value of such property and
the principal amount of such Indebtedness), (f) all guarantees by such Person of
Indebtedness of others (provided, that, (i) the term "guarantee" shall not
include endorsements of negotiable instruments for collection or deposit in the
ordinary course of business and (ii) the amount of any guarantee of a Person
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such guarantee is given or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith), (g) all capitalized lease
obligations and synthetic lease obligations of such Person, (h) all obligations
of such Person as an account party in respect of letters of credit, (i) all
obligations of such Person in respect of bankers' acceptances, and (j) all
obligations of such Person under or in respect of any interest rate or commodity
hedging agreements.

            1.29 "INITIAL ADVANCE DATE" shall mean means the date on which the
initial Loan is made by the Lender to the Company hereunder upon satisfaction of
the conditions specified in SECTION 7.1 (or waiver of such conditions in
accordance with SECTION 10.6).

            1.30 "INSOLVENCY EVENT" shall have the meaning ascribed to such term
in SECTION 9.1(A)

            1.31 "INTELLECTUAL PROPERTY RIGHTS" shall mean all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for
use in connection with the Company's business as described in the SEC Reports.

            1.32 "KNOWLEDGE OF THE COMPANY" means the actual knowledge of any of
Steven Gluckstern, Andre' DiMino, David Saloff, Alan Gallantar, Edward Hammel or
Sean Hagberg; PROVIDED, that, any such individual will be deemed to have "actual
knowledge" of a particular fact or other matter if a prudent individual could be
expected to discover or otherwise become aware of such fact or other matter in
the conduct of the employment duties of the applicable individual in the
ordinary course of business.

            1.33 "LENDER" shall have the meaning ascribed to such term in the
preamble to this Agreement.

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            1.34 "LENDER PARTY" shall mean the Lender and its Affiliates and
their respective directors, officers, members, shareholders, partners,
employees, representatives, attorneys and agents.

            1.35 "LIEN" shall mean, with respect to any asset, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

            1.36 "LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Warrant and the Security Documents, as each of the foregoing may be amended from
time to time.

            1.37 "LOANS" shall have the meaning ascribed to such term in SECTION
2.1.

            1.38 "LOSS" shall mean 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 preparation and investigation.

            1.39 "MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse
effect on the results of operations, business, prospects, assets, liabilities or
condition (financial or otherwise) of the Company, or (ii) any material
limitation on the ability of the Company to perform its obligations under, or
the legality, validity or enforceability of, this Agreement or any of the other
Loan Documents; PROVIDED, that, solely for the purposes of the usage of the term
"Material Adverse Effect" in SECTION 8.1(E) or 9.1(G), the term "Material
Adverse Effect" shall mean (i) a material adverse effect on the results of
operations, business, assets, liabilities or condition (financial or otherwise)
of the Company, or (ii) any material limitation on the ability of the Company to
perform its obligations under, or the legality, validity or enforceability of,
this Agreement or any of the other Loan Documents.

            1.40 "MATERIAL CONTRACTS" shall have the meaning ascribed to such
term in SECTION 5.18.

            1.41 "MATURITY DATE" shall have the meaning ascribed to such term in
the Note.

            1.42 "MAXIMUM PRINCIPAL BALANCE" shall mean $2,500,000.

            1.43 "NOMINEE AND SHARING AGREEMENT" shall mean that certain Nominee
and Sharing Agreement, dated as of the date hereof, between the Lender and the
participants named therein.

            1.44 "NOTE" shall have the meaning ascribed to such term in SECTION
2.1.

            1.45 "PARTY" shall have the meaning ascribed to such term in the
preamble to this Agreement.

            1.46 "PERMITTED LIENS" shall mean (a) Liens for taxes not yet due
and payable or which are being contested in good faith in accordance with
SECTION 8.1(B), (b) Liens existing on the date hereof to the extent that the

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existence of such Liens does not constitute a breach of the representations and
warranties set forth in SECTION 5.7; PROVIDED that such Liens shall secure only
those obligations which they secure on the date hereof and any extensions,
renewals and replacements thereof permitted hereunder, (c) Liens created under
the Loan Documents, (d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
securing obligations that are not due and payable, (e) pledges and deposits made
in the ordinary course of business in compliance with workers' compensation,
unemployment insurance and other social security laws or regulations, (f) zoning
restrictions, easements, rights-of-way, restrictions on use of real property and
other similar encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount and do not materially detract from
the value of the property subject thereto or interfere with the ordinary conduct
of the business of the Company, (g) licenses, leases or subleases granted by the
Company to third Persons in the ordinary course of business not interfering in
any material respect with the business of the Company, (h) Liens arising solely
by virtue of any statutory or common law provision relating to bankers' liens,
rights of setoff or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution, (i) statutory and
common law landlord's Liens under leases to the Company is a party and (j)
judgment Liens in respect of judgments that do not constitute an Event of
Default under SECTION 9.1(F).

            1.47 "PERSON" shall mean 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.

            1.48 "QUALIFIED FINANCING" shall have the meaning ascribed to such
term in the Note.

            1.49 "QUALIFIED FINANCING CONVERSION STOCK" shall have the meaning
ascribed to such term in the Note.

            1.50 "SEC REPORTS" shall mean, collectively, (i) the Company's
Annual Report on Form 10-KSB for the fiscal year ended March 31, 2008, as filed
by the Company with the Commission on June 30, 2008, (ii) the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008, as
filed by the Company with the Commission on August 14, 2008, (iii) the Company's
Amendment No. 1 to Quarterly Report on Form 10-Q/A for the fiscal quarter ended
September 30, 2008, as filed by the Company with the Commission on November 20,
2008, (iv) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 2008, as filed by the Company with the Commission on February
23, 2009, and (v) any Current Report on Form 8-K filed or furnished by the
Company with the Commission since April 1, 2008 and publicly available prior to
the date of this Agreement.

            1.51 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

            1.52 "SECURITY AGREEMENT" shall mean that certain Security
Agreement, dated the date hereof, between the Company and the Lender, in the
form attached hereto as EXHIBIT C, as the same may be amended from time to time.

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            1.53 "SECURITY DOCUMENTS" shall mean the Security Agreement and each
of the security agreements, mortgages and other instruments and documents that
provides for the granting of a Lien by the Company on any of its assets in
connection with the Loan Documents and that is executed and delivered pursuant
to any of the foregoing, as each may be amended from time to time.

            1.54 "SEVERANCE AMENDMENTS" shall have the meaning ascribed to such
term in SECTION 7.1(J).

            1.55 "SUBJECT EMPLOYEE" shall mean each of Steven Gluckstern, Andre'
DiMino, David Saloff, Edward Hammel, Alan Gallantar and Sean Hagberg.

            1.56 "SUBSEQUENT ADVANCE DATE" shall mean each of May 1, 2009, June
1, 2009 and July 1, 2009; PROVIDED, that, in the event that any such date is not
a Business Day, the applicable Subsequent Advance Date shall be the first
Business Day occurring after such date.

            1.57 "WARRANT" shall have the meaning ascribed to such term in
SECTION 2.7(B).

            1.58 "WARRANT SHARES" shall have the meaning ascribed to such term
in SECTION 2.7(B).

      2. BORROWINGS; ISSUANCE OF NOTE AND WARRANT.

            2.1 THE LOANS. Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, the Lender hereby agrees to
make loans to the Company on each Advance Date, as set forth herein, in an
aggregate principal amount of up to the Maximum Principal Balance (each such
loan made by the Lender hereunder is herein referred to individually as a "LOAN"
and collectively as the "LOANS"). The Loans will be evidenced by a convertible
promissory note in the form attached hereto as EXHIBIT A (as amended from time
to time, the "NOTE"). The Loans shall bear interest and shall be repaid by the
Company in the manner and at the times set forth in the Note.

            2.2 USE OF PROCEEDS. The proceeds of each Loan made by the Lender to
the Company hereunder shall be used by the Company solely for working capital
purposes.

            2.3 BORROWINGS.

                  (a) INITIAL ADVANCE DATE. Subject to the satisfaction of the
            conditions set forth in SECTION 7.1, on the Initial Advance Date,
            the Lender shall make a Loan to the Company in a principal amount up
            to $1,000,000 by wire transfer of immediately available funds in
            such amount to the Company Account.

                  (b) SUBSEQUENT ADVANCE DATES.

                        (i) In the event that the Company desires to obtain a
                  Loan hereunder on any Subsequent Advance Date, the Company
                  shall hand deliver or fax (or give telephonic notice promptly
                  confirmed by hand delivery or fax) to the Lender a duly
                  completed drawdown notice in the form attached hereto as
                  EXHIBIT D (a "DRAWDOWN NOTICE") at least five Business Days
                  prior to such Subsequent Advance Date. Each Drawdown Notice

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                  shall (x) state the principal amount of Loans that the Company
                  desires to obtain hereunder on the applicable Subsequent
                  Advance Date, which amount shall not exceed the Applicable
                  Subsequent Advance Amount, (y) certify that each of the
                  conditions to the making of such Loan on such Subsequent
                  Advance Date set forth in SECTION 7.2 hereof has been
                  satisfied, and (z) be executed by a duly authorized officer of
                  the Company.

                        (ii) Following the receipt of a duly and timely
                  delivered Drawdown Notice in respect of a Subsequent Advance
                  Date pursuant to CLAUSE (I) above and subject to the
                  satisfaction of the conditions set forth in SECTION 7.2, the
                  Lender shall make a Loan to the Company on such Subsequent
                  Advance Date in a principal amount equal to the amount
                  requested pursuant to SECTION 2.3(B)(I) by wire transfer of
                  immediately available funds in such amount to the Company
                  Account.

                  (c) EXPIRATION OF COMMITMENTS. Subject to SECTION 2.8, the
            obligation of the Lender to make any further Loans to the Company
            hereunder shall expire immediately following the earlier of (x) the
            final Advance Date (after the making of any Loan to be made on such
            date) and (y) the Conversion Date.

                  (d) NOT REVOLVING LOANS. Amounts paid or prepaid by the
            Company in respect of Loans may not be reborrowed.

            2.4 NO VOLUNTARY PREPAYMENT. The Company may not optionally prepay
all or any portion of the outstanding principal amount of the Loans or any
accrued and unpaid interest thereon.

            2.5 MANDATORY PREPAYMENT. In the event that (x) the Company
consummates a Qualified Financing prior to the occurrence of the Maturity Date
and (y) the Lender shall not elect to convert the entire aggregate outstanding
principal balance of the Loans and all accrued and unpaid interest thereon into
shares of Qualified Financing Conversion Stock in accordance with Section 4.2 of
the Note, then the Company shall be required, on the date of the closing of such
Qualified Financing, to (i) prepay, in cash, the entire outstanding principal
amount of the Loans, together with all accrued and unpaid interest thereon, and
(ii) make an additional payment, in cash, to the Lender in an amount equal to
the Forgone Interest Amount.

            2.6 REPAYMENT AT MATURITY. Unless the Lender shall elect to convert
the entire aggregate outstanding principal balance of the Loans and all accrued
and unpaid interest thereon into Conversion Shares on the Maturity Date in
accordance with Section 4.3(a) of the Note, on the Maturity Date, the Company
shall repay, in cash, the entire outstanding principal amount of the Loans,
together with all accrued and unpaid interest thereon.

            2.7 ISSUANCE OF THE NOTE AND WARRANT.

                  (a) ISSUANCE OF THE NOTE. At the Closing, the Company will
            execute, issue and deliver the Note to the Lender.

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                  (b) ISSUANCE OF THE WARRANT. At the Closing, the Company will
            execute, issue and deliver to the Lender, as part of its inducement
            to make the Loans hereunder, warrants to purchase certain shares of
            the Company's capital stock (the "WARRANT SHARES"), in the form
            attached hereto as EXHIBIT B (the "WARRANT").

            2.8 OPTIONAL LOAN ADVANCE IN CONNECTION WITH CONVERSION.
Notwithstanding anything to the contrary set forth herein, in the event that (x)
the Company consummates a Qualified Financing, (y) the Lender elects to convert
the entire aggregate outstanding principal balance of the Loans and all accrued
and unpaid interest thereon into shares of Qualified Financing Conversion Stock
in accordance with Section 4.2 of the Note, and (z) as of the date of the
closing of the Qualified Financing, the aggregate principal amount of Loans made
pursuant to this Agreement is less than the Maximum Principal Balance, then the
Lender shall have the option, but not the obligation, to elect to make,
immediately prior to the conversion of the entire aggregate outstanding
principal balance of the Loans and all accrued and unpaid interest thereon into
shares of Qualified Financing Conversion Stock in accordance with Section 4.2 of
the Note, an additional Loan to the Company hereunder in an amount which will
result in the aggregate outstanding principal balance of the Note being equal to
the Maximum Principal Balance immediately prior to the conversion of the Note
into shares of Qualified Financing Conversion Stock under Section 4.2 of the
Note). The Lender shall notify the Company of such election and shall fund such
additional Loan not later than the Business Day preceding the Conversion Date.

      3. THE CLOSING. The closing (the "CLOSING") of the issuance and delivery
of the Note and the Warrant under this Agreement shall take place at the offices
of Mayer Brown LLP, 1675 Broadway, New York, New York 10010, or at such other
place as is mutually agreeable to the Company and the Lender. At the Closing,
the Company shall deliver to the Lender (a) the Note and (b) the Warrant. The
Closing shall occur on such date as is mutually agreeable to the Company and the
Lender (the "CLOSING DATE").

      4. CONDITION TO THE OBLIGATIONS OF THE COMPANY TO ISSUE THE NOTE AND THE
WARRANT. The obligations of the Company to issue and deliver the Note and
Warrant to the Lender at the Closing are subject to fulfillment, or the waiver,
of the following condition on or before the Closing Date:

            4.1 THIS AGREEMENT. The Company shall have received a copy of this
Agreement executed by the Lender.

      5. REPRESENTATIONS OF THE COMPANY. Except as disclosed by the Company in
the Disclosure Schedule attached as EXHIBIT E hereto (the "DISCLOSURE
SCHEDULE"), which Disclosure Schedule makes explicit reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty as to which such exception
shall apply, the Company hereby represents and warrants, as of the date hereof
and as of the Closing Date, to the Lender as follows:

            5.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has full power and authority to own its properties and
to conduct its business as presently conducted and as proposed to be conducted
by it. The Company is duly qualified to do business as a foreign corporation in

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every jurisdiction in which the failure so to qualify would reasonably be
expected to have a Material Adverse Effect. The Company has made available to
the Lender true, correct and complete copies of the Company's Certificate of
Incorporation and Bylaws as in effect on the date of this Agreement.

            5.2 CAPITALIZATION.

                  (a) The authorized capital stock of the Company (immediately
            prior to the Closing) consists of (i) 70,000,000 shares of Common
            Stock, of which (x) 10,116,930 shares are issued and outstanding as
            of February 24, 2009 and (y) 650,000 shares are held by the Company
            in treasury as of February 24, 2009, and (ii) 5,000,000 shares of
            preferred stock, no par value per share, none of which are issued
            and outstanding.

                  (b) All of the issued and outstanding shares of the Company's
            capital stock have been duly authorized and validly issued and are
            fully paid and nonassessable. Except as provided in this Agreement
            (including Schedule 5.2 hereto) or in the Loan Documents, as of the
            date hereof, (i) no subscription, warrant, option, convertible
            security or other right (contingent or otherwise) to purchase or
            acquire any shares of capital stock of the Company is authorized or
            outstanding, (ii) the Company has no obligation (contingent or
            otherwise) to issue any subscription, warrant, option, convertible
            security or other such right or to issue or distribute to holders of
            any shares of its capital stock, any evidences of indebtedness or
            assets of the Company, and (iii) the Company has no obligation
            (contingent or otherwise) to purchase, redeem or otherwise acquire
            any shares of its capital stock or any interest therein or to pay
            any dividend or make any other distribution in respect thereof. All
            of the issued and outstanding shares of capital stock of the Company
            have been offered, issued and sold by the Company in compliance with
            applicable federal and state securities laws.

            5.3 SUBSIDIARIES, ETC. The Company has no subsidiaries and does not
      own or control, directly or indirectly, any shares of capital stock or
      other equity interest of any other corporation or limited liability
      company or any interest in any partnership, joint venture or other
      non-corporate business enterprise.

            5.4 ISSUANCE AND DELIVERY OF THE NOTE AND WARRANT; ISSUANCE, SALE
      AND DELIVERY OF THE CONVERSION SHARES AND WARRANT SHARES.

                  (a) The Note, when issued and delivered in accordance with the
            provisions of this Agreement, will be duly and validly issued and
            free and clear of all Liens (other than Liens created by the
            Lender), will not be subject to any contractual preemptive rights of
            any other stockholder of the Company and will constitute a valid and
            binding obligation of the Company enforceable in accordance with its
            terms, subject as to enforcement of remedies to applicable
            bankruptcy, insolvency, reorganization or similar laws affecting
            generally the enforcement of creditors' rights and subject to a
            court's discretionary authority with respect to the granting of a
            decree ordering specific performance or other equitable remedies.

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                  (b) The Warrant, when issued and delivered in accordance with
            the provisions of this Agreement, will be duly and validly issued,
            fully paid and nonassessable, and free and clear of all Liens (other
            than Liens created by the Lender), will not be subject to preemptive
            rights of any other stockholder of the Company and will constitute a
            valid and binding obligation of the Company enforceable in
            accordance with its terms, subject as to enforcement of remedies to
            applicable bankruptcy, insolvency, reorganization or similar laws
            affecting generally the enforcement of creditors' rights and subject
            to a court's discretionary authority with respect to the granting of
            a decree ordering specific performance or other equitable remedies.

                  (c) Upon the issuance of any Conversion Shares upon the
            conversion of the Note in accordance with its terms, the issuance,
            sale and delivery of such Conversion Shares will have been duly
            authorized by all necessary corporate action and, when so issued and
            delivered in accordance with the terms of the Note, such Conversion
            Shares will be validly issued, fully paid and nonassessable, and
            free and clear of all Liens (other than Liens created by the Lender)
            and will not be subject to preemptive rights of any other
            stockholder of the Company.

                  (d) Upon the issuance of any Warrant Shares upon the exercise
            of the Warrant in accordance with its terms, the issuance, sale and
            delivery of such Warrant Shares will have been duly authorized by
            all necessary corporate action and, when so issued and delivered in
            accordance with the terms of the Warrant, such Warrant Shares will
            be validly issued, fully paid and nonassessable, and free and clear
            of all Liens (other than Liens created by the Lender) and will not
            be subject to preemptive rights of any other stockholder of the
            Company.

                  5.5 AUTHORITY FOR AGREEMENT; EFFECT OF TRANSACTIONS.

                  (a) The Company has the corporate power and authority to enter
            into this Agreement and each of the other Loan Documents and to
            carry out its obligations hereunder and thereunder. The execution,
            delivery and performance by the Company of this Agreement and each
            of the other Loan Documents, the performance by the Company of each
            of its obligations hereunder and thereunder and the consummation by
            the Company of the transactions contemplated hereby and thereby
            (including, without limitation, the issuance and delivery of the
            Note and the Warrant at the Closing), have been duly authorized by
            all necessary corporate action. No other corporate proceedings or
            stockholder actions are necessary for the execution and delivery by
            the Company of this Agreement and each of the other Loan Documents,
            the performance by the Company of each of its obligations hereunder
            and thereunder, and the consummation by the Company of each of the
            transactions contemplated hereby and thereby, including, without
            limitation, (x) the issuance and delivery by the Company to the
            Lender of the Note and the Warrant on the Closing Date, (y) the
            issuance, sale and delivery of the Warrant Shares that may be
            issuable upon exercise of the Warrant and (z) the issuance, sale and
            delivery of the shares of the Company's capital stock that may be
            issuable upon conversion of the Note (the "CONVERSION SHARES").

                                       10

<page>

                  (b) This Agreement and each of the other Loan Documents have
            been duly executed and delivered by the Company and constitute valid
            and binding obligations of the Company enforceable in accordance
            with their respective terms, subject as to enforcement of remedies
            to applicable bankruptcy, insolvency, reorganization or similar laws
            affecting generally the enforcement of creditors' rights and subject
            to a court's discretionary authority with respect to the granting of
            a decree ordering specific performance or other equitable remedies.

                  (c) The execution of and performance of the transactions
            contemplated by this Agreement and the Loan Documents and compliance
            with their provisions by the Company will not (i) violate any
            provision of any law, regulation, decree, judgment, license, permit,
            order, statute or rule applicable to the Company, (ii) except with
            respect to the Liens imposed by the Security Agreement, result in
            the creation of any Lien upon any of the property of the Company,
            (iii) conflict with or result in any breach of any of the terms,
            conditions or provisions of, or constitute a default under, or
            require a consent or waiver under, its Certificate of Incorporation
            or Bylaws (each as amended to date), or (iv) conflict with or result
            in any breach of any of the terms, conditions or provisions of, or
            constitute a default under, or require a consent or waiver under,
            any material note, indenture, bond, lease, agreement or other
            instrument to which the Company is a party or by which it or any of
            its properties is bound, except, in the case of CLAUSE (I) or (IV),
            for any such violations, conflicts, breaches or defaults which would
            not reasonably be expected to have a Material Adverse Effect.

                  (d) The Company is not required to obtain any third-party
            consent, waiver, authorization or order of, give any notice to, or
            make any filing or registration with, any court or other federal,
            state, local or other governmental authority or other Person in
            connection with the execution, delivery and performance by the
            Company of this Agreement and the other Loan Documents, other than
            (i) filings required by state securities laws, and the filing of a
            Notice of Sale of Securities on Form D with the Commission as
            required under Regulation D of the Securities Act, (ii) the filing
            of financing statements in appropriate form, properly describing the
            collateral and identifying the Company as debtor and the Lender as
            the secured party in the Department of the Treasury of the State of
            New Jersey or such other office specified by the Uniform Commercial
            Code as necessary for perfection, (iii) the recording of appropriate
            documents with respect to Intellectual Property Rights in the United
            States Patent and Trademark Office and (iv) those that have been
            made or obtained prior to the date of this Agreement.

            5.6 LITIGATION. There is no Action to which the Company is a party
which (i) adversely affects or challenges the legality, validity or
enforceability of this Agreement or the other Loan Documents, the Conversion
Shares or the Warrant Shares or (ii) except as disclosed in the SEC Reports,
would, if any such Action were decided adversely to the Company, reasonably be
expected to have a Material Adverse Effect, individually or considered in the
aggregate with all such Actions. Neither the Company nor, to the Knowledge of

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<page>

the Company, any director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as disclosed in
the SEC Reports. There has not been, and to the Knowledge of the Company, there
is not pending or contemplated, any Action by the Commission involving the
Company or any current director or officer of the Company. To the Knowledge of
the Company, there has not been, and there is not pending or contemplated, any
Action by the Commission involving any former director or officer of the
Company. The Company has not received any stop order or other order suspending
the effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.

            5.7 TITLE TO ASSETS. The Company has good title in fee simple to all
real property owned by it that is material to its business and good title in all
personal property owned by it that is material to its business, in each case
free and clear of all Liens, except for (i) Liens disclosed in the SEC Reports,
(ii) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and (iii) Permitted Liens. Any real property and facilities or
personal property held under lease by the Company are held by it under valid,
subsisting and enforceable leases with which the Company is in compliance,
except to the extent of non-compliance which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

            5.8 COMPANY REPORTS; FINANCIAL STATEMENTS.

                  (a) Since October 18, 2006, the Company has filed all reports,
            registrations, documents, filings, statements and submissions,
            together with any amendments thereto, that it was required to file
            with the Commission under applicable law and the rules and
            regulations of the Commission (the "COMPANY REPORTS") on a timely
            basis or has timely filed a valid extension of such time of filing
            and has filed any such Company Reports prior to the expiration of
            any such extension. As of their respective dates, the Company
            Reports complied in all material respects with the requirements of
            the Securities Act and the Exchange Act and the rules and
            regulations of the Commission promulgated thereunder, and none of
            the Company Reports, at the time it was filed, contained any untrue
            statement of a material fact or omitted to state a material fact
            required to be stated therein or necessary in order to make the
            statements therein not misleading. The financial statements of the
            Company included in the Company Reports comply in all material
            respects with applicable accounting requirements and the rules and
            regulations of the Commission with respect thereto as in effect at
            the time of filing. Such financial statements have been prepared in
            accordance with GAAP to the extent required by applicable law and
            the rules and regulations of the Commission, except as may be
            otherwise specified in such financial statements or the notes
            thereto, and fairly present in all material respects the financial
            position of the Company as of and for the dates thereof and the
            results of operations and cash flows for the periods then ended,
            subject, in the case of unaudited statements, to normal, immaterial,
            year-end audit adjustments. All material agreements to which the
            Company is a party or to which the property or assets of the Company
            are subject are included as part of or specifically identified in
            the Company Reports to the extent required by applicable law and the
            rules and regulations of the Commission. No executive officer of the
            Company has failed in any respect to make the certifications
            required of him or her under Section 302 or 906 of the
            Sarbanes-Oxley Act of 2002.

                                       12

<page>

                  (b) The records, systems, controls, data and information of
            the Company are recorded, stored, maintained and operated under
            means (including any electronic, mechanical or photographic process,
            whether computerized or not) that are under the exclusive ownership
            and direct control of the Company or its accountants (including all
            means of access thereto and therefrom), except for any non-exclusive
            ownership and non-direct control that would not reasonably be
            expected to adversely affect in any material respect the system of
            internal accounting controls described below in this Section 5.8(b).
            The Company (A) has implemented and maintains disclosure controls
            and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
            ensure that material information relating to the Company is made
            known to the chief executive officer and the chief financial officer
            of the Company by others within the Company or the Company's
            accounting firm, and (B) has disclosed, based on its most recent
            evaluation prior to the date hereof, to the Company's outside
            auditors and the audit committee of the board of directors of the
            Company (x) any significant deficiencies and material weaknesses in
            the design or operation of internal controls over financial
            reporting (as defined in Rule 13a-15(f) of the Exchange Act) that
            are reasonably likely to adversely affect the Company's ability to
            record, process, summarize and report financial information and (y)
            any fraud, whether or not material, that involves management or
            other employees who have a significant role in the Company's
            internal controls over financial reporting. Since October 18, 2006
            and until the date of this Agreement, (A) neither the Company nor,
            to the Knowledge of the Company, any director, officer, employee,
            auditor, accountant or representative of the Company has received or
            otherwise had or obtained knowledge of any material complaint,
            allegation, assertion or claim, whether written or oral, regarding
            the accounting or auditing practices, procedures, methodologies or
            methods of the Company or its internal accounting controls,
            including any material complaint, allegation, assertion or claim
            that the Company has engaged in questionable accounting or auditing
            practices, and (B) no attorney representing the Company, whether or
            not employed by the Company, has reported evidence of a material
            violation of securities laws, breach of fiduciary duty or similar
            violation by the Company or any of its officers, directors,
            employees or agents to the board of directors of the Company or any
            committee thereof or to any director or officer of the Company.

            5.9 MATERIAL CHANGES. Since the date of the latest audited financial
statements included in the Company's most recent Annual Report on Form 10-KSB,
except as disclosed in the SEC Reports, (i) the Company has operated its
business in the ordinary course consistent with past practices, (ii) there has
been no event, occurrence or development that has had or that could reasonably
be expected to have a Material Adverse Effect, (iii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses, and other liabilities incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iv) the
Company has not altered its critical accounting policies or the identity of its
auditors, (v) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
binding agreements to purchase or redeem any shares of its capital stock, and
(vi) the Company has not issued any securities to any officer, director or
affiliate, except pursuant to existing Company stock option or incentive plans

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<page>

under registration statements on Form S-8. The Company does not have pending
before the Commission any request for confidential treatment of information or
documents.

            5.10 TAX MATTERS. The Company has timely filed (taking into account
all permitted extensions) all foreign, federal, state and local income, excise
or franchise tax returns, real estate and personal property tax returns, sales
and use tax returns and other tax returns required to be filed by it and has
paid all taxes owed by it, except taxes which have not yet accrued or otherwise
become due. The provision for taxes in the financial statements contained in
each SEC Report is materially sufficient as of its date for the payment of all
accrued and unpaid federal, state, county and local taxes of any nature of the
Company, and any applicable taxes owing to any foreign jurisdiction, whether or
not disputed. All taxes and other assessments and levies which the Company is
required to withhold or collect have been withheld and collected in a timely
manner and have been paid over to the proper governmental authorities to the
extent required to be so paid. With regard to the income tax returns of the
Company, the Company has not received notice of any audit or of any proposed
deficiencies from any taxing authority, and no controversy with respect to taxes
of the Company of any type is pending or, to the Knowledge of the Company,
threatened. There are in effect no waivers of applicable statutes of limitations
with respect to any taxes owed by the Company for any year.

            5.11 LOANS AND ADVANCES. Except as set forth in the SEC Reports, the
Company does not have any outstanding loans or advances to any Person and is not
obligated to make any such loans or advances, except, in each case, for advances
to employees of the Company in respect of reimbursable business expenses
anticipated to be incurred by them in connection with their performance of
services for the Company.

            5.12 ASSUMPTIONS, GUARANTIES, ETC. OF INDEBTEDNESS OF OTHER PERSONS.
Except as set forth in the SEC Reports, the Company has not assumed, guaranteed,
endorsed or otherwise become directly or contingently liable on any indebtedness
of any other Person (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor, or otherwise to assure the
creditor against loss), except for guaranties by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business.

            5.13 TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Reports, none of the officers, directors, employee, stockholders or other
Affiliates of the Company is presently a party to any transaction with the
Company (other than (i) the transactions contemplated by this Agreement and the
other Loan Documents and (ii) for services as employees, officers, directors and
consultants), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director, employee, stockholder or Affiliate or, to the Knowledge
of the Company, any entity in which any such officer, director, employee,
stockholder or Affiliate has a substantial interest or is an officer, director,
trustee or partner, in each case that would be required to be disclosed now or
in the future pursuant to the requirements of Item 404 of Regulation S-K in any
filing or report required to be filed by the Company with the Commission.

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<page>

            5.14 PROPRIETARY RIGHTS; EMPLOYEE RESTRICTIONS. The Company owns, or
has the legal right to use, all Intellectual Property Rights, except where the
failure to do so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Knowledge of the Company,
neither the present nor proposed business activities or products of the Company
infringe or misappropriate any patents, copyrights, trademarks, trade names,
service marks, logos or other intellectual or tangible proprietary rights
recognized by U.S. law of others, except for any such infringements or
misappropriations that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. The Company has not received
any notice or other claim from any Person asserting that any of the Company's
present or proposed activities infringe or misappropriate, or may infringe or
misappropriate, any patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights or licenses of any Person.
To the Knowledge of the Company, the Company has the right to use, free and
clear of Liens, claims or rights of others, other than Liens described in the
SEC Reports, all trade secrets and know-how required for or incident to its
products or its business as presently conducted or contemplated, including
without limitation: customer lists, manufacturing processes, hardware designs,
programming processes, software. The Company has taken all commercially
reasonable steps to establish and preserve its ownership of all of the
Intellectual Property Rights owned by it, including but not limited to requiring
all employees and consultants to execute a confidentiality and assignment of
inventions agreement in favor of the Company. The Company is not aware of any
infringement or misappropriation by others of any Intellectual Property Rights,
or any violation of the confidentiality of any of its proprietary information.
To the Knowledge of the Company, the Company is not making unlawful use of any
confidential information or trade secrets of any past or present employees of
the Company. Except as disclosed in the SEC Reports, the Company has not granted
or assigned to any other Person any right to manufacture, have manufactured,
assemble or sell the products or proposed products or to provide the services or
proposed services of the Company, except pursuant to agreements with
distributors of the Company's products entered into in the ordinary course of
business.

            5.15 PROPRIETARY INFORMATION OF THIRD PARTIES. No third party has
claimed or, to the Knowledge of the Company, has reason to claim, that any
Person employed or engaged by the Company has, in the performance of such
Person's duties to the Company, (a) violated any of the material terms or
conditions of his employment, non-competition or non-disclosure agreement with
such third party, (b) disclosed or utilized or may be utilizing any trade secret
or proprietary information or documentation of such third party or (c)
interfered in the employment relationship between such third party and any of
its present or former employees, except in each instance, where such violation,
disclosure or interference would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

            5.16 BUSINESS; COMPLIANCE WITH LAWS. The Company has all necessary
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as is presently
conducted, except for those the lack of which would not reasonably be expected
to have a Material Adverse Effect. The Company is not in violation of any law,
regulation, authorization or order material to the ownership of its properties
or the carrying on of its business as presently conducted.

                                       15

<page>

            5.17 ENVIRONMENTAL COMPLIANCE. Except as set forth in the SEC
Reports, the Company (a) has never violated any, and is presently in material
compliance with all, federal, state, and local environmental and health and
safety laws, rules, regulations, ordinances, guidelines, codes, orders,
approvals and similar items ("ENVIRONMENTAL LAWS") applicable to its business
and properties; (b) has not generated, manufactured, used, refined, transported,
treated, stored, handled, disposed of, transferred, produced, or processed any
pollutant, toxic substance, hazardous waste, hazardous substance, hazardous
material, oil, or petroleum product other than ordinary cleaning and other
similar products ("HAZARDOUS MATERIALS") as defined under any Environmental Law,
or any solid waste, and, to the Knowledge of the Company, is not aware of the
release or threat of release of any Hazardous Materials from its products,
properties or facilities except, in each case, in material compliance with law;
(c) has not (i) entered into or been subject to any consent decree, compliance
order, or administrative order with respect to any environmental or health and
safety matter relating to its business or any of its properties or facilities,
(ii) received notice under the citizen suit provision of any Environmental Law
in connection with its business or any of its properties or facilities, (iii)
received any request for information, notice, demand letter, administrative
inquiry, or formal or informal complaint or claim with respect to any
environmental or health and safety matter relating to its business or any of its
properties or facilities, or (iv) been subject to or, to its Knowledge,
threatened with any governmental or citizen enforcement action with respect to
any environmental or health and safety matter relating to its business or any of
its properties or facilities, and has no reason to believe that any matters
described in CLAUSES (I) through (IV) above will be forthcoming. No Lien has
been imposed on any of the properties or facilities of the Company by any
governmental agency at the federal, state, or local level in connection with the
presence of any Hazardous Materials.

            5.18 CONTRACTS. All contracts and agreements filed or required to be
filed as exhibits to the Company Reports filed prior to the date hereof (except
such contracts and agreements that have expired by their own terms)
(collectively, "MATERIAL CONTRACTS") are in full force and effect and constitute
legal, valid and binding obligations of the Company and, to the Knowledge of the
Company, the other parties thereto; the Company and, to the Knowledge of the
Company, each other party thereto, have performed in all material respects all
obligations required to be performed by them under the Material Contracts, and
no material violation or default exists in respect thereof, nor any event that
with notice or lapse of time, or both, would constitute a material default
thereof, on the part of the Company or, to the Knowledge of the Company, any
other party thereto; none of the Material Contracts is currently being
renegotiated; and the validity, effectiveness and continuation of no Material
Contract will be materially adversely affected by the transactions contemplated
by this Agreement and the other Loan Documents.

            5.19 BROKERAGE. There are no claims for and no person is entitled to
any brokerage commissions, finder's fees or similar compensation in connection
with the transactions contemplated by this Agreement from the Company or based
on any arrangement or agreement made by or on behalf of the Company.

            5.20 EMPLOYEE BENEFIT PLANS. Except as set forth in the SEC Reports,
the Company does not maintain or contribute to any employee benefit plans. The
Company is in material compliance with the provisions of all laws or rules or
regulations applicable to any employee benefit plan maintained or contributed to
by the Company for the benefit of its employees and, to the Knowledge of the

                                       16

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Company, there are no claims (other than routine claims for benefits) pending or
threatened with respect to any of such employee benefit plans. The Company does
not maintain or contribute to, nor has it ever maintained or contributed to, any
qualified retirement plan that is subject to the minimum funding requirements of
Section 412 of the United States Internal Revenue Code of 1986, as amended.
There are no material unfunded obligations of the Company under any retirement,
pension, profit-sharing or deferred compensation plan or program. The Company is
not required to make any payments or contributions to any employee benefit plan
pursuant to any collective bargaining agreement. For purposes of this SECTION
5.20, the term "COMPANY" includes all entities that have controlled, have been
under the control of, or have been under common control with, the Company.

            5.21 EMPLOYEES. No officer or key employee of the Company has
advised the Company (orally or in writing) that he or she intends to terminate
employment with the Company. Except as set forth in the SEC Reports, the Company
has complied in all material respects with all applicable laws relating to the
employment of labor, including provisions relating to wages, equal opportunity,
collective bargaining and the payment of social security and other
employee-related taxes. Except as set forth in the SEC Reports, none of the
employees of the Company is represented by any labor union or covered by any
collective bargaining agreements, the Company is not aware of any effort to
establish a labor union or bargaining unit or similar organizational effort with
respect to its employees, and, to the Knowledge of the Company, there is no
labor strike or other material labor trouble pending or threatened with respect
to the Company. Except as set forth in the SEC Reports, there are no pending,
or, to the Knowledge of the Company, threatened (i) employment discrimination
charges or complaints against the Company before any federal, state or local
commission or agency or (ii) unfair labor practice charges or complaints,
disputes or grievances against the Company.

            5.22 NASDAQ CAPITAL MARKET. The Common Stock is listed on The Nasdaq
Capital Market, and there are no proceedings to revoke or suspend such listing.
The issuance of the Note and the Warrant, and the issuance of any Conversion
Shares or Warrant Shares issuable upon conversion or exercise of the Note or the
Warrant, will not contravene any Nasdaq Marketplace Rule. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act. The Company has taken
no action designed to, or which, to the Knowledge of the Company, is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from The Nasdaq Capital Market. The
Company has not received any notification that, and has no knowledge that, the
Commission or the NASD is contemplating terminating such listing or
registration.

            5.23 NO SOLICITATION OR ADVERTISEMENT. Neither the Company nor, to
the Knowledge of the Company, any person acting on its behalf has engaged, in
connection with the offering of the Note, Warrant, Warrant Shares or Conversion
Shares, in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.

            5.24 NO MANIPULATION OF STOCK. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock.

                                       17

<page>

            5.25 SECURITIES ACT REGISTRATION. Assuming that the representations
and warranties of the Lender contained herein are true, it is not necessary in
connection with the offer, issuance and delivery of the Note and the Warrant
hereunder, or in connection with the offer, sale, issuance and delivery of any
Conversion Shares or Warrant Shares upon any exercise or conversion of the Note
or the Warrant, to register the Note, the Warrant, the Warrant Shares or the
Conversion Shares under the Securities Act or under applicable state securities
or Blue Sky laws regulating the issuance or sale of securities. Neither the
Company nor, to the Knowledge of the Company, any of its Affiliates or any
Person acting on the Company's behalf has, directly or indirectly, at any time
within the six (6) month period immediately prior to the date of this Agreement,
made any offer or sale of any security or solicitation of any offer to buy any
security under circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale of the Note, the Warrant, the Conversion
Shares and the Warrant Shares as contemplated hereby or (ii) cause the offering
of the Note, the Warrant, the Conversion Shares and the Warrant Shares pursuant
to the Loan Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of the Nasdaq
Capital Market.

            5.26 SOLVENCY. Immediately after the consummation of the
transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, (a) the fair value of the assets of the Company, at a fair valuation, will
exceed the Company's debts and liabilities, subordinated, contingent or
otherwise; (b) the present fair saleable value of the property of the Company
will be greater than the amount that will be required to pay the probable
liability of the Company's debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(c) the Company will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) the Company will not have unreasonably small capital with which
to conduct the businesses in which it is engaged as such businesses are now
conducted and are proposed to be conducted following the Closing Date.

            5.27 SECURITY AGREEMENT. The Security Agreement, upon execution and
delivery thereof by the parties thereto, will create in favor of the Lender a
legal, valid and enforceable security interest in the Collateral and the
proceeds thereof and (i) when certificates representing the pledged securities
required to be delivered on the Closing Date to the Lender under the Security
Agreement are delivered to the Lender, together with appropriate stock powers
undated and executed in blank, the Lien created under the Security Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Company in such pledged securities, in each case prior
and superior in right to any other person subject to any Permitted Liens, (ii)
when financing statements in appropriate form are filed in the offices specified
in the Security Agreement and (iii) when appropriate documents with respect to
Intellectual Property Rights are recorded in the United States Patent and
Trademark Office, the Lien created under the Security Agreement will constitute
a fully perfected first priority Lien on, and security interest in, all right,
title and interest of the Company as of the Closing Date in such Collateral to
the extent that a security interest in such Collateral may be perfected by such
delivery, filing or recording, as applicable, in each case prior and superior in
right to any other person, other than with respect to Permitted Liens.

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<page>

            5.28 NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
has occurred and is continuing.

            5.29 INVESTMENT COMPANY ACT. The Company is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

            5.30 ACKNOWLEDGMENT REGARDING LENDER'S STATUS. The Company
acknowledges and agrees that the Lender is acting solely in the capacity of an
arm's-length lender with respect to this Agreement, the other Loan Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that the Lender is not acting as a financial advisor or fiduciary
of the Company with respect to this Agreement, the other Loan Documents and the
transactions contemplated hereby and thereby. The Company further represents to
the Lender that the Company's decision to enter into this Agreement and the
other Loan Documents has been based solely on the independent evaluation of the
transactions contemplated hereby and thereby by the Company and its
representatives, and no statement, commitment or promise to the Company or any
of its representatives by the Lender (other than those statements, commitments
or promise set forth in this Agreement and the other Loan Documents) is or was
an inducement to the Company to enter into this Agreement, the other Loan
Documents or otherwise.

            5.31 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now
and has never been a "United States real property holding corporation," as
defined in the Internal Revenue Code of 1986, as amended.

            5.32 DISCLOSURE. Neither this Agreement, any Loan Document nor any
SEC Report contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements made herein or
therein, in light of the circumstances under which they were made, not
misleading.

      6. REPRESENTATIONS OF THE LENDER. The Lender represents and warrants to
the Company as follows:

            6.1 AUTHORITY. The Lender is duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Lender has now, and
will have at the Closing Date, all requisite power to enter into this Agreement
and the other Loan Documents to which the Lender is a party and the transactions
contemplated hereby and thereby and to perform its obligations under the terms
of this Agreement and the other Loan Documents to which it is a party.

            6.2 VALIDITY; NO CONFLICTS.

                  (a) This Agreement and each of the other Loan Document to
            which the Lender is a party, when executed and delivered by the
            Lender and each of the other parties thereto, will constitute a
            valid and legally binding obligation of the Lender, enforceable in
            accordance with its terms, subject to bankruptcy, insolvency,
            fraudulent transfer, reorganization, moratorium and similar laws of
            general applicability relating to or affecting creditors' rights.

                                       19

<page>

                  (b) The execution, delivery and performance by the Lender of
            this Agreement and the other Loan Documents to which it is a party
            and the consummation by the Lender of the transactions contemplated
            hereby and thereby will not (i) result in a violation of the
            organizational documents of the Lender, (ii) conflict with, or
            constitute a default (or an event which 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 of, any
            agreement, indenture or instrument to which the Lender is a party,
            or (iii) result in a violation by the Lender of any law, rule,
            regulation, order, judgment or decree (including federal and state
            securities laws) applicable to the Lender, except in the case of
            CLAUSES (II) and (III) above, for such conflicts, defaults, rights
            or violations which could not, individually or in the aggregate,
            reasonably be expected to have a material adverse effect on the
            ability of such the Lender to perform its obligations hereunder and
            thereunder.

            6.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Lender hereby confirms
that, except with respect to the Nominee and Sharing Agreement pursuant to which
the Lender is acting as nominee for certain participants, the Note and Warrant
to be issued to the Lender at the Closing will be acquired for investment for
the Lender's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that, except with respect to the
Nominee and Sharing Agreement pursuant to which the Lender has granted a
participation interest to certain participants, the Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, the Lender further represents that the
Lender (i) does not, except for the Nominee and Sharing Agreement, have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to such Note or such Warrant and (ii) is not a registered broker-deal
under Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered.

                  6.4 RELIANCE UPON LENDER'S REPRESENTATIONS. The Lender
understands that the Note and Warrant are not, and any Warrant Shares and
Conversion Shares acquired on the exercise or conversion of the Note or Warrant
at the time of issuance may not be, registered under the Securities Act on the
ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Regulation D promulgated pursuant thereto, and that the Company's
reliance on such exemption is predicated on the Lender's representations set
forth herein.

            6.5 RESTRICTED SECURITIES. The Lender understands that the Note and
Warrant (and any Warrant Shares and Conversion Shares issued on exercise or
conversion of the Note or Warrant) are "restricted securities" and may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Note or Warrant (or any Warrant
Shares and Conversion Shares issued on exercise or conversion of any of the Note
or Warrant) or an available exemption from registration under the Securities
Act, the Note and Warrant (and any Warrant Shares and Conversion Shares issued
on exercise or conversion of any of the Note or Warrant) must be held
indefinitely. The Lender understands that the certificates evidencing the Note
and the Warrant shall bear any legend as required by the "blue sky" laws of any
state and a restrictive legend in substantially the following form, until such
time as such legends are not required under applicable law:

                                       20

<page>

         "NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON EXERCISE OR
         CONVERSION OF THIS SECURITY HAVE BEEN REGISTERED UNDER THE U.S.
         SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED,
         SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED ("TRANSFERRED") IN THE
         ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. IN
         THE ABSENCE OF SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE
         TRANSFERRED (OTHER THAN TO AN AFFILIATE OR MEMBER OF THE HOLDER HEREOF
         FOR NO CONSIDERATION) UNLESS THE COMPANY HAS RECEIVED A WRITTEN OPINION
         FROM COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING
         THAT SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL APPLICABLE
         FEDERAL AND STATE SECURITIES LAWS."

Notwithstanding the foregoing, the Company, for all purposes of this Agreement
and the other Loan Documents, acknowledges and consents to the transactions
contemplated by the Nominee and Sharing Agreement and any transfers or
participations contemplated thereby.

            6.6 ECONOMIC RISK; SOPHISTICATION; NO GENERAL SOLICITATION. The
Lender is able to bear the economic risk of an investment in the Note and
Warrant acquired by it pursuant to this Agreement and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the proposed investment and therefore has the capacity
to protect its own interests in connection with such purchase and such
conversion. The Lender is not purchasing the Note and Warrant as a result of any
advertisement, article, notice or other communication regarding the Note and
Warrant published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
advertisement.

            6.7 ACCREDITED INVESTOR. The Lender meets the criteria of an
"accredited investor" as defined in Rule 501(a) of Regulation D adopted under
the Securities Act.

            6.8 BROKERAGE. There are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by the Agreement based on any arrangement or agreement made on
behalf of the Lender.

            6.9 ACCESS TO INFORMATION. The Lender acknowledges that it has had
      the opportunity to review the SEC Report and the Disclosure Schedules and
has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Note and Warrant and
the merits and risks of investing in the Note and Warrant; (ii) access to
information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment.

                                       21

<page>

            6.10 CERTAIN TRADING ACTIVITIES. Other than with respect to the
transactions contemplated herein and except as set forth on Schedule 6.10
hereof, since the earlier to occur of (1) the time that the Lender was first
contacted by the Company or any other Person regarding the transactions
contemplated hereby and (2) the tenth (10th) day prior to the date of this
Agreement, neither the Lender nor any Affiliate of the Lender which (x) had
knowledge of the transactions contemplated hereby, (y) has or shares discretion
relating to the Lender's investments or trading or information concerning the
Lender's investments, including in respect of the Note and Warrant, and (z) is
subject to the Lender's review or input concerning such Affiliate's investments
or trading (collectively, "TRADING AFFILIATES") has directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with the
Lender or Trading Affiliate, effected or agreed to effect any transactions in
the securities of the Company (including, without limitation, any Short Sales
(as defined below) involving the Company's securities). Other than to other
Persons party to this Agreement (and their respective officers, employees,
representatives, agents, attorneys or investors), the Lender has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). For
purposes hereof, "SHORT SALES" include, without limitation, (i) all "short
sales" as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, "put equivalent positions" (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
(ii) sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers.

            6.11 INDEPENDENT INVESTMENT DECISION. The Lender has independently
evaluated the merits of its decision to acquire the Note and the Warrant
pursuant to the Loan Documents. The Lender understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to the
Lender in connection with the acquisition of the Note and Warrant constitutes
legal, tax or investment advice. The Lender has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its acquisition of the Note and Warrant.

            6.12 NO GOVERNMENTAL REVIEW. The Lender understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Note or Warrant
or the fairness or suitability of the investment the Note or Warrant nor have
such authorities passed upon or endorsed the merits of the offering of the Note
or Warrant.

            6.13 REGULATION M. The Lender is aware that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of Common Stock
and other activities with respect to the Common Stock by the Lender.

            6.14 RESIDENCY. The Lender's principal executive offices are located
in the State of New York.

      7. CONDITIONS TO THE OBLIGATIONS OF THE LENDER TO MAKE LOANS.

                                       22

<page>

            7.1 CONDITIONS TO THE OBLIGATIONS OF THE LENDER TO MAKE A LOAN ON
THE INITIAL ADVANCE DATE. The obligation of the Lender to make a Loan to the
Company on the Initial Advance Date pursuant to SECTION 2.3(A) is subject to the
satisfaction of each of the following conditions:

                  (a) DRAWDOWN NOTICE. The Company shall have delivered to the
            Lender a duly completed Drawdown Notice at least five Business Days
            prior to the Initial Advance Date (or, in the event that the Initial
            Advance Date is on the Closing Date, the Company shall have
            delivered such Drawdown Notice on or prior to the Closing Date),
            which Drawdown Notice shall (x) state the principal amount of Loans
            that the Company desires to obtain hereunder on the Initial Advance
            Date, which amount shall not exceed $1,000,000, (y) certify that
            each of the conditions to the making of such Loan on such Initial
            Advance Date set forth in this SECTION 7.1 has been satisfied, and
            (z) be executed by a duly authorized officer of the Company.

                  (b) NOTE. The Company shall have issued and delivered the Note
            to the Lender on the Closing Date.

                  (c) WARRANT. The Company shall have issued and delivered the
            Warrant to the Lender on the Closing Date.

                  (d) SECURITY DOCUMENTS. Each of the other Security Documents
            (as defined in the Security Agreement) shall have been executed by
            the Company and, to the extent that the Lender is a party thereto,
            the Lender and, in connection therewith, the Company shall have
            delivered to the Lender:

                        (i) all of the Collateral consisting of certificated
                  securities and promissory notes, if any, referred to therein
                  and then owned by the Company, (x) either endorsed in blank or
                  accompanied by executed and undated instruments of transfer;

                        (ii) appropriate completed financing statements on Form
                  UCC-1 for filing under the Uniform Commercial Code in the
                  appropriate filing offices of each jurisdiction as may be
                  necessary to perfect the security interests purported to be
                  created by the Security Documents; and

                        (iii) evidence of the completion (or arrangements
                  therefor satisfactory to the Lender) of all other recordings
                  and filings of, or with respect to, and all action necessary
                  in connection with, the Security Documents as may be necessary
                  or, in the reasonable opinion of the Lender, desirable, to
                  perfect and protect the security interests intended to be
                  created by the Security Documents.

            (e) OPINION OF COUNSEL. The Lender shall have received, on or prior
      to the Closing Date, a written opinion from Lowenstein Sandler PC, counsel
      for the Company, dated as of the Closing Date and addressed to the Lender,
      in the form attached hereto as EXHIBIT F.

                                       23

<page>

            (f) FEES. The Company shall have paid the fees and expenses of the
      Lender on the Closing Date in accordance with SECTION 10.1.

            (g) NO INSOLVENCY EVENT. No Insolvency Event shall have occurred on
      or prior to the Initial Advance Date.

            (h) CERTIFICATES AND DOCUMENTS. On or prior to the Closing Date, the
      Company shall have delivered to the Lender:

                  (i) certificates, dated no more than ten days prior to the
            Closing Date, as to the corporate good standing of the Company
            issued by the Secretary of State of the State of New Jersey and any
            other jurisdiction where the Company is qualified to do business;

                  (ii) the Certificate of Incorporation and Bylaws of the
            Company, in each case, as in effect as of the Closing Date,
            certified by its Secretary or Assistant Secretary of the Company as
            of the Closing Date;

                  (iii) a certificate of incumbency of the Company's principal
            officers, certified by its Secretary or Assistant Secretary of the
            Company as of the Closing Date;

                  (iv) resolutions of the board of directors of the Company,
            authorizing and approving all matters in connection with this
            Agreement and the other Loan Documents and the transactions
            contemplated hereby and thereby, certified by the Secretary or
            Assistant Secretary of the Company as of the Closing Date

            (i) BLUE SKY APPROVALS. The Company shall have received, on or prior
      to the Closing Date, the requisite approvals of the securities
      commissioners of all states in which prior approvals are required and such
      approvals shall be in full force and effect on the Closing Date.

            (j) AMENDMENTS TO CERTAIN EMPLOYMENT AGREEMENTS. The Company and
      each Subject Employee shall have executed and delivered an amendment
      (collectively, the "SEVERANCE AMENDMENTS") to each such Subject Employee's
      Applicable Employment Agreement, in form and substance reasonably
      acceptable to the Lender, pursuant to which the Applicable Employment
      Agreement for each such Subject Employee shall be amended to implement the
      changes described on ANNEX 2 hereto.

            (k) OTHER MATTERS. All corporate, legal, governmental,
      administrative and other proceedings in connection with the transactions
      contemplated by this Agreement and the other Loan Documents and all
      documents and instruments incident to such transactions shall be
      reasonably satisfactory in substance and form to the Lender, and the
      Lender shall have received all such counterpart originals or certified or
      other copies of such documents as they may reasonably request.

Notwithstanding the foregoing, the obligation of the Lender to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to SECTION 10.6) at or prior to 3:00 p.m., New

                                       24

<page>

York City time, on April 15, 2009 (and, in the event such conditions are not so
satisfied or waived, the commitment of the Lender hereunder shall terminate at
such time).

            7.2 CONDITIONS TO THE OBLIGATIONS OF THE LENDER TO MAKE A LOAN ON
ANY SUBSEQUENT ADVANCE DATE. The obligation of the Lender to make a Loan to the
Company on any Subsequent Advance Date pursuant to SECTION 2.3(B) is subject to
the satisfaction of each of the following conditions:

            (a) INITIAL ADVANCE DATE. All of the conditions to the Lender's
      obligation to make a Loan to the Company on the Initial Advance Date set
      forth in SECTION 7.1 shall have been satisfied in accordance with SECTION
      7.1.

            (b) DRAWDOWN NOTICE. The Lender shall have timely received from the
      Company a Drawdown Notice in respect of such Subsequent Advance Date as
      required by SECTION 2.3(B)(I).

            (c) REMAINING COMMITMENT. After giving effect to the making of such
      Loan on such Subsequent Advance Date, the aggregate outstanding principal
      amount of all Loans made under this Agreement shall not exceed the Maximum
      Principal Balance.

            (d) NO INSOLVENCY EVENT. No Insolvency Event shall have occurred on
      or prior to such Subsequent Advance Date.

      8. COVENANTS OF THE COMPANY.

            8.1 COVENANTS WITH RESPECT TO THE LOANS. For so long as any of the
Loans remains outstanding, the Company hereby covenants and agrees that, unless
the Company shall have obtained the prior written consent of Lender, it shall
comply with the following covenants:

                  (a) EXISTENCE; BUSINESSES AND PROPERTIES.

                        (i) The Company will do or cause to be done all things
                  necessary to preserve, renew and keep in full force and effect
                  its legal existence.

                        (ii) The Company will do or cause to be done all things
                  necessary to (A) obtain, preserve, renew, extend and keep in
                  full force and effect all rights, licenses, permits,
                  franchises, authorizations, patents, copyrights, trademarks
                  and trade names used in or relating to the conduct of its
                  business, except where the failure to do so could not,
                  individually or in the aggregate, reasonably be expected to
                  have a Material Adverse Effect; (B) maintain and operate such
                  business in substantially the manner in which it is presently
                  conducted and operated; (C) comply with all applicable laws,
                  rules, regulations and decrees and orders of any governmental
                  authority, whether now in effect or hereafter enacted, except
                  where the failure to do so could not, individually or in the
                  aggregate, reasonably be expected to have a Material Adverse
                  Effect; and (D) at all times maintain and preserve all
                  property material to the conduct of such business and keep
                  such property in good repair, working order and condition

                                       25

<page>

                  (ordinary wear and tear excepted) and from time to time make,
                  or cause to be made, all needful and proper repairs, renewals,
                  additions, improvements and replacements thereto consistent
                  with past practice.

                  (b) OBLIGATIONS AND TAXES. The Company will pay its
            obligations promptly and in accordance with their terms and pay and
            discharge promptly when due all taxes, assessments and governmental
            charges or levies imposed upon it or upon its income or profits or
            in respect of its property, before the same shall become delinquent
            or in default, as well as all lawful claims for labor, materials and
            supplies or otherwise that, if unpaid, might give rise to a Lien
            upon any properties or assets of the Company or any part thereof
            (other than any Permitted Lien); PROVIDED, HOWEVER, that such
            payment and discharge shall not be required with respect to any such
            tax, assessment, charge, levy or claim so long as the validity or
            amount thereof shall be contested in good faith by appropriate
            proceedings and the Company shall have set aside on its books
            adequate reserves with respect thereto in accordance with GAAP and
            such contest operates to suspend collection of the contested
            obligation, tax, assessment or charge and enforcement of a Lien.

                  (c) FINANCIAL STATEMENTS; REPORTS; ETC. The Company will
            maintain books of account in accordance with GAAP, keep full and
            complete financial records and furnish to the Lender the following
            reports:

                        (i) within 90 days after the last day of each fiscal
                  year (or, in the event the Company timely files a Form 12b-25
                  under the Exchange Act, such longer period allowed under Rule
                  12b-25 of the rules and regulations promulgated under the
                  Exchange Act), a copy of the balance sheet of the Company as
                  at such date, together with statements of operations,
                  stockholders' equity and cash flows of the Company for the
                  fiscal year then ended, audited and certified without
                  qualification by independent public accountants of recognized
                  national standing reasonably satisfactory to the Lender (it
                  being acknowledged that Raich Ende Malter & Co. LLP, the
                  Company's current independent public accountants, are
                  satisfactory to the Lender for this purpose) and prepared in
                  accordance with generally accepted accounting principles and
                  practices consistently applied;

                        (ii) within 45 days after the last day of each of the
                  first three fiscal quarters of each fiscal year (or, in the
                  event the Company timely files a Form 12b-25 under the
                  Exchange Act, such longer period allowed under Rule 12b-25 of
                  the rules and regulations promulgated under the Exchange Act),
                  an unaudited balance sheet as at such date, together with
                  statements of operations, stockholders' equity and cash flows
                  of the Company for the fiscal quarter then ended and the then
                  elapsed portion of the fiscal year, setting forth in each case
                  in comparative form the figures for the corresponding period
                  or periods of the previous fiscal year;

                        (iii) monthly financial statements in the form delivered
                  to the Board of Directors of the Company within thirty (30)
                  days following the end of the month;

                                       26

<page>

                        (iv) promptly after the same become publicly available,
                  copies of (A) all periodic and other reports, proxy statements
                  and other materials filed by the Company with the Commission
                  or with any national securities exchange, (B) all press
                  releases and (C) any written notices of default, acceleration
                  or enforcement received from holders (or any trustee, agent or
                  other representative therefor) of any indebtedness of the
                  Company pursuant to the terms of the documentation governing
                  the same;

                        (v) promptly after the receipt thereof by the Company, a
                  copy of any "management letter" received by any such person
                  from its certified public accountants and the management's
                  response thereto; and

                        (vi) promptly, from time to time, such other information
                  regarding the operations, business affairs and financial
                  condition of the Company, or compliance with the terms of any
                  Loan Document, as the Lender may reasonably request.

      Notwithstanding the provisions of SECTIONS 8.1(C)(I) and (II) above, to
      the extent the information required by such Section is included in the
      documents delivered pursuant to SECTION 8.1(C)(IV), such information need
      not be separately delivered pursuant to SECTION 8.1(C)(I) or (II).

                  (d) INSURANCE. The Company will keep its insurable properties
            insured, upon reasonable business terms, by financially sound and
            reputable insurers against liability, and the perils of casualty,
            fire and extended coverage in amounts of coverage sufficient in the
            reasonable business judgment of the Company to protect the Company.
            The Company will also maintain with such insurers insurance against
            other hazards and risks and liability to persons and property which,
            in the reasonable business judgment of the Company, is customary in
            the industry in which the Company operates for companies of
            comparable size.

                  (e) LITIGATION AND OTHER NOTICES.

                        (i) The Company will furnish to the Lender, within two
                  (2) Business Days of the Company's obtaining knowledge
                  thereof, written notice of any Event of Default or Default,
                  specifying the nature and extent thereof and the corrective
                  action (if any) taken or proposed to be taken with respect
                  thereto;

                        (ii) The Company will furnish to the Lender, within five
                  (5) Business Days of the Company's obtaining knowledge
                  thereof, written notice of the filing or commencement of, or

                                       27

<page>

                  any threat or notice of intention of any person to file or
                  commence, any Action, whether at law or in equity or by or
                  before any governmental or regulatory authority, against the
                  Company that, individually or in the aggregate, could
                  reasonably be expected to result in a Material Adverse Effect;
                  or

                        (iii) The Company will furnish to the Lender, within
                  five (5) Business Days of the Company's obtaining knowledge
                  thereof, written notice of any development, event, change or
                  circumstance that has resulted in, or could, individually or
                  in the aggregate, reasonably be expected to result in, a
                  Material Adverse Effect.

                  (f) COMPLIANCE WITH LAW. The Company will comply in all
            material respects with all applicable statutes, regulations and
            orders of, and all applicable restrictions imposed by, all
            governmental or regulatory authorities in respect of the conduct of
            its business and the ownership of its properties.

                  (g) USE OF PROCEEDS. The Company shall use the proceeds of the
            Loans solely for the purposes specified in SECTION 2.2.

                  (h) FURTHER ASSURANCES. The Company shall execute any and all
            further documents, financing statements, agreements and instruments,
            and take all further action (including filing Uniform Commercial
            Code and other financing statements, charges, mortgages and deeds of
            trust) that may be required under any applicable law, or that the
            Lender may reasonably request, in order to effectuate the
            transactions contemplated by the Loan Documents and in order to
            grant, preserve, protect and perfect the validity and priority of
            the security interests created or intended to be created by the
            Security Documents.

                  (i) LIENS. The Company will not create, incur, suffer or
            permit to exist any Lien on any property or assets now owned or
            hereafter acquired by it or on any income or revenues or rights in
            respect of any thereof, except for Permitted Liens.

                  (j) INDEBTEDNESS. The Company will not incur, create, assume
            or permit to exist any Indebtedness other than (x) Indebtedness in
            respect of the Note, and (y) Indebtedness in an aggregate principal
            amount at any time outstanding that does not exceed $100,000.

                  (k) RESTRICTIONS ON DISTRIBUTIONS. The Company will not pay
            any dividends, in cash or otherwise, or make any other distributions
            in respect of its capital stock, or purchase, redeem or otherwise
            acquire any of its outstanding securities.

                  (l) PAYMENT ON NOTES. The Company will not enter into, become
            a party to or otherwise become subject to any agreement, contract or
            instrument, or any amendments or modifications of the foregoing, the
            provisions of which restrict or limit the Company's ability or
            obligation to make payments on the Note or otherwise perform its
            obligations under this Agreement and the other Loan Documents.

                  (m) MERGERS, AMALGAMATIONS, CONSOLIDATIONS; ACQUISITIONS AND
            SALES OF ASSETS. The Company will not merge into, amalgamate, or
            consolidate with any other Person, or permit any other Person to
            merge into, amalgamate or consolidate with it, or sell, transfer,
            lease or otherwise dispose of (in one transaction or in a series of
            transactions) all or substantially all of the assets (whether now
            owned or hereafter acquired) of the Company, or purchase, lease or
            otherwise acquire (in one transaction or a series of transactions)
            all or any substantial part of the assets of any other Person.

                                       28

<page>

                  (n) BUSINESS ACTIVITIES. The Company shall not engage at any
            time in any business or business activity other than the business
            currently conducted by, or, to the extent set forth on SCHEDULE
            8.1(N), currently proposed to be conducted by, the Company on the
            Closing Date and similar, related, ancillary or complementary
            businesses.

                  (o) AFFILIATED TRANSACTIONS. Except (w) for the transactions
            contemplated by this Agreement and the other Loan Documents, (x)
            with respect to compensation arrangements with, and the
            reimbursement of expenses of, employees, consultants and directors
            of the Company in the ordinary course of business, (y) for such
            transactions described under (but only in the manner described
            under) the heading "Certain Relationships and Related Transactions"
            under Item 12 in the Company's Annual Report on Form 10-KSB for the
            fiscal year ended March 31, 2008, as filed by the Company with the
            Commission on June 30, 2008 and (z) for the transactions
            contemplated by (A) the employment agreements (or amendments to
            employment agreements) attached as Exhibits 10.1, 10.2, 10.3 and
            10.4 to the Company's Current Report on Form 8-K as filed by the
            Company with the Commission on January 2, 2009 and for such
            transactions provided for in the amendments to the employment
            agreements for Edward Hammel and Sean Hagberg, each dated as of
            December 31, 2008, all transactions by and between the Company and
            any director, officer, employee, stockholder or other Affiliate of
            the Company or persons controlled by or affiliated with such
            director, officer, employee, stockholder or Affiliate, including
            relatives and family members, shall be conducted on an arms-length
            basis, shall be on terms and conditions no less favorable to the
            Company than could be obtained from nonrelated persons and shall be
            approved by a majority of the members of the board of directors of
            the Company after full disclosure of the terms thereof.

                  (p) SUBSIDIARIES; INVESTMENTS. The Company shall not create or
            acquire any subsidiary and shall not purchase or otherwise acquire
            any shares of capital stock or other equity interest of any other
            corporation or limited liability company or any interest in any
            partnership, joint venture or other non-corporate business
            enterprise. The Company shall not make any equity or debt investment
            in any Person.

                  (q) QUALIFIED FINANCING NOTICE. At least ten (10) Business
            Days prior to consummating any Qualified Financing, the Company
            shall deliver to the Lender written notice of the Company's
            intention to consummate such Qualified Financing, describing the
            type of securities to be issued, the price thereof and the general
            terms upon which the Company proposes to effect such issuance.

                  (r) EXCHANGE OR REISSUANCE OF NOTE. Upon receipt of evidence
            reasonably satisfactory to the Company of the loss, theft,
            destruction or mutilation of the Note and an indemnity customary for
            promissory notes similar to the Note executed by the Lender, the
            Company shall deliver to the Lender a new Note of like tenor and
            date for the principal amount of the Note so lost, stolen, destroyed
            or mutilated.

            8.2 COVENANTS WITH RESPECT TO THE WARRANT. For so long as the
Warrant remains outstanding, the Company hereby covenants and agrees that,
unless the Company shall have obtained the prior written consent of Lender, it
shall comply with the following covenants:

                                       29

<page>

                  (a) QUALIFIED FINANCING NOTICE. At least ten (10) Business
            Days prior to consummating any Qualified Financing, the Company
            shall deliver to the Lender written notice of the Company's
            intention to consummate such Qualified Financing, describing the
            type of securities to be issued, the price thereof and the general
            terms upon which the Company proposes to effect such issuance.

                  (b) EXCHANGE OR REISSUANCE OF WARRANT. Upon receipt of
            evidence reasonably satisfactory to the Company of the loss, theft,
            destruction or mutilation of the Warrant and an indemnity customary
            for warrants similar to the Warrant executed by the Lender, the
            Company shall deliver to the Lender a new Warrant of like
            denomination, tenor and date as the Warrant so lost, stolen,
            destroyed or mutilated.

            8.3 GENERAL COVENANTS.

                  (a) INTEGRATION. The Company shall not, and shall use its
            reasonable best efforts to ensure that no Affiliate of the Company
            (other than the Lender) shall, sell, offer for sale or solicit
            offers to buy or otherwise negotiate in respect of any securities of
            the Company or any of its Affiliates that would be integrated with
            the offer, issuance or sale of the Note, the Warrant, the Conversion
            Shares or the Warrant Shares pursuant to this Agreement in a manner
            that would require the registration under the Securities Act of the
            offer, issuance or sale of the Note, the Warrant, the Conversion
            Shares or the Warrant Shares to the Lender, or that would be
            integrated with the offer, issuance or sale of the Note, the
            Warrant, the Conversion Shares or the Warrant Shares for purposes of
            the rules and regulations of the Nasdaq Capital Market.

                  (b) EMPLOYEE COMPENSATION. Until such time as the Loans cease
            to be outstanding, without the prior written consent of the Lender,
            neither the Company nor any of its subsidiaries shall:

                        (i) enter into any new, or amend, restate, supplement or
                  otherwise modify any existing, employment, consulting,
                  severance, change of control or bonus agreement with any
                  employee or consultant whose annual total compensation
                  (including salary, bonus and any other compensation) is at
                  least $100,000 or grant to any employee or consultant whose
                  annual total compensation (including salary, bonus and any
                  other compensation) is at least $100,000 (or would be at least
                  $100,000 after giving effect to such increase) any increase in
                  compensation, severance or termination pay, change in control
                  bonus or any other benefits; or

                        (ii) enter into any new, or amend, restate, supplement
                  or otherwise modify any existing, employment, consulting,
                  severance, change of control or bonus agreement with any
                  employee (other than the employees covered in CLAUSE (I)
                  above) or grant to any employee (other than the employees
                  covered in CLAUSE (I) above) any increase in compensation,
                  severance or termination pay, change in control bonus or any
                  other benefits, other than, in the case of this CLAUSE (II),
                  in the ordinary course of business.

                                       30

<page>

            8.4 INDEMNIFICATION OF THE LENDER.

                  (a) The Company will indemnify and hold the Lender Parties
            harmless from any and all Losses that any such Lender Party may
            suffer or incur as a result of or relating to (i) any breach of any
            of the representations, warranties, covenants or agreements made by
            the Company in any Loan Document or (ii) any Action instituted
            against a Lender Party with respect to any of the transactions
            contemplated by the Loan Documents, provided, that, such indemnity
            shall not, as to any particular Lender Party, be available to such
            Lender Party the extent that such Losses result from the gross
            negligence or willful misconduct of such Lender Party. In addition
            to the indemnity contained herein, the Company will reimburse each
            Lender Party for its reasonable legal and other expenses (including
            the cost of any investigation, preparation and travel in connection
            therewith) incurred in connection therewith, as such expenses are
            incurred.

                  (b) If any Action shall be brought or asserted against any
            Lender Party in respect of which indemnity may be sought pursuant to
            this Agreement, such Lender Party shall promptly notify the Company
            in writing, and the Company shall have the right to assume the
            defense thereof, including the employment of counsel reasonably
            satisfactory to the Lender Party and the payment of all fees and
            expenses incurred in connection with defense thereof; PROVIDED that
            the failure of any Lender Party to give such notice shall not
            relieve the Company of its obligations or liabilities pursuant to
            this Agreement or any other Loan Document, except (and only) to the
            extent that it shall be finally determined by a court of competent
            jurisdiction (which determination is not subject to appeal or
            further review) that such failure shall have proximately and
            materially adversely prejudiced the Company.

                  (c) A Lender Party shall have the right to employ separate
            counsel in any such Action and to participate in the defense
            thereof, but the fees and expenses of such counsel shall be at the
            expense of such Lender Party unless: (1) the Company has agreed in
            writing to pay such fees and expenses; (2) the Company shall have
            failed promptly to assume the defense of such Action or to employ
            counsel reasonably satisfactory to such Lender Party in any such
            Action; or (3) the named parties to any such Action (including any
            impleaded parties) include both such Lender Party and the Company,
            and such Lender Party shall have been advised by counsel that a
            material conflict of interest is likely to exist if the same counsel
            were to represent such Lender Party and the Company (in which case,
            if such Lender Party notifies the Company in writing that it elects
            to employ separate counsel at the expense of the Company, the
            Company shall not have the right to assume the defense thereof and
            such counsel shall be at the expense of the Company). The Company
            shall not be liable for any settlement of any such Action effected
            without its written consent, which consent shall not be unreasonably
            withheld. The Company shall not, without the prior written consent
            of the Lender Party, effect any settlement of any pending Action in
            respect of which any Lender Party is a party, unless such settlement
            includes an unconditional release of such Lender Party from all
            liability on claims that are the subject matter of such Action.

                  (d) All fees and expenses of the Lender Party (including
            reasonable fees and expenses of counsel to the extent incurred in
            connection with investigating or preparing to defend such Action in

                                       31

<page>

            a manner not inconsistent with this Section) shall be paid to the
            Lender Party, as incurred, within ten (10) Business Days of written
            notice thereof to the Company (regardless of whether it is
            ultimately determined that a Lender Party is not entitled to
            indemnification hereunder; PROVIDED, that the Company may require
            such Lender Party to undertake to reimburse all such fees and
            expenses to the extent it is finally judicially determined that such
            Lender Party is not entitled to indemnification hereunder).

                  (e) Notwithstanding anything to the contrary set forth herein,
            in the event of any inaccuracy or misrepresentation in, or other
            breach or violation of, any representation or warranty made by the
            Company in this Agreement or in any of the other Loan Documents,
            such inaccuracy, misrepresentation, breach or other violation shall
            constitute a breach of such representation or warranty whether or
            not the Lender had knowledge of such inaccuracy, misrepresentation,
            breach or other violation at the date of this Agreement or otherwise
            at the time of Closing and, accordingly, the Lender shall be
            entitled to indemnification under this SECTION 8 for any such
            inaccuracy, misrepresentation, breach or other ---------- violation
            whether or not the Lender had knowledge of such inaccuracy,
            misrepresentation, breach or other violation at the date of this
            Agreement or otherwise at the time of Closing.

      9. EVENTS OF DEFAULT AND REMEDIES.

            9.1 EVENTS OF DEFAULT. Each of the following events or occurrences
shall constitute an "EVENT OF DEFAULT":

                  (a) the Company shall (i) make a general assignment for the
            benefit of its creditors, (ii) generally not pay its debts as they
            become due (other than unsecured trade accounts payable paid in the
            ordinary course of business), (iii) file a voluntary case or
            petition in bankruptcy, (iv) file a petition or answer seeking for
            itself any reorganization, arrangement, composition, readjustment,
            liquidation, dissolution or similar relief under any present or
            future applicable law pertinent to such circumstances, (v) file any
            answer admitting or not contesting the material allegations of a
            bankruptcy, insolvency or similar petition filed against the
            Company, (vi) seek or consent to, or acquiesce in, the appointment
            of any trustee, receiver, or liquidator of the Company, (vii) suffer
            or permit to continue unstayed and in effect for 60 consecutive days
            any judgment, decree or order, entered by a court or governmental
            commission of competent jurisdiction, that assumes custody or
            control of the Company, approves a petition seeking its
            reorganization, arrangement, composition, readjustment, liquidation,
            dissolution or similar relief under any present or future applicable
            law without such action being dismissed or without all orders or
            proceedings thereunder affecting the operations or the business of
            the Company being stayed, or if a stay of any such order or
            proceedings is thereafter set aside and the action setting it aside
            is not timely appealed, or (viii) suffer or permit to continue
            unstayed and in effect for 60 consecutive days, the appointment,
            without the consent or acquiescence of the Company of any trustee,
            receiver or liquidator thereof or of all or any substantial part of
            the assets and properties of the Company without such appointment
            being vacated (each of the events specified in the foregoing CLAUSES
            (i) through (VIII) is herein referred to as an "INSOLVENCY EVENT");

                                       32

<page>

                  (b) a default shall occur in the observance of or performance
            by the Company of any covenant or agreement contained in SECTION
            8.1(A), 8.1(E), 8.1(F), 8.1(G), 8.1(I), 8.1(J), 8.1(K), 8.1(L),
            8.1(M), 8.1(N), 8.1(O), 8.1(P), 8.1(Q), 8.2(A), 8.3(A) or 8.3(B);

                  (c) a default shall occur in the observance or performance by
            the Company of any other covenant or agreement contained in this
            Agreement (other than those specified in CLAUSE (B) or (I)) or any
            other Loan Document and such default shall continue unremedied for a
            period of 10 days;

                  (d) any representation or warranty made or deemed made by the
            Company in or in connection with any Loan Document, or any
            representation, warranty, statement or information contained in any
            report, certificate, financial statement or other instrument
            furnished in connection with or pursuant to any Loan Document, shall
            prove to have been false or misleading in any material respect when
            so made, deemed made or furnished;

                  (e) the failure by the Company to pay at final maturity
            (giving effect to any applicable grace periods and any extensions
            thereof) the principal amount of any Indebtedness, which constitutes
            a breach under the terms governing such Indebtedness, or the
            acceleration of the final stated maturity of any such Indebtedness,
            which aggregates $100,000 or more at any time;

                  (f) one or more judgments for the payment of money aggregating
            in excess of $100,000 shall be rendered against the Company and the
            same shall remain undischarged for a period of 30 consecutive days
            during which execution shall not be effectively stayed, or any
            action shall be legally taken by a judgment creditor to levy upon
            assets or properties of the Company to enforce any such judgment
            provided, however, that any such judgment or order shall not give
            rise to an Event of Default under this SECTION 9.1(F) if and for so
            long as (i) the amount of such judgment is covered by a valid and
            binding policy of insurance between the defendant and the insurer,
            which shall be rated at least "A" by A.M. Best Company, covering
            full payment thereof and (ii) such insurer has been notified, and
            has not disputed the claim made for payment, of the amount of such
            judgment or order;

                  (g) the occurrence of any event or circumstance that results
            in a Material Adverse Effect;

                  (h) any security interest purported to be created by any
            Security Document shall cease to be, or shall be asserted by the
            Company not to be, a valid, perfected, first priority (except as
            otherwise expressly provided in this Agreement or such Security
            Document) security interest in the securities, assets or properties
            covered thereby, except (i) to the extent that any such loss of
            perfection or priority results from the failure of the Lender to
            maintain possession of certificates representing securities or
            instruments pledged under the Security Agreement, (ii) where the
            perfection of such Liens is pending during the transmission to the
            appropriate filing office of applicable and appropriate
            documentation required by applicable law to perfect such Liens or
            (iii) with respect to Intellectual Property Rights, where the
            perfection of such Liens may not be accomplished by recording in the

                                       33

<page>

            United States Patent and Trademark Office or the appropriate UCC
            filing office of the appropriate jurisdiction; or

                  (i) the Company shall fail to pay any amount (whether for
            principal, interest or otherwise) that becomes due under the Note,
            this Agreement or any other Loan Document when such amount becomes
            due.

      9.2 REMEDIES.

                  (a) ACTION IN BANKRUPTCY. If any Event of Default described in
            SECTION 9.1(A) shall occur, the aggregate outstanding principal
            amount of all outstanding Loans, and all accrued and unpaid interest
            thereon, shall automatically become immediately due and payable,
            without notice, demand or presentment.

                  (b) ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
            described in SECTIONS 9.1(B) through 9.1(I) shall occur for any
            reason, whether voluntary or involuntary, and be continuing, the
            Lender may, if it shall not elect to convert the entire aggregate
            outstanding principal balance of the Loans and all accrued and
            unpaid interest thereon into Conversion Shares in accordance with
            Section 4.3(b) of the Note, by written notice to the Company (an
            "ACCELERATION NOTICE"), declare all or any portion of the aggregate
            outstanding principal amount of all outstanding Loans, and all
            accrued and unpaid interest thereon, immediately due and payable,
            without further notice, demand or presentment.

                  (c) OTHER RIGHTS AND REMEDIES. In addition to the foregoing
            and subject to the limitations set forth herein, the Lender shall be
            entitled to exercise all rights available under the Security
            Documents and all such other rights and remedies available at law or
            in equity.

      10. MISCELLANEOUS.

            10.1 EXPENSES. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby, whether or not such
transactions shall be consummated; PROVIDED, HOWEVER, that the Company shall, at
the Closing, pay the reasonable fees and expenses of the Lender (including the
reasonable fees and expenses of Lender's counsel, Mayer Brown LLP) in connection
with such transactions in an amount not to exceed $65,000.

            10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.

            10.3 NOTICES. Any notice required or permitted under this Agreement
or any of the other Loan Documents shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or sent by
electronic facsimile transmission with a copy in either case sent by United
States Post Office, by registered or certified mail, postage prepaid and
addressed to the party to be notified or by overnight or international courier,
as follows:

                                       34

<page>

         If to the Company, to:

                  Ivivi Technologies, Inc.
                  135 Chestnut Ridge Rd.
                  Montvale, NJ 07465
                  Facsimile: 201-476-9600
                  Attn: Alan Gallanter, Chief Financial Officer

         With a copy to:

                  Lowenstein Sandler PC
                  65 Livingston Avenue
                  Roseland, NJ 07068
                  Facsimile: 973-597-2477
                  Attn: Steven M. Skolnick, Esq.

         If to Lender, to:

                  Emigrant Capital Corp.
                  6 East 43rd Street
                  8th Floor
                  New York, New York 10017
                  Facsimile:  (212) 850-3470
                  Attention:  Kenneth Walters

         With a copy to:

                  Mayer Brown LLP
                  1675 Broadway
                  New York, NY 10019
                  Attn: Thomas M. Vitale
                  Facsimile: (212) 262-1910

         Notices provided in accordance with this SECTION 10.3 shall be deemed
delivered upon personal delivery and facsimile transmission or three Business
Days after deposit in the mail.

            10.4 SUCCESSOR AND ASSIGNS. The provisions of this Agreement shall
bind and inure to the benefit of the respective successors, assigns, heirs,
executors and administrators of the parties hereto.

            10.5 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, whether written
or oral, relating to such subject matter.

            10.6 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth
in this Agreement, neither this Agreement nor any of the Loan Documents may be
amended except by an instrument signed and delivered by each of the Parties
hereto. Any Party hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto or (b) waive compliance

                                       35

<page>

with any of the agreements of the other Party or any conditions to its own
obligations, in each case only to the extent such obligations, agreements, or
conditions are intended for its benefit; PROVIDED, HOWEVER, that any such
extension or waiver shall be binding upon a Party only if such extension or
waiver is set forth in a writing executed and delivered by such Party. No
waivers of or exceptions to any term, condition or provision of this Agreement
or any of the other Loan Documents, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.

            10.7 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall be one and the same document. This Agreement
may be executed by facsimile signatures or by delivery of an executed signature
page via electronic mail.

            10.8 SECTION HEADINGS. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.

            10.9 SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

            10.10 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       36

<page>

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

                                           COMPANY:

                                           IVIVI TECHNOLOGIES, INC.

                                           By: /s/ Alan V. Gallantar
                                               ---------------------------------
                                               Name: Alan V. Gallantar
                                               Title: CFO

                                           LENDER:

                                           EMIGRANT CAPITAL CORP.

                                           By: /s/ Kenneth L. Walters
                                               ---------------------------------
                                               Name: Kenneth L. Walters
                                               Title: Senior Vice President

                                       37<page>

Exhibit 10.2

                               SECURITY AGREEMENT

         This SECURITY AGREEMENT (this "AGREEMENT"), dated as of April 7, 2009,
between Ivivi Technologies, Inc., a New Jersey corporation (the "BORROWER"), and
Emigrant Capital Corp., a Delaware corporation (the "SECURED Party").

                              W I T N E S S E T H:

         WHEREAS, pursuant to that certain Loan Agreement of even date herewith
(as amended, restated, supplemented, or otherwise modified from time to time,
including all schedules and exhibits thereto, the "LOAN AGREEMENT") between the
Borrower and the Secured Party, the Secured Party may, subject to the
satisfaction of certain conditions set forth in the Loan Agreement, make certain
Loans to the Borrower, as evidenced by that certain Convertible Promissory Note
(the "NOTE") issued by the Borrower to the Secured Party pursuant to the terms
of the Loan Agreement, and

         WHEREAS, in order to induce the Secured Party to enter into the Loan
Agreement, and as a condition precedent to the making of the Loans evidenced by
the Note, the Borrower has agreed to grant a continuing security interest in and
to the Collateral in order to secure the prompt and complete payment, observance
and performance of, the Secured Obligations.

         NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:

         1. DEFINED TERMS. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Loan Agreement. Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein or in the Loan Agreement; PROVIDED, HOWEVER,
that to the extent that the Code is used to define any term herein and if such
term is defined differently in different Articles of the Code, the definition of
such term contained in Article 9 of the Code shall govern. In addition to those
terms defined elsewhere in this Agreement, as used in this Agreement, the
following terms shall have the following meanings:

                  (a) "ACCOUNT" means an account (as that term is defined in
Article 9 of the Code).

                  (b) "ACCOUNT DEBTOR" means an account debtor (as that term is
defined in the Code).

                  (c) "ACTIVATION INSTRUCTION" has the meaning specified
therefor in SECTION 6(L).

                  (d) "BANKRUPTCY CODE" means Title 11 of the United States
Code, as in effect from time to time.

                  (e) "BOOKS" means books and records (including the Borrower's
Records indicating, summarizing, or evidencing the Borrower's assets (including
the Collateral) or liabilities, the Borrower's Records relating to the
Borrower's business operations or financial condition, and the Borrower's goods
or General Intangibles related to such information).

                  (f) "BORROWER" has the meaning specified therefor in the
preamble to this Agreement.

                  (g) "CHATTEL PAPER" means chattel paper (as that term is
defined in the Code) and includes tangible chattel paper and electronic chattel
paper.

<page>

                  (h) "CODE" means the New York Uniform Commercial Code, as in
effect from time to time; PROVIDED, HOWEVER, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to the Liens of the Secured Party granted
under the Loan Documents on any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of New
York, the term "Code" shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies.

                  (i) "COLLATERAL" has the meaning specified therefor in SECTION
2.

                  (j) "COLLECTIONS" means all cash, checks, notes, instruments,
and other items of payment (including insurance proceeds, cash proceeds of asset
sales, rental proceeds, and tax refunds).

                  (k) "COMMERCIAL TORT CLAIMS" means commercial tort claims (as
that term is defined in the Code), and includes those commercial tort claims
listed on SCHEDULE 1 attached hereto.

                  (l) "CONTROL AGREEMENT" means (i) with respect to a Securities
Account, an agreement relating to such Securities Account and of the type
described in (A) Section 8-106(c)(2) of the Code, duly executed and delivered by
the Borrower, the Secured Party and the issuer of uncertificated securities
pledged pursuant to this Agreement or (B) (A) Section 8-106(d)(2) of the Code,
duly executed and delivered by the Borrower, the Secured Party and the
securities intermediary maintaining such Securities Account, (ii) with respect
to a Deposit Account, an agreement relating to such Deposit Account and of the
type described in Section 9-104(a)(2) of the Code duly executed and delivered by
the Borrower, the Secured Party and the depositary bank maintaining such Deposit
Account and (iii) with respect to a Commodity Account, an agreement relating to
such Commodity Account and of the type described in (A) Section 9-106(b)(2) of
the Code, duly executed and delivered by the Borrower, the Secured Party and the
commodity intermediary maintaining such Commodity Account.

                  (m) "CONTROLLED ACCOUNT" has the meaning specified therefor in
SECTION 6(L).

                  (n) "CONTROLLED ACCOUNT AGREEMENTS" means those certain cash
management agreements, in form and substance reasonably satisfactory to the
Secured Party, each of which is among the Borrower, the Secured Party, and one
of the Controlled Account Banks.

                  (o) "CONTROLLED ACCOUNT BANK" has the meaning specified
therefor in SECTION 6(L).

                  (p) "COPYRIGHTS" means any and all copyrights and copyright
registrations, including, (i) the copyright registrations and recordings thereof
and all applications in connection therewith listed on SCHEDULE 2 attached
hereto and made a part hereof, (ii) all reissues, continuations, extensions or
renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements thereof, (iv) the right to sue for past,
present and future infringements thereof, and (v) all of the Borrower's rights
corresponding thereto throughout the world.

                  (q) "COPYRIGHT SECURITY AGREEMENT" means each Copyright
Security Agreement among the Borrower and the Secured Party, in substantially
the form of EXHIBIT A attached hereto, pursuant to which the Borrower has
granted to the Secured Party a security interest in all of its Copyrights.

                  (r) "DEFAULT" has the meaning specified therefor in the Loan
Agreement.

                  (s) "DEPOSIT ACCOUNT" means a deposit account (as that term is
defined in the Code).

                  (t) "EQUIPMENT" means equipment (as that term is defined in
the Code).

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<page>

                  (u) "EVENT OF DEFAULT" has the meaning specified therefor in
the Loan Agreement.

                  (v) "GENERAL INTANGIBLES" means general intangibles (as that
term is defined in the Code) and includes payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, pension plan
refunds, pension plan refund claims, insurance premium rebates, tax refunds, and
tax refund claims, interests in a partnership or limited liability company which
do not constitute a security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts, Chattel Paper,
Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and
oil, gas, or other minerals before extraction.

                  (w) "INSOLVENCY PROCEEDING" means any proceeding commenced by
or against any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.

                  (x) "INSTRUMENT" means instrument (as that term is defined in
the Code).

                  (y) "INTELLECTUAL PROPERTY" means any and all Intellectual
Property Licenses, Patents, Copyrights, Trademarks, the goodwill associated with
such Trademarks, trade secrets, know-how, customer lists and any other
proprietary rights of any kind.

                  (z) "INTELLECTUAL PROPERTY LICENSES" means rights under or
interests in any Patent, Trademark, Copyright or other Intellectual Property,
including software license agreements under which Borrower is a licensee or
licensor (but excluding any off-the-shelf software license agreement), including
the license agreements listed on SCHEDULE 3 attached hereto and made a part
hereof, and the right to use the foregoing in connection with the enforcement of
the Secured Party's rights under the Loan Documents, including the right to
prepare for sale and sell any and all Inventory and Equipment now or hereafter
owned by the Borrower and now or hereafter covered by such licenses.

                  (aa) "INVENTORY" means inventory (as that term is defined in
the Code).

                  (bb) "INVESTMENT RELATED PROPERTY" means (i) any and all
investment property (as that term is defined in the Code), and (ii) any and all
of the following (regardless of whether classified as investment property under
the Code): all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.

                  (cc) "LENDER" has the meaning specified therefor in the Loan
Agreement.

                  (dd) "LENDER EXPENSES" means all (a) costs or expenses
(including taxes and insurance premiums) required to be paid by the Borrower
under any of the Loan Documents that are paid, advanced, or incurred by the
Secured Party, (b) out-of-pocket fees or charges paid or incurred by the Secured
Party in connection with the Secured Party's transactions with the Borrower
under any of the Loan Documents, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in any Loan
Document), real estate surveys, real estate title policies and endorsements, and

                                       3

<page>

environmental audits, (c) out-of-pocket charges paid or incurred by the Secured
Party resulting from the dishonor of checks payable by or to the Borrower, (d)
reasonable out-of-pocket costs and expenses paid or incurred by the Secured
Party to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (e) reasonable out-of-pocket
audit fees and expenses (including travel, meals, and lodging) of the Secured
Party related to any inspections or audits to the extent of the fees and charges
(and up to the amount of any limitation) contained in the Loan Documents, (f)
reasonable out-of-pocket costs and expenses of third-party claims or any other
amount paid or incurred by the Secured Party in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents, (g) the Secured Party's reasonable costs and expenses (including
reasonable attorneys' fees) incurred in administering or amending the Loan
Documents, and (h) the Secured Party's reasonable costs and expenses (including
reasonable attorneys', accountants', consultants', and other advisors' fees and
expenses) incurred in terminating, enforcing (including attorneys',
accountants', consultants', and other advisors' fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning the Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any remedial action concerning the Collateral.

                  (ee) "LOAN AGREEMENT" has the meaning specified therefor in
the recitals to this Agreement.

                  (ff) "LOAN DOCUMENT" has the meaning specified therefor in the
Loan Agreement.

                  (gg) "LOANS" has the meaning specified therefor in the Loan
Agreement.

                  (hh) "MORTGAGES" means, individually and collectively, one or
more mortgages, deeds of trust, or deeds to secure debt, executed and delivered
by the Borrower in favor of the Secured Party, in form and substance reasonably
satisfactory to the Secured Party, that encumber the Real Property Collateral.

                  (ii) "NEGOTIABLE COLLATERAL" means letters of credit,
letter-of-credit rights, instruments, notes, drafts and documents (as such terms
are defined in the Code).

                  (jj) "NOTE" has the meaning specified therefor in the recitals
to this Agreement.

                  (kk) "PATENTS" means patents and patent applications,
including, (i) the patents and patent applications listed on SCHEDULE 4 attached
hereto and made a part hereof, (ii) all renewals thereof, (iii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
thereof, (iv) the right to sue for past, present and future infringements
thereof, and (v) all of the Borrower's rights corresponding thereto throughout
the world.

                  (ll) "PATENT SECURITY AGREEMENT" means each Patent Security
Agreement between the Borrower and the Secured Party, in substantially the form
of EXHIBIT B attached hereto, pursuant to which the Borrower has granted to the
Secured Party a security interest in all of its Patents.

                  (mm) "PERMITTED LIENS" has the meaning specified therefor in
the Loan Agreement.

                  (nn) "PERSON" has the meaning specified therefor in the Loan
Agreement.

                  (oo) "PLEDGED COMPANIES" means, each Person listed on SCHEDULE
5 hereto as a "Pledged Company", together with each other Person, all or a
portion of whose Stock, is acquired or otherwise owned by the Borrower after the
Closing Date.

                                       4

<page>

                  (pp) "PLEDGED INTERESTS" means all of the Borrower's right,
title and interest in and to all of the Stock now or hereafter owned by the
Borrower, regardless of class or designation, including, in each of the Pledged
Companies, and all substitutions therefor and replacements thereof, all proceeds
thereof and all rights relating thereto, also including any certificates
representing the Stock, the right to receive any certificates representing any
of the Stock, all warrants, options, share appreciation rights and other rights,
contractual or otherwise, in respect thereof and the right to receive all
dividends, distributions of income, profits, surplus, or other compensation by
way of income or liquidating distributions, in cash or in kind, and all cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of, on
account of, or in exchange for any or all of the foregoing.

                  (qq) "PLEDGED INTERESTS ADDENDUM" means a Pledged Interests
Addendum substantially in the form of EXHIBIT C to this Agreement.

                  (rr) "PLEDGED OPERATING AGREEMENTS" means all of the
Borrower's rights, powers, and remedies under the limited liability company
operating agreements of each of the Pledged Companies that are limited liability
companies.

                  (ss) "PLEDGED PARTNERSHIP AGREEMENTS" means all of the
Borrower's rights, powers, and remedies under the partnership agreements of each
of the Pledged Companies that are partnerships.

                  (tt) "PROCEEDS" has the meaning specified therefor in SECTION
2.

                  (uu) "REAL PROPERTY" means any estates or interests in real
property now owned or hereafter acquired by the Borrower and the improvements
thereto.

                  (vv) "REAL PROPERTY COLLATERAL" means the Real Property
identified on SCHEDULE 7 and any Real Property hereafter acquired by the
Borrower.

                  (ww) "RECORDS" means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.

                  (xx) "RESCISSION" has the meaning specified therefor in
SECTION 6(L).

                  (yy) "SECURED OBLIGATIONS" means all obligations of the
Borrower under the Loan Agreement, this Agreement and the Note, including the
obligation to pay principal, interest (including any interest that accrues after
the commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
premiums, liabilities, obligations (including indemnification obligations),
fees, expenses (including any fees or expenses that accrue after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, covenants, and duties of any kind and description owing by Borrower
to the Secured Party and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all other expenses or other amounts that Borrower is required to pay or
reimburse by this Agreement, the Loan Agreement or the Note or by law or
otherwise in connection with this Agreement, the Loan Agreement or the Note. Any
reference in this Agreement, the Loan Agreement or any other the Loan Document
to the Secured Obligations shall include all or any portion thereof and any
extensions, modifications, renewals, or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.

                  (zz) "SECURED PARTY" has the meaning specified therefore in
the preamble to this Agreement.

                  (aaa) "SECURITIES ACCOUNT" means a securities account (as that
term is defined in the Code).

                                       5

<page>

                  (bbb) "SECURITY INTEREST" has the meaning specified therefor
in SECTION 2.

                  (ccc) "STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).

                  (ddd) "SUPPORTING OBLIGATIONS" means supporting obligations
(as such term is defined in the Code) and includes letters of credit and
guaranties issued in support of Accounts, Chattel Paper, documents, General
Intangibles, instruments or Investment Related Property.

                  (eee) "TRADEMARKS" means any and all trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service mark applications, including (i) the trade names, registered
trademarks, trademark applications, registered service marks and service mark
applications listed on SCHEDULE 6 attached hereto and made a part hereof, (ii)
all renewals thereof, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to sue for
past, present and future infringements and dilutions thereof, (v) the goodwill
of the Borrower's business symbolized by the foregoing or connected therewith,
and (vi) all of the Borrower's rights corresponding thereto throughout the
world.

                  (fff) "TRADEMARK SECURITY AGREEMENT" means each Trademark
Security Agreement among the Borrower and the Secured Party, in substantially
the form of EXHIBIT D attached hereto, pursuant to which the Borrower has
granted to the Secured Party a security interest in all of its Trademarks.

                  (ggg) "URL" means "uniform resource locator," an internet web
address.

         2. GRANT OF SECURITY. The Borrower hereby unconditionally grants,
assigns, and pledges to the Secured Party, to secure the Secured Obligations, a
continuing security interest (hereinafter referred to as the "SECURITY
INTEREST") in all personal property of the Borrower whether now owned or
hereafter acquired or arising and wherever located, including the Borrower's
right, title, and interest in and to the following, whether now owned or
hereafter acquired or arising and wherever located (the "COLLATERAL"):

                  (a) all of the Borrower's Accounts;

                  (b) all of the Borrower's Books;

                  (c) all of the Borrower's Chattel Paper;

                  (d) all of the Borrower's interest with respect to any Deposit
Account;

                  (e) all of the Borrower's Equipment and fixtures;

                  (f) all of the Borrower's General Intangibles;

                  (g) all of the Borrower's Inventory;

                  (h) all of the Borrower's Investment Related Property;

                  (i) all of the Borrower's Negotiable Collateral;

                  (j) all of the Borrower's rights in respect of Supporting
Obligations;

                                       6

<page>

                  (k) all of the Borrower's interest with respect to any
Commercial Tort Claims;

                  (l) all of the Borrower's money, cash and cash equivalents;

                  (m) all of the proceeds (as that term is defined in the Code)
and products, whether tangible or intangible, of any of the foregoing, including
proceeds of insurance or Commercial Tort Claims covering or relating to any or
all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit
Accounts, Equipment, General Intangibles, Inventory, Investment Related
Property, Negotiable Collateral, Supporting Obligations, money, or other
tangible or intangible property resulting from the sale, lease, license,
exchange, collection, or other disposition of any of the foregoing, whatever is
collected on, or distributed on account of any of the foregoing, any and all
rights arising out of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, claims arising out of the loss,
non-conformity, or interference with the use of, defects, or infringement of
rights in, or damage to, any of the foregoing, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, insurance, or
guaranty payable by reason of loss or non-conformity of, defects or infringement
of rights in, or damage to, or otherwise with respect to any of the foregoing
(the "PROCEEDS"). Without limiting the generality of the foregoing, the term
"Proceeds" includes whatever is receivable or received when Investment Related
Property or proceeds are sold, exchanged, collected, or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes proceeds of
any indemnity or guaranty payable to the Borrower or the Secured Party from time
to time with respect to any of the Investment Related Property.

         Notwithstanding anything contained in this Agreement to the contrary,
the term "Collateral" shall not include any rights or interest in any contract,
lease, permit, license, charter or license agreement covering real or personal
property of the Borrower if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect thereto,
the grant of a security interest or lien therein is prohibited as a matter of
law or by the terms of such contract, lease, permit, license, charter or license
agreement and such prohibition has not been waived or the consent of the other
party to such contract, lease, permit, license, charter or license agreement has
not been obtained (PROVIDED, that, the foregoing exclusions of this paragraph
shall in no way be construed (A) to apply to the extent that any described
prohibition is unenforceable under Section 9-406, 9-407, 9-408 or 9-409 of the
Code or other applicable law, (B) to limit, impair, or otherwise affect the
Secured Party's continuing security interests in and liens upon any rights or
interests of the Borrower in or to (x) monies due or to become due under any
described contract, lease, permit, license, charter or license agreement
(including any Accounts), or (y) any proceeds from the sale, license, lease, or
other dispositions of any such contract, lease, permit, license, charter,
license agreement, or Stock, or (C) to apply to the extent that any such
prohibition is ineffective, lapsed or has been terminated, or any consent or
waiver has been obtained that would permit the security interest of lien
notwithstanding the prohibition).

         3. SECURITY FOR SECURED OBLIGATIONS. The Security Interest created
hereby secures the payment and performance of the Secured Obligations, whether
now existing or arising hereafter. Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Secured Obligations and would be owed by the Borrower to the Secured
Party but for the fact that they are unenforceable or not allowable due to the
existence of an Insolvency Proceeding involving the Borrower.

         4. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral, including the Pledged Operating
Agreements and the Pledged Partnership Agreements, to perform all of the duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Secured Party of any of the rights hereunder
shall not release the Borrower from any of its duties or obligations under such
contracts and agreements included in the Collateral, and (c) the Secured Party
shall not have any obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Secured
Party be obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any claim for payment

                                       7

<page>

assigned hereunder. Until an Event of Default shall occur and be continuing,
except as otherwise provided in this Agreement, the Loan Agreement or the Note,
the Borrower shall have the right to possession and enjoyment of the Collateral
for the purpose of conducting the ordinary course of its business, subject to
and upon the terms hereof and of the Loan Agreement and the Note. Without
limiting the generality of the foregoing, it is the intention of the parties
hereto that record and beneficial ownership of the Pledged Interests, including
all voting, consensual, and dividend rights, shall remain in the Borrower until
the occurrence of an Event of Default and until the Secured Party shall notify
the Borrower of the Secured Party's exercise of voting, consensual, or dividend
rights with respect to the Pledged Interests pursuant to SECTION 14 hereof.

         5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants as follows:

                  (a) The exact legal name of the Borrower is set forth on the
signature pages of this Agreement.

                  (b) SCHEDULE 7 attached hereto sets forth all Real Property
owned the Borrower as of the Closing Date.

                  (c) As of the Closing Date, the Borrower has no interest in,
or title to, any Copyrights, Intellectual Property Licenses, Patents, or
Trademarks except as set forth on SCHEDULES 2, 3, 4, and 6, respectively,
attached hereto. This Agreement is effective to create a valid and continuing
Lien on all U.S. Intellectual Property in which the Borrower has any right,
title, or interest and, assuming that New York law will apply to the creation of
such Lien, on all foreign Intellectual Property in which the Borrower has any
right, title, or interest. Upon the filing of the Copyright Security Agreement
with the United States Copyright Office and filing of the Patent Security
Agreement and the Trademark Security Agreement with the United States Patent and
Trademark Office, and the filing of appropriate financing statements in the
jurisdictions listed on SCHEDULE 8 hereto, all action necessary to perfect the
Security Interest in the Borrower's U.S. Intellectual Property will have been
taken and such perfected Security Interest is enforceable as such as against any
and all creditors of and purchasers from the Borrower. The Borrower exclusively
owns, free and clear of any Liens (other than Permitted Liens), all right, title
and interest in, or holds licenses in, all Intellectual Property that are
necessary to the conduct of its business as currently conducted.

                  (d) This Agreement creates a valid security interest in favor
of the Secured Party in the Collateral, to the extent a security interest
therein can be created under the Code, securing the payment of the Secured
Obligations. Except to the extent a security interest in the Collateral cannot
be perfected by the filing of a financing statement under the Code, upon the
filing of financing statements naming the Borrower, as debtor, and the Secured
Party, as secured party, in the jurisdictions listed next to the Borrower's name
on SCHEDULE 8 attached hereto all filings and other actions necessary to perfect
such security interest will have been taken. Upon the making of such filings,
the Secured Party shall have a first priority perfected security interest in the
Collateral of the Borrower to the extent such security interest can be perfected
by the filing of a financing statement under the Code (subject only to Permitted
Liens).

                  (e) Except for the Security Interest created hereby, (i) the
Borrower is and will at all times be the sole record and beneficial owner of the
Pledged Interests described on SCHEDULE 5, and, when acquired by the Borrower,
of any Pledged Interests acquired after the Closing Date, in each case free and
clear of all Liens other than Permitted Liens; (ii) all of the Pledged Interests
are (or, in the case of Pledged Interests acquired after the Closing Date, will
be) duly authorized, validly issued, fully paid and nonassessable and the
Pledged Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies identified on SCHEDULE 5 hereto, as
supplemented or modified by any Pledged Interests Addendum or any Supplement to
this Agreement; (iii) the Borrower has the right and requisite authority to
pledge the Investment Related Property pledged by the Borrower to the Secured
Party as provided herein; (iv) all actions necessary to perfect, and establish
the first priority of, the Liens of the Secured Party granted under the Loan
Documents in the Investment Related Collateral, and the proceeds thereof, will
have been duly taken (A) upon the execution and delivery of this Agreement; (B)

                                       8

<page>

upon the taking of possession by the Secured Party of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated transfer powers undated and
endorsed in blank by the Borrower; (C) upon the filing of financing statements
in the applicable jurisdiction set forth on SCHEDULE 8 attached hereto for the
Borrower with respect to the Pledged Interests of the Borrower that are not
represented by certificates; and (D) with respect to each Securities Account,
upon the delivery of a Control Agreement adequately describing such Securities
Account, duly executed by the Borrower, the Secured Party and securities
intermediary maintaining such Securities Account; (v) the Borrower has delivered
to and deposited with the Secured Party (or, with respect to any Pledged
Interests created or obtained after the Closing Date, will deliver and deposit
in accordance with SECTIONS 6(A) and 8 hereof) all certificates representing the
Pledged Interests owned by the Borrower to the extent such Pledged Interests are
represented by certificates, and undated transfer powers endorsed in blank with
respect to such certificates; and (vi) none of the Pledged Interests owned or
held by the Borrower has been issued or transferred in violation of any
securities registration, securities disclosure, or similar laws of any
jurisdiction to which such issuance or transfer may be subject.

                  (f) Other than the filing of financing statements and the
Copyright Security Agreement, Patent Security Agreement and Trademark Security
Agreement and the execution and delivery of an appropriate Control Agreement
with respect to each Securities Account, no consent, approval, authorization, or
other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by the Borrower in and to the Collateral pursuant to this
Agreement or for the execution, delivery, or performance of this Agreement by
the Borrower, or (ii) for the exercise by the Secured Party of the voting or
other rights provided for in this Agreement with respect to the Investment
Related Property or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with such disposition of
Investment Related Property by laws affecting the offering and sale of
securities generally and except for consents or approvals that have been
obtained and that are still in force and effect. No Intellectual Property
License to which the Borrower is a party requires any consent for the Borrower
to grant the security interest granted hereunder in the Borrower's right, title
or interest in or to any Copyrights, Patents, Trademarks or material
Intellectual Property Licenses.

         6. COVENANTS. The Borrower covenants and agrees with the Secured Party
that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with SECTION 21 hereof:

                  (a) POSSESSION OF COLLATERAL. In the event that any
Collateral, including Proceeds, is evidenced by or consists of Negotiable
Collateral, certificated Investment Related Property, or Chattel Paper, and if
and to the extent that perfection or priority of the Secured Party's Liens
granted under the Loan Documents is dependent on or enhanced by possession, the
Borrower, promptly upon the request of the Secured Party, shall execute such
other documents and instruments as shall be reasonably requested by the Secured
Party or, if applicable, endorse and deliver physical possession of such
Negotiable Collateral, certificated Investment Related Property, or Chattel
Paper to the Secured Party, together with such undated transfer powers endorsed
in blank as shall be requested by the Secured Party.

                  (b) CHATTEL PAPER.

                           (i) The Borrower shall take all steps reasonably
necessary to maintain all (A) electronic chattel paper so that the Secured Party
has control of the electronic chattel paper in the manner specified in Section
9-105 of the Code and (B) all transferable records so that the Secured Party has
control of the transferable records in the manner specified in Section 16 of the
Uniform Electronic Transactions Act, as in effect in the jurisdiction governing
such transferable record, and Section 201 of the federal Electronic Signatures
in Global and National Commerce Act as in effect in any relevant jurisdiction.

                           (ii) If the Borrower retains possession of any
Chattel Paper or instruments (which retention of possession shall be subject to
the extent permitted hereby and by the Loan Agreement), promptly upon the

                                       9

<page>

request of the Secured Party, such Chattel Paper and instruments shall be marked
with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the Security Interest of Emigrant Capital Corp.".

                  (c) CONTROL AGREEMENTS.

                           (i) Except to the extent otherwise consented to by
the Secured Party, the Borrower shall use its best efforts to obtain an
authenticated Control Agreement from each bank maintaining a Deposit Account for
the Borrower. Each Control Agreement shall provide, among other things, that the
bank maintaining such Deposit Account will comply with any instructions
originated by the Secured Party directing disposition of the funds in such
Deposit Account without further consent by the Borrower. The Secured Party
agrees not to issue any such instruction with respect to such Deposit Account
unless a Default has occurred. Upon the occurrence of a Default, the Secured
Party shall be free to issue such instructions and the subsequent elimination,
cure or waiver of such Default shall not vitiate eliminate the effectiveness of
such notice.

                           (ii) The Borrower shall use its best efforts to
obtain an authenticated Control Agreement from (A) each issuer of uncertificated
securities pledged pursuant to this Agreement and (B) each securities
intermediary and commodities intermediary maintaining any financial assets or
commodities for the account of the Borrower.

                           (iii) The Borrower shall use its best efforts to
obtain an authenticated Control Agreement with respect to all of the Borrower's
electronic chattel paper and investment property.

                  (d) LETTER-OF-CREDIT RIGHTS. If the Borrower is or becomes the
beneficiary of a letter of credit, the Borrower shall promptly (and in any event
within 2 Business Days after becoming a beneficiary), notify the Secured Party
thereof and, upon the request by the Secured Party, shall use its best efforts
to provide the Secured Party with control of the letter-of-credit rights
relating thereto in the manner specified in Section 9-107 of the Code.

                  (e) COMMERCIAL TORT CLAIMS. The Borrower shall promptly (and
in any event within 5 Business Days of receipt thereof) notify the Secured Party
in writing of any Commercial Tort Claim that the Borrower has against any party
and of which the Borrower becomes aware and, upon request of the Secured Party,
promptly amend SCHEDULE 1 to this Agreement to describe such after-acquired
Commercial Tort Claim in a manner that reasonably identifies such Commercial
Tort Claim, and hereby authorizes the filing of additional financing statements
or amendments to existing financing statements describing such Commercial Tort
Claim, and agrees to do such other acts or things deemed necessary or desirable
by the Secured Party to give the Secured Party a first priority (subject to
Permitted Liens), perfected security interest in any such Commercial Tort Claim.

                  (f) GOVERNMENT CONTRACTS. If any Account or Chattel Paper
arises out of a contract or contracts with the United States of America or any
department, agency, or instrumentality thereof, the Borrower shall promptly (and
in any event within 5 Business Days of the creation thereof) notify the Secured
Party thereof in writing and execute any instruments or take any steps
reasonably required by the Secured Party in order that all moneys due or to
become due under such contract or contracts shall be assigned to the Secured
Party and shall provide written notice thereof under the Assignment of Claims
Act or other applicable law.

                  (g) INTELLECTUAL PROPERTY.

                           (i) Upon the request of the Secured Party, in order
to facilitate filings with the United States Patent and Trademark Office and the
United States Copyright Office, the Borrower shall execute and deliver to the
Secured Party one or more Copyright Security Agreements, Trademark Security

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Agreements, or Patent Security Agreements to further evidence the Liens of the
Secured Party granted under the Loan Documents on the Borrower's Patents,
Trademarks, or Copyrights, and the General Intangibles of the Borrower relating
thereto or represented thereby.

                           (ii) The Borrower shall have the duty, to take all
necessary steps, to the extent deemed economically desirable by the Borrower in
the operation of its business, (A) to diligently enforce and defend the
Borrower's Patents, Trademarks and Copyrights, including promptly suing for
infringement, misappropriation, or dilution and to recover any and all damages
for such infringement, misappropriation, or dilution, and filing for opposition,
interference, and cancellation against conflicting intellectual property rights
of any third party, (B) to prosecute diligently any trademark application or
service mark application that is part of the Trademarks pending as of the date
hereof or hereafter until the termination of this Agreement, (C) to prosecute
diligently any patent application that is part of the Patents pending as of the
date hereof or hereafter until the termination of this Agreement, and (D) to
take all action necessary to preserve and maintain all of the Borrower's
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights
therein, including paying all maintenance fees and filing applications for
renewal, affidavits of use and affidavits of noncontestability, as applicable.
The Borrower shall promptly file an application with the United States Copyright
Office for any Copyright that has not been registered with the United States
Copyright Office if such Copyright is necessary in connection with the operation
of the Borrower's business. Any expenses incurred in connection with the
foregoing shall be borne by the Borrower. The Borrower further agrees not to
abandon any Trademark, Patent, Copyright, or Intellectual Property License that
is necessary or economically desirable in the operation of the Borrower's
business.

                           (iii) The Borrower acknowledges and agrees that the
Secured Party shall have no duties with respect to the Trademarks, Patents,
Copyrights, or Intellectual Property Licenses. Without limiting the generality
of this SECTION 6(G), the Borrower acknowledges and agrees that the Secured
Party shall not be under any obligation to take any steps necessary to preserve
rights in the Trademarks, Patents, Copyrights, or Intellectual Property Licenses
against any other Person, but the Secured Party may do so at its option from and
after the occurrence and during the continuance of an Event of Default, and all
expenses incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrower and shall be reimbursed by Borrower.

                           (iv) In no event shall the Borrower, either itself or
through any agent, employee, licensee, or designee, file an application for the
registration of any Copyright with the United States Copyright Office (or any
similar office or agency in another country) without giving the Secured Party
prior written notice thereof or any Patent or Trademark with the United States
Patent and Trademark Office (or any similar office or agency in another country)
without giving the Secured Party written notice thereof promptly thereafter.
Promptly upon any such filing, the Borrower shall comply with SECTION 6(G)(I)
hereof.

                  (h) INVESTMENT RELATED PROPERTY.

                           (i) If the Borrower shall receive or become entitled
to receive any Pledged Interests after the Closing Date, it shall promptly (and
in any event within 2 Business Days of receipt thereof) deliver to the Secured
Party a duly executed Pledged Interests Addendum identifying such Pledged
Interests.

                           (ii) All sums of money and property paid or
distributed in respect of the Investment Related Property which are received by
the Borrower shall be held by the Borrower in trust for the benefit of the
Secured Party segregated from the Borrower's other property, and the Borrower
shall deliver it forthwith to the Secured Party in the exact form received.

                           (iii) The Borrower shall promptly deliver to the
Secured Party a copy of each material written notice or other material written
communication received by it in respect of any Pledged Interests.

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                           (iv) The Borrower shall not make or consent to any
amendment or other modification or waiver with respect to any Pledged Interests,
Pledged Operating Agreement, or Pledged Partnership Agreement, or enter into any
agreement or permit to exist any restriction with respect to any Pledged
Interests other than pursuant to the Loan Documents.

                           (v) The Borrower agrees that it will cooperate with
the Secured Party in obtaining all necessary approvals and making all necessary
filings under federal, state or local in order to constitute the Security
Interest in the Investment Related Property a fully perfected first priority
security interest, subject only to Permitted Liens.

                           (vi) As to all limited liability company or
partnership interests, issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, the Borrower hereby represents, warrants and covenants
that the Pledged Interests issued pursuant to such agreement (A) are not and
shall not be dealt in or traded on securities exchanges or in securities
markets, (B) do not and will not constitute investment company securities, and
(C) are not and will not be held by the Borrower in a securities account. In
addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests
issued under any Pledged Operating Agreement or Pledged Partnership Agreement,
provide or shall provide that such Pledged Interests are securities governed by
Article 8 of the Uniform Commercial Code as in effect in any relevant
jurisdiction.

                  (i) REAL PROPERTY; FIXTURES. The Borrower covenants and agrees
that upon the acquisition of any fee interest in Real Property it will promptly
(and in any event within 5 Business Days of acquisition) notify the Secured
Party of the acquisition of such Real Property and will grant to the Secured
Party a first Mortgage lien (subject to Permitted Liens and any exceptions to
title existing at the time the fee interest in such Real Property is conveyed to
the Borrower and appearing on schedule B to the title insurance policy insuring
the Borrower's fee interest in such Real Property) on each fee interest in Real
Property now or hereafter owned by the Borrower and shall deliver such other
documentation and opinions, in form and substance reasonably satisfactory to the
Secured Party, in connection with the grant of such Mortgage as the Secured
Party shall reasonably request, including title insurance policies, financing
statements, fixture filings and environmental audits and the Borrower shall pay
all recording costs, intangibles taxes and other fees and costs (including
reasonable attorneys' fees and expenses) incurred in connection therewith. The
Borrower acknowledges and agrees that, to the extent permitted by applicable
law, all of the Collateral (other than Real Property Collateral) shall remain
personal property regardless of the manner of its attachment or affixation to
Real Property.

                  (j) TRANSFERS AND OTHER LIENS. The Borrower shall not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except as expressly
permitted by the Loan Agreement and except for the sale of inventory in the
ordinary course of business, or (ii) create or permit to exist any Lien upon or
with respect to any of the Collateral of the Borrower, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to
constitute the Secured Party's consent to any sale or other disposition of any
of the Collateral except as expressly permitted in this Agreement or the other
Loan Documents.

                  (k) OTHER ACTIONS AS TO ANY AND ALL COLLATERAL. The Borrower
shall promptly (and in any event within 5 Business Days of acquiring or
obtaining such Collateral) notify the Secured Party in writing upon (i)
acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment
Related Property, Chattel Paper (electronic, tangible or otherwise), documents
(as defined in Article 9 of the Code), promissory notes (as defined in the Code,
or instruments (as defined in the Code) or (ii) any amount payable under or in
connection with any of the Collateral being or becoming evidenced after the date

                                       12

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hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of the Secured Party, promptly execute such
other documents, or if applicable, deliver such Chattel Paper, other documents
or certificates evidencing any Investment Related Property and do such other
acts or things reasonably deemed necessary or desirable by the Secured Party to
protect the Secured Party's Security Interest therein.

                  (l) CONTROLLED ACCOUNTS.

                           (i) The Borrower shall (i) establish and maintain
cash management services of a type and on terms reasonably satisfactory to the
Secured Party at one or more of the banks set forth on SCHEDULE 6(L) (each a
"CONTROLLED ACCOUNT BANK"), and shall take reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Controlled Account Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all of its Collections (including those sent directly by the
Account Debtors to the Borrower) into a bank account of the Borrower (each, a
"CONTROLLED ACCOUNT") at one of the Controlled Account Banks.

                           (ii) Each Controlled Account Bank shall establish and
maintain Controlled Account Agreements with the Secured Party and the Borrower,
in form and substance reasonably acceptable to the Secured Party. Each such
Controlled Account Agreement shall provide, among other things, that (a) the
Controlled Account Bank will comply with any instructions originated by the
Secured Party directing the disposition of the funds in such Controlled Account
without further consent by the Borrower, (b) the Controlled Account Bank has no
rights of setoff or recoupment or any other claim against the applicable
Controlled Account other than for payment of its service fees and other charges
directly related to the administration of such Controlled Account and for
returned checks or other items of payment, and (c) upon the instruction of the
Secured Party (an "ACTIVATION INSTRUCTION"), the Controlled Account Bank will
forward by daily sweep all amounts in the applicable Controlled Account to an
account as to which the Controlled Account Bank shall have received written
notice from the Secured Party, together with appropriate wire transfer
instructions enabling it to make such transfer. The Secured Party agrees not to
issue an Activation Instruction with respect to the Controlled Accounts unless a
Default has occurred and is continuing at the time such Activation Instruction
is issued. The Secured Party agrees to use commercially reasonable efforts to
rescind an Activation Instruction (the "RESCISSION") if: (x) the Default by
reason of which such Activation Instruction was issued is waived in writing in
accordance with the terms of this Agreement, and (y) no additional Default has
occurred prior to and is continuing on the date of the Rescission.

                  (m) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend SCHEDULE 6(L) to add or replace a Controlled
Account Bank or Controlled Account; PROVIDED, HOWEVER, that (i) such prospective
Controlled Account Bank shall be reasonably satisfactory to the Secured Party,
and (ii) prior to the time of the opening of such Controlled Account, the
Borrower and such prospective Controlled Account Bank shall have executed and
delivered to the Secured Party a Controlled Account Agreement. The Borrower
shall close any of its Controlled Accounts (and establish replacement Controlled
Account accounts in accordance with the foregoing sentence) as promptly as
practicable and in any event within 45 days of notice from the Secured Party
that the operating performance, funds transfer, or availability procedures or
performance of the Controlled Account Bank with respect to Controlled Accounts
or the Secured Party's liability under any Controlled Account Agreement with
such Controlled Account Bank is no longer acceptable in the Secured Party's
reasonable judgment.

         7. RELATION TO OTHER SECURITY DOCUMENTS. The provisions of this
Agreement shall be read and construed with the other Loan Documents referred to
below in the manner so indicated.

                  (a) LOAN AGREEMENT. In the event of any conflict between any
provision in this Agreement and a provision in the Loan Agreement, such
provision of the Loan Agreement shall control.

                  (b) PATENT, TRADEMARK, COPYRIGHT SECURITY AGREEMENTS. The
provisions of the Copyright Security Agreements, Trademark Security Agreements,
and Patent Security Agreements are supplemental to the provisions of this
Agreement, and nothing contained in the Copyright Security Agreements, Trademark

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<page>

Security Agreements, or the Patent Security Agreements shall limit any of the
rights or remedies of the Secured Party hereunder.

         8. FURTHER ASSURANCES.

                  (a) The Borrower agrees that from time to time, at its own
expense, the Borrower will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that the
Secured Party may reasonably request, in order to perfect and protect the
Security Interest granted or purported to be granted hereby or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any of the Collateral.

                  (b) The Borrower authorizes the filing by the Secured Party of
financing or continuation statements, or amendments thereto, and the Borrower
will execute and deliver to the Secured Party such other instruments or notices,
as may be necessary or as the Secured Party may reasonably request, in order to
perfect and preserve the Security Interest granted or purported to be granted
hereby.

                  (c) The Borrower authorizes the Secured Party at any time and
from time to time to file, transmit, or communicate, as applicable, financing
statements and amendments (i) describing the Collateral as "all personal
property of debtor" or "all assets of debtor" or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by chapter 5 of Article 9
of the Code for the sufficiency thereof or filing office acceptance. The
Borrower also hereby ratifies any and all financing statements or amendments
previously filed by the Secured Party in any jurisdiction relating to the
Secured Obligations.

                  (d) The Borrower acknowledges that it is not authorized to
file any financing statement or amendment or termination statement with respect
to any financing statement filed in connection with this Agreement without the
prior written consent of the Secured Party, subject to the Borrower's rights
under Section 9-509(d)(2) of the Code.

         9. SECURED PARTY'S RIGHT TO PERFORM CONTRACTS, EXERCISE RIGHTS, ETC.
Upon the occurrence and during the continuance of an Event of Default, the
Secured Party (or its designee) (a) may, to the extent permitted by law, perform
any and all of the obligations of the Borrower contained in any contract, lease,
or other agreement and exercise any and all rights of the Borrower therein
contained as fully as the Borrower itself could, (b) shall have the right to use
the Borrower's rights under Intellectual Property Licenses in connection with
the enforcement of the Secured Party's rights hereunder, including the right to
prepare for sale and sell any and all Inventory in compliance with applicable
law and Equipment now or hereafter owned by the Borrower and now or hereafter
covered by such licenses, and (c) shall have the right to request that any Stock
that is pledged hereunder be registered in the name of the Secured Party or any
of its nominees.

         10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Borrower hereby
irrevocably appoints the Secured Party its attorney-in-fact, with full authority
in the place and stead of the Borrower and in the name of the Borrower or
otherwise, at such time as an Event of Default has occurred and is continuing
under the Loan Agreement, to take any action and to execute any instrument which
the Secured Party may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:

                  (a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in connection with the Accounts or any other Collateral of the Borrower;

                  (b) to receive and open all mail addressed to the Borrower and
to notify postal authorities to change the address for the delivery of mail to
the Borrower to that of the Secured Party;

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<page>

                  (c) to receive, indorse, and collect any drafts or other
instruments, documents, Negotiable Collateral or Chattel Paper;

                  (d) to file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable for the
collection of any of the Collateral of the Borrower or otherwise to enforce the
rights of the Secured Party with respect to any of the Collateral;

                  (e) to repair, alter, or supply goods, if any, necessary to
fulfill in whole or in part the purchase order of any Person obligated to the
Borrower in respect of any Account of the Borrower;

                  (f) to use any labels, Patents, Trademarks, trade names, URLs,
domain names, industrial designs, Copyrights, advertising matter or other
industrial or intellectual property rights, in advertising for sale and selling
Inventory and other Collateral and to collect any amounts due under Accounts,
contracts or Negotiable Collateral of the Borrower; and

                  (g) the Secured Party shall have the right, but shall not be
obligated, to bring suit in its own name to enforce the Trademarks, Patents,
Copyrights and Intellectual Property Licenses and, if the Secured Party shall
commence any such suit, the Borrower shall, at the request of the Secured Party,
do any lawful acts and execute any and all proper documents reasonably required
by the Secured Party in aid of such enforcement.

         To the extent permitted by law, the Borrower hereby ratifies all that
such attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
until this Agreement is terminated.

         11. THE SECURED PARTY MAY PERFORM. If the Borrower shall fail to
perform any agreement contained herein, the Secured Party may itself perform, or
cause performance of, such agreement, and the reasonable expenses of the Secured
Party incurred in connection therewith shall be payable by the Borrower.

         12. COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES AND NEGOTIABLE
COLLATERAL. At any time upon the occurrence and during the continuation of an
Event of Default, the Secured Party or the Secured Party's designee may (a)
notify Account Debtors of the Borrower that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to the Secured Party,
or that the Secured Party has a security interest therein, and (b) collect the
Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of the Borrower's Secured
Obligations under the Loan Documents.

         13. DISPOSITION OF PLEDGED INTERESTS BY THE SECURED PARTY. None of the
Pledged Interests existing as of the date of this Agreement are, and Pledged
Interests hereafter acquired on the date of acquisition thereof may not be,
registered or qualified under the various federal or state securities laws of
the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. The Borrower understands that in connection with such
disposition, the Secured Party may approach only a restricted number of
potential purchasers and further understands that a sale under such
circumstances may yield a lower price for the Pledged Interests than if the
Pledged Interests were registered and qualified pursuant to federal and state
securities laws and sold on the open market. The Borrower, therefore, agrees
that: (a) if the Secured Party shall, pursuant to the terms of this Agreement,
sell or cause the Pledged Interests or any portion thereof to be sold at a
private sale, the Secured Party shall have the right to rely upon the advice and
opinion of any nationally recognized brokerage or investment firm (but shall not
be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of such action) as to
the best manner in which to offer the Pledged Interest or any portion thereof
for sale and as to the best price reasonably obtainable at the private sale
thereof; and (b) such reliance shall be conclusive evidence that the Secured
Party has handled the disposition in a commercially reasonable manner.

                                       15

<page>

         14. VOTING RIGHTS.

                  (a) Upon the occurrence and during the continuation of an
Event of Default, (i) the Secured Party may, at its option, and with 2 Business
Days' prior written notice to the Borrower, and in addition to all rights and
remedies available to the Secured Party under any other agreement, at law, in
equity, or otherwise, exercise all voting rights, and all other ownership or
consensual rights in respect of the Pledged Interests owned by the Borrower, but
under no circumstances is the Secured Party obligated by the terms of this
Agreement to exercise such rights, and (ii) if the Secured Party duly exercises
its right to vote any of such Pledged Interests, the Borrower hereby appoints
the Secured Party, the Borrower's true and lawful attorney-in-fact and
irrevocable proxy to vote such Pledged Interests in any manner the Secured Party
deems advisable for or against all matters submitted or which may be submitted
to a vote of shareholders, partners or members, as the case may be. The power of
attorney granted hereby is coupled with an interest and shall be irrevocable.

                  (b) For so long as the Borrower shall have the right to vote
the Pledged Interests owned by it, the Borrower covenants and agrees that it
will not, without the prior written consent of the Secured Party, vote or take
any consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of the Secured Party or the value of the
Pledged Interests.

         15. REMEDIES. Upon the occurrence and during the continuance of an
Event of Default:

                  (a) The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein, in the
other Loan Documents, or otherwise available to it, all the rights and remedies
of a secured party on default under the Code or any other applicable law.
Without limiting the generality of the foregoing, the Borrower expressly agrees
that, in any such event, the Secured Party without demand of performance or
other demand, advertisement or notice of any kind (except a notice specified
below of time and place of public or private sale) to or upon the Borrower or
any other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code or any other
applicable law), may take immediate possession of all or any portion of the
Collateral and (i) require the Borrower to, and the Borrower hereby agrees that
it will at its own expense and upon request of the Secured Party forthwith,
assemble all or part of the Collateral as directed by the Secured Party and make
it available to the Secured Party at one or more locations where the Borrower
regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Secured Party's offices or elsewhere, for cash,
on credit, and upon such other terms as the Secured Party may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least 10 days notice to the Borrower of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable "authenticated notification of disposition" within the meaning of
Section 9-611 of the Code. The Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

                  (b) The Secured Party is hereby granted a license or other
right to use, without liability for royalties or any other charge, the
Borrower's labels, Patents, Copyrights, rights of use of any name, trade
secrets, trade names, Trademarks, service marks and advertising matter, URLs,
domain names, industrial designs, other industrial or intellectual property or
any property of a similar nature, whether owned by the Borrower or with respect
to which the Borrower has rights under license, sublicense, or other agreements,
to the extent it pertains to the Collateral, in preparing for sale, advertising
for sale and selling any Collateral.

                  (c) The Secured Party may, in addition to other rights and
remedies provided for herein, in the other Loan Documents, or otherwise
available to it under applicable law and without the requirement of notice to or
upon any the Borrower or any other Person (which notice is hereby expressly
waived to the maximum extent permitted by the Code or any other applicable law),

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(i) with respect to the Borrower's Deposit Accounts in which the Liens of the
Secured Party granted under the Loan Documents are perfected by control under
Section 9-104 of the Code, instruct the bank maintaining such Deposit Account
for the Borrower to pay the balance of such Deposit Account to or for the
benefit of the Secured Party, and (ii) with respect to any of the Borrower's
Securities Accounts in which the Liens of the Secured Party granted under the
Loan Documents are perfected by control under Section 9-106 of the Code,
instruct the securities intermediary maintaining such Securities Account for the
Borrower to (A) transfer any cash in such Securities Account to or for the
benefit of the Secured Party, or (B) liquidate any financial assets in such
Securities Account that are customarily sold on a recognized market and transfer
the cash proceeds thereof to or for the benefit of the Secured Party.

                  (d) Any cash held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied against the Secured Obligations in the order set forth in the
Loan Agreement. In the event the proceeds of Collateral are insufficient to
satisfy all of the Secured Obligations in full, the Borrower shall remain liable
for any such deficiency.

                  (e) The Borrower hereby acknowledges that the Secured
Obligations arose out of a commercial transaction, and agrees that if an Event
of Default shall occur and be continuing the Secured Party shall have the right
to an immediate writ of possession without notice of a hearing. The Secured
Party shall have the right to the appointment of a receiver for the properties
and assets of the Borrower, and the Borrower hereby consents to such rights and
such appointment and hereby waives any objection the Borrower may have thereto
or the right to have a bond or other security posted by the Secured Party.

         16. REMEDIES CUMULATIVE. Each right, power, and remedy of the Secured
Party as provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by the Secured Party, of any one or more
of such rights, powers, or remedies shall not preclude the simultaneous or later
exercise by the Secured Party of any or all such other rights, powers, or
remedies.

         17. MARSHALING. The Secured Party shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising. To the extent that it lawfully may do so, the Borrower hereby agrees
that it will not invoke any law relating to the marshaling of collateral which
might cause delay in or impede the enforcement of the Secured Party's rights and
remedies under this Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Borrower hereby irrevocably waives the benefits of all such laws.

         18. INDEMNITY AND EXPENSES.

                  (a) The Borrower agrees to indemnify the Secured Party from
and against all claims, lawsuits and liabilities (including reasonable attorneys
fees) growing out of or resulting from this Agreement (including enforcement of
this Agreement) or any other Loan Document to which the Borrower is a party,
except claims, losses or liabilities resulting from the gross negligence or
willful misconduct of the party seeking indemnification as determined by a final
non-appealable order of a court of competent jurisdiction. This provision shall
survive the termination of this Agreement and the Loan Agreement and the
repayment of the Secured Obligations.

                                       17

<page>

                  (b) The Borrower shall, upon demand, pay to the Secured Party
all the Lender Expenses which the Secured Party may incur in connection with (i)
the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or, upon an Event of Default, the sale of, collection from, or
other realization upon, any of the Collateral in accordance with this Agreement
and the other Loan Documents, (iii) the exercise or enforcement of any of the
rights of the Secured Party hereunder or (iv) the failure by the Borrower to
perform or observe any of the provisions hereof.

         19. MERGER, AMENDMENTS; ETC. THIS AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by the Borrower herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by the Secured Party
and the Borrower.

         20. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be given in the form and manner and delivered to
the Secured Party at its address specified in the Loan Agreement, and to the
Borrower at its address specified in the Loan Agreement, as applicable, or, as
to any party, at such other address as shall be designated by such party in a
written notice to the other party.

         21. CONTINUING SECURITY INTEREST: ASSIGNMENTS UNDER LOAN AGREEMENT.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Secured Obligations have
been paid in full in cash in accordance with the provisions of the Loan
Agreement and the obligation of the Lender to extend any future Loans under the
Loan Agreement have expired or have been terminated, (b) be binding upon the
Borrower, and its successors and assigns, and (c) inure to the benefit of, and
be enforceable by, the Secured Party, and its successors, transferees and
assigns. Without limiting the generality of the foregoing CLAUSE (C), the
Secured Party may, in accordance with the provisions of the Loan Agreement,
assign or otherwise transfer all or any portion of its rights and obligations
under the Loan Agreement to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to the
Secured Party herein or otherwise. Upon payment in full in cash of the Secured
Obligations in accordance with the provisions of the Loan Agreement and the
expiration or termination of the obligation of the Secured Party to extend any
future Loans under the Loan Agreement, the Security Interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Borrower or
any other Person entitled thereto. At such time, the Secured Party will
authorize the filing of appropriate termination statements to terminate such
Security Interests. No transfer or renewal, extension, assignment, or
termination of this Agreement or of the Loan Agreement, any other Loan Document,
or any other instrument or document executed and delivered by the Borrower to
the Secured Party nor any additional Advances or other loans made by the Secured
Party to Borrower, nor the taking of further security, nor the retaking or
re-delivery of the Collateral to the Borrower by the Secured Party shall release
the Borrower from any obligation, except a release or discharge executed in
writing by the Secured Party in accordance with the provisions of the Loan
Agreement. The Secured Party shall not by any act, delay, omission or otherwise,
be deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by the Secured Party and then only to the extent
therein set forth. A waiver by the Secured Party of any right or remedy on any
occasion shall not be construed as a bar to the exercise of any such right or
remedy which the Secured Party would otherwise have had on any other occasion.

         22. GOVERNING LAW.

                  (a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE

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DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

                  (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
SECURED PARTY'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE SECURED
PARTY ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY
BE FOUND. THE SECURED PARTY AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 22(B).

                  (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE
SECURED PARTY AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. THE SECURED PARTY AND EACH GRANTOR REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

         23. MISCELLANEOUS.

                  (a) This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission also shall deliver an original executed counterpart of
this Agreement but the failure to deliver an original executed counterpart shall
not affect the validity, enforceability, and binding effect of this Agreement.
The foregoing shall apply to each other Loan Document MUTATIS MUTANDIS.

                  (b) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.

                  (c) Headings used in this Agreement are for convenience only
and shall not be used in connection with the interpretation of any provision
hereof.

                  (d) The pronouns used herein shall include, when appropriate,
either gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.

                  (e) Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement

                                       19

<page>

or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Secured
Obligations shall mean the repayment in full in cash (or cash collateralization
in accordance with the terms of the Loan Agreement) of all Secured Obligations
other than unasserted contingent indemnification Secured Obligations. Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in any
other Loan Document shall be satisfied by the transmission of a Record.

                                       20

<page>

17554278

                  IN WITNESS WHEREOF, the undersigned parties hereto have
executed this Agreement by and through their duly authorized officers, as of the
day and year first above written.

BORROWER:                               IVIVI TECHNOLOGIES, INC., as Borrower

                                        By: /s/Alan V. Gallantar
                                        Name: Alan V. Gallantar
                                        Title: CFO

SECURED PARTY:                          EMIGRANT CAPITAL CORP., as Secured Party

                                        By: /s/ Kenneth L. Walters
                                        Name: Kenneth L. Walters
                                        Title: Senior Vice President

                                       21

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