Document:

NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THIS NOTE HAS BEEN ACQUIRED, AND ANY SHARES OF COMMON
STOCK OR ANY OTHER SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE ARE REQUIRED
TO BE ACQUIRED, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR THIS NOTE AND/OR
SUCH SHARES OR OTHER SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER OF THIS NOTE AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.

                          Walker Financial Corporation
           10% Senior Subordinated Secured Convertible Promissory Note

Dated: December 5, 2003                            Principal Amount: $___,000.00
Garden City, New York

     For Value Received, the undersigned, Walker Financial Corporation (together
with its successors and assigns, "Walker"), a Delaware corporation, hereby
promises to pay to ________________, [an individual residing in the State of
_____________] [a _________ {state and type of entity}] ("Lender"), the
principal sum of _______________________ Thousand Dollars ($___,000.00),
together with interest as set forth below. This 10% Senior Subordinated Secured
Convertible Promissory Note (this "Note") is issued (a) pursuant to, and is the
"Note" referred to, in that certain Subscription Agreement between Walker and
Lender, as accepted by Walker on December 5, 2003 (the "Subscription
Agreement"), and (b) in connection with, and is a "Note" referred to in, that
certain Security Agreement, dated as of December 5, 2003 (the "Security
Agreement"), by and between Walker, Lender and the original registered owners of
10% Senior Subordinated Secured Convertible Promissory Notes of Walker (together
with this Note, the "Secured Notes") identical in form to this Note (other than
the name of the lender, principal amount and issuance date) in the aggregate
original principal amount (together with the original principal amount of this
Note) of between $650,000.00 and $1,600,000.00, each as entered into in
connection with the private placement offering (the "Private Placement") of
Walker of the Secured Notes made pursuant to a Private Placement Memorandum,
dated October 7, 2003 (the "PPM"). The Company has granted the placement agent
for the Private Placement the right to sell additional Secured Notes up to
$240,000 in aggregate principal amount solely to cover over-allotments in the
Private Placement. This Note is made subject to the terms and conditions of the
Security Agreement as if set forth in full in this Note.

1. Interest Rate. Until an event of Default shall have occurred, the
principal amount evidenced by this Note shall bear interest at the rate of 10%
per annum, computed on the basis of a 360-day year for the actual number of days
elapsed (the "Applicable Interest Rate"). Upon the occurrence of an event of
Default, the outstanding principal amount and any accrued but unpaid interest
thereon shall bear interest until paid at the Applicable Interest Rate plus an
additional 2% per annum (the "Default Interest Rate").

<PAGE>

2. Payment Date; Payment Method; Prepayment.

     (a) Payment Dates. Payment of all accrued and unpaid interest due under
this Note shall be payable semi-annually, in arrears, on the first business day
(each, an "Interest Payment Date") of the months of January and July of each
calendar year in which any principal amount evidenced by this Note remains
outstanding, commencing with July 1, 2004. Payment of any outstanding principal
amount evidenced by this Note (and any accrued but unpaid interest thereon)
shall be made on the earlier of (i) December 4, 2006 or (ii) the date on which
the Company (A) is merged with or combines with another entity in which the
Company is not deemed the surviving corporation under the applicable provisions
of the General Corporation Law of the State of Delaware (the "DGCL") or (B)
sells all or substantially all of its assets within the meaning of the DGCL (in
either of such events, the "Maturity Date"). Upon payment in full of the
principal evidenced by this Note (and any accrued but unpaid interest thereon),
Lender, by Lender's acceptance of this Note, agrees to mark this Note
"CANCELLED" and return this Note as so marked to Walker within five days after
such payment in full is received. For purposes of this Note, the term "business
day" shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.

     (b) Payment Method. Payment of the principal evidenced by this Note (and
any accrued but unpaid interest thereon) shall be made by check, subject to
collection, tendered to Lender, via postage-paid, first class mail, at the
address for the giving of notices as set forth in Section 8 of this Note.

     (c) Voluntary Prepayment. Walker may pay, without penalty or premium, the
principal amount evidenced by this Note (and any accrued but unpaid interest
thereon), in whole or part, at any time up to the Maturity Date upon no less
than ten days' prior notice (the "Prepayment Notice Period") to Lender. Any
partial prepayment shall first be applied against any accrued and unpaid
interest due under this Note and then to the principal amount evidenced by this
Note. In the event of a voluntary prepayment being less than the full amount
outstanding under this Note (including any accrued but unpaid interest), upon
surrender of this Note in connection with said partial prepayment, Walker shall
deliver to Lender a new note substantially in the form of this Note and
evidencing as principal any amount not so prepaid. Notwithstanding the
immediately preceding sentence, following any partial prepayment of principal
evidenced by this Note, this Note shall be deemed to evidence a debt of Walker
only to the extent of the remaining principal amount outstanding following such
partial repayment(s) (plus any accrued and unpaid interest).

3. Default; Acceleration.

     (a) Any of the following shall constitute an "event of Default" under this
Note:

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<PAGE>

     (i) the failure by Walker to pay any amounts required to be paid under this
Note or any of the other Secured Notes on or before the date on which such
payment was due;
     (ii) the breach or noncompliance by Walker of any of its material
representations, warranties or covenants contained in the Security Agreement;
     (iii) Walker shall
     (A) apply for or consent to the appointment of a receiver or trustee of
Walker's assets,
     (B) make a general assignment for the benefit of creditors,
     (C) file a petition or other request no matter how denominated ("Petition")
seeking relief under Title 11 of the United States Code or under any other
federal or state bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute ("Bankruptcy Statute"), or
     (D) file an answer admitting the material allegations of a Petition filed
against it in any proceeding under any Bankruptcy Statute;
     (iv) there shall have entered against Walker an order for relief under any
Bankruptcy Statute; or
     (v) a Petition seeking an order for relief under any Bankruptcy Statute is
filed by any one other than Walker and without Walker's consent or agreement
which is not dismissed or stayed within 60 days after the date of such filing,
or such Petition is not dismissed upon the expiration of any stay thereof.

     (b) Subject to the provisions of paragraph 3(d), upon the occurrence of an
event of Default, the unpaid principal amount evidenced by this Note (and any
accrued but unpaid interest thereon) shall be immediately due and payable.

     (c) Until the occurrence of an event of Default, the principal amount
evidenced by this Note shall bear interest at the Applicable Interest Rate and
upon an event of Default, any unpaid principal amount under this Note and any
accrued but unpaid interest through the date of effectiveness of such event of
Default shall bear interest until paid at the Default Interest Rate.

     (d)  (i) In the event that Walker shall fail to tender payment of all
          outstanding principal evidenced by this Note on or prior to the
          Maturity Date, Walker shall issue and deliver to Lender shares (each,
          a "Penalty Share") of the common stock, par value $.10 per share (the
          "Common Stock"), of Walker, at the per diem rate equal to 0.003125
          Penalty Shares for every $1.00 of principal evidenced by this Note not
          so tender (i.e., 2,343.75 Penalty Shares per month for each $25,000 of
          principal not paid on the Maturity Date), for the period from the
          Maturity Date to the date of payment of such principal. Issuance of
          any Penalty Shares shall be made monthly, in arrears, commencing one
          month following the Maturity Date, and, with respect to the final
          issuance of Penalty Shares, within twenty days of the date when
          payment in full of all such principal is tendered to Lender. The
          Penalty Shares shall not be registered under the Securities Act of
          1933, as amended (the "Securities Act"), or any state securities laws
          and Walker shall be under no obligation to register any Penalty Shares
          under the Securities Act.

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<PAGE>

     (ii) So long as Walker shall issue and tender Penalty Shares in accordance
with the provisions of subparagraph 3(d)(i), the failure to pay interest under
this Note shall not be deemed an event of Default.

4. Subordination. This Note shall at all times be wholly subordinate and
junior in right of payment to all Senior Indebtedness to the extent and in the
manner provided in this Section 4. This Note shall at all times be deemed equal
and pari passu in right of payment to all Indebtedness evidenced by the Secured
Notes.

     (a) Definitions. As used in this Section 4 and Section 12, the following
terms shall have the following meanings:
     (i) "Indebtedness" shall mean (A) all indebtedness for borrowed money or
for the deferred purchase price of property or services (other than current
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (B) any other indebtedness that is
evidenced by a note, bond, debenture or similar instrument, (C) all obligations
under financing leases, (D) all obligations in respect of acceptances issued or
created, (E) all obligations secured by any lien on property and (F) all
guarantee obligations;
     (ii) "Senior Covenant Default" shall mean any event of default as defined
under any agreement pertaining to Senior Indebtedness, other than a Senior
Payment Default;
     (iii) "Senior Indebtedness" means all Indebtedness of Walker currently or
in the future outstanding to Branch Banking & Trust Company ("Mortgagee") under
that certain North Carolina Deed of Trust, dated July 3, 2002, between Mortgagee
and Walker;
     (iv) "Senior Default" shall mean a Senior Payment Default or a Senior
Covenant Default;
     (v) "Senior Payment Default" shall mean any default in the payment of any
Senior Indebtedness; and
     (vi) "Subordinated Indebtedness" shall mean the principal evidenced by the
Secured Notes (and all accrued and upon interest thereon), including this Note,
and any other obligations of Walker arising out of the Secured Notes, including
this Note.

     (b) General. Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration, required prepayment or otherwise, such Senior Indebtedness shall
first be paid in full in cash or in a manner satisfactory to the payees of such
Senior Indebtedness, or such payment duly provided for in cash or in a manner
satisfactory to the payees of such Senior Indebtedness, before any payment is
made on account of the Subordinated Indebtedness or by Walker or Affiliates (as
defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended) of
Walker to acquire this Note. Notwithstanding any provision in this Section 4 to
the contrary, (i) for so long as no Senior Default has occurred and is
continuing, or would occur as a result of such a payment, Walker may pay and
Lender may receive and retain all regularly scheduled payments of principal and
interest (other than at the Default Interest Rate) under the Secured Notes,
including this Note, and (ii) for so long as no Senior Default has occurred and
is continuing or would occur as a result of any such prepayment, Walker may
prepay the principal amount evidenced by the Secured Notes, including this Note,
in accordance with the provisions of paragraph 2(c), and Lender may receive such
prepayments.

     (c) Limitation on Payment.

                                       4
<PAGE>

     (i) Upon receipt by Walker and Lender of a Blockage Notice (as defined
below), then, unless and until (A) all Senior Defaults that gave rise to the
Blockage Notice shall have been remedied or effectively waived or shall have
ceased to exist or (B) the Senior Indebtedness in respect of which such Senior
Defaults shall have occurred shall have been paid in full in cash or in a manner
satisfactory to the payees of such Senior Indebtedness, no direct or indirect
payment (in cash, property, securities or by set-off or otherwise) of or on
account of the principal evidenced by the Secured Notes, including this Note, or
accrued and unpaid interest or as a sinking fund for the Secured Notes,
including this Note, or in respect of any redemption, retirement, purchase or
other acquisition of the Secured Notes, including this Note, shall be made.
Notwithstanding the foregoing, in the case of a Blockage Notice that relates to
a Senior Covenant Default, the foregoing restrictions shall commence upon
Walker's receipt of such Blockage Notice and shall expire 270 days thereafter.
Any principal and interest paid with respect to the Secured Notes, including
this Note, prior to the receipt of the Blockage Notice in question by Lender
hereof may be kept by such holders of the Secured Notes, including Lender; and
     (ii) For purposes of this Section 4, a "Blockage Notice" is a notice of the
holder of Senior Indebtedness that a Senior Default has in fact occurred and is
continuing, given to Walker and the holders of the Secured Notes, including
Lender.

     Notwithstanding any provision contained herein to the contrary, once all
Senior Defaults which gave rise to the Blockage Notice in question shall have
been remedied or effectively waived or shall have ceased to exist, or the Senior
Indebtedness in respect of which such Senior Defaults shall have occurred shall
have been paid in full in cash or in a manner satisfactory to the payees of such
Senior Indebtedness, thereafter (unless another Blockage Period shall then be in
effect) all amounts which would have been payable under the Secured Notes,
including this Note, but for the existence of the Blockage Notice delivered with
respect to the Senior Default in question shall be payable in their entirety.

     (d) Limitation on Remedies. As long as any Senior Indebtedness remains
outstanding, upon the occurrence of an event of Default under this Note, Lender
shall not, unless the payees of any Senior Indebtedness shall have caused such
Senior Indebtedness to become due prior to its stated maturity or any event of
Default pursuant to subparagraphs 3(a)(iii) through (v) of this Note shall have
commenced, declare or join in any declaration of this Note to be due and payable
by reason of such event of Default or otherwise take any action against Walker
(including, without limitation, commencing any legal action against Walker or
filing or joining in the filing of any insolvency petition against Walker) or
exercise or cause to be exercised any other contractual rights available to it
prior to the expiration of 30 days after the written notice of Lender's ability
to accelerate on account of the occurrence of such event of Default (a "Remedy
Notice") shall have been given by Lender to Walker and, to the extent known by
Lender, the payees of the Senior Indebtedness (a "Remedy Standstill Period").

     Notwithstanding the foregoing, the Remedy Standstill Period shall be
inapplicable or cease to be effective if the payees of any Senior Indebtedness
shall have caused such Senior Indebtedness to become due prior to its stated
maturity or an event of Default pursuant to subparagraphs 3(a)(iii) through (v)
shall have occurred.

                                       5
<PAGE>

     Upon the expiration or termination of any Remedy Standstill Period, Lender
shall be entitled to exercise any of its rights with respect to this Note other
than any right to accelerate the maturity date of this Note based upon the
occurrence of any event of Default in respect thereto which has been cured or
otherwise remedied during the Remedy Standstill Period.

     (e) Subordination Upon Certain Events. Upon the occurrence of any event of
Default with respect to Walker under subparagraphs 3(a)(iii) through (v) of this
Note:

     (i) upon any payment or distribution of assets of Walker to creditors of
Walker, payees of Senior Indebtedness shall be entitled to receive indefeasible
payment in full of all obligations with respect to the Senior Indebtedness
before Lender shall be entitled to receive any payment in respect of the
Subordinated Indebtedness;
     (ii) until all Senior Indebtedness is paid in full in cash or in a manner
satisfactory to the payees of such Senior Indebtedness, any distribution to
which Lender would be entitled but for this Section 4 shall be made to the
payees of Senior Indebtedness, as their interests may appear, except that Lender
may, pursuant to a plan of reorganization under Chapter 11 of the Bankruptcy
Code of 1978, as amended, or any similar provision of any successor legislation
thereto, receive securities that are subordinate to the Senior Indebtedness to
at least the same extent as this Note if pursuant to such plan the distributions
to the payees of the Senior Indebtedness in the form of cash, securities or
other property, by set-off or otherwise, provide for payment of the full amount
of the allowed claim of the payees of the Senior Indebtedness;
     (iii) for purposes of this Section 4, a distribution may consist of cash,
securities or other property, by set-off or otherwise; and
     (iv) notwithstanding the foregoing provisions of paragraphs 4(b), (c) or
(e), if payment or delivery by Walker of cash, securities or other property to
Lender is authorized by an order or decree giving effect, and stating in such
order or decree that effect is given, to the subordination of this Note to the
Senior Indebtedness, and made by a court of competent jurisdiction in a
proceeding under any applicable bankruptcy or reorganization law, payment or
delivery by such Walker of such cash, securities or other property shall be made
to Lender in accordance with such order or decree.

     (f) Payments and Distributions Received. If Lender shall have received any
payment from or distribution of assets of Walker in respect of the Subordinated
Indebtedness in contravention of the terms of this Section 4 before all Senior
Indebtedness is paid in full in cash or in a manner satisfactory to the payees
of such Senior Indebtedness, then, and in such event, such payment or
distribution shall be received and held in trust for and shall be promptly paid
over or delivered to the payees of Senior Indebtedness to the extent necessary
to pay all such Senior Indebtedness in full in cash or in a manner satisfactory
to the payees of such Senior Indebtedness.

     (g) Proofs of Claim. If, while any Senior Indebtedness is outstanding, any
event of Default under subparagraphs 3(a)(iii) through (v) occurs with respect
to Walker, Lender shall duly and promptly take such action as any payee of
Senior Indebtedness may reasonably request to collect any payment with respect
to this Note for the account of the payees of the Senior Indebtedness and to
file appropriate claims or proofs of claim in respect of this Note. Upon the
failure of Lender to take any such action, each payee of Senior Indebtedness is
hereby irrevocably authorized and empowered (in its own name or otherwise), but
shall have no obligation, to demand, sue for, collect and receive every payment
or distribution referred to in respect of this Note and to file claims and
proofs of claim and take such other action as it may deem necessary or advisable
for the exercise or enforcement of any of the rights or interests of Lender with
respect to this Note.

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<PAGE>

     (h) Subrogation. After all amounts payable under or in respect of Senior
Indebtedness are paid in full in cash or in a manner satisfactory to the payees
of such Senior Indebtedness, Lender shall be subrogated to the rights of payees
of Senior Indebtedness to receive payments or distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to Lender have
been applied to the payment of Senior Indebtedness. A distribution made under
this Section 4 to a payee of Senior Indebtedness which otherwise would have been
made to Lender is not, as between Walker and Lender, a payment by Walker on
Senior Indebtedness.

     (i) Relative Rights. By acceptance of this Note, Lender agrees that this
Section 4 defines the relative rights of Lender and the payees of Senior
Indebtedness. Nothing in this Section 4 shall: (A) impair, as between Walker and
Lender, the obligations of Walker, which are absolute and unconditional, to pay
the principal amount evidenced by this Note (and accrued and unpaid interest,
including default interest) in accordance with its terms; (B) affect the
relative rights of Lender and creditors of Walker other than payees of Senior
Indebtedness or (C) prevent Lender from exercising its available remedies upon
an event of Default, subject to the rights, if any, under this Section 4 of
payees of Senior Indebtedness.

     (j) Subordination May Not Be Impaired by Walker. No right of any payee of
any Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Secured Notes, including this Note, shall be impaired by any
failure to act by Walker or such payee of Senior Indebtedness or by the failure
of Walker or such payee to comply with the terms of the Secured Notes, including
this Note. The provisions of this Section 4 shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by any payee of Senior
Indebtedness as a result of the insolvency, bankruptcy or reorganization of
Walker or any of its subsidiaries or otherwise, all as though such payment had
not been made.

     (k) Payments. A payment with respect to principal of or interest on the
Subordinated Indebtedness shall include, without limitation, payment of
principal evidenced by the Secured Notes, including this Note (and accrued and
unpaid interest), any depositing of funds for the defeasance of the Subordinated
Indebtedness, any sinking fund and any payment on account of mandatory
prepayment or optional prepayment provisions.

     (l) Section Not to Prevent Events of Default. The failure to make a payment
on account of principal of or interest on or other amounts constituting
Subordinated Indebtedness by reason of any provision of this Section 4 shall not
be construed as preventing the occurrence of an event of Default under Section
3.

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<PAGE>

     (m) Subordination Not Impaired; Benefit of Subordination. Lender agrees and
consents that, without notice to or assent by the holders of the Secured Notes,
including Lender, and without affecting the liabilities and obligations of
Walker and the rights and benefits of the payees of the Senior Indebtedness set
forth in this Section 4:
     (i) the obligations and liabilities of Walker and any other party or
parties for or upon the Senior Indebtedness may, from time to time, be
increased, renewed, refinanced, extended, modified, amended, restated,
compromised, supplemented, terminated, waived or released;
     (ii) the payees of Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may exercise or refrain from
exercising any right, remedy or power granted by or in connection with any
agreements relating to the Senior Indebtedness; and
     (iii) any balance or balances of funds with any payee of Senior
Indebtedness at any time outstanding to the credit of Walker may, from time to
time, in whole or in part, be surrendered or released;

all as the payees of the Senior Indebtedness, and any representative or
representatives acting on behalf thereof, may deem advisable, and all
without impairing, abridging, diminishing, releasing or affecting the
subordination of the Subordinated Indebtedness to the Senior Indebtedness
provided for herein.

     (n) Modification of Section 4. The provisions of this Section 4 are for the
benefit of the payees from time to time of Senior Indebtedness and, so long as
any Senior Indebtedness remains unpaid, may not be modified, rescinded or
canceled in whole or in part without the prior written consent thereto of all
payees of Senior Indebtedness.
     (o) Covenants of Lender. Until all of the Senior Indebtedness has been
fully paid:
     (i) Lender shall not hereafter give any subordination in respect of this
Note;
     (ii) Lender shall not release, exchange, extend the time of payment of,
compromise, set off or otherwise discharge any part of this Note or modify or
amend this Note; and
     (iii) Lender hereby undertakes and agrees for the benefit of the payees of
Senior Indebtedness that, upon the occurrence and during the continuance of a
Senior Default, it shall take any actions reasonably requested by any payee of
Senior Indebtedness to effectuate the full benefit of the subordination
contained herein.

     (p) Miscellaneous.
     (i) To the extent permitted by applicable law, Lender and Walker hereby
waive (A) notice of acceptance hereof by the payees of the Senior Indebtedness,
and (B) all diligence in the collection or protection of or realization upon the
Senior Indebtedness.
     (ii) Walker and Lender hereby expressly agree that the payees of Senior
Indebtedness may enforce any and all rights derived herein by suit, either in
equity or law, for specific performance of any agreement contained in this
Section 4 or for judgment at law and any other relief whatsoever appropriate to
such action or procedure.
     (iii) Lender acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each payee of Senior Indebtedness, whether such Senior Indebtedness was created
or acquired before or after the issuance of this Note, and each payee of Senior
Indebtedness shall be deemed conclusively to have relied upon such subordination
provisions in acquiring and continuing to hold such Senior Indebtedness.

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<PAGE>

5. Conversion Right.

     (a) Conversion Option. Lender shall have the option (the "Conversion
Option"), exercisable at any time and from time to time on or prior to the
earlier of (i) the Maturity Date and the last date of the Prepayment Notice
Period to convert all or any portion of the principal amount evidenced by this
Note, and all (but not a portion of) accrued and unpaid interest on such
principal to be converted, into such whole number of fully-paid and
non-assessable shares (each, a "Conversion Share") of Common Stock as is equal
to the quotient obtained by dividing (i) the amount of principal (and accrued
and unpaid interest thereon) being so converted by (ii) the Conversion Price (as
hereinafter defined), as last adjusted and then in effect. The Conversion Price,
until adjusted as provided in paragraph 5(d), shall be (x) $0.71 for the period
terminating on December 5, 2005 (i.e., 35,211 Conversion Shares for each $25,000
of principal, and accrued and unpaid interest thereon, so converted) or (y)
$1.25 for the period commencing on December 6, 2005 and terminating on the
Maturity Date (i.e., 20,000 Conversion Shares for each $25,000 of principal, and
accrued and unpaid interest thereon, so converted).

     (b) Method of Exercise. Lender shall exercise the Conversion Option by
delivering to Walker, during regular business hours, this Note with the
Conversion Notice attached as Appendix A to this Note duly completed and
executed. Conversion shall be deemed to have been effected immediately prior to
the close of business on the date (the "Conversion Date") upon which such
delivery is properly made. As promptly as practicable following the Conversion
Date, Walker shall issue and deliver to Lender (or to such other party as
designated by Lender), at the place designated by Lender, a stock certificate to
which Lender is entitled and a check or cash in respect of any fractional
interest in a share of Common Stock as provided in paragraph 5(b). Lender (or
the party in whose name the stock certificate(s) evidencing the Conversion
Shares are to be issued) shall be deemed to have become the holder of record of
the Conversion Shares immediately prior to the close of business on the
applicable Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event Lender shall be deemed to have become the
holder of record of the Conversion Shares immediately prior to the close of
business on the next succeeding date on which the transfer books are open, but
the Conversion Price shall be that in effect on the Conversion Date. Upon
conversion of only a portion of the principal and accrued and unpaid interest
evidenced by this Note, Walker shall issue and deliver to Lender, at the sole
expense of Walker, a new note, substantially in the form of this Note,
evidencing the remaining principal outstanding and due Lender which new Note
shall be dated as of the last date upon which accrued interest under this Note
shall have been paid.

     (c) Fractional Shares. No fractional shares of Common Stock or scrip shall
be issued upon conversion of indebtedness evidenced by this Note. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion, Walker shall pay a cash adjustment in respect of such fractional
share in an amount equal to the product resulting from multiplying (i) the
Conversion Price as in effect on the relevant Conversion Date by (ii) such
fractional share. A fractional share shall not be entitled to interest or
dividends, and Lender shall not be entitled to any rights as stockholders of
Walker with respect of such fractional interest.

                                       9
<PAGE>

     (d) Adjustment to Conversion Price. The Conversion Price shall be subject
to adjustment from time to time as provided in this Paragraph 5(d).
     (i) If Walker shall at any time, (A) pay a dividend on outstanding Common
Stock in shares of Common Stock or effect a distribution to holders of
outstanding Common Stock payable in shares of Common Stock, (B) subdivide
outstanding Common Stock, (C) combine outstanding Common Stock into a smaller
number of shares of Common Stock or (D) issue any securities of Walker in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which Walker is the continuing or
surviving corporation), the Conversion Price in effect immediately prior to such
an event shall be adjusted so that Lender, upon surrendered of this Note for
conversion, in whole or part, shall be entitled to receive the number and kind
of shares of Common Stock and other securities which Lender would have owned or
have been entitled to receive after the happening of such event had the Note
been converted immediately prior to the happening of such event. An adjustment
made pursuant to this subparagraph (i) shall become effective (x) immediately
after the record date, in the case of a dividend, or (y) immediately after the
effective date in the case of a subdivision, combination or reclassification.
     (ii) If Walker shall at any time or from time to time issue (A) shares of
Common Stock, (B) rights, options, warrants or other securities entitling the
holder thereof to subscribe for, purchase, convert to, exchange for or otherwise
acquire Common Stock (excluding any such issuance that results in an adjustment
under subparagraph 5(d)(i) or (C) rights, options, warrants or other securities
entitling the holder thereof to subscribe for, purchase, convert to, exchange
for or otherwise acquire such convertible or exchangeable securities (in each
case, other than Excluded Securities (as defined in subparagraph 5(d)(iii) and
other than issuances that result in an adjustment under subparagraph 5(d)(i),
without consideration or for a consideration per share of Common Stock less than
the Conversion Price in effect immediately prior to the issuance of such Common
Stock or such rights, options, warrants or other securities, the Conversion
Price in effect immediately prior to each such issuance shall forthwith be
adjusted to a price equal to the (1) per share issuance price of such shares of
Common Stock, (2) per share exercise price of such rights, options, warrants or
other securities, or (3) per share subscription price of such rights, options
warrants or other securities, as the case may be.
     (iii) For purposes of subparagraph 5(d)(ii), the term "Excluded Securities"
shall mean: shares of Common Stock:
     (A) issued to employees or directors of, or consultants to, Walker,
pursuant to any option, warrant, agreement, plan or arrangement approved by the
Board of Directors of Walker (or committee of the Board of Directors of Walker),
but only to the extent that the maximum aggregate number of shares of Common
Stock so issued or issuable pursuant to all such options, warrants, agreements,
plans and arrangements does not exceed (x) 500,000 shares of Common Stock in the
aggregate in any fiscal year of Walker or (y) 2,500,000 shares of Common Stock
in the aggregate (in each case subject to adjustment to reflect stock splits,
stock dividends, stock combinations, recapitalizations and like occurrences),

                                       10
<PAGE>

     (B) issued upon the exercise of the warrants and options exercisable for
Common Stock outstanding as of the date of the PPM,
     (C) issuable upon exercise of warrants issued to Strasbourger Pearson
Tulcin Wolff Incorporated ("Strasbourger Pearson") in connection with the
Private Placement,
     (D) issuable upon conversion of any of the Secured Notes,
     (E) issuable in connection with any acquisition by Walker of the equity
securities or assets of a bona fide third party, provided that the per share
acquisition price (including, but not limited to, goodwill and other
intangibles), as determined in good faith by the Board of Directors of Walker,
irrespective of any accounting treatment, equals or exceeds the per share
current Market Price on the effective date of such acquisition, and
     (F) issued in connection with any equity or debt financing in which
Strasbourger Pearson shall be entitled, directly or indirectly, to a fee or
commission of any kind.
     (iv) For the purpose of subparagraph 5(d)(iii), the current Market Price
per share of Common Stock at any date shall be deemed to be the average daily
Closing Price of the shares of Common Stock for twenty consecutive trading days
ending within fifteen days before the date in question. The term "Closing Price"
of the shares of Common Stock for a day or days shall mean (i) if the shares of
Common Stock are listed or admitted for trading on a national securities
exchange, the last reported sales price regular way, or, in case no such
reported sale takes place on such day or days, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the shares of the Common Stock are listed
or admitted for trading, or (ii) if the shares of Common Stock are not listed or
admitted for trading on a national securities exchange, (A) the last transaction
price for the Common Stock on The Nasdaq Stock Market ("Nasdaq") or, in the case
no such reported transaction takes place on such day or days, the average of the
reported closing bid and asked prices thereof quoted on Nasdaq, or (B) if the
shares of Common Stock are not quoted on Nasdaq, the average of the closing bid
and asked prices of the Common Stock as quoted on the Over-The-Counter Bulletin
Board maintained by the National Association of Securities Dealers, Inc. (the
"Bulletin Board"), or (C) if the shares of Common Stock are not quoted on Nasdaq
nor on the Bulletin Board, the average of the closing bid and asked prices of
the common stock in the over-the-counter market, as reported by The Pink Sheets,
LLC, or an equivalent generally accepted reporting service, or (iii) if on any
such day or days the shares of Common Stock are not quoted by any such
organization, the fair market value of the shares of Common Stock on such day or
days, as determined in good faith by the Board of Directors of Walker, shall be
used.

     (e) Certificate and Notice of Adjustment to Conversion Price. Whenever the
Conversion Price shall be adjusted as provided in paragraph 5(d), Walker shall
forthwith file, at the office of Walker, a statement, signed by its chief
financial officer, showing in detail the facts requiring such adjustment and the
Conversion Price then in effect. Walker also shall cause a copy of such
statement to be sent to Lender. Where appropriate, such copy may be given in
advance and may be included as part of a notice required to be mailed under the
provisions of paragraph 5(f).

                                       11
<PAGE>

     (f) Advanced Notice of Adjustment Events. In the event Walker shall propose
to take any action of the types described in paragraph 5(d), Walker shall give
notice to Lender, which notice shall specify the record date, if any, with
respect to such action and the date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be at the date of such notice) on the Conversion Price and the
number, kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of the principal and accrued interest evidenced by this Note. In
the case of any action which would require the fixing of a record date, such
notice shall be given at least twenty days prior to the date so fixed, or, in
case of all other action, such notice shall be given at least 30 days prior to
the taking of such proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.

     (g) Liability for Taxes on Conversion Shares. Walker shall pay all
documentary, stamp and other transactional taxes attributable to the issuance of
Conversion Shares or other securities issuable upon conversion of any portion of
the principal and accrued interest evidenced by this Note if issued in the name
of Lender. In all other cases, such taxes shall be paid by Lender.

     (h) Reservation of Conversion Shares. Walker shall reserve, free from
preemptive rights, out of its authorized but unissued shares of Common Stock a
sufficient number of shares of Common Stock for issuance as Conversion Shares.

     (i) Status of Conversion Shares. All Conversion Shares which may be issued
in connection with the conversion provisions set forth in this Section 5 will,
upon delivery by Walker, be duly and validly issued, fully paid and
non-assessable, with no personal liability attaching to the ownership of such
Conversion Shares, and free from all taxes, liens or charges with respect
thereto and not subject to any preemptive rights.

6. Automatic Conversion.

     (a) Mandatory Conversion.
     (i) The outstanding principal amount of this Note and all accrued and
unpaid interest owing under this Note shall automatically be converted into
shares (each, a "Mandatory Conversion Share") of Common Stock, at the Conversion
Price then in effect, as of the date (the "Mandatory Conversion Date")
immediately following the twentieth consecutive trading date on which each of
the following events shall have occurred:
     (A) the Closing Price (as defined in subparagraph 5(d)(iv)) of the Common
Stock equals or exceeds $3.00 (the "Threshold Price") and
     (B) the trading volume of the Common Stock equals or exceeds 50,000 shares.
    (ii) The Mandatory Conversion Date shall be suspended, and the automatic
conversion pursuant to subparagraph 6(a)(i) shall not be effective, until such
date as the Mandatory Conversion Shares are:
     (A) subject to an effective registration statement under the Securities
Act, or

                                       12
<PAGE>

     (B) available for resale pursuant to Rule 144 promulgated under the
Securities Act.

     (b) Issuance of Mandatory Conversion Shares. On the Mandatory Conversion
Date, each Mandatory Conversion Share issuable upon conversion of the principal
amount represented by this Note shall be deemed issued and the principal amount
evidenced by this Note and all accrued and unpaid interest owing under this Note
shall be deemed paid in full.

     (c) Surrender of Note. Promptly after the Mandatory Conversion Date, this
Note shall be surrendered by Lender to Walker. Upon surrender of this Note to
Walker, or to such other agent or agents as may be appointed by Walker, Lender
shall be entitled to a certificate representing the number of Conversion Shares
that the outstanding principal amount evidenced by this Note and all accrued and
unpaid interest owing under this Note has been converted into at the Conversion
Price as in effect on the Mandatory Conversion Date, and this Note as
surrendered shall be cancelled. Until so surrendered, this Note will be deemed
from and after the Mandatory Conversion Date, for all corporate purposes, to
represent solely the right to receive the Mandatory Conversion Shares at the
Conversion Price as in effect on the Mandatory Conversion Date and the Lender
shall not be entitled to vote or receive any dividend or other distribution
payable to holders of shares of Common Stock, nor shall Lender be deemed a
creditor of Walker at any time after the Mandatory Conversion Date; provided,
however, that, upon the surrender of this Note in exchange for a certificate
representing the applicable number of Conversion Shares, there shall be paid to
the holder of the certificate representing the Mandatory Conversion Shares
issued upon such exchange of such certificate for this Note, the amount of
dividends or other distributions which theretofore became payable and were not
paid with respect to the number of Mandatory Conversion Shares represented by
the certificate issued upon such surrender. In no event shall the persons
entitled to receive such dividends or distributions be entitled to receive
interest thereon. Notwithstanding anything to the contrary in this Paragraph
6(c), neither Walker nor any other party hereto shall be liable to Lender or any
other party for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.

     (d) No fractional Mandatory Conversion Shares or scrip shall be issued upon
conversion of indebtedness evidenced by this Note pursuant to this Section 6.
Instead of any fractional Mandatory Conversion Shares which would otherwise be
issuable upon conversion, Walker shall pay a cash adjustment in respect of such
fractional Mandatory Conversion Share in an amount equal to the product
resulting from multiplying (i) the Conversion Price as in effect on the
Mandatory Conversion Date by (ii) such fractional Mandatory Conversion Share. A
fractional Mandatory Conversion Share shall not be entitled to interest or
dividends, and Lender shall not be entitled to any rights as a stockholder of
Walker with respect of such fractional interest.

     (e) Walker hereby covenants that all Mandatory Conversion Shares which are
issuable upon the conversion of the outstanding principal amount of this Note
under this Section 6 will, upon issuance in accordance with the terms hereof, be
validly issued, fully-paid and non-assessable and free from all taxes, liens and
charges with respect to the issue thereof.

                                       13
<PAGE>

     (f) Liability for Taxes on Mandatory Conversion Shares. Walker shall pay
all documentary, stamp and other transactional taxes attributable to the
issuance of Mandatory Conversion Shares or other securities issuable upon
conversion of any portion of the principal and accrued interest evidenced by
this Note if issued in the name of Lender. In all other cases, such taxes shall
be paid by Lender.

     (g) Reservation of Mandatory Conversion Shares. Walker shall reserve, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock a sufficient number of shares of Common Stock for issuance as Mandatory
Conversion Shares.

     (h) Status of Mandatory Conversion Shares. All Mandatory Conversion Shares
which may be issued in connection with the conversion provisions set forth in
this Section 6 will, upon delivery by Walker, be duly and validly issued, fully
paid and non-assessable, with no personal liability attaching to the ownership
of such Mandatory Conversion Shares, and free from all taxes, liens or charges
with respect thereto and not subject to any preemptive rights.

7. Enforcement. All disputes regarding the enforcement or construction of
this Note shall be resolved in accordance with the Security Agreement and may
not be resolved independently of the enforcement or construction of the Security
Agreement which has been made a part hereof.

8. Assignment. This Note is not assignable by Walker, and any purported
assignment of this Note shall be null and void and of no effect.

9. Governing Law. This Note and all rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and be performed wholly within such State,
without regard to such State's conflicts of laws principles.

10. Notices. All requests, demands, notices and other communications
required or otherwise given under this Agreement shall be sufficiently given if
(a) delivered by hand, against written receipt therefor, (b) forwarded by
overnight courier requiring acknowledgment of receipt or (c) mailed by postage
prepaid, registered or certified mail, return receipt requested, addressed, in
the case of clauses (b) or (c) of this Section 8 as follows:

         If to Walker, to:                  Mitchell Segal, President
                                            Walker Financial Corporation
                                            370 Old Country Road - Second Floor
                                            Garden City, New York  11530

                  with a copy to:           Keith S. Braun, Esq.
                                            Snow Becker Krauss P.C.
                                            605 Third Avenue
                                            New York, New York 10158-0125

         If to Lender, to:                  The address of Lender as set forth
                                            in the Subscription Agreement

                                       14
<PAGE>

or, in the case of any of the parties hereto, at such other address as such
party shall have furnished in writing, in accordance with this Section 10, to
the other parties hereto. Each such request, demand, notice or other
communication shall be deemed given (a) on the date of delivery by hand, (b) on
the first business day following the date of delivery to an overnight courier or
(c) three business days following mailing by registered or certified mail.

11. Director Nominee. Upon issuance of Secured Notes in the aggregate
amount of at least $650,000, the holders of a majority of the outstanding
principal amount of the Secured Notes shall have the right to designate in
writing one person as the designee of the holders of all of the Secured Notes
for membership on the board of directors of Walker. Upon notification of such
designation, Walker shall increase its board of directors by one member and
elect such designee to fill the newly-created board vacancy. For so long as at
least $650,000 in aggregate principal amount of Secured Notes remain
outstanding, Walker shall use its best efforts to cause the designee of the
holders of the Notes to be elected as a director of the Company at all
applicable meetings of the stockholders of Walker. In the event that the
membership of the board of directors of the Company shall contain of eight or
more individuals, other than designees of the holders of the Secured Notes, the
number of designees referred to in this Section 11 shall be increased to two
and, in the event that the membership of the board of directors shall contain
twelve or more individuals, other than designees of the holders of the Secured
Notes, the number of designees referred to in this Section 11 shall be increased
to three.

12. Further Covenants of Walker. Until the Subordinated Indebtedness is
paid in full or other than with the written consent of either (x) Strasbourger
Pearson or (y) the holders of Secured Notes aggregating more than 50% of the
entire then outstanding principal amount of Secured Notes, Walker shall not:

     (a) incur indebtedness for borrowed money, except where such borrowed money
is (i) utilized, in whole or part, to retire all Senior Indebtedness and/or
Subordinated Indebtedness or (ii) incurred in connection with the acquisition of
a business (whether in the form of a stock or asset acquisition or otherwise);

     (b) increase the principal amount of the Senior Indebtedness to more than
$150,000; or

     (c) pay or declare any dividend payable in cash on the Common Stock or any
other equity securities of Walker.

                                       15
<PAGE>

     IN WITNESS WHEREOF, this Note has been duly executed and delivered as of
the date first above written.

                                      Walker Financial Corporation

                                      By:
                                          -------------------------
                                          Mitchell Segal, President

ATTEST:

By:
     ------------------------
     Peter Walker, Secretary

                                       16
<PAGE>
                                                                      Appendix A

                                CONVERSION NOTICE

To Walker Financial Corporation:

     The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert the principal evidenced by this Note, or portion hereof
below designated, and all accrued and unpaid interest on such principal for
shares of Common Stock of Walker Financial Corporation or securities or other
property or cash in accordance with the terms of this Note, and directs that the
shares, other securities, other property or cash deliverable upon the
conversion, together with any check in payment for fractional shares and a new
note evidencing any remaining principal amount, be issued and delivered to the
registered holder of this Note unless a different name has been indicated below.
If the shares or other securities are to be registered in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.

                              (Sign exactly as name appears on the cover of this
                                  Note and the signature(s) must be guaranteed)

Principal Amount of this Note to be Converted:                $

Fill in for registration of shares or other securities if to be delivered,
and of a new note if to be issued, otherwise than to the registered holder.

Name:

Social Security or Other Taxpayer Identification Number:

Address:

                                       A-1SECURITY AGREEMENT

     This Security Agreement (this "Agreement"), dated as of December 5, 2003,
is between Walker Financial Corporation, a Delaware corporation (together with
all of its subsidiaries, the "Debtor"), the persons listed on Schedule I to this
Agreement (each, a "Secured Party") and Strasbourger Pearson Tulcin Wolff,
Incorporated, as agent for the Secured Parties.

     WHEREAS, the Secured Parties have, individually purchased from Debtor a
series of 10% Senior Subordinated Secured Convertible Promissory Notes (each, a
"Promissory Note") in the minimum aggregate principal amount of $650,000 and in
the maximum aggregate principal amount of $1,600,000 (subject to an
over-allotment right to increase the aggregate principal amount of the
Promissory Notes by an additional $240,000), registered in the names of the
individual Secured Parties; and

     WHEREAS, as a condition precedent to the making of such loan, the Secured
Parties have required that Debtor grant the Secured Parties, collectively and
not individually, a security interest in the assets of Debtor and that Debtor
execute and deliver this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants of the Debtor and
Secured Party set forth herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:

                                    ARTICLE I
                                  DEFINED TERMS

1.1. Accounts. As used herein, the term "Accounts" shall mean any and all
rights of Debtor to payment for goods sold or leased or for services rendered
which are not evidenced by an Instrument (as hereinafter defined) or Chattel
Paper (as hereinafter defined), whether or not such rights have been earned by
performance, all guaranties and security therefore and all Debtor's interests
and rights in and to any and all good giving rise thereto.

1.2. Account Debtor. As used herein, the term "Account Debtor" shall mean
that party (other than Debtor) which is obligated on or under any Account,
Chattel Paper or General Intangible (as hereinafter defined).

1.3. Chattel Paper. As used herein, the term "Chattel Paper" shall mean a
writing or writings evidencing both a monetary obligation and a security
interest in, or a lease or consignment of, specific goods. When a transaction is
evidenced both by a security agreement or a lease and by an Instrument (as
hereinafter defined) or a series of Instruments, the group of writings taken
together constitutes Chattel Paper.

1.4. Documents. As used herein, the term "Documents" shall mean any and all
documents of title.

<PAGE>

1.5. Equipment. As used herein, the term "Equipment" shall mean any and all
tangible personal property and fixtures of Debtor (other than Inventory, Chattel
Paper, Documents, Instruments and money) including, without limitation,
communications systems, computer systems, computer hardware and software,
heating ventilation, air conditioning and other utility installations,
furnishings, furniture, fixtures and other goods used or brought for use
primarily in business, together with any and all accessions, accessories, parts
and appurtenances thereto.

1.6. Event of Default. As used herein, the term "Event of Default" shall
have the meaning as set forth under the Note.

1.7. General Intangibles. As used herein, the term "General Intangibles"
shall mean any and all personal property (including, without limitation, things
in action) other than Inventory, Equipment, Accounts, Chattel Paper, Documents,
Instruments and money, including, without limitation, contract rights, corporate
or other business records (including, without limitation, customer lists,
correspondence, advertising materials, computer programs, printout and other
computer materials, and records), inventions, designs, patents, patent
applications, service marks, trademarks, trademark applications, trade names,
trade secrets, registrations, copyrights, licenses, permits, franchises,
warranties, rights and claims against third parties, rights to indemnification,
leasehold and subleasehold interest in personal property, plans, specifications,
drawings, appraisals, reports, security interests and security held by or
granted to Debtor, tax refunds, tax refund claims, royalty and product rights,
rights to the retrieval from third parties of electronically processed and
recorded data pertaining to any Collateral, and goodwill, whether or not
associated with any of the foregoing.

1.8. Instrument. As used herein, the term "Instrument" shall mean any and
all negotiable instruments, certificated securities and all other writings which
evidence a right to the payment of money and is of a type which is in the
ordinary course of business transferred by delivery with any necessary
endorsement or assignment, including, without limitation, drafts, checks,
certificates of deposit, notes, bills of exchange and uncertificated securities.

1.9. Inventory. As used herein, the term "Inventory" shall mean any and all
goods owned or held by or for the account of Debtor for sale or lease or for
furnishing under a contract of service, all raw materials, work in process or
materials incorporated in or consumed in the production of any of the foregoing,
and supplies, in each case wherever the same shall be located, whether in
transit, on consignment, or otherwise, and all property the sale or lease of
which has given rise to Accounts, Chattel Paper or Instruments where such
property has been returned to Debtor or repossessed by such Debtor or stopped in
transit or is to be used or consumed in Debtor's business.

1.10. Obligations. As used herein, the term "Obligations" shall mean any
and all of a Debtor's liabilities, obligations and indebtedness to the Secured
Parties under the this Agreement and the Promissory Notes.

1.11. Terms Defined in Uniform Commercial Code. All other terms used in
this Agreement which are not specifically defined herein or the definitions of
which are not incorporated herein by reference shall have the meanings assigned
to such terms in the Uniform Commercial Code in effect in the State of New York
(the "UCC") to the extent such other terms are defined therein.

                                       2
<PAGE>

1.12. Singular/Plural; Headings. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular,
references to the singular include the plural and "or" has the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereunder"
and other similar terms contained in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The headings in
this Agreement are for reference purposes only and shall not control or affect
the construction of this Agreement or the interpretation hereof in any respect.
Any and all references to sections, subsections and exhibits relate to this
Agreement unless otherwise provided.

1.15. Tenancy Interests. As used herein, the term "Tenancy Interests"
means, to the extent not included in "General Intangibles," all of Debtors
right, title and interest in and to its leases of real property where the Debtor
is the tenant.

                                   ARTICLE II
                                   COLLATERAL

2.1. Collateral. As security for the payment and performance of all of the
Obligations, Debtor hereby mortgages, pledges and assigns to the Secured
Parties, and hereby creates in and grants to the Secured Parties, a continuing
security interest in and to all of Debtor's right, title and interest in and to
all personal property (tangible and intangible) and fixtures of whatever kind
and wherever located, whether now owned or hereafter created or acquired
(collectively, the "Collateral"), including, without limitation, the following:

         (a)      all Accounts;
         (b)      all Chattel Paper;
         (c)      all Documents;
         (d)      all Equipment;
         (e)      all General Intangibles;
         (f)      all Instruments;
         (g)      all Inventory;
         (h)      all Investment Securities;
         (i)      all Tenancy Interests (to the extent permitted by the
                  applicable landlords); and
         (j)      all increases in, additions and accessions to, substitutions
                  for, and replacements, proceeds and products of, any of the
                  foregoing.

                                   ARTICLE III
                           DEBTOR'S USE OF COLLATERAL

3.1. Processing and Sales. So long as an Event of Default shall not have
occurred and be continuing, Debtor may use, sell, lease or otherwise deal in the
Collateral free of restriction or limitation, except for those limitations and
restrictions expressly provided herein.

                                       3
<PAGE>

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

                  Debtor hereby represents, warrants and agrees as follows:

4.1. Chief Executive Offices. Debtor's chief executive office and principal
place of business are located at the address set forth in Exhibit A hereto. The
Inventory and Equipment are located at the locations set forth in Exhibit B
hereto. If any change in any such locations occurs, Debtor shall notify the
Secured Parties and Agent thereof in writing.

4.2. Ownership of Collateral. Except for any liens arising under that
certain (i) North Carolina Deed of Trust, dated July 3, 2002 (the "Mortgage
Facility"), between Kelly Color Laboratories, Inc. and Branch Banking & Trust
Company (Mortgagee"), and (ii) Security Agreement, dated as of July 25, 2003,
between Debtor and Dr. David Cohen, Debtor lawfully owns its Collateral free and
clear of any and all liens, security interests, claims, charges, encumbrances,
taxes and assessments whatsoever, except for interests of lessors of leased
Equipment used by Debtor in its operations and Debtor shall defend the title to
its Collateral against any and all third parties and against all claims and
demands whatsoever.

                                    ARTICLE V
                            COVENANTS AND AGREEMENTS

  Debtor covenants and agrees that so long as this Agreement remains in effect:

5.1. Possession. Debtor shall retain possession of the Collateral and shall
not sell, exchange, assign, loan, deliver, lease, mortgage or otherwise dispose
of same without the prior written consent of the Agent, except as otherwise
required under the terms of the Mortgage Facility or in the ordinary course of
business consistent with the past practice of Debtor.

5.2. Liens. Except as otherwise required under the terms of the Mortgage
Facility, Debtor shall keep the Collateral free and clear of any and all liens,
charges, encumbrances, taxes and assessments.

5.3. Taxes. Debtor shall pay, when due, any and all taxes, assessments and
license fees relating to the Collateral.

5.4. Repairs. Debtor shall maintain the Collateral in good repair and
working order at Debtor's cost and expense, normal wear and tear excepted.
Debtor shall promptly notify the Agent of any material damage to any of the
Collateral.

5.5. Insurance. Debtor shall keep the Collateral insured against loss by
fire, theft and other casualties in amounts reasonably acceptable to the Agent.
Upon the request of the Agent, Debtor shall cause the Agent and Secured Parties
to be named as a loss payee on all policies providing such insurance and shall
furnish the Agent with a certificate of insurance as evidence thereof and a copy
of such policies. Upon the request of the Agent, Debtor shall cause to be added
to any such insurance policy a clause requiring the Agent to be notified by the
applicable insurance company of any cancellation or lapse of any such policy at
least ten days in advance of any such cancellation or lapse.

                                       4
<PAGE>

5.6. Change of Location. Debtor shall give at least 30 days' prior written
notice to the Agent of the opening of a new place of business where any of the
Collateral or books or records relating thereto are to be located, of any change
in the location of any of the Inventory or Equipment (other than goods in
transit) from that listed in Exhibit B hereto, and of any change in the location
of its chief executive office and principal place of business from that set
forth in Exhibit A hereto.

5.7. Inspection and Verification of Books, Records and Collateral. The
Agent or any third party designated by its shall have the right, but shall not
have the obligation, at any reasonable time, without hindrance or delay, at the
Agent's and Secured Parties's expense: (a) to inspect, audit and examine such
books, records and accounts of Debtor relating to the Collateral and to make
copies thereof and extracts therefrom; (b) to make such verification concerning
the Collateral as it may consider reasonable under the circumstances; and (c) to
discuss the business, properties, operations, prospects and condition (financial
or otherwise) of Debtor and its subsidiaries, if any, with its officers.

5.8. Safekeeping of Equipment and Inventory. The Agent and Secured Parties
shall not be responsible for: (i) the safekeeping of the Equipment, Inventory or
other Collateral; (ii) any loss or damage to the Equipment, Inventory or other
Collateral; (iii) any diminution in the value of the Equipment, Inventory or
other Collateral; or (iv) any act or default of any repairman, bailee or other
person or entity ("Person") with respect to the Equipment, Inventory or other
Collateral. Any and all risks of loss, damage, destruction or diminution in
value of the Equipment, Inventory or other Collateral shall be borne solely by
Debtor.

5.9. Maintenance of Security Interests. Subject to the rights of Mortgagee
under the Mortgage Facility, Debtor shall do any and all acts and things, and
will execute and deliver, all instruments (including without limitation, an
assignment of Tenancy Interests, an assignment of trademarks, any mortgages,
pledges, assignments, security agreements, financing statements, continuation
statements and other similar items) reasonably requested by the Agent to
establish, perfect, maintain and continue the perfection and priority of the
security interest of the Secured Parties in the Collateral. Debtor authorizes
the Agent to file financing statements describing the Collateral.

                                   ARTICLE VI
                                    REMEDIES

6.1.     Rights and Remedies Generally.

     (a) Upon the occurrence of an Event of Default, and subject to the terms of
the Loan Agreement and the Note, the Agent, on behalf of the Secured Parties,
shall be entitled to exercise, in addition to any and all rights and remedies
contained in this Agreement and any and all other agreements with Debtor, any
and all of the rights and remedies available to a Secured Parties under the UCC
or applicable law, including, without limitation:

                                       5
<PAGE>

     (i) without notice, demand or legal process, to enter upon any premises of
Debtor and take possession of any of the Collateral and the books and records of
Debtor constituting Collateral or relating to the Collateral;
     (ii) require Debtor to assemble, at such Debtor's expense, any and all of
the Inventory and Equipment at reasonably convenient location(s) designated by
the Agent, including the premises of Debtor, and to make the same available to
the Agent and Secured Parties and reasonably cooperate in all material respects
in connection with the Agent's and Secured Parties's rights hereunder; and
     (iii) to sell, lease, transfer, endorse, assign or deliver the whole or any
part of the Collateral at any public or private sale; and, upon consummation of
any such sale, the Agent shall have the right to assign, transfer, endorse and
deliver to the purchaser or purchasers thereof the Collateral or any portion
thereof so sold, and each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Debtor.

     (b) Debtor hereby irrevocably appoints the Agent as its attorney-in-fact
(which appointment shall be irrevocable and deemed coupled with an interest),
with full authority in the place and stead of Debtor and in the name of Debtor
or otherwise, from time to time after an Event of Default has occurred, to take
any action and to execute any instrument which the Agent may deem necessary or
advisable to:

     (i) obtain and adjust insurance required to be paid to the Agent or Secured
Parties pursuant to this Agreement;
     (ii) ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;
     (iii) receive, endorse, and collect any drafts or other Instruments,
Documents and Chattel Paper in connection with clause (a) or (b) of this
Paragraph 6.1(b);
     (iv) prepare, execute and file appropriate UCC financing statements; and
     (v) file any claims or take any action or institute any proceedings which
the Agent may deem necessary or desirable for the collection of any of the
Collateral or the assignment or other transfer of the Collateral in connection
with the exercise of the Agent's and Secured Parties's remedies under this
Agreement.
Notwithstanding the foregoing, such appointment (other than the appointment
in clause (iv) of this Paragraph 6.1(b)) shall be effective only upon an Event
of Default and then only if and to the extent necessary to permit the Agent and
Secured Parties the practical realization of rights and remedies granted under
this Agreement.

     (c) The Agent shall give the Debtor at least ten days' written notice
(which the Debtor agrees is reasonable notification within meaning of the
applicable sections of the UCC) of the Agent's intention to attempt to make any
such public or private sale of Collateral. Such notice, in the case of public
sale, shall state the time and place for such sale (which may be on the premises
of Debtor). Any public sale of any of the Collateral shall be held at such time
or times within ordinary business hours and at such place or places as the Agent
may fix and so state in the notice of such sale. At any such sale, the
Collateral or any portion thereof may be sold in its entirety or in separate
parcels, as determined by the Agent (in its sole discretion). The Agent may,
without any notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. As an alternative to exercising
the power of sale herein conferred upon it, the Agent may proceed by action at
law or in equity to foreclose the security interest created under this Agreement
and sell the Collateral or any portion thereof pursuant to judgment or decree of
a court or courts having competent jurisdiction.

                                       6
<PAGE>

6.2. Disposition of Collateral. The net proceeds realized by the Agent and
Secured Parties upon any sale or other disposition, after deduction for any and
all actual and reasonable expenses incurred in connection with the retaking,
holding, preparing for sale or selling of the Collateral (including, without
limitation, reasonable attorneys' fees and disbursements) shall be applied
toward satisfaction of the Obligations. The Agent and Secured Parties shall pay
to Debtor any surplus realized upon such sale or other disposition. Debtor shall
remain liable for any deficiency. The commencement of any action, legal or
equitable, or the rendering of any judgment or decree for any deficiency shall
not affect the Secured Parties's security interest in the Collateral. Debtor
agrees that the Agent and Secured Parties shall not be under any obligation
whatsoever at any time to collect, attempt to collect, protect or enforce the
Collateral or any security therefor (which Debtor agrees to do at its own
expense), but the Agent may do so in its sole discretion at any time after the
occurrence and during the continuation of an Event of Default and at such times
the Agent shall have the right to take any steps by judicial process or
otherwise to enforce the Collateral or any security therefor.

6.3. Waiver of Notice. Debtor waives any and all rights to notice of any
kind prior to the exercise by the Agent or Secured Parties of their rights to
take possession of the Collateral without judicial process.

                                   ARTICLE VII
                       APPOINTMENT AND AUTHORITY OF AGENT

7.1. Compensation. The Agent shall be entitled to reasonable compensation
for its services hereunder and shall be reimbursed for all reasonable expenses,
disbursements and advances (including reasonable attorney's fees and expenses)
incurred or made by it in performance of its duties under this Agreement. Such
reasonable compensation, disbursement, expenses and advances shall be borne by
the Secured Parties, jointly and severally, and shall be paid promptly upon
request by the Agent.

7.2. Discharge. The Agent may resign and be discharged from its duties
under this Agreement at any time by giving notice of such resignation to the
Debtor and Secured Parties specifying a date (not less than 30 days after the
giving of such notice) when such resignation shall take effect. Promptly after
such notice, the Secured Parties shall appoint a mutually agreeable successor
Agent, such successor Agent to become Agent hereunder upon the resignation date
specified in such notice. If Secured Parties are unable to agree upon a
successor Agent with 30 days after such notice, the Agent shall have the right
to petition a court of competent jurisdiction to appoint a successor, and the
Agent shall continue to serve until its successor is so appointed.

7.3. Limited Duties. The Agent undertakes to perform only such duties as
are specifically set forth in this Agreement and the Subscription Agreements
pursuant to which the Promissory Notes have been issued. The Agent, when acting

                                       7
<PAGE>

or refraining from acting in good faith, shall not be liable for any mistake of
fact or error of judgment by it or for any acts or omissions by it of any kind
unless caused by gross negligence or willful misconduct, and shall be entitled
to rely, and shall be protected in doing so, upon (a) any written notice,
instrument or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so and (b) the
advice of counsel (which may be of the Agent's own choosing, so long as such
counsel is not counsel to Debtor at the time of rendering such advice).

7.4. Litigation. In the event the Agent becomes involved in any litigation
or dispute by reason of this Agreement, Agent is hereby authorized to deposit
with the clerk of a court of competent jurisdiction the Collateral held by Agent
pursuant to this Agreement and, thereupon, shall stand fully relieved and
discharged of any further duties under this Agreement. Furthermore, in the event
the Agent is threatened with litigation by reason of this Agreement, Agent is
hereby authorized to interplead all interested parties in any court of competent
jurisdiction and to deposit with the clerk of such court the Collateral held by
Agent pursuant to this Agreement and, thereupon, shall stand fully relieved and
discharged of any future duties hereunder.

7.5. Additional Secured Parties. Agent shall have the authority to amend
Schedule A to add and/or modify the names of the Secured Parties to conform with
the actual names of the holders of the Promissory Notes.

                                   ARTICLE VII
                                  MISCELLANEOUS

8.1. Secondary Security Interest; Senior Indebtedness. Notwithstanding
anything to the contrary contained in this Agreement or the Promissory Notes,
the security interest granted to the Secured Parties in the Collateral shall
remain secondary in all respects, regardless of the date of perfection, to any
security interest granted to Mortgagee under the Mortgage Facility. In addition,
notwithstanding to the contrary contained in this Agreement and the Promissory
Notes, the security interest granted to the Secured Parties in the Collateral
shall be subordinated and junior in the right of collection to all Senior
Indebtedness as set forth in the Promissory Notes.

8.2. Law. This Agreement is governed by the internal laws of the State of
New York, without giving effect to any laws or principles that would apply the
laws of any other jurisdiction. Each party to this Agreement irrevocably
consents to the non-exclusive jurisdiction of the state and federal courts
located in Nassau County, New York.

8.3. Waivers, Amendments; Assignments. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the parties. This Agreement and all
obligations of the Debtor hereunder shall be binding upon the successors and
assigns of the Debtor, and shall, together with the rights and remedies of the
Secured Parties hereunder, inure to the benefit of the Secured Parties and its
successors and assigns. The rights, benefits, duties and obligations of (a) the
Debtor under this Agreement may not be assigned by Debtor without the Agent's
prior written consent.

                                       8
<PAGE>

8.4. Notices. All notices and other communications called for or required
by this Security Agreement shall be in writing to the respective parties and
given as provided in the Promissory Notes.

8.5. Entire Agreement. This Agreement constitutes the entire agreement
between the parties regarding the subject matter contained herein and supersedes
all prior and contemporaneous undertakings and agreements of the parties,
whether written or oral, with respect to the subject matter herein.

     IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Security Agreement as of the date first above written.

                    Walker Financial Corporation

                    By:        /s/ Mitchell S. Segal
                         -----------------------------------------
                              Mitchell S. Segal, President

                    Secured Parties as Listed on Schedule A,
                    By Strasbourger Pearson Tulcin Wolff,
                           Incorporated, Attorney-in Fact

                    By:        /s/ Michael J. Schumacher
                          ---------------------------------------
                              Michael J. Schumacher, President

                    Strasbourger Pearson Tulcin Wolff, Incorporated

                    By:        /s/ Michael J. Schumacher
                          ---------------------------------------
                             Michael J. Schumacher, President

                                       9
<PAGE>

                                    EXHIBIT A

             Chief Executive Office and Principal Place of Business

Chief Executive Office:             370 Old Country Road - Second Floor
                                    Garden City, New York 11530

Principal Place of Business:        370 Old Country Road - Second Floor
                                    Garden City, New York 11530

                                       10
<PAGE>

                                    EXHIBIT B
                      Locations of Inventory and Equipment

370 Old Country Road - Second Floor
Garden City, New York 11530

517 North Sylvania Avenue
Fort Worth, Texas 76111

513 East Union Street
Morganton, North Carolina 28655

                                       11
<PAGE>

                                   SCHEDULE I
                             List of Secured Parties

<TABLE>
<CAPTION>
                                                                                       Initial Principal Amount
Name of Secured Party                                                                     of Promissory Note
---------------------                                                                  -----------------------

<S>                                                                                     <C>
David L. Cohen......................................................................    $           200,000.00
Mathew A. Dancy.....................................................................                 25,000.00
David Dercher.......................................................................                 25,000.00
Gary M. Glasscock...................................................................                 25,000.00
Michael Goldfarb....................................................................                 50,000.00
Alexander Haas, MD..................................................................                 50,000.00
Nasrollah Jahdi.....................................................................                 20,000.00
Frank G. Lake, III..................................................................                 25,000.00
Jody Nelson.........................................................................                 50,000.00
Garo A. Partoyan....................................................................                 25,000.00
Pisces Partners, L.P................................................................                100,000.00
Michael Poujol and Angela G. Poujol, JTWROS.........................................                 30,000.00
Joseph P. Rienzi and Judith A. Rienzi, JTWROS.......................................                 35,000.00
RS & VS Ltd.........................................................................                 50,000.00
Dr. Stephen Schmidt.................................................................                 35,000.00
Jay Shrager and Carole Shrager, JTWROS..............................................                 50,000.00
Domenic Strazzulla..................................................................                 25,000.00
Sybesma Research Corp. LLC..........................................................                 25,000.00

</TABLE>

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