Document:

EX-10.38

                              BRIDGE LOAN AGREEMENT

              THIS BRIDGE LOAN  AGREEMENT,  dated as of September  28, 2006,  is
entered into by and between Sonoma College,  Inc., a California corporation with
headquarters  located  at 1304  South  Point  Boulevard,  Suite  280,  Petaluma,
California 94954 (the "Company"), and Harborview Master Fund Lp (the "Lender").

                              W I T N E S S E T H:

              WHEREAS,  the Company and the Lender are executing and  delivering
this  Agreement  in  accordance  with and in reliance  upon the  exemption  from
securities  registration for offers and sales to accredited  investors afforded,
INTER ALIA, by Rule 506 under  Regulation D  ("Regulation  D") as promulgated by
the United  States  Securities  and  Exchange  Commission  (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"),  and/or Section 4(2) of the
1933 Act; and

              WHEREAS,  the Lender wishes to lend funds to the Company,  subject
to and upon the terms and  conditions of this  Agreement and  acceptance of this
Agreement by the Company,  the  repayment  of which will be  represented  by 10%
Secured Promissory Note of the Company (the "Note"), on the terms and conditions
referred to herein; and

              WHEREAS, in connection with the loan to be made by the Lender, the
Company has agreed to cause the Issued  Shares (as  defined  below) to be issued
and/or transferred to the Lender; and

              WHEREAS,  the  Company's  obligations  to repay  the Note  will be
secured by certain real estate (the "Real Estate")  pledged by Charles D. Newman
and Elysa K. Newman (each a "Pledgor" and together,  the "Pledgors") pursuant to
separate Security Interest and Pledge Agreements (the "Pledge Agreements"),  and
by a mortgage (the "Mortgage") executed by the Pledgors in favor of the Lender.

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

              1.     AGREEMENT TO PURCHASE; PURCHASE PRICE.

              a.     PURCHASE.

              (i)    Subject to the terms and  conditions of this  Agreement and
the  other  Transaction  Agreements,  the  Lender  hereby  agrees to loan to the
Company $275,000 (the "Loan Amount").
<PAGE>

              (ii)   The  obligation  to repay the loan from the Lender shall be
evidenced by the Company's  issuance of the Note, which shall be shall be in the
form of ANNEX I annexed  hereto.  The Note will be secured by the Mortgage under
the terms of the Pledge  Agreements and Mortgage,  which Pledge Agreements shall
be  substantially  in the  form of ANNEX  VI  hereto,  which  the  Company  will
acknowledge.

              (iii)  In consideration of the loan to be made by the Lender,  the
Company  agrees  to issue to the  Lender  the  Issued  Shares  and the  Warrant.
Additional provisions relating to the Issued Shares and the Warrant are provided
below.

              (iv)   The loan to be made by the Lender and the  issuance  of the
Note and Warrant to the Lender and the  issuance  and/or  transfer of the Issued
Shares  to the  Lender  and  the  other  transactions  contemplated  hereby  are
sometimes  referred  to herein and in the other  Transaction  Agreements  as the
purchase  and sale of the  Securities  (as defined  below),  and are referred to
collectively as the "Transactions".

              b.     CERTAIN DEFINITIONS.  As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:

              "Additional  Issued Shares" means 1,527,777 shares of Common Stock
(half of which shall be restricted  and half of which shall be  free-trading  or
subject to  piggy-back  registration  rights) to be issued by the Company to the
Lender on  December  29,  2006 in the event  that the Note is not  repaid in its
entirety on or before such date.

              "Affiliate"  means,  with respect to a specific Person referred to
in the relevant provision, another Person who or which controls or is controlled
by or is under common control with such specified Person.

              "Certificates"  means the original  ink-signed Note and the Issued
Share Certificates, each duly executed by the Company and issued in the name of,
or in the case of the Share  Certificates,  duly endorsed or accompanied by duly
executed stock powers for transfer to, the Lender.

              "Closing Date" means the date of the closing of the  Transactions,
as provided herein.

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

              "Company Control Person" means each director,  executive  officer,
promoter,  and such other  Persons  as may be deemed in  control of the  Company
pursuant  to Rule  405  under  the 1933  Act or  Section  20 of the 1934 Act (as
defined below).
<PAGE>

              "Disclosure  Annex"  means  ANNEX V to this  Agreement;  provided,
however,  that the Disclosure Annex shall be arranged in sections  corresponding
to the  identified  Sections of this  Agreement,  but the disclosure in any such
section of the Disclosure Annex shall qualify other provisions in this Agreement
to the extent that it would be readily  apparent  to an  informed  reader from a
reading of such  section of the  Disclosure  Annex that it is also  relevant  to
other provisions of this Agreement.

              "Exchange  Act"  means the  Securities  Exchange  Act of 1934,  as
amended.

              "Holder" means the Person  holding the relevant  Securities at the
relevant time.

              "Issued Share  Certificates"  means one or more stock certificates
issued by the Company in the name of the Lender representing,  in the aggregate,
the Issued Shares and the Additional Issued Shares if required.

              "Issued  Shares" " means $137,500  worth of Common Stock,  half of
which shall be restricted and half of which shall be  free-trading or subject to
piggy-back registration rights.

              "Last Audited Date" means December 31, 2005.

              "Lender  Control Person" means each director,  executive  officer,
promoter,  and such  other  Persons  as may be deemed in  control  of the Lender
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

              "Liens"  means a lien,  charge,  security  interest,  encumbrance,
right of first refusal, preemptive right or other restriction.

              "Material Adverse Effect" means an event or combination of events,
which  individually  or in the  aggregate,  would  reasonably be expected to (w)
adversely affect the legality,  validity or  enforceability of the Securities or
any of the  Transaction  Agreements,  (x) have or result in a  material  adverse
effect on the results of operations,  assets, prospects, or condition (financial
or  otherwise)  of the  Company  and its  subsidiaries,  taken as a  whole,  (y)
adversely  impair the  Company's  ability to perform fully on a timely basis its
obligations  under  any  of  the  Transaction  Agreements  or  the  transactions
contemplated  thereby,  or (z) materially and adversely  affect the value of the
rights granted to the Lender in the Transaction Agreements.

              "Person"  means any living person or any entity,  such as, but not
necessarily limited to, a corporation, partnership or trust.

              "Principal  Trading  Market"  means the Over the Counter  Bulletin
Board or such other  market on which the Common Stock is  principally  traded at
the relevant time, but shall not include the "pink sheets."

              "Registrable  Securities"  means  all of the  following:  (i)  the
Issued Shares, (ii) the Warrant Shares and (iii) the Additional Issued Shares in
the event such shares are  issued,  except to the extent such shares can then be
sold by the Holder without volume or other restrictions or limits.
<PAGE>

              "Registration Rights Provisions" means the piggy-back registration
rights contemplated by the terms of this Agreement,  if any, including,  but not
necessarily  limited  to,  Section  4(g)  hereof,  and of the other  Transaction
Agreements.

              "Registration Statement" means an effective registration statement
covering the Registrable Securities.

              "Securities" means the Note and the Shares.

              "Shares" means the shares of Common Stock  representing any or all
of the Issued Shares,  the Additional Issued Shares in the event such shares are
issued, the Warrant Shares and, where relevant, the Pledged Shares.

              "State of Incorporation" means California.

              "Subsidiary"  means any  subsidiary of the Company as set forth on
the Disclosure Annex.

              "Subsidiary  Guarantee" means the Subsidiary Guarantee dated as of
September 1, 2006 between each Subsidiary and the Lender.

              "Trading  Day" means any day during  which the  Principal  Trading
Market shall be open for business.

              "Transaction  Fees" means legal and due diligence fees incurred by
the Lender.

              "Transfer  Agent" means,  at any time,  the transfer agent for the
Company's Common Stock.

              "Transaction  Agreements"  means this Bridge Loan  Agreement,  the
Note,  the Subsidiary  Guarantee,  the Pledge  Agreements,  the Mortgage and the
Warrant and includes all ancillary documents referred to in those agreements.

              "VWAP" means,  for any date, the price  determined by the first of
the following  clauses that  applies:  (a) if the Common Stock is then listed or
quoted on a Trading  Market,  the daily  volume  weighted  average  price of the
Common  Stock  for such  date (or the  nearest  preceding  date) on the  primary
Trading Market on which the Common Stock is then listed or quoted as reported by
Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. EST to 4:02 p.m.
Eastern Time) using the VAP function; (b) if the Common Stock is not then listed
or quoted on the  Trading  Market and if prices  for the  Common  Stock are then
reported in the "Pink  Sheets"  published by the Pink Sheets,  LLC (or a similar
organization  or agency  succeeding to its functions of reporting  prices),  the
most recent bid price per share of the Common Stock so  reported;  or (c) in all
other cases, the fair market value of a share of Common Stock as determined by a
nationally  recognized-independent  appraiser  selected in good faith by Holders
holding a majority of the principal amount of Notes then outstanding.
<PAGE>

              "Warrant  Shares"  means  shares of Common  Stock  underlying  the
Warrant.

              c.     FORM OF PAYMENT; DELIVERY OF CERTIFICATES.

              (i)    The  Lender  shall  pay  the  Loan  Amount  by   delivering
immediately  available good funds in United States Dollars to the Company on the
Closing Date.

              (ii)   No later than one (1) business  day from the Closing  Date,
the Company shall deliver the Certificates,  each duly executed on behalf of the
Company to the Lender.

              (iii)  By  signing  this  Agreement,  each of the  Lender  and the
Company agrees to all of the terms and conditions of the Transaction  Documents,
all of the provisions of which are  incorporated  herein by this reference as if
set forth in full.

              d.     METHOD OF PAYMENT. Payment of the Loan Amount shall be made
by wire transfer of funds to:

                     LAW OFFICE OF ISAAC M. ZUCKER, PLLC
                     ATTORNEY TRUST ACCOUNT
                     BANK: CITIBANK, N.A.
                     ADDRESS: 600 OLD COUNTRY ROAD
                     GARDEN CITY, NY 11530
                     ABA ROUTING NO.: 021001486
                     ACCOUNT NO.: 065641284

       The Company shall issue disbursement  instructions to effectuate transfer
of funds from the above-referenced account.

              2.     LENDER   REPRESENTATIONS,   WARRANTIES,   ETC.;  ACCESS  TO
INFORMATION; INDEPENDENT INVESTIGATION.

              The Lender  represents  and warrants to, and  covenants and agrees
with, the Company as follows:

              a.     Without  limiting  Lender's  right to sell  the  Securities
pursuant to an effective  registration statement or otherwise in compliance with
the 1933 Act, the Lender is purchasing  the  Securities  for its own account for
investment  only and not with a view  towards  the public  sale or  distribution
thereof and not with a view to or for sale in connection  with any  distribution
thereof.

              b.     The Lender is (i) an "accredited  investor" as that term is
defined in Rule 501 of the General Rules and  Regulations  under the 1933 Act by
reason of Rule  501(a)(3),  (ii)  experienced in making  investments of the kind
described in this Agreement and the related documents,  (iii) able, by reason of
the  business  and  financial  experience  of its  officers  (if an entity)  and
professional  advisors (who are not affiliated with or compensated in any way by
the  Company or any of its  Affiliates  or selling  agents),  to protect its own
interests in connection with the transactions

<PAGE>

described  in this  Agreement,  and the related  documents,  and to evaluate the
merits and risks of an investment in the Securities, and (iv) able to afford the
entire loss of its investment in the Securities.

              c.     All  subsequent  offers and sales of the  Securities by the
Lender shall be made pursuant to registration of the relevant  Securities  under
the 1933 Act or pursuant to an exemption from registration.

              d.     The  Lender  understands  that  the  Securities  are  being
offered and sold to it in reliance on specific  exemptions from the registration
requirements  of the 1933 Act and state  securities laws and that the Company is
relying upon the truth and accuracy of, and the Lender's  compliance  with,  the
representations,  warranties, agreements,  acknowledgments and understandings of
the Lender  set forth  herein in order to  determine  the  availability  of such
exemptions and the eligibility of the Lender to acquire the Securities.

              e.     The Lender and its advisors,  if any,  have been  furnished
with or have  been  given  access to all  materials  relating  to the  business,
finances and  operations of the Company and materials  relating to the offer and
sale of the Securities which have been requested by the Lender,  including those
set forth on in any annex attached hereto. The Lender and its advisors,  if any,
have been  afforded  the  opportunity  to ask  questions  of the Company and its
management  and have  received  complete  and  satisfactory  answers to any such
inquiries. Without limiting the generality of the foregoing, the Lender has also
had the  opportunity  to obtain  and to review  the  Company's  filings on EDGAR
listed on ANNEX IV hereto (the documents  listed on such Annex IV, to the extent
available  on EDGAR or  otherwise  provided to the Lender as  indicated  on said
Annex IV, collectively, the "Company's SEC Documents").

              f.     The  Lender   understands   that  its   investment  in  the
Securities involves a high degree of risk.

              g.     The Lender hereby  represents  that, in connection with its
purchase of the Securities, it has not relied on any statement or representation
by the Company or any of its  officers,  directors and employees or any of their
respective attorneys or agents, except as specifically set forth herein.

              h.     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 Securities.

              i.     This  Agreement  and the other  Transaction  Agreements  to
which the Lender is a party, and the  transactions  contemplated  thereby,  have
been duly and validly authorized, executed and delivered on behalf of the Lender
and are valid and binding  agreements  of the Lender  enforceable  in accordance
with their respective terms,  subject as to enforceability to general principles
of equity and to  bankruptcy,  insolvency,  moratorium  and other  similar  laws
affecting the enforcement of creditors' rights generally.
<PAGE>

              3.     COMPANY  REPRESENTATIONS,  ETC. The Company  represents and
warrants to the Lender as of the date  hereof and as of the  Closing  Date that,
except as otherwise  provided in the  Disclosure  Annex or in the  Company's SEC
Documents:

              a.     RIGHTS OF OTHERS AFFECTING THE  TRANSACTIONS.  There are no
preemptive  rights of any  shareholder  of the Company,  as such, to acquire the
Note, the Issued Shares or the Additional Issued Shares in the event such shares
are issued.  No party other than a Lender has a currently  exercisable  right of
first  refusal  which  would  be  applicable  to any or all of the  transactions
contemplated by the Transaction Agreements.

              b.     STATUS.  The  Company  is  a  corporation  duly  organized,
validly  existing  and  in  good  standing  under  the  laws  of  the  State  of
Incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign  corporation to do business and is in good standing in each jurisdiction
where the nature of the business  conducted  or property  owned by it makes such
qualification necessary,  other than those jurisdictions in which the failure to
so qualify would not have or result in a Material  Adverse  Effect.  The Company
has registered its stock and is obligated to file reports pursuant to Section 12
or Section  15(d) of the  Securities  and Exchange Act of 1934,  as amended (the
"1934 Act"). The Common Stock is, or immediately following the Closing Date will
be, quoted on the Principal Trading Market.  The Company has received no notice,
either oral or written,  with respect to the continued eligibility of the Common
Stock for such quotation on the Principal  Trading  Market,  and the Company has
maintained all requirements on its part for the continuation of such quotation.

              c.     AUTHORIZED SHARES.

       (i)    The   authorized   capital  stock  of  the  Company   consists  of
250,000,000  shares of Common  Stock,  $0.01 par value,  63,510,467 of which are
outstanding as of the date hereof.

       (ii)   All issued and  outstanding  shares of Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable. The Company
has  sufficient  authorized  and  unissued  shares  of  Common  Stock  as may be
necessary to affect the issuance of the Shares on the Closing Date.

       (iii)  As of the Closing Date, the Shares shall have been duly authorized
by all necessary  corporate action on the part of the Company,  and, when issued
on the Closing Date or pursuant to other relevant  provisions of the Transaction
Agreements, in each case in accordance with their respective terms, will be duly
and  validly  issued,  fully paid and  non-assessable  and will not  subject the
Holder thereof to personal liability by reason of being such Holder.

              d.     TRANSACTION  AGREEMENTS AND STOCK.  This Agreement and each
of the other Transaction Agreements,  and the transactions contemplated thereby,
have been duly and validly  authorized by the Company,  this  Agreement has been
duly executed and  delivered by the Company and this  Agreement is, and the Note
and each of the other Transaction Agreements, when executed and delivered by the
Company,  will be, valid and binding  agreements of the Company  enforceable  in
accordance with their respective terms,  subject as to enforceability to general
principles of equity and

<PAGE>

to  bankruptcy,  insolvency,  moratorium,  and other similar laws  affecting the
enforcement of creditors' rights generally.

              e.     NON-CONTRAVENTION.  The  execution  and  delivery  of  this
Agreement  and each of the other  Transaction  Agreements  by the  Company,  the
issuance of the  Securities,  and the  consummation  by the Company of the other
transactions  contemplated  by this  Agreement,  each of the Notes and the other
Transaction  Agreements  do not and will not conflict with or result in a breach
by the Company of any of the terms or  provisions  of, or  constitute  a default
under (i) the certificate of  incorporation  or by-laws of the Company,  each as
currently  in effect,  (ii) any  indenture,  mortgage,  deed of trust,  or other
material  agreement or instrument to which the Company is a party or by which it
or any of its  properties or assets are bound,  including any listing  agreement
for the Common Stock except as herein set forth, or (iii) to its knowledge,  any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or  order  of any  court,  United  States  federal  or  state  regulatory  body,
administrative  agency, or other governmental body having  jurisdiction over the
Company or any of its  properties  or assets,  except such  conflict,  breach or
default which would not have or result in a Material Adverse Effect.

              f.     APPROVALS.  No  authorization,  approval  or consent of any
court, governmental body, regulatory agency,  self-regulatory  organization,  or
stock  exchange or market or the  shareholders  of the Company is required to be
obtained by the  Company  for the  issuance  and sale of the  Securities  to the
Lender as contemplated by this Agreement, except such authorizations,  approvals
and consents that have been obtained.

              g.     FILINGS. None of the Company's SEC Documents contained,  at
the time they were filed,  any untrue statement of a material fact or omitted to
state any material fact  required to be stated  therein or necessary to make the
statements  made  therein in light of the  circumstances  under  which they were
made, not misleading.  Since December 31, 2005, the Company has timely filed all
requisite forms,  reports and exhibits thereto,  if any, required to be filed by
the Company with the SEC.

              h.     ABSENCE OF CERTAIN  CHANGES.  Since the Last Audited  Date,
there has been no material adverse change and no Material Adverse Effect, except
as disclosed in the Company's SEC Documents. Since the Last Audited Date, except
as provided in the Company's SEC Documents,  the Company has not (i) incurred or
become  subject to any  material  liabilities  (absolute or  contingent)  except
liabilities  incurred in the ordinary  course of business  consistent  with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material  obligation  or  liability  (absolute  or  contingent),  other than
current liabilities paid in the ordinary course of business consistent with past
practices;  (iii) declared or made any payment or  distribution of cash or other
property to  shareholders  with  respect to its capital  stock,  or purchased or
redeemed,  or made any  agreements  to  purchase  or  redeem,  any shares of its
capital stock; (iv) sold,  assigned or transferred any other tangible assets, or
canceled  any debts  owed to the  Company  by any  third  party or claims of the
Company  against  any third  party,  except in the  ordinary  course of business
consistent with past practices; (v) waived any rights of material value, whether
or not in the ordinary course of business,  or suffered the loss of any material
amount of existing business;  (vi) made any increases in employee  compensation,
except in the ordinary course of business  consistent  with past  practices;  or
(vii)

<PAGE>

experienced  any material  problems with labor or management in connection  with
the terms and conditions of their employment.

              i.     FULL  DISCLOSURE.  To the best of the Company's  knowledge,
there is no fact known to the Company  (other than general  economic  conditions
known to the public  generally or as disclosed in the Company's  SEC  Documents)
that has not been  disclosed in writing to the Lender that would  reasonably  be
expected to have or result in a Material Adverse Effect.

              j.     ABSENCE  OF   LITIGATION.   There  is  no   action,   suit,
proceeding,  inquiry or  investigation  before or by any court,  public board or
body  pending  or,  to the  knowledge  of the  Company,  threatened  against  or
affecting the Company before or by any governmental authority or nongovernmental
department,  commission,  board, bureau,  agency or instrumentality or any other
person, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would  adversely  affect the validity or  enforceability
of, or the authority or ability of the Company to perform its obligations under,
any of the Transaction  Agreements.  The Company is not aware of any valid basis
for any such claim that (either  individually or in the aggregate with all other
such events and  circumstances)  could reasonably be expected to have a Material
Adverse  Effect.  There are no  outstanding or  unsatisfied  judgments,  orders,
decrees,  writs,  injunctions or stipulations to which the Company is a party or
by which it or any of its  properties  is bound,  that  involve the  transaction
contemplated  herein or that,  alone or in the  aggregate,  could  reasonably be
expect to have a Material Adverse Effect.

              k.     ABSENCE  OF  EVENTS  OF  DEFAULT.  Except  as set  forth in
Section  3(e)  and  3(g)  hereof,  (i)  neither  the  Company  nor  any  of  its
subsidiaries  is in default in the  performance  or  observance  of any material
obligation,   agreement,   covenant  or  condition  contained  in  any  material
indenture,  mortgage, deed of trust or other material agreement to which it is a
party or by which its  property  is bound,  and (ii) no Event of Default (or its
equivalent term), as defined in the respective agreement to which the Company or
its subsidiary is a party, and no event which,  with the giving of notice or the
passage of time or both,  would  become an Event of Default  (or its  equivalent
term) (as so defined in such agreement),  has occurred and is continuing,  which
would have a Material Adverse Effect.

              l.     ABSENCE  OF  CERTAIN  COMPANY  CONTROL  PERSON  ACTIONS  OR
EVENTS.  To the Company's  knowledge,  none of the following has occurred during
the past five (5) years with respect to a Company Control Person:

       (1)    A  petition  under  the  federal  bankruptcy  laws  or  any  state
       insolvency  law was filed by or against,  or a receiver,  fiscal agent or
       similar  officer was appointed by a court for the business or property of
       such Company Control Person, or any partnership in which he was a general
       partner at or within two years  before  the time of such  filing,  or any
       corporation or business  association of which he was an executive officer
       at or within two years before the time of such filing;

       (2)    Such Company Control Person was convicted in a criminal proceeding
       or is a named subject of a pending criminal proceeding (excluding traffic
       violations and other minor offenses);
<PAGE>

       (3)    Such Company Control Person was the subject of any order, judgment
       or decree, not subsequently reversed,  suspended or vacated, of any court
       of competent jurisdiction, permanently or temporarily enjoining him from,
       or otherwise limiting, the following activities:

              (i)    acting, as an investment  advisor,  underwriter,  broker or
              dealer in  securities,  or as an  affiliated  person,  director or
              employee  of  any  investment  company,  bank,  savings  and  loan
              association  or  insurance   company,   as  a  futures  commission
              merchant, introducing broker, commodity trading advisor, commodity
              pool  operator,  floor broker,  any other Person  regulated by the
              Commodity  Futures Trading  Commission  ("CFTC") or engaging in or
              continuing  any  conduct  or  practice  in  connection  with  such
              activity;

              (ii)   engaging in any type of business practice; or

              (iii)  engaging in any activity in connection with the purchase or
              sale of any  security  or  commodity  or in  connection  with  any
              violation  of  federal  or  state   securities   laws  or  federal
              commodities laws;

       (4)    Such Company Control Person was the subject of any order, judgment
       or decree,  not  subsequently  reversed,  suspended  or  vacated,  of any
       federal or state authority barring,  suspending or otherwise limiting for
       more than 60 days the right of such Company  Control  Person to engage in
       any activity described in paragraph (3) of this item, or to be associated
       with Persons engaged in any such activity; or

       (5)    Such  Company  Control  Person  was found by a court of  competent
       jurisdiction in a civil action or by the CFTC or SEC to have violated any
       federal or state securities law, and the judgment in such civil action or
       finding by the CFTC or SEC has not been subsequently reversed, suspended,
       or vacated.

       m.     NO UNDISCLOSED LIABILITIES OR EVENTS. To the best of the Company's
knowledge,  the  Company  has no  liabilities  or  obligations  other than those
disclosed in the Transaction  Agreements or the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Last Audited
Date,  or which  individually  or in the  aggregate,  do not or would not have a
Material Adverse Effect.  No event or circumstances  has occurred or exists with
respect  to the  Company  or its  properties,  business,  operations,  condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under  consideration  by the Board of Directors or the executive  officers of
the Company  which  proposal  would (x) change the  articles or  certificate  of
incorporation  or other  charter  document  or by-laws of the  Company,  each as
currently in effect,  with or without shareholder  approval,  which change would
reduce or otherwise  adversely  affect the rights and powers of the shareholders
of the Common Stock or (y)  materially  or  substantially  change the  business,
assets or capital of the Company, including its interests in subsidiaries.
<PAGE>

       n.     NO  INTEGRATED  OFFERING.  Neither  the  Company  nor  any  of its
Affiliates  nor any  Person  acting  on its or their  behalf  has,  directly  or
indirectly,  at any time since September 1, 2005, made any offer or sales of any
security or solicited any offers to buy any security  under  circumstances  that
would  eliminate the  availability  of the  exemption  from  registration  under
Regulation  D in  connection  with  the  offer  and  sale of the  Securities  as
contemplated hereby.

       o.     DILUTION.  The Issued Shares and the  Additional  Issued Shares in
the event such  shares are  issued may have a dilutive  effect on the  ownership
interests  of the other  shareholders  (and  Persons  having the right to become
shareholders)  of the Company.  The Company's  executive  officers and directors
have studied and fully understand the nature of the Securities being sold hereby
and  recognize  that they have such a potential  dilutive  effect.  The board of
directors of the Company has  concluded,  in its good faith  business  judgment,
that such issuance is in the best interests of the Company.

       p.     RESERVED.

       q.     FEES TO  BROKERS,  FINDERS  AND  OTHERS.  The Company has taken no
action  which  would  give  rise  to any  claim  by  any  Person  for  brokerage
commission,  finder's  fees or  similar  payments  by  Lender  relating  to this
Agreement  or  the  transactions  contemplated  hereby.  Lender  shall  have  no
obligation with respect to such fees or with respect to any claims made by or on
behalf of other Persons for fees of a type  contemplated  in this paragraph that
may be due in connection with the transactions  contemplated hereby. The Company
shall  indemnify  and hold  harmless each of Lender,  its  employees,  officers,
directors,  agents,  and partners,  and their  respective  Affiliates,  from and
against all claims,  losses,  damages, costs (including the costs of preparation
and  attorney's  fees) and  expenses  suffered in respect of any such claimed or
existing fees, as and when incurred.

       r.     CONFIRMATION.  The Company  confirms  that all  statements  of the
Company  contained  herein shall  survive  acceptance  of this  Agreement by the
Lender.  The Company  agrees that,  if any events occur or  circumstances  exist
prior to the Closing Date or the release of the Loan Amount to the Company which
would make any of the Company's representations, warranties, agreements or other
information set forth herein  materially  untrue or materially  inaccurate as of
such date, the Company shall immediately  notify the Lender (directly or through
its  counsel,  if any) in writing  prior to such date of such  fact,  specifying
which representation, warranty or covenant is affected and the reasons therefor.

       s.     AUTHORIZATION;   ENFORCEMENT.   The  Company  has  the   requisite
corporate  power and authority to enter into and to consummate the  transactions
contemplated  by each of the  Transaction  Agreements and otherwise to carry out
its  obligations  thereunder.   The  execution  and  delivery  of  each  of  the
Transaction  Agreements  by  the  Company  and  the  consummation  by it of  the
transactions  contemplated  thereby have been duly  authorized  by all necessary
action on the part of the  Company  and no  further  action is  required  by the
Company in  connection  therewith  other than in  connection  with the  Required
Approvals. Each Transaction Agreement has been (or upon delivery will have been)
duly  executed by the Company and, when  delivered in accordance  with the terms
hereof,  will  constitute  the  valid  and  binding  obligation  of the  Company
enforceable against the Company in

<PAGE>

accordance  with its terms  except  (i) as  limited  by  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  and other laws of general  application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.

       t.     SEC  REPORTS;  FINANCIAL  STATEMENTS.  Other  than  as  previously
disclosed to the Lender,  the Company has filed all reports required to be filed
by it under the  Securities  Act and the  Exchange  Act,  including  pursuant to
Section 13(a) or 15(d) thereof,  for the two years preceding the date hereof (or
such shorter  period as the Company was  required by law to file such  material)
(the foregoing  materials,  including the exhibits thereto,  being  collectively
referred to herein as the "SEC  REPORTS")  on a timely  basis or has  received a
valid  extension of such time of filing and has filed any such SEC Reports prior
to the expiration of any such extension.  As of their respective  dates, the SEC
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 SEC  Reports,  when 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,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The  financial  statements  of the Company  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  United  States
generally  accepted  accounting  principles applied on a consistent basis during
the periods  involved  ("GAAP"),  except as may be  otherwise  specified in such
financial  statements or the notes thereto and except that  unaudited  financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries  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.

       u.     LABOR  RELATIONS.  No  material  labor  dispute  exists or, to the
knowledge of the Company,  is imminent  with respect to any of the  employees of
the Company which could  reasonably be expected to result in a Material  Adverse
Effect.

       v.     COMPLIANCE.  Neither  the  Company  nor any  Subsidiary  (i) is in
default  under or in violation  of (and no event has occurred  that has not been
waived that, with notice or lapse of time or both,  would result in a default by
the Company or any  Subsidiary  under),  nor has the  Company or any  Subsidiary
received  notice  of a  claim  that  it is in  default  under  or  that it is in
violation of, any indenture,  loan or credit agreement or any other agreement or
instrument  to which it is a party  or by which it or any of its  properties  is
bound  (whether or not such default or violation  has been  waived),  (ii) is in
violation of any order of any court,  arbitrator or governmental  body, or (iii)
is or  has  been  in  violation  of  any  statute,  rule  or  regulation  of any
governmental authority, including without limitation all foreign, federal, state
and local laws  applicable to its business except in each case as could not have
a Material Adverse Effect.

       w.     REGULATORY PERMITS.  The Company and the Subsidiaries  possess all
certificates,  authorizations  and permits  issued by the  appropriate  federal,
state,  local or foreign  regulatory  authorities  necessary  to  conduct  their
respective  businesses,  except where the failure to possess such permits  could
not have or  reasonably  be  expected  to result in a  Material  Adverse  Effect
("MATERIAL

<PAGE>

PERMITS"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

       x.     TITLE TO ASSETS.  The Company and the  Subsidiaries  have good and
marketable  title in fee  simple  to all  real  property  owned by them  that is
material  to the  business  of the  Company  and the  Subsidiaries  and good and
marketable title in all personal  property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens,  except for 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 the  Subsidiaries  and Liens for the payment of
federal,  state or other taxes,  the payment of which is neither  delinquent nor
subject to penalties.  Any real property and facilities  held under lease by the
Company  and the  Subsidiaries  are held by them  under  valid,  subsisting  and
enforceable leases of which the Company and the Subsidiaries are in compliance.

       y.     PATENTS AND TRADEMARKS.  The Company and the Subsidiaries have, or
have rights to use,  all patents,  patent  applications,  trademarks,  trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights  necessary  or  material  for use in  connection  with  their  respective
businesses and which the failure to so have could have a Material Adverse Effect
(collectively,  the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any
Subsidiary has received a written notice that the  Intellectual  Property Rights
used by the Company or any  Subsidiary  violates or infringes upon the rights of
any Person.  To the  knowledge of the Company,  all such  Intellectual  Property
Rights are enforceable  and there is no existing  infringement by another Person
of any of the Intellectual Property Rights of others.

       z.     INSURANCE.  The  Company  and  the  Subsidiaries  are  insured  by
insurers of recognized  financial  responsibility  against such losses and risks
and in such amounts as are prudent and customary in the  businesses in which the
Company and the Subsidiaries are engaged,  at least equal to the Loan Amount. To
the best of  Company's  knowledge,  such  insurance  contracts  and policies are
accurate and complete.  Neither the Company nor any Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage  expires or to obtain similar  coverage from similar insurers
as may be necessary to continue its business  without a significant  increase in
cost.

       aa.    TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as disclosed in
the SEC  Reports,  none of the  officers or directors of the Company and, to the
knowledge  of the Company,  none of the  employees of the Company is presently a
party to any  transaction  with the  Company or any  Subsidiary  (other than for
services  as  employees,  officers  and  directors),   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 officer,  director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner,  in each case in excess of $50,000 other than (i) for payment of salary
or  consulting  fees for  services  rendered,  (ii)  reimbursement  for expenses
incurred  on behalf of the  Company  and  (iii)  for  other  employee  benefits,
including stock option agreements under any stock option plan of the Company.
<PAGE>

       bb.    SARBANES-OXLEY;  INTERNAL ACCOUNTING  CONTROLS.  The Company is in
material  compliance with all provisions of the Sarbanes-Oxley Act of 2002 which
are  applicable to it as of the Closing Date.  The Company and the  Subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (i)  transactions  are executed in  accordance  with
management's general or specific authorizations,  (ii) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
GAAP and to maintain asset  accountability,  (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded  accountability  for assets is compared with the existing assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.  The Company has established disclosure controls and procedures (as
defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(e))  for the Company and
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information relating to the Company,  including its Subsidiaries,  is made known
to the certifying officers by others within those entities,  particularly during
the period in which the Company's most recently filed periodic  report under the
Exchange Act, as the case may be, is being  prepared.  The Company's  certifying
officers  have  evaluated  the  effectiveness  of  the  Company's  controls  and
procedures  as of the date prior to the filing date of the most  recently  filed
periodic report under the Exchange Act (such date, the "EVALUATION  DATE").  The
Company  presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying  officers about the  effectiveness  of the
disclosure  controls  and  procedures  based  on  their  evaluations  as of  the
Evaluation  Date.  Since the  Evaluation  Date,  there have been no  significant
changes  in the  Company's  internal  controls  (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge,
in  other  factors  that  could  significantly  affect  the  Company's  internal
controls.

       cc.    SOLVENCY.  Based on the  financial  condition of the Company as of
the  Closing  Date after  giving  effect to the  receipt  by the  Company of the
proceeds  from the sale of the  Securities  hereunder,  (i) the  Company's  fair
saleable value of its assets exceeds the amount that will be required to be paid
on or  in  respect  of  the  Company's  existing  debts  and  other  liabilities
(including  known  contingent  liabilities)  as they mature;  (ii) the Company's
assets do not constitute unreasonably small capital to carry on its business for
the  current  fiscal  year as now  conducted  and as  proposed  to be  conducted
including  its  capital  needs  taking  into  account  the  particular   capital
requirements  of the business  conducted by the Company,  and projected  capital
requirements and capital  availability  thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets,  after taking into account all anticipated  uses of
the cash,  would be  sufficient  to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not intend to incur
debts  beyond its ability to pay such debts as they mature  (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).  The
Company has no knowledge of any facts or circumstances  which lead it to believe
that it will file for  reorganization  or  liquidation  under the  bankruptcy or
reorganization  laws of any jurisdiction  within one year from the Closing Date.
The  financial  statements  of the Company set forth as of the dates thereof all
outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments.  For the purposes of
this Agreement, "INDEBTEDNESS" shall mean (a) any liabilities for borrowed money
or amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties,  endorsements and other
contingent  obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected  in the  Company's  balance  sheet (or the notes

<PAGE>

thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar  transactions in the ordinary  course of business;  and
(c) the  present  value of any lease  payments  in excess of  $50,000  due under
leases required to be capitalized in accordance  with GAAP.  Neither the Company
nor any Subsidiary is in default with respect to any Indebtedness.

       dd.    TAX STATUS.  Except for matters that would not, individually or in
the  aggregate,  have or reasonably be expected to result in a Material  Adverse
Effect, the Company and each Subsidiary has filed all necessary  federal,  state
and foreign  income and  franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.

       ee.    NO  DISAGREEMENTS  WITH  ACCOUNTANTS  AND  LAWYERS.  There  are no
disagreements of any kind presently existing,  or reasonably  anticipated by the
Company to arise,  between the  accountants  and lawyers  formerly or  presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers.  By making this  representation the Company does
not, in any manner,  waive the attorney/client  privilege or the confidentiality
of the communications between the Company and its lawyers.

       ff.    ACCOUNTANTS.  The Company's  accountants are Markum & Kleigman. To
the Company's knowledge, such accountants,  who the Company expects will express
their  opinion  with  respect  to the  financial  statements  for the year ended
December 31, 2005, are a registered  public  accounting  firm as required by the
Securities Act.

              4.     CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

              a.     TRANSFER RESTRICTIONS. The Lender acknowledges that (1) the
Securities  have not been and are not being  registered  under the provisions of
the 1933 Act and, except as provided in the  Registration  Rights  Provisions or
otherwise included in an effective registration  statement,  the Shares have not
been and are not being registered under the 1933 Act, and may not be transferred
unless (A)  subsequently  registered  thereunder  or (B) the  Lender  shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Securities to be sold
or  transferred  may be sold or  transferred  pursuant to an exemption from such
registration;  (2) any  sale of the  Securities  made in  reliance  on Rule  144
promulgated  under the 1933 Act ("Rule 144") may be made only in accordance with
the terms of said Rule and further,  if said Rule is not applicable,  any resale
of such  Securities  under  circumstances  in which the  seller,  or the  Person
through whom the sale is made, may be deemed to be an underwriter,  as that term
is used in the 1933 Act, may require  compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither
the  Company  nor any other  Person  is under any  obligation  to  register  the
Securities (other than pursuant to the Registration Rights Provisions) under the
1933 Act or to comply with the terms and conditions of any exemption thereunder.

              b.     RESTRICTIVE  LEGEND.  The  Lender  acknowledges  and agrees
that, until such time as the relevant Shares have been registered under the 1933
Act,  as  contemplated  by  the  Registration  Rights  Provisions  and  sold  in
accordance with an effective  Registration  Statement or otherwise in accordance
with  another  effective  registration  statement,  the  certificates  and other

<PAGE>

instruments  representing any of the Securities shall bear a restrictive  legend
in  substantially  the following form (and a  stop-transfer  order may be placed
against transfer of any such Securities):

       THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
       OF 1933, AS AMENDED,  OR THE SECURITIES  LAWS OF ANY STATE AND MAY
       NOT BE SOLD OR OFFERED  FOR SALE IN THE  ABSENCE  OF AN  EFFECTIVE
       REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL
       OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
       IS NOT REQUIRED.

              c.     FILINGS.  The  Company  undertakes  and  agrees to make all
necessary  filings in connection  with the sale of the  Securities to the Lender
under any United States laws and  regulations  applicable to the Company,  or by
any  domestic  securities  exchange  or  trading  market,  and to provide a copy
thereof to the Lender promptly after such filing.

              d.     REPORTING STATUS.  So long as the Lender  beneficially owns
any of the Shares or has a security interest in the Pledged Shares,  the Company
shall file all reports  required to be filed with the SEC pursuant to Section 13
or 15(d) of the 1934 Act, shall take all reasonable  action under its control to
ensure that adequate current public information with respect to the Company,  as
required  in  accordance  with  Rule  144(c)(2)  of the 1933  Act,  is  publicly
available,  and shall not  terminate  its status as an issuer  required  to file
reports  under the 1934 Act even if the 1934 Act or the  rules  and  regulations
thereunder would permit such  termination.  The Company will take all reasonable
action under its control to maintain the  continued  listing and  quotation  and
trading of its Common Stock  (including,  without  limitation,  all  Registrable
Securities) on the Principal Trading Market or a listing on the NASDAQ/Small Cap
or  National  Markets  and, to the extent  applicable  to it, will comply in all
material  respects with the Company's  reporting,  filing and other  obligations
under the by-laws or rules of the Principal  Trading  Market and/or the National
Association of Securities  Dealers,  Inc., as the case may be,  applicable to it
for so long as the Lender  beneficially owns any of the Shares or has a security
interest in the Pledged Shares.

              e.     USE OF PROCEEDS. The Company will use the proceeds received
hereunder  (excluding  amounts paid by the Company for legal fees in  connection
with the sale of the Securities) for general corporate purposes.

              f.     ISSUED  SHARES.  The Company agrees to issue or cause to be
transferred  the  Issued  Shares  to the  Lender  on the  Closing  Date  and the
Additional  Issued  Shares  on  December  29,  2006 in the event the Note is not
repaid in its entirety  before such date.  Certain terms  relating to the Issued
Shares the Additional  Issued Shares are provided in ANNEX VIII annexed  hereto,
the  terms of which are  incorporated  herein by  reference.  All of the  Issued
Shares the  Additional  Issued  Shares in the event such shares are issued shall
have Registration Rights Provisions.

              g.     WARRANT.  The  Company  agrees  to  issue  a  warrant  (the
"Warrant") to the Lender on the Closing Date.  The terms relating to the Warrant
are provided in ANNEX VII annexed

<PAGE>

hereto,  the terms of which are  incorporated  herein by  reference.  All of the
Warrant Shares shall have Registration Rights Provisions.

              h.     PIGGY-BACK RIGHTS; RULE 144.

              (i)    The Holder shall have piggy-back  registration  rights with
respect to the Registrable Securities subject to the conditions set forth below.
If the Company  participates  (whether voluntarily or by reason of an obligation
to a third party) in the  registration of any shares of the Company's stock, the
Company  shall give  written  notice  thereof to the Holder and the Holder shall
have the right,  exercisable  within ten (10) Trading Days after receipt of such
notice,  to demand  inclusion  of all or a portion of the  Holder's  Registrable
Securities  in  such   registration   statement  (a   "Subsequent   Registration
Statement"),  without any cutbacks.  If the Holder exercises such election,  the
Registrable  Securities  so  designated  shall be included  in the  registration
statement  (without any  holdbacks)  at no cost or expense to the Holder  (other
than any commissions,  if any,  relating to the sale of Holder's  shares).  Each
Holder's  rights  under this Section  4(g)(i)  shall expire at such time as such
Holder can sell all of such Holder's remaining Registrable Securities under Rule
144 (as defined below) without volume or other  restrictions or limit.  Anything
to  the  contrary   notwithstanding,   a  registration  statement  covering  the
Registrable Securities shall be filed no later than November 1, 2006.

              (ii)   The  parties  acknowledge  that the  damages  which  may be
incurred by the Holder if the Company  does not  fulfill its  obligations  under
subparagraph  (i) above,  which will  affect  the  Holder's  ability to sell the
shares,  may be difficult to ascertain.  If either (A) the Company fails to give
the Lender the notice referred to in the immediately preceding  subparagraph (i)
which results in any of the Holder's shares not being included in the Subsequent
Registration  Statement or (B) after giving such  notice,  the Company  fails to
include all of the  Holder's  shares (to the extent  requested by the Holder) in
the  Subsequent  Registration  Statement  or (C)  the  Company  fails  to file a
registration statement covering the Registrable Securities on or before November
15, 2006, then the Company will make payment to the Lender, for each Computation
Period  (as  defined  below) an amount  equal to 2% of the  aggregate  principal
amount  of  the  Note  then  outstanding  (the  "Periodic  Amount").   The  term
"Computation  Period"  means  each  thirty  (30) day  period  commencing  on the
effective date of the Subsequent  Registration  Statement and ending on the date
on which there are one or more effective  registration  statements  covering the
Lender's sale of all of the Holder's  shares.  The Periodic  Amount shall be due
without  further  demand or notice from the Lender.  The parties  agree that the
amounts  payable  pursuant to the  foregoing  provisions  of this  Section  4(g)
represent a reasonable  estimate on the part of the  parties,  as of the date of
this Agreement, of the amount of such damages.

              (iii)  With a view to making  available to the Holder the benefits
of Rule  144  promulgated  under  the  1933  Act or any  other  similar  rule or
regulation of the SEC that may at any time permit  Holder to sell  securities of
the Company to the public without registration  (collectively,  "Rule 144"), the
Company agrees to:

              (a)    make and keep public information available,  as those terms
are understood and defined in Rule 144;
<PAGE>

              (b)    file with the SEC in a timely  manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act; and

              (c)    furnish   to  the   Holder  so  long  as  such  party  owns
Registrable  Securities,  promptly upon request,  (i) a written statement by the
Company that it has complied  with the reporting  requirements  of Rule 144, the
1933 Act and the 1934 Act, (ii) if not  available on the SEC's EDGAR  system,  a
copy of the most recent annual or quarterly report of the Company and such other
reports and  documents so filed by the Company and (iii) such other  information
as may be  reasonably  requested  to permit the  Holder to sell such  securities
pursuant to Rule 144 without registration; and

              (d)    at the  request  of any  Holder  then  holding  Registrable
Securities,  give the Transfer  Agent  instructions  (supported by an opinion of
Company  counsel,  if required or requested by the Transfer Agent) to the effect
that, upon the Transfer Agent's receipt from such Holder of

       (i)    a certificate (a "Rule 144  Certificate")  certifying (A) that the
       Holder's  holding period (as determined in accordance with the provisions
       of Rule  144) for the  Shares  which  the  Holder  proposes  to sell (the
       "Securities  Being  Sold")  is not less  than (1) year and (B) as to such
       other matters as may be appropriate in accordance with Rule 144 under the
       Securities Act, and

       (ii)   an opinion of counsel acceptable to the Company that, based on the
       Rule 144  Certificate,  Securities Being Sold may be sold pursuant to the
       provisions of Rule 144, even in the absence of an effective  registration
       statement,

the Transfer  Agent is to effect the transfer of the  Securities  Being Sold and
issue to the Lender(s) or transferee(s)  thereof one or more stock  certificates
representing  the  transferred  Securities  Being Sold  without any  restrictive
legend and without  recording any  restrictions on the  transferability  of such
shares on the Transfer  Agent's books and records (except to the extent any such
legend or restriction results from facts other than the identity of the relevant
Holder,  as the seller or  transferor  thereof,  or the  status,  including  any
relevant  legends or  restrictions,  of the shares of the Securities  Being Sold
while  held by the  Lender).  If the  Transfer  Agent  reasonably  requires  any
additional  documentation at the time of the transfer, the Company shall deliver
or cause to be delivered all such reasonable additional  documentation as may be
necessary to effectuate the issuance of an unlegended certificate.

              (iv)   Notwithstanding the foregoing,  if at any time or from time
to time  after the date of  effectiveness  of the  registration  statement,  the
Company notifies the Holder in writing of the existence of a Potential  Material
Event (as defined  below),  the Holder  shall not offer or sell any  Registrable
Securities,  or engage in any other  transaction  involving  or  relating to the
Registrable Securities,  from the time of the giving of notice with respect to a
Potential  Material  Event  until the Holder  receives  written  notice from the
Company that such  Potential  Material  Event  either has been  disclosed to the
public or no longer constitutes a Potential Material Event;  PROVIDED,  HOWEVER,
that the  Company  may not so suspend  such right  other than during a Permitted
Suspension  Period.  The  term  "Potential  Material  Event"  means  any  of the
following:  (i) the possession by the Company of material  information  not ripe
for  disclosure  in a  registration  statement,  which  shall  be  evidenced  by
determinations  in good  faith by the Board of  Directors  of the  Company  that
disclosure of such

<PAGE>

information in the  registration  statement would be detrimental to the business
and affairs of the Company;  or (ii) any material  engagement or activity by the
Company which would, in the good faith  determination  of the Board of Directors
of the Company, be adversely affected by disclosure in a registration  statement
at  such  time,  which  determination  shall  be  accompanied  by a  good  faith
determination  by the Board of Directors  of the Company  that the  registration
statement  would  be  materially   misleading   absent  the  inclusion  of  such
information.

              i.     PUBLICITY,  FILINGS,  RELEASES,  ETC.  Each of the  parties
agrees that it will not disseminate any information  relating to the Transaction
Agreements or the transactions contemplated thereby, including issuing any press
releases,  holding any press  conferences or other forums, or filing any reports
(collectively,  "Publicity"),  without giving the other party reasonable advance
notice and an opportunity to comment on the contents thereof. Neither party will
include in any such  Publicity any statement or statements or other  material to
which the other party reasonably  objects,  unless in the reasonable  opinion of
counsel  to the party  proposing  such  statement,  such  statement  is  legally
required to be  included.  In  furtherance  of the  foregoing,  the Company will
provide to the Lender  drafts of the  applicable  text of the first  filing of a
Current  Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K
intended to be made with the SEC which refers to the  Transaction  Agreements or
the transactions  contemplated  thereby as soon as practicable (but at least two
(2)  Trading  Days  before  such  filing  will be made) will not include in such
filing any statement or  statements  or other  material to which the other party
reasonably  objects,  unless in the  reasonable  opinion of counsel to the party
proposing such  statement,  such  statement is legally  required to be included.
Notwithstanding  the  foregoing,  each of the  parties  hereby  consents  to the
inclusion of the text of the Transaction Agreements in filings made with the SEC
as well as any  descriptive  text  accompanying  or part of such filing which is
accurate  and  reasonably  determined  by the  Company's  counsel  to be legally
required.  Notwithstanding,  but subject to, the  foregoing  provisions  of this
Section 4(i), the Company will, after the Closing Date,  promptly file a Current
Report on Form 8-K or,  if  appropriate,  a  quarterly  or annual  report on the
appropriate form, referring to the transactions  contemplated by the Transaction
Agreements.

              5.     TRANSFER AGENT INSTRUCTIONS.

              a.     The Company  warrants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 4(a) hereof,
it will give its transfer agent no instructions  inconsistent  with instructions
to  issue  Common  Stock  to the  Holder  as  contemplated  in  the  Transaction
Agreements.  Except  as so  provided,  the  Shares  shall  otherwise  be  freely
transferable  on the books  and  records  of the  Company  as and to the  extent
provided in this Agreement and the other Transaction Agreements. Nothing in this
Section shall affect in any way the Lender's obligations and agreement to comply
with all applicable securities laws upon resale of the Securities. If the Lender
provides the Company with an opinion of counsel  reasonably  satisfactory to the
Company that  registration of a resale by the Lender of any of the Securities in
accordance  with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act,  the  Company  shall  (except as  provided  in clause (2) of
Section  4(a) of this  Agreement)  permit the  transfer or reissue of the Shares
represented  by one or more  certificates  for Common Stock  without  legend (or
where  applicable,  by  electronic  registration)  in  such  name  and  in  such
denominations as specified by the Lender.
<PAGE>

              b.     The  Company  will  authorize  the  Transfer  Agent to give
information  relating  to the  Company  directly  to the Holder or the  Holder's
representatives  upon the request of the Holder or any such  representative,  to
the extent such information  relates to (i) the status of shares of Common Stock
issued or  claimed  to be issued to the  Holder in  connection  with a Notice of
Exercise  or transfer of Pledged  Shares to the  Holder,  or (ii) the  aggregate
number of outstanding  shares of Common Stock of all  shareholders  (as a group,
and not individually) as of a current or other specified date. At the request of
the Holder, the Company will provide the Holder with a copy of the authorization
so given to the Transfer Agent.

              6.     CLOSING DATE.

              a.     The Closing Date shall occur on the date which is the first
Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run.

              b.     The closing of the Transactions  shall occur on the Closing
Date at the  offices of the Lender and shall take place no later than 3:00 P.M.,
New York time, on such day or such other time as is mutually  agreed upon by the
Company and the Lender.

              7.     CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

              The Lender  understands that the Company's  obligation to sell the
Note,  the Issued  Shares  and the  Additional  Issued  Shares in the event such
shares are issued to the Lender  pursuant to this  Agreement on the Closing Date
is conditioned upon:

              a.     The execution and delivery of this Agreement by the Lender;

              b.     Delivery  by the  Lender to the  Company  of good  funds as
payment in full of an amount  equal to the Loan Amount in  accordance  with this
Agreement;

              c.     The accuracy on such  Closing  Date of the  representations
and  warranties of the Lender  contained in this  Agreement,  each as if made on
such  date,  and the  performance  by the  Lender on or before  such date of all
covenants  and  agreements  of the Lender  required to be performed on or before
such date; and

              d.     There  shall not be in effect any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained.

              8.     CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.

              The Company  understands that the Lender's  obligation to purchase
the Note and the Issued Shares on the Closing Date is conditioned upon:
<PAGE>

              a.     The execution and delivery of this  Agreement and the other
Transaction Agreements by the Company;

              b.     Delivery by the  Company to the Lender of the  Certificates
in accordance with this Agreement;

              c.     The execution and delivery of the Pledge  Agreements by the
Pledgors, together the Mortgage;

              d.     The receipt by the Lender of an  independent  appraisal  in
connection with the Real Estate.

              e.     The   execution   and  delivery  of  the,  the   Subsidiary
Guarantee;

              f.     The execution and delivery of the Warrant;

              g.     The reimbursement of the Transaction Fees;

              h.     The Company publicly traded on the bulletin board exchange;

              i.     The receipt by the Lender of current audited financials for
the Company

              j.     The receipt by the Lender of the Company's consolidated pro
forma and five year projected  financial  statements (income statement,  balance
sheet and cash flow), including acquisition and total capital requirements;

              k.     The  receipt by the Lender of any  agreements  to which the
Company is a party  which in any way  restrict  the conduct and or nature of the
Company's business.

              l.     The accuracy in all  material  respects on the Closing Date
of  the  representations  and  warranties  of  the  Company  contained  in  this
Agreement,  each as if made on such date, and the  performance by the Company on
or before such date of all covenants and  agreements of the Company  required to
be performed on or before such date;

              m.     On the  Closing  Date,  the Lender  shall have  received an
opinion of counsel for the Company,  dated the Closing Date, in form,  scope and
substance reasonably satisfactory to the Lender;

              n.     There  shall not be in effect any law,  rule or  regulation
prohibiting or restricting the transactions  contemplated  hereby,  or requiring
any consent or approval which shall not have been obtained; and

              o.     From and after the date hereof to and including the Closing
Date, each of the following conditions will remain in effect: (i) the trading of
the Common Stock shall not have been  suspended  by the SEC or on the  Principal
Trading Market; (ii) trading in securities generally on the

<PAGE>

Principal  Trading  Market shall not have been  suspended  or limited;  (iii) no
minimum prices shall been  established  for  securities  traded on the Principal
Trading Market;  and (iv) there shall not have been any material  adverse change
in any financial market.

              9.     INDEMNIFICATION AND REIMBURSEMENT.

              a.     (i)    The Company  agrees to indemnify  and hold  harmless
the Lender and its officers,  directors,  employees, and agents, and each Lender
Control  Person from and against any losses,  claims,  damages,  liabilities  or
expenses incurred (collectively, "Damages"), joint or several, and any action in
respect  thereof  to which  the  Lender,  its  partners,  Affiliates,  officers,
directors,  employees,  and duly authorized  agents, and any such Lender Control
Person becomes  subject to,  resulting  from,  arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or failure to perform
any covenant or agreement on the part of Company contained in this Agreement, as
such Damages are incurred,  except to the extent such Damages  result  primarily
from  Lender's  failure to perform any covenant or  agreement  contained in this
Agreement or the Lender's or its officer's,  director's,  employee's, agent's or
Lender  Control  Person's  gross  negligence,   recklessness  or  bad  faith  in
performing its obligations under this Agreement.

                     (ii)   The Company hereby agrees that, if the Lender, other
than by reason of its gross negligence,  illegal or willful  misconduct (in each
case, as determined by a  non-appealable  judgment to such effect),  (x) becomes
involved in any capacity in any action,  proceeding or investigation  brought by
any  shareholder  of the  Company,  in  connection  with or as a  result  of the
consummation  of the  transactions  contemplated  by this Agreement or the other
Transaction  Agreements,  or if the  Lender  is  impleaded  in any such  action,
proceeding  or  investigation  by any  Person,  or (y)  becomes  involved in any
capacity in any action,  proceeding  or  investigation  brought by the SEC,  any
self-regulatory  organization  or other  body  having  jurisdiction,  against or
involving the Company or in connection  with or as a result of the  consummation
of the  transactions  contemplated  by this  Agreement or the other  Transaction
Agreements,  or (z) is impleaded in any such action, proceeding or investigation
by any Person,  then in any such case, the Company shall  indemnify,  defend and
hold harmless the Lender from and against and in respect of all losses,  claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by the
Lender,  directly or  indirectly,  and reimburse  such Lender for its reasonable
legal  and  other  expenses   (including  the  cost  of  any  investigation  and
preparation)  incurred in connection  therewith,  as such expenses are incurred.
The  indemnification  and  reimbursement  obligations  of the Company under this
paragraph  shall be in addition to any liability which the Company may otherwise
have,  shall extend upon the same terms and  conditions to any Affiliates of the
Lender who are actually named in such action,  proceeding or investigation,  and
partners,  directors,  agents, employees and Lender Control Persons (if any), as
the case may be, of the Lender and any such Affiliate, and shall be binding upon
and  inure  to the  benefit  of any  successors,  assigns,  heirs  and  personal
representatives  of the Company,  the Lender,  any such  Affiliate  and any such
Person.  The Company also agrees that neither the Lender nor any such Affiliate,
partner,  director,  agent,  employee or Lender  Control  Person  shall have any
liability to the Company or any Person asserting claims on behalf of or in right
of the Company in  connection  with or as a result of the  consummation  of this
Agreement or the other  Transaction  Agreements,  except as may be expressly and
specifically provided in or contemplated by this Agreement.
<PAGE>

              b.     All claims for indemnification by any Indemnified Party (as
defined below) under this Section shall be asserted and resolved as follows:

                     (i)    In the event any claim or demand in respect of which
any Person  claiming  indemnification  under any  provision  of this Section (an
"Indemnified Party") might seek indemnity under paragraph (a) of this Section is
asserted  against or sought to be  collected  from such  Indemnified  Party by a
Person  other  than a party  hereto or an  Affiliate  thereof  (a  "Third  Party
Claim"), the Indemnified Party shall deliver a written notification, enclosing a
copy of all papers  served,  if any, and  specifying the nature of and basis for
such Third Party Claim and for the Indemnified Party's claim for indemnification
that is being  asserted  under any provision of this Section  against any Person
(the "Indemnifying Party"),  together with the amount or, if not then reasonably
ascertainable,  the estimated  amount,  determined in good faith,  of such Third
Party Claim (a "Claim  Notice") with reasonable  promptness to the  Indemnifying
Party.  If the  Indemnified  Party  fails  to  provide  the  Claim  Notice  with
reasonable  promptness after the Indemnified Party receives notice of such Third
Party Claim,  the  Indemnifying  Party shall not be  obligated to indemnify  the
Indemnified  Party with respect to such Third Party Claim to the extent that the
Indemnifying  Party's  ability to defend has been  prejudiced by such failure of
the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party
as soon as  practicable  within the period  ending  thirty  (30)  calendar  days
following  receipt  by the  Indemnifying  Party of  either a Claim  Notice or an
Indemnity  Notice  (as  defined  below)  (the  "Dispute   Period")  whether  the
Indemnifying  Party disputes its liability or the amount of its liability to the
Indemnified Party under this Section and whether the Indemnifying Party desires,
at its sole cost and expense, to defend the Indemnified Party against such Third
Party Claim. The following provisions shall also apply.

       (x)    If the  Indemnifying  Party notifies the Indemnified  Party
       within the Dispute Period that the  Indemnifying  Party desires to
       defend the Indemnified Party with respect to the Third Party Claim
       pursuant  to  this  paragraph  (b)  of  this  Section,   then  the
       Indemnifying  Party shall have the right to defend,  with  counsel
       reasonably satisfactory to the Indemnified Party, at the sole cost
       and expense of the Indemnifying  Party,  such Third Party Claim by
       all appropriate proceedings, which proceedings shall be vigorously
       and  diligently  prosecuted by the  Indemnifying  Party to a final
       conclusion   or  will  be  settled  at  the   discretion   of  the
       Indemnifying  Party (but only with the consent of the  Indemnified
       Party in the case of any  settlement  that provides for any relief
       other than the payment of monetary  damages or that  provides  for
       the payment of monetary damages as to which the Indemnified  Party
       shall not be indemnified in full pursuant to paragraph (a) of this
       Section).  The Indemnifying  Party shall have full control of such
       defense and  proceedings,  including any  compromise or settlement
       thereof; provided, however, that the Indemnified Party may, at the
       sole cost and expense of the Indemnified  Party, at any time prior
       to the Indemnifying  Party's delivery of the notice referred to in
       the first  sentence  of this  subparagraph  (x),  file any motion,
       answer  or other  pleadings  or take  any  other  action  that the
       Indemnified   Party   reasonably   believes  to  be  necessary  or
       appropriate protect its interests;  and provided further,  that if
       requested by the Indemnifying  Party, the Indemnified  Party will,
       at the sole cost and expense of the  Indemnifying  Party,  provide
       reasonable cooperation to the Indemnifying Party in contesting any
       Third Party Claim that the  Indemnifying  Party elects to contest.
       The Indemnified Party may

<PAGE>

       participate in, but not control,  any defense or settlement of any
       Third Party Claim controlled by the Indemnifying Party pursuant to
       this  subparagraph  (x),  and except as provided in the  preceding
       sentence,  the  Indemnified  Party  shall  bear its own  costs and
       expenses with respect to such  participation.  Notwithstanding the
       foregoing,  the Indemnified Party may take over the control of the
       defense or  settlement  of a Third  Party  Claim at any time if it
       irrevocably  waives its right to indemnity  under paragraph (a) of
       this Section with respect to such Third Party Claim.

       (y)    If the  Indemnifying  Party fails to notify the Indemnified
       Party  within  the  Dispute  Period  that the  Indemnifying  Party
       desires to defend the Third Party Claim  pursuant to paragraph (b)
       of this Section,  or if the  Indemnifying  Party gives such notice
       but fails to prosecute  vigorously  and  diligently  or settle the
       Third Party Claim, or if the Indemnifying  Party fails to give any
       notice whatsoever within the Dispute Period,  then the Indemnified
       Party shall have the right to defend, at the sole cost and expense
       of  the   Indemnifying   Party,  the  Third  Party  Claim  by  all
       appropriate proceedings,  which proceedings shall be prosecuted by
       the Indemnified  Party in a reasonable manner and in good faith or
       will be settled at the discretion of the  Indemnified  Party (with
       the consent of the Indemnifying  Party,  which consent will not be
       unreasonably  withheld).  The  Indemnified  Party  will  have full
       control of such defense and proceedings,  including any compromise
       or settlement thereof; provided, however, that if requested by the
       Indemnified  Party, the Indemnifying  Party will, at the sole cost
       and  expense  of  the  Indemnifying   Party,   provide  reasonable
       cooperation to the Indemnified Party and its counsel in contesting
       any Third Party Claim which the  Indemnified  Party is contesting.
       Notwithstanding the foregoing provisions of this subparagraph (y),
       if the  Indemnifying  Party has  notified  the  Indemnified  Party
       within the Dispute Period that the Indemnifying Party disputes its
       liability  or  the  amount  of  its  liability  hereunder  to  the
       Indemnified  Party with  respect to such Third  Party Claim and if
       such dispute is resolved in favor of the Indemnifying Party in the
       manner provided in  subparagraph(z)  below, the Indemnifying Party
       will  not be  required  to bear  the  costs  and  expenses  of the
       Indemnified  Party's defense pursuant to this  subparagraph (y) or
       of  the  Indemnifying   Party's   participation   therein  at  the
       Indemnified  Party's  request,  and the  Indemnified  Party  shall
       reimburse the Indemnifying  Party in full for all reasonable costs
       and expenses incurred by the Indemnifying Party in connection with
       such litigation.  The  Indemnifying  Party may participate in, but
       not  control,   any  defense  or  settlement   controlled  by  the
       Indemnified  Party  pursuant  to this  subparagraph  (y),  and the
       Indemnifying  Party  shall  bear its own costs and  expenses  with
       respect to such participation.

       (z)    If the  Indemnifying  Party notifies the Indemnified  Party
       that it does  not  dispute  its  liability  or the  amount  of its
       liability to the Indemnified Party with respect to the Third Party
       Claim under  paragraph  (a) of this Section or fails to notify the
       Indemnified   Party   within  the  Dispute   Period   whether  the
       Indemnifying  Party  disputes  its  liability or the amount of its
       liability  to the  Indemnified  Party  with  respect to such Third
       Party Claim,  the amount of Damages  specified in the Claim Notice
       shall be conclusively deemed a liability of the Indemnifying Party
       under  paragraph  (a) of this Section and the  Indemnifying  Party
       shall pay the amount of such Damages

<PAGE>

       to the Indemnified Party on demand. If the Indemnifying  Party has
       timely  disputed its liability or the amount of its liability with
       respect to such claim, the Indemnifying  Party and the Indemnified
       Party shall  proceed in good faith to  negotiate a  resolution  of
       such  dispute;  provided,  however,  that  if the  dispute  is not
       resolved  within  thirty  (30) days  after the Claim  Notice,  the
       Indemnifying  Party  shall be  entitled  to  institute  such legal
       action as it deems appropriate.

              (ii)   In the  event any  Indemnified  Party  should  have a claim
under paragraph (a) of this Section against the Indemnifying Party that does not
involve a Third Party  Claim,  the  Indemnified  Party  shall  deliver a written
notification  of a claim  for  indemnity  under  paragraph  (a) of this  Section
specifying the nature of and basis for such claim,  together with the amount or,
if not then reasonably  ascertainable,  the estimated amount, determined in good
faith, of such claim (an "Indemnity  Notice") with reasonable  promptness to the
Indemnifying  Party. The failure by any Indemnified  Party to give the Indemnity
Notice shall not impair such party's rights  hereunder except to the extent that
the Indemnifying  Party  demonstrates  that it has been  irreparably  prejudiced
thereby.  If the Indemnifying  Party notifies the Indemnified Party that it does
not dispute  the claim or the amount of the claim  described  in such  Indemnity
Notice or fails to notify  the  Indemnified  Party  within  the  Dispute  Period
whether the  Indemnifying  Party  disputes  the claim or the amount of the claim
described  in such  Indemnity  Notice,  the amount of Damages  specified  in the
Indemnity  Notice will be  conclusively  deemed a liability of the  Indemnifying
Party under paragraph (a) of this Section and the  Indemnifying  Party shall pay
the  amount  of  such  Damages  to  the  Indemnified  Party  on  demand.  If the
Indemnifying  Party has  timely  disputed  its  liability  or the  amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall  proceed in good faith to  negotiate a resolution  of such  dispute;
provided,  however,  that it the dispute is not resolved within thirty (30) days
after the Claim Notice,  the  Indemnifying  Party shall be entitled to institute
such legal action as it deems appropriate.

              c.     The  indemnity  agreements  contained  herein  shall  be in
addition to (i) any cause of action or similar rights of the  indemnified  party
against  the  indemnifying  party  or  others,  and  (ii)  any  liabilities  the
indemnifying party may be subject to.

              10.    JURY TRIAL WAIVER.  The Company and the Lender hereby waive
a trial by jury in any action,  proceeding or counterclaim  brought by either of
the Parties  hereto against the other in respect of any matter arising out or in
connection with the Transaction Agreements.
<PAGE>

              11.    GOVERNING LAW: MISCELLANEOUS.

              a.     (i)    This Agreement  shall be governed by and interpreted
in accordance  with the laws of the State of New York for contracts to be wholly
performed  in such state and without  giving  effect to the  principles  thereof
regarding  the conflict of laws.  Each of the parties  consents to the exclusive
jurisdiction  of the federal  courts whose  districts  encompass any part of the
County of New York or the state  courts of the State of New York  sitting in the
County of New York in connection  with any dispute  arising under this Agreement
or any of the other  Transaction  Agreements and hereby  waives,  to the maximum
extent  permitted by law, any objection,  including any objection based on FORUM
NON CONVENIENS,  to the bringing of any such proceeding in such jurisdictions or
to any claim that such venue of the suit,  action or proceeding is improper.  To
the extent  determined by such court, the Company shall reimburse the Lender for
any  reasonable  legal  fees  and  disbursements   incurred  by  the  Lender  in
enforcement  of or protection of any of its rights under any of the  Transaction
Agreements.  Nothing in this  Section  shall  affect or limit any right to serve
process in any other manner permitted by law.

                     (ii)   The  Company  and the Lender  acknowledge  and agree
that  irreparable  damage would occur in the event that any of the provisions of
this  Agreement  or the  other  Transaction  Agreements  were not  performed  in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions  to prevent or cure breaches of the provisions of this Agreement and
the other  Transaction  Agreements  and to  enforce  specifically  the terms and
provisions  hereof and  thereof,  this being in addition to any other  remedy to
which any of them may be entitled by law or equity.

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

              c.     This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.

              d.     All  pronouns  and  any  variations  thereof  refer  to the
masculine, feminine or neuter, singular or plural, as the context may require.

              e.     A facsimile  transmission of this signed Agreement shall be
legal and binding on all parties hereto.

              f.     This  Agreement may be signed in one or more  counterparts,
each of which shall be deemed an original.

              g.     The  headings  of this  Agreement  are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

              h.     If any  provision  of this  Agreement  shall be  invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or  enforceability of the

<PAGE>

remainder of this Agreement or the validity or  enforceability of this Agreement
in any other jurisdiction.

              i.     This  Agreement  may be amended  only by an  instrument  in
writing signed by the party to be charged with enforcement thereof.

              j.     This  Agreement   supersedes   all  prior   agreements  and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof.

              12.    NOTICES.  Any notice required or permitted  hereunder shall
be given in writing  (unless  otherwise  specified  herein)  and shall be deemed
effectively given on the earliest of

              (a)    the date  delivered,  if delivered by personal  delivery as
              against  written  receipt  therefor  or  by  confirmed   facsimile
              transmission,

              (b)    the fifth Trading Day after deposit,  postage  prepaid,  in
              the United States Postal Service by registered or certified  mail,
              or

              (c)    the  third   Trading  Day  after  mailing  by  domestic  or
              international  express  courier,  with  delivery  costs  and  fees
              prepaid,

in each case,  addressed to each of the other parties thereunto  entitled at the
following  addresses (or at such other  addresses as such party may designate by
ten (10)  days'  advance  written  notice  similarly  given to each of the other
parties hereto):

COMPANY:             At the address set forth at the head of this Agreement.
                     Attn: Charles D. Newman
                     Telephone No.: (707) 283-0800
                     Telecopier No.:

LENDER:              Harborview Master Fund Lp
                     c/o Navigator Management Ltd.
                     Harbour House, Second Floor
                     Waterfron Drive, Road Town
                     Tortola, British Virgin Islands

              13.    SURVIVAL OF REPRESENTATIONS  AND WARRANTIES.  The Company's
and the  Lender's  representations  and  warranties  herein  shall  survive  the
execution and delivery of this  Agreement  and the delivery of the  Certificates
and the payment of the Loan Amount, and shall inure to the benefit of the Lender
and the Company and their respective successors and assigns.

                   [Balance of page intentionally left blank]
<PAGE>

           IN WITNESS  WHEREOF,  this  Agreement  has been duly  executed by the
Lender and the Company as of the date set first above written.

                                        HARBORVIEW MASTER FUND LP

                                        By:
                                           ---------------------------------
                                        Name:
                                        Title:

SONOMA COLLEGE, INC.

By:
   ----------------------------------
(Signature of Authorized Person)

-------------------------------------
Printed Name and Title
<PAGE>

           ANNEX I             FORM OF NOTE

           ANNEX II            [INTENTIONALLY LEFT BLANK]

           ANNEX III           [INTENTIONALLY LEFT BLANK]

           ANNEX IV            COMPANY'S SEC DOCUMENTS AVAILABLE ON EDGAR

           ANNEX V             COMPANY DISCLOSURE MATERIALS

           ANNEX VI            PLEDGE AGREEMENTS

           ANNEX VII           WARRANT

           ANNEX VIII          ISSUED SHARES/ADDITIONAL ISSUED SHARES PROVISIONS

           ANNEX IX            SUBSIDIARY GUARANTEE

                                       29EX-10.39

                                                                        ANNEX VI
                                                           BRIDGE LOAN AGREEMENT

                     SECURITY INTEREST AND PLEDGE AGREEMENT

       SECURITY INTEREST AND PLEDGE AGREEMENT  ("Pledge  Agreement") dated as of
September 28, 2006, by and among Harborview  Master Fund, Lp ("Secured  Party"),
Sonoma College,  Inc., a California  corporation having its principal  executive
offices at 1304 South Point  Boulevard,  Suite 280,  Petaluma,  California 94954
(the  "Company"  or the  "Debtor"),  Charles  D.  Newman  and  Elysa  K.  Newman
("Pledgors").

                                    RECITALS

       A.     Reference  is made to (i) that  certain  Bridge Loan  Agreement of
even date herewith (the "Loan  Agreement")  to which the Company and the Secured
Party are parties, and (ii) the Transaction  Agreements (as that term is defined
in the Loan Agreement),  including,  without limitation,  the Note.  Capitalized
terms not otherwise  defined herein shall have the meanings  ascribed to them in
the relevant Transaction Agreements.

       B.     Pursuant  to the  Transaction  Agreements,  the Debtor has certain
obligations  to the Secured  Party (all such  obligations,  the  "Obligations"),
including,  but not limited to, obligations to pay principal and interest of the
Note, which was issued in the original  aggregate  principal amount of $275,000,
on the Maturity Date. The Note  Obligations are secured by a mortgage on certain
real  estate  that  is held  in the  names  of the  Pledgors  and is more  fully
described  below.  The  obligations of the Company and of the Pledgors,  if any,
under the Note are referred to collectively as the "Note Obligations".

       C.     To secure the Note Obligations, the Pledgors have agreed to pledge
certain real estate; specifically, Condominium Unit 7BC located at 525 East 80th
Street, New York, New York 10021 (the "Real Estate").

       D.     The Pledgors are  shareholders  of the Debtor and have  determined
that it is in the  Pledgors'  best  interests,  including  to the benefit of the
other  interests of the Pledgors in the Company,  to provide the pledge referred
to herein.

       E.     The Secured Party is willing to enter into the Loan  Agreement and
the other Transaction  Agreements only upon receiving the Pledgors' mortgage for
the Real Estate, as set forth in this Pledge Agreement.

       NOW,  THEREFORE,  in consideration of the premises,  the mutual covenants
and conditions contained herein, and for other good and valuable  consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

<PAGE>

       1.     GRANT OF SECURITY INTEREST.

              To secure the Note  Obligations  of Debtor,  the  Pledgors  hereby
pledge to the  Secured  Party all of their  interest  in the Real  Estate.  Said
pledge shall be evidenced by a mortgage in the form attached hereto as Exhibit A
(the "Mortgage").

       2.     OBLIGATIONS SECURED.  During the term hereof, the Collateral shall
secure the following:

       (a)    The performance by the Company of the Note Obligations; and

       (b)    The performance by the Pledgors of their  obligations,  covenants,
and agreements under this Agreement.

The obligations,  covenants and agreements  described in clauses (a) and (b) are
the "Obligations."

       3.     PERFECTION OF SECURITY  INTERESTS.  Upon  execution of this Pledge
Agreement by the Debtor and the Pledgors,

              (a)    the Pledgors  shall deliver and transfer  possession of the
Mortgage, to the Secured Party.

              (b)    The  Mortgage  shall be  recorded  in the New  York  County
Clerk's Office, to perfect the security interest of the Secured Party, until the
earlier of

       (i)    the payment in full of all amounts due under the Note, or

       (ii)   foreclosure  of Secured  Party's  security  interests  as provided
herein.

              (c)    The Debtor and the  Pledgors  hereby  appoint  the  Secured
Party, as attorney-in-fact with powers of substitution, to execute all documents
and perform all acts in order to perfect and maintain a valid security  interest
for Secured Party in the Real Estate.

       4.     RESERVED.

       5.     PLEDGORS'  WARRANTY.  The Pledgors represent and warrant hereby to
the Secured Party as follows with respect to the Real Estate:

              A.     WITH RESPECT TO TITLE TO THE REAL ESTATE

              (i)    that the Real Estate is free and clear of any  encumbrances
of every nature whatsoever, aside from any existing mortgages which have already
been disclosed to the Secured Party, and the Pledgors are the sole owners of the
Real Estate;
<PAGE>

              (ii)   that  the  Pledgors  agree  not to  grant  or  create,  any
security interest,  claim, lien, pledge or other encumbrance with respect to the
Real Estate or attempt to sell, transfer or otherwise dispose of any of the Real
Estate until (a) the  Obligations  have been paid in full, or (b) this Agreement
has terminated,  or (iii) the Pledgors  receive express written  permission from
the Secured Party.

              B.     WITH RESPECT TO CERTAIN OTHER MATTERS:

              (i)    that the  Pledgors  have made  necessary  inquiries  of the
Company  and  believe  that the  Company  fully  intends to fulfill  and has the
capability  of  fulfilling  the  Obligations  to be  performed by the Company in
accordance with the terms of the Transaction Agreements; and

              (ii)   that this Pledge Agreement  constitutes a legal,  valid and
binding  obligation of the Pledgors  enforceable  in  accordance  with its terms
(except as the  enforcement  thereof may be limited by  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium,  and similar laws,  now or
hereafter in effect).

       6.     PRESERVATION OF THE VALUE OF THE COLLATERAL AND  REIMBURSEMENT  OF
SECURED PARTY.  Pledgors shall pay all taxes,  charges,  and assessments against
the Real Estate and do all acts  necessary  to preserve  and  maintain the value
thereof.  On failure of Pledgors so to do,  Secured Party may make such payments
on account thereof as (in Secured Party's  discretion) is deemed desirable,  and
Pledgors  shall  reimburse  Secured Party  immediately on demand for any and all
such payments expended by Secured Party in enforcing, collecting, and exercising
its remedies hereunder.

       7.     DEFAULT AND REMEDIES.

              For purposes of this Agreement,  "Event of Default" shall mean any
one or more of the following events:

              (i)    any  default  in  the  performance  by the  Company  or any
Pledgor of any of the Note Obligations,  after the expiration,  without cure, of
the cure period (but only if any such cure  period is  specifically  provided in
the Transaction  Agreements and without any regard to any cure period if no such
cure period is provided;  it being specifically  acknowledged by the Company and
the Pledgors that all payment  obligations are time of the essence  obligations,
with no cure periods provided), or

              (ii)   a  breach  by the  Company  or  Pledgor  of any of the  its
respective representations,  warranties,  covenants or agreements in this Pledge
Agreement, subject to applicable cure periods.

       8.     WAIVER.  Each of the Debtor and the Pledgors waives any right that
it may have to require  Secured Party to proceed  against any other  person,  or
proceed  against  or exhaust  any other  security,  or pursue  any other  remedy
Secured Party may have.
<PAGE>

       9.     TERM OF AGREEMENT.  This Pledge  Agreement  shall continue in full
force and effect  until the earlier of the  payment in full of the Note.  If the
Note is paid in full, the security  interests in the Real Estate shall be deemed
released, and the Mortgage shall be returned to the Pledgors.

       10.    GENERAL PROVISIONS:

       10.1   BINDING AGREEMENT; NO MODIFICATION OF TRANSACTION AGREEMENTS. This
Pledge  Agreement  shall be binding  upon and shall  inure to the benefit of the
successors and assigns of the respective  parties  hereto.  Except to the extent
specifically  provided  herein,  nothing in this Pledge Agreement shall limit or
modify any provision of any of the Transaction Agreements

       10.2   CAPTIONS.  The headings used in this Pledge Agreement are inserted
for reference  purposes only and shall not be deemed to define,  limit,  extend,
describe,  or affect in any way the meaning,  scope or  interpretation of any of
the terms or provisions of this Pledge Agreement or the intent hereof.

       10.3   COUNTERPARTS. This Pledge Agreement may be signed in any number of
counterparts with the same effect as if the signatures upon any counterpart were
upon the same  instrument.  All  signed  counterparts  shall be deemed to be one
original.  A facsimile  transmission  of this signed Pledge  Agreement  shall be
legal and binding on all parties hereto.

       10.4   FURTHER  ASSURANCES.  The parties hereto agree that,  from time to
time upon the written request of any party hereto, they will execute and deliver
such  further  documents  and do such  other  acts and  things as such party may
reasonably  request  in order  fully  to  effect  the  purposes  of this  Pledge
Agreement.

       10.5   WAIVER OF BREACH.  Any waiver by either party of any breach of any
kind or character  whatsoever  by the other,  whether such be direct or implied,
shall not be construed as a  continuing  waiver of or consent to any  subsequent
breach of this Pledge Agreement.

       10.6   CUMULATIVE REMEDIES. The rights and remedies of the parties hereto
shall be construed  cumulatively,  and none of such rights and remedies shall be
exclusive of, or in lieu or limitation of any other right,  remedy,  or priority
allowed by applicable law.

       10.7   AMENDMENT. This Pledge Agreement may be modified only in a written
document that refers to this Pledge  Agreement and is executed by Secured Party,
the Pledgors and the Debtor.

       10.8   INTERPRETATION.   This  Pledge  Agreement  shall  be  interpreted,
construed,  and enforced  according to the substantive  laws of the State of New
York.

       10.9   GOVERNING  LAW.  This  Pledge  Agreement  shall be governed by and
construed  in  accordance  with the laws of the State of New  York.  Each of the
parties  consents to the  jurisdiction  of the federal  courts  whose  districts
encompass any part of the County of New York or the state courts of the State of
New York  sitting  in the  County  of New York in  connection  with any  dispute
arising under this Pledge  Agreement and hereby  waives,  to the maximum  extent
permitted by law,

<PAGE>

any  objection,  including any objection  based on FORUM NON  COVENIENS,  to the
bringing of any such proceeding in such jurisdictions.

       10.10  WAIVER OF JURY TRIAL.  The parties to this Pledge Agreement hereby
waive a trial by jury in any action,  proceeding or counterclaim  brought by any
of them against any other in respect of any matter  arising out or in connection
with this Pledge Agreement.

       10.11  NOTICE. Any notice or other communication required or permitted to
be given hereunder shall be effective upon receipt. Such notices may be sent (i)
in the United  States  mail,  postage  prepaid  and  certified,  (ii) by express
courier with receipt, (iii) by facsimile transmission,  with a copy subsequently
delivered  as in (i) or (ii)  above.  Any  such  notice  shall be  addressed  or
transmitted as follows:

       If to Pledgor, to:

       If to the Secured Party, to:
       Harborview Master Fund, Lp
       c/o Navigator Management Ltd.
       Harbour House, Second Floor
       Waterfront Drive, Road Town
       Tortola, British Virgin Islands
       Tel:
       Fax:

       If to Sonoma College, Inc., to:
       1304 South Point Boulevard
       Suite 280
       Petaluma, California 94954
       Tel:
       Fax:

       If to Charles D. Newman and/or Elysa K. Newman, to:
       525 East 80th Street
       Unit 7BC
       New York, New York 10021
       Tel:
       Fax:

Any party may change its address by notice  similarly given to the other parties
(except that a Secured Party need not give notice to other Secured Party).

       10.12  ACKNOWLEDGEMENT  BY DEBTOR  AND  PLEDGORS.  In the event  that any
provision of the Transaction Agreements,  the Guarantee or this Pledge Agreement
as  applied to any party or  circumstances  shall be  adjudged  by a court to be
invalid or  unenforceable,  each of the Debtor or the

<PAGE>

Pledgors, as the case may be, acknowledges and agrees that this Pledge Agreement
shall remain valid and  enforceable  in all respects  against the Debtor and the
Pledgors.

       IN WITNESS  WHEREOF,  the Parties have executed this  Agreement as of the
day, month and year first above written.

HARBORVIEW MASTER FUND, LP

By:
   ---------------------------------------
Name:
Title:

SONOMA COLLEGE, INC.:

By:
   ---------------------------------------
Its:

CHARLES D. NEWMAN

------------------------------------------

ELYSA K. NEWMAN

------------------------------------------

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