Document:

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                                                                    Exhibit 10.1

                                    AGREEMENT

         This Agreement ("Agreement") is made as of December 31, 2003, effective
January 26, 2004 (the "Effective Date"), by and between Harris Interactive Inc.
("Harris"), a Delaware corporation with an address of 60 Corporate Woods,
Rochester, New York 14623, and Robert E. Knapp ("Knapp") with an address of 299
Saugatuck Avenue, Westport, Connecticut 06880.

         WHEREAS, Harris desires to employ Knapp as its Vice Chairman and Chief
Executive Officer on the terms and conditions contained in this Agreement, and
Knapp desires to accept such employment,

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

         1.       Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings:

         "Base Salary" means $500,000 per annum, or such higher base salary as
may hereafter be approved by the Board of Directors.

         "Bonus" shall mean non-salary, performance-based cash compensation
under a plan approved for the applicable fiscal year by the Board of Directors
(or a committee thereof) and applicable to the senior executives of Harris
(including Knapp) as a group. Such plan shall provide for a target Bonus for
Knapp of at least $250,000 based upon achievement of Harris's annual financial
plan as approved by its Board of Directors, and for additional Bonus above such
target Bonus for performance exceeding Harris's annual financial plan.

         "Cause" means Knapp's:

                  (a) willful refusal to perform, willful failure to perform
(other than failure due to physical or mental illness), or willful misconduct in
the performance of, the duties set forth in Section 3 hereof provided that such
refusal, failure, or misconduct is material and has continued after Harris has
given Knapp fifteen days written notice specifying the same in reasonable
detail, provided, however, for the purposes of clarity, failure of Harris to
achieve the results outlined in its annual operating plan shall not be "Cause",

                  (b) overt and willful disobedience of orders or directives
issued by the Board of Directors of Harris that are within the scope of Knapp's
duties to Harris, provided that such overt and willful disobedience has
continued after Harris has given Knapp fifteen days' written notice specifying
the same in reasonable detail,

                  (c) conviction, plea of nolo contendere, or express admission
of commission of any felony, whether or not related to performance of duties
under this Agreement,

                  (d) commission of any other illegal act if committed in
connection with the performance of duties for Harris if such act could be
materially and demonstrably injurious to Harris,

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                  (e) breach of the material terms of this Agreement, provided,
however, in the case of any breach that is curable, such breach has continued
uncured after Harris has given Knapp fifteen days' written notice specifying the
same in reasonable detail, and/or

                  (f) material violation of Harris's written rules, regulations
or policies provided that such violation has continued after Harris has given
Knapp fifteen days written notice specifying the same in reasonable detail.

         "Change in Control" means the occurrence of any of the following
events:

                  (a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Harris (not including in the securities
beneficially owned by such Person any securities acquired directly from Harris
or its Affiliates) representing 50% or more of the combined voting power of
Harris's then outstanding securities; or

                  (b) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as directors of
Harris: individuals who, on the date hereof, constitute the Board of Directors
of Harris and any new director (other than a director whose initial assumption
of office is in connection with the settlement of an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of Harris) whose appointment or election by the
Board of Directors of Harris or nomination for election by Harris's stockholders
was approved or recommended by a vote of at least a majority of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or

                  (c) there is consummated a merger or consolidation of Harris
or any direct or indirect subsidiary of Harris with any other corporation or
entity, other than (i) a merger or consolidation which would result in the
voting securities of Harris outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any Parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of Harris or any subsidiary of
Harris, at least 50% of the combined voting power of the securities of Harris,
such surviving entity or any Parent thereof outstanding immediately after such
merger or consolidation or (ii) a merger or consolidation effected solely to
implement a recapitalization of Harris (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of Harris (not including in the securities beneficially owned by such Person any
securities acquired directly from Harris or its Affiliates) representing 50% or
more of the combined voting power of Harris's then outstanding securities; or

                  (d) the stockholders of Harris approve a plan of complete
liquidation or dissolution of Harris, or there is consummated a sale or
disposition by Harris or any of its subsidiaries of any assets which
individually or as part of a series of related transactions constitute all or
substantially all of Harris's consolidated assets, other than any such sale or
disposition to an entity at least 50% of the combined voting power of the voting
securities of which stockholders of Harris are Beneficial Owners in
substantially the same proportions as their Beneficial Ownership of the voting
securities of Harris immediately prior to such sale or disposition.

                  As used herein, "Affiliate" shall have the meaning set forth
in Rule 12b-2 promulgated under Section 12 of the Exchange Act; "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act;
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended

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from time to time; "Parent" shall mean any entity that becomes the Beneficial
Owner of at least 80% of the voting power of the outstanding voting securities
of Harris or of an entity that survives any merger or consolidation of Harris or
any direct or indirect subsidiary of Harris; and "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include Harris or any
of its subsidiaries, a trustee or other fiduciary holding securities under an
employee benefit plan of Harris or any of its Affiliates, an underwriter
temporarily holding securities pursuant to an offering of such securities, or a
corporation or entity owned, directly or indirectly, by the stockholders of
Harris in substantially the same proportions as their ownership of stock of
Harris.

         "Confidential Information" means any and all information and material
proprietary to Harris or not generally known or available to the public in which
Harris has any interest or rights now or in the future, including without
limitation Harris's business strategies, client lists, supplier lists, partners,
agreement terms, pricing, databases, products, designs, processes, systems,
methods; trade secrets, know-how, data, technical plans, drawings, information,
inventions, formulas, technology and anything else that might be construed as
proprietary or confidential in nature. Confidential Information shall not
include information and material (a) publicly available through no breach by
Knapp of any confidentiality obligation to Harris, (b) released by Harris with a
written waiver of confidentiality, (c) lawfully obtained from third parties, or
(d) previously known or developed by third parties independently of Harris and
Knapp provided that such knowledge or development can be independently
substantiated.

         "Disability" shall mean a disability that would, after the passage of
any applicable waiting period, entitle Knapp to coverage under Harris's long
term disability insurance policies covering executive employees ("Disability
Policies").

         "Good Reason" means: (a) material breach of Harris's obligations
hereunder provided that such breach continues after Knapp has given Harris
fifteen days written notice specifying the same in reasonable detail; or (b)
material diminution of Knapp's title of Chief Executive Officer,
responsibilities, or direct reporting line to the Board of Directors, or
assignment of duties or responsibilities which occupy a significant proportion
of Knapp's time that are inconsistent with those described in Section 3 hereof,
in each case after fifteen days written notice of objection by Knapp specifying
the same in reasonable detail; provided, however, that after a Change of
Control, Good Reason shall not include a change of title, reporting line,
responsibilities, and duties so long as such changed title, reporting line, and
reassignment of executive duties are at a level commensurate with the level of
participation of Harris in the controlling Person (such as, for example,
executive duties at a divisional, subsidiary, or group level, if Harris becomes
a division, subsidiary, or group within the controlling Person), or assignment
of other duties not materially inconsistent with duties appropriate for a past
vice chairman and chief executive officer; provided, that following such Change
in Control, Knapp remains the highest ranking employee of such division,
subsidiary or group within the controlling Person; or (c) without Knapp's prior
consent, the relocation of Knapp's principal business location more than fifty
(50) miles from either Rochester, New York or New York City.

         "Termination Date" means the earliest of:

                  (a) December 31, 2007 or a later date, if any, to which such
date is extended by mutual agreement of the parties,

                  (b) the date of Knapp's death, and

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                  (c) the date on which Knapp's employment is terminated under
Section 6(b) or Section 6(c).

         2.       Employment. Harris shall employ Knapp, and Knapp accepts
employment from Harris, as Vice Chairman and Chief Executive Officer of Harris
commencing on the Effective Date and continuing through and including the
Termination Date. The Board of Directors of Harris shall appoint Knapp as a
member of the Board of Directors as of the Effective Date.

         3.       Duties.

                  (a) Duties. Commencing on the Effective Date and continuing
through and including the Termination Date, Knapp shall perform the duties of
Vice Chairman and Chief Executive Officer of Harris, including duties requested
from time to time by the Board of Directors consistent with those generally
performed by the vice-chairman and chief executive officer of a public company
of a size and type similar to Harris. Knapp shall report to the Board of
Directors (or a duly authorized committee thereof) and, subject to the authority
of the Board of Directors, shall have such authority as is reasonably necessary
to carry out his duties hereunder. With the exception of Harris's Chairman,
Gordon Black, all employees of Harris shall report to Knapp, or such other
employee as Knapp shall reasonably designate.

                  (b) Board of Directors. Knapp shall be appointed as a member
of the Board of Directors of Harris as of the Effective Date. Prior to the
Termination Date and prior to any Change of Control, the Board of Directors
shall nominate Knapp for re-election as a director at each annual meeting of
stockholders coinciding with the expiration of his term as a director, and shall
recommend him for re-election, but the failure of the stockholders to elect
Knapp as a member of the Board of Directors shall not constitute a breach of
this Agreement. Knapp will resign as a director on the Termination Date unless
otherwise requested by the Board of Directors.

                  (c) Efforts. Until the Termination Date, Knapp shall devote
his full business time and efforts to his duties under this Agreement.

                  (d) Non-Disparagement. Knapp acknowledges that Harris's
reputation is important in the continued success of its business, and agrees
that he will not discuss or comment in such a manner as may adversely impact the
reputation or public perception, or otherwise disparage, Harris or its officers,
employees, or directors in any manner; provided, however, that Knapp may make
such disclosures as may be required by law. Harris acknowledges that Knapp's
reputation is important to his continued success. Harris agrees that it will
not, and that it will use all reasonable efforts to cause its officers,
employees, and directors not to, defame, disparage, or otherwise discuss or
comment about Knapp in such a manner as may adversely impact his reputation or
public perception; provided, however, that Harris may make such disclosures as
may be required by law.

         4.       Payment and Provision of Benefits to Knapp. Subject to and in
consideration of Knapp's compliance with this Agreement, and in lieu of any and
all other compensation and benefits whether pursuant to agreement, company
policy or otherwise (except as otherwise required by law):

                  (a) Payments. Harris shall provide to Knapp:

                      (i) his Base Salary commencing on the Effective Date and
continuing through and including the Termination Date, payable on the same
schedule as is applicable to salary payments for other Harris executives,

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                      (ii) Bonus for the period commencing on July 1, 2004 and
continuing through and including the Termination Date, pro rated in any partial
fiscal year in which a Termination Date occurs,

                      (iii) health and dental insurance benefits comparable to
those then provided to other executive employees of Harris, subject to the same
co-pay, deductibles, and the like applicable to such executive employees,
commencing on the Effective Date and continuing through and including the
Termination Date,

                      (iv) term life insurance and long and short term
disability coverage under policies of general applicability to Harris's
executive employees, commencing on the Effective Date and continuing through and
including the Termination Date,

                      (v) in addition to life insurance provided under (iv), a
term life insurance policy in the amount of $2,000,000 subject to Knapp's
insurability at commercially reasonable rates, such insurance to be effective as
soon as reasonably practical after the Effective Date and continuing through and
including the Termination Date,

                      (vi) a car allowance of $1,000 per month commencing on the
Effective Date and continuing through and including the Termination Date, and

                      (vii) participation to the extent he is otherwise eligible
therefor in Harris's 401(k) Plan and Employee Stock Purchase Plan, commencing on
the Effective Date and continuing through and including the Termination Date.

                  (b) Vacation. Commencing on the Effective Date and continuing
through and including the Termination Date, Knapp shall continue to accrue, and
may use, vacation time in accordance with Harris company policy; provided,
however, Knapp shall be entitled to not less than four (4) weeks vacation per
annum for every year of the employment term. Subject to company policy regarding
limitations on carry-over of vacation time, Harris shall pay Knapp all of his
vacation time, accrued and unused, through and including the Termination Date on
the Termination Date.

                  (c) Disability. If a Disability of Knapp occurs after the
Effective Date and prior to the Termination Date:

                      (i) during the period that Knapp is receiving disability
payments under Harris's Disability Policies and the Termination Date, Knapp
shall not be entitled to payments under Section 4(a)(i) hereof; provided,
however, until and including the earlier to occur of the date fifteen (15)
months after the Disability date and the Termination Date, Knapp shall be
entitled to payments in the amount of the difference between the disability
payments and the amount that would otherwise be paid under Section 4(a)(i);

                      (ii) to the extent payments under Section 4(a)(ii) hereof
would otherwise be earned for any Harris fiscal year commencing with the fiscal
year ending June 30, 2005, such payments shall be pro rated for the period
through and including the date of Knapp's Disability, and Knapp shall not be
eligible for payments under Section 4(a)(ii) after such Disability;

                      (iii) after the date of Disability Knapp shall not be
eligible for payments or benefits under Sections 4(a)(iii), 4(a)(v), and
4(a)(vi), Section 4(e), and Section 4(g);

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                      (iv) after the date of Disability, Knapp shall receive the
payment when due under Section 4(h) but proportionately reduced for the period
from Disability through and including June 30, 2004, and shall receive benefits
and payments and under Section 6(b)(ii) until December 31, 2007, or such later
date to which the Termination Date shall have been extended previously by mutual
agreement of the parties; and

                      (v) after the date of Disability until and including the
Termination Date, Knapp shall receive benefits and payments under Sections
4(a)(iv) and 4(a)(vii) only to the extent that he is eligible for such benefits
and payments under Harris's benefit plans applicable to all other executive
employees.

                  (d) Business Expenses; Attorney Fees. Harris shall reimburse
Knapp for his ordinary and customary business expenses incurred prior to the
Termination Date as well as reasonable attorney fees and disbursements related
to the transactions contemplated by this Agreement.

                  (e) Apartment; Relocation. Harris shall provide Knapp with an
apartment in Rochester, New York at a reasonable monthly rental expense, or in
lieu thereof reasonable hotel expenses, commencing on the Effective Date and
continuing through the Termination Date; provided, however, that if Knapp and
the Board of Directors mutually agree that Knapp should relocate his principal
residence to Rochester, in lieu of the apartment or hotel expenses Harris shall
pay Knapp's reasonable and customary relocation expenses including moving costs,
brokerage commissions related to the sale of his existing residence and purchase
of a Rochester residence, and closing costs.

                  (f) Withholding. All payments hereunder shall be subject
to any required withholding of federal, state and local taxes pursuant to any
applicable law or regulation.

                  (g) Change of Control. If a Change of Control shall have
occurred:

                      (i) after such Change of Control Knapp's entitlement to
Bonus under Section 4(a)(ii) may be modified by the new controlling Person in a
reasonable manner so that such Bonus is calculated with reference to a
performance-based bonus plan provided by the new controlling Person, provided,
however, that the amount of the target and additional bonus for which Knapp is
eligible is not decreased and his ability to earn the Bonus is not materially
impaired;

                      (ii) after such Change of Control Knapp's entitlement to
payments and benefits under Sections 4(a)(iii), 4(a)(iv), and 4(a)(vii) may be
modified by the new controlling Person to entitlement to those benefits
generally provided to executives of the new controlling Person;

                      (iii) if in connection with, or within the fifteen
(15)-month period following the date of, the Change of Control, Harris and/or
the new controlling Person terminates Knapp's employment without Cause, or Knapp
terminates his employment with Good Reason, in lieu of further payments or
benefits under any other provision of this Agreement except as provided in
Section 5, Knapp shall be entitled to a lump sum payment of $1,250,000, and in
consideration of Knapp's continuing obligations under Sections 7, 8, and 9
hereof, Knapp shall be entitled to an additional lump sum payment of $1,000,000;
and

                      (iv) if all or any portion of the payments or other
benefits paid or payable to Knapp under this Agreement and under any other plan,
program or agreement of the Company or its affiliates, in each case, however, in
connection with or after a Change of Control, are determined to constitute an
excess parachute payment within the meaning of Section 280G of the Internal
Revenue Code

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of 1986, as amended, and as it may be amended on or after the date of this
Agreement (the "Code"), and results in the imposition on Knapp of an excise tax
under Section 4999 of the Code, then, in addition to any other benefits to which
Knapp is entitled under this Agreement, Harris shall pay to Knapp an amount
equal to the sum of (A) the excise taxes payable by Knapp by reason of receiving
excess payments; and (B) a gross-up amount necessary to offset any and all
applicable federal, state, and local excise, income, or other taxes incurred by
Knapp by reason of Harris's payment of the excise tax described in (A) above.

                  (h) Signing Bonus. Knapp shall receive a signing bonus of
$125,000, payable on June 30, 2004.

         5.       Stock Options.

                  (a) Options. On the Effective Date the Executive shall receive
non-qualified options to purchase 1,000,000 shares of the Company's stock. The
options shall have an exercise price equal to the fair market value of the stock
as of the close of trading on the last trading day immediately prior to the
Effective Date.

                  (b) Vesting. 25% of the options shall vest on the date one
year after the Effective Date and the balance shall vest over the 36 months
thereafter at a rate of 1/36 of the remaining 750,000 shares per month.
Notwithstanding the foregoing:

                      (i) if a Termination Date has not previously occurred, on
the date of a Change of Control all remaining unvested options shall immediately
vest, and

                      (ii) no unvested options shall vest after Knapp's
Disability, or after a Termination Date.

                  (c) Exercise Period. Options will expire unless exercised on
or before the earliest to occur of (i) the date ten years after the Effective
Date, (ii) the date one year after the date on which Knapp's employment is
terminated for any reason including Knapp's death if a Change of Control has
occurred, (iii) the date one year after Knapp's Disability, and (iv) the date
fifteen (15) months after termination of Knapp's employment by Harris or Knapp
for any reason including Knapp's death (the "Expiration Date").

                  (d) Method of Option Exercise. The options may be exercised in
whole or in part by filing a written notice with the Secretary of Harris at its
corporate headquarters prior to the Expiration Date. Such notice shall (i)
specify the number of shares of stock which Knapp elects to purchase, and (ii)
be accompanied by payment of the exercise price for such shares of stock.
Payment shall be by cash or by check payable to Harris, provided, however, (i)
all or a portion of the Exercise Price may be paid by delivery of shares of
stock acceptable to Harris (including, if Harris so approves, the withholding of
shares otherwise issuable upon exercise of the options) and having an aggregate
fair market value (valued as of the date of exercise) that is equal to the
amount of cash that would otherwise be required; and (ii) Knapp may pay the
exercise price by authorizing and directing a third party to sell shares of
stock (or a sufficient portion of the shares) acquired upon exercise of the
option and to remit to Harris a sufficient portion of the sale proceeds to pay
the entire exercise price and any tax withholding resulting from such exercise.

                  (e) Withholding. All distributions under this Section 5 are
subject to withholding of all applicable taxes. At the election of Knapp, such
withholding obligations may be satisfied through the surrender of shares of
stock which Knapp already owns or to which he is otherwise entitled hereunder.

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                  (f) Transferability. Except as otherwise provided in this
Section 5, the options are not transferable other than as designated by Knapp by
will or by the laws of descent and distribution, and during the Knapp's life,
may be exercised only by Knapp or by his guardian or legal representative.

                  (g) Registration Rights. If any grant of options hereunder is
not made pursuant to a plan that is then covered by an effective registration
statement pursuant to the Securities Act of 1933, as amended, Harris agrees to
file, as soon as practicable after the date on which such grant is made, to the
extent it is then eligible to do so, a Form S-8 registration statement covering
the shares of Harris common stock underlying the options.

         6.       Termination.

                  (a) Employment At Will. Harris reserves the right to terminate
Knapp's employment at any time with or without Cause, and Knapp reserves the
right to terminate his employment at any time with or without Good Reason and in
any of such events, neither party shall have any further obligation to the other
under Section 2 or Section 3(a), (b), and (c) hereof.

                  (b) Termination Without Cause or With Good Reason. If Harris
terminates Knapp's employment without Cause or Knapp validly terminates his
employment for Good Reason prior to any otherwise occurring Termination Date, in
consideration of Knapp's continuing obligations under Sections 3(d), 7, 8, and 9
hereof and in lieu of obligations under Section 4 hereof, Harris shall
nonetheless remain liable for, and pay or provide to Knapp:

                      (i) an aggregate payment of $1,000,000 payable in fifteen
(15) equal monthly installments commencing on the first day of the first month
following the Termination Date,

                      (ii) coverage by Harris's health and dental insurance
plans if coverage is available (provided that Harris and Knapp shall cooperate
to take such steps as are reasonably practical to qualify Knapp for continued
coverage by Harris's health and dental insurance plans following his
termination), or if such coverage is not available, reimbursement for health and
dental insurance benefits obtained by Knapp, in an amount equal to the amount
then paid by Harris for such benefits for other executive employees and subject
to the same co-pay, deductibles, and the like, commencing the day after the date
of termination and continuing for a period of eighteen months, and

                      (iii) all amounts accrued hereunder prior to the
Termination Date (including obligations under Section 4(a)(ii) and 4(h)
applicable to any fiscal year prior to such termination but not including
obligations under Section 4(a)(ii) and 4(h) applicable to the portion of the
year in which the termination occurs).

                  (c) Termination With Cause or Without Good Reason. If Harris
validly terminates Knapp's employment with Cause or Knapp terminates his
employment without Good Reason (including by death) prior to a Termination Date
that occurs other than by operation of this Section 6(c), Harris's obligations
under Section 4 shall be cancelled and of no further effect as of the
Termination Date, but Harris shall remain liable to pay Knapp all amounts
accrued hereunder prior to the Termination Date (including obligations under
Section 4(a)(ii) and 4(h) applicable to any fiscal year prior to such
termination but not including obligations under Section 4(a)(ii) and 4(h)
applicable to the portion of the year in which the termination occurs). The
cessation of employment of Knapp shall not be deemed to be for Cause unless and
until notice shall have been given to Knapp of adoption of a resolution by vote
of a majority of the Board of Directors of Harris after at least five (5)
business days notice is provided to Knapp, such notice to include in reasonable
specificity the alleged conduct justifying such termination

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for Cause, and Knapp is given an opportunity, together with counsel, to be heard
by the Board of Directors of Harris at a meeting (which may be held by
telephonic conference call), finding that in the good faith opinion of the Board
of Directors of Harris Knapp is guilty of the conduct described in the
definition of Cause. The cessation of employment of Knapp shall not be deemed to
be for Good Reason unless and until Knapp shall have provided to all members of
the Board of Directors of Harris at least five business days' notice describing
in reasonable detail the particulars thereof.

                  (d) Mitigation; Offset. In the event of any termination of
employment under this Section 6, or under Section 4(g) in the event of a Change
of Control, Knapp shall be under no obligation to mitigate amounts payable
hereunder by seeking other employment or otherwise and there shall be no offset
against amounts due to Knapp hereunder on account of subsequent employment.

         7. Confidentiality. During the course of his employment, Knapp may have
access to, develop, or otherwise be exposed to or aware of Confidential
Information. Knapp acknowledges that the Confidential Information must be kept
strictly confidential. During and after termination of Knapp's employment with
Harris Knapp agrees: (a) to take every reasonable precaution to safeguard and
treat the Confidential Information as confidential, (b) not to disclose the
Confidential Information to any third party except as part and in furtherance of
the business of Harris, and (c) not to disclose or use the Confidential
Information in any manner that would not be in furtherance of the interests of
Harris.

         8. Ownership of Intellectual Property. During the course of his
employment, Knapp individually or with others may be involved in the
development, invention, or creation of proprietary material, methods,
intellectual property, inventions, or technology including without limitation
items or materials that may be patentable. All such materials, methods,
intellectual property, inventions, and technology are developed on behalf of
Harris and in the course of Knapp's employment by Harris, and Harris shall be
the sole and exclusive owner thereof and shall have all proprietary rights
therein. Knapp shall execute and deliver any assignments, licenses, or other
agreements necessary or desirable from time to time to give Harris the full
benefit of such ownership.

         9. Non-Competition. In consideration of the payments and benefits
provided to Knapp under this Agreement, including among others payments and
benefits due after termination of his employment under certain circumstances:

                  (a) During Employment. Prior to the Termination Date, Knapp
shall not, directly or indirectly in any capacity (including among others as a
director, officer, employee, agent, consultant, partner or equity owner of any
entity, except as owner of less than 5% of the shares of the publicly traded
stock of a corporation), compete in any manner with Harris.

                  (b) Following Termination. During the fifteen (15) month
period following the Termination Date, Knapp shall not, directly or indirectly
in any capacity (including among others as a director, officer, employee, agent,
consultant, partner or equity owner of any entity, except as owner of less than
5% of the shares of the publicly traded stock of a corporation), compete with
Harris. Without limitation, Knapp shall not competitively solicit or otherwise
deal in a competitive way with any of the clients or customers of Harris as of
the time of his termination (including any client to whom Harris has sold
services or products in the two years prior to termination and any prospective
client or customer who has been targeted or approached by Harris within the
previous six months) with respect to any services or products competitive with
those of Harris, or which otherwise directly or indirectly in any manner compete
with Harris in any line of business carried on or planned by Harris during
Knapp's employment.

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                  (c) Non-Solicitation. Prior to and during the fifteen (15)
month period following the Termination Date, Knapp shall not, directly or
indirectly, including on behalf of, for the benefit of, or in conjunction with,
any other person or entity, (i) solicit, assist, advise, influence, induce or
otherwise encourage in any way, any employee of Harris to terminate such
employee's relationship with Harris for any reason, or assist any person or
entity in doing so, (ii) employ, engage or otherwise contract with any employee
or former employee of Harris unless such former employee shall not have been
employed by Harris for a period of at least one year, or (iii) interfere in any
manner with the relationship between any employee and Harris.

                  (d) Injunctive Relief. Knapp acknowledges that damages for any
breach of this Section 9 will be difficult, if not impossible, to calculate and
that legal remedies for breach of this provision will be inadequate. Therefore,
Harris shall be entitled to obtain injunctive relief to enforce this provision
in addition to any other remedy at law or equity including termination of
payments hereunder.

         10. Related Agreements/Further Assurances. The parties agree to
mutually cooperate in the execution and delivery of any documents and
agreements, and in the taking of any actions, reasonably necessary or desirable
to effectuate the purposes of this Agreement.

         11. Notices. Any notice or demand upon any party hereto shall be deemed
to have been sufficiently given or served for all purposes hereof when in
writing and effective (i) when delivered in person, (ii) one business day after
deposit with nationally recognized overnight courier for next business day
delivery with receipt requested, or (iii) three business days after it is mailed
certified mail postage prepaid, return receipt requested, addressed to the
address shown in the preamble to this Agreement or to such other address as may
be designated by any party by notice given to the other in the manner described
in this Section 11, and in the case of notice to Harris, with a copy given or
served in the same manner addressed to Beth Ela Wilkens, Harris Beach LLP, 99
Garnsey Road, Pittsford, New York 14534, and in the case of Knapp, with a copy
given or served in the same manner addressed to David E. Rubinsky, Willkie Farr
& Gallagher, LLP, 787 Seventh Avenue, New York, New York 10019.

         12. Representation/Drafting. Each of the parties acknowledges that it
has been represented by legal counsel in the negotiation and drafting of this
Agreement, that this Agreement has been drafted by mutual effort, and that no
ambiguity in this Agreement shall be construed against either party as
draftsperson.

         13. Successors and Assigns.

             (a) This Agreement shall inure to the benefit of, and shall be
binding upon, the respective heirs, legal representatives, successors, and
assigns of the parties hereto. Neither party hereto may assign, transfer, or
otherwise dispose of this Agreement, or any of its other rights or obligations
hereunder (other than Knapp's rights to payments hereunder, which may be
transferred only by will or by the laws of descent and distribution), without
the prior written consent of the other party, and any such attempted assignment,
transfer or other disposition without such consent shall be null and void;
provided, however, that Harris shall be entitled to assign its obligations under
this Agreement, without the prior written consent of Knapp, (i) in connection
with an arm's-length merger or consolidation of such party with another
unaffiliated corporation or (ii) in connection with an arm's-length sale of all
or substantially all of its assets or business operations to another person or
entity, provided that such assignee expressly assumes all of the rights and
obligations of such party hereunder. After any such assignment, this Agreement
shall continue in full force and effect. In the event of Knapp's death, all
amounts then payable to Knapp hereunder shall be paid in accordance with the
terms of this Agreement to Knapp's devisee, legatee or other designee or, if
there be no such designee, to Knapp's estate.

<PAGE>

             (b) In addition to any obligations imposed by law upon any
successor to Harris, Harris shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of Harris expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
Harris would be required to perform it if no such succession had taken place.
Failure of Harris to obtain the assumption and agreement prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
entitle Knapp to compensation from Harris in the same amount and on the same
terms as Knapp would be entitled to hereunder if Knapp were to terminate his
employment for Good Reason immediately after a Change in Control.

         14. Term. The term of this Agreement shall commence on the date hereof
and shall expire on the Termination Date, except that the obligations provided
in Sections 3(b) as it relates to resignation as a director, 3(d), 4(f), 5, 7,
8, 9(b), 9(c), 9(d), and 10-18 (inclusive) shall survive and be continuing in
accordance with their terms, and except that any financial obligation accrued
prior to or in connection with the Termination Date shall survive until
discharged by the payment thereof.

         15. Governing Law. This Agreement shall be construed under and governed
by the laws of the State of New York, without reference to principles of
conflicts of laws. The parties hereto consent to venue in the courts of the
State of New York or in the Federal courts sitting in the State of New York with
respect to any dispute regarding the subject matter hereof, including any
dispute as to the validity of an assertion of Cause or Good Reason. If any legal
action is commenced to enforce or interpret the provisions of this Agreement, or
to recover damages for its breach, each party shall be responsible for its own
legal fees, disbursements, and court costs paid or incurred in connection with
such action or proceeding and neither party shall be entitled to recover any
such fees, disbursements, or costs from the other party.

         16. Entire Agreement/Waivers. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and shall not
be modified or amended except in writing signed by both of the parties. No
waiver of any breach of this Agreement shall be a waiver of any preceding or
succeeding breach, and no waiver of any right under this Agreement shall be
construed as a waiver of any other right. Harris and Knapp shall not be required
to give notice to enforce strict adherence to all terms of this Agreement.

         17. Severability. If one or more of the provisions in this Agreement
are deemed unenforceable by law, then the remaining provisions shall continue in
full force and effect, and the offending provision shall be modified to give it
the greatest legally permissible effect.

         18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall be deemed to constitute the same Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                            [Signature Pages Follow]

<PAGE>

HARRIS INTERACTIVE INC.

By:        /s/ GORDON S. BLACK
         ------------------------------------

Title:   Chairman and Chief Executive Officer
         ------------------------------------

<PAGE>

       /s/ Robert E. Knapp
-----------------------------------
         ROBERT E. KNAPPExhibit 10.20.1

                               SECURITY AGREEMENT

         This Security  Agreement is made as of December 30, 2003 by and between
LAURUS MASTER FUND,  LTD., a Cayman  Islands  corporation  ("Laurus")  and INYX,
INC., a Nevada corporation (the "Company"),  and INYX PHARMA LTD., a corporation
established  under the law of  England  and Wales  (the "UK  Subsidiary").  (The
Company  and the UK  Subsidiary  are  collectively  referred  to  herein  as the
"Borrower".)

                                   BACKGROUND

         Borrower has requested that Laurus make advances available to Borrower;
and

         Laurus has agreed to make such  advances  to  Borrower on the terms and
conditions set forth in this Agreement.

                                    AGREEMENT

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings and the terms and conditions  contained herein,  the parties hereto
agree as follows:

         1. (a) General  Definitions.  Capitalized  terms used in this Agreement
shall have the meanings assigned to them in Annex A.

         (b) Accounting Terms. Any accounting terms used in this Agreement which
are not specifically  defined shall have the meanings  customarily given them in
accordance with GAAP and all financial  computations  shall be computed,  unless
specifically provided herein, in accordance with GAAP consistently applied.

         (c) Other Terms.  All other terms used in this Agreement and defined in
the UCC, shall have the meaning given therein unless otherwise defined herein.

         (d) Rules of Construction. All Schedules, Addenda, Annexes and Exhibits
hereto or expressly  identified  to this  Agreement are  incorporated  herein by
reference  and  taken  together  with  this  Agreement  constitute  but a single
agreement. The words "herein", hereof" and "hereunder" or other words of similar
import refer to this  Agreement as a whole,  including  the  Exhibits,  Addenda,
Annexes and  Schedules  thereto,  as the same may be from time to time  amended,
modified,  restated  or  supplemented,   and  not  to  any  particular  section,
subsection or clause  contained in this Agreement.  Wherever from the context it
appears  appropriate,  each term stated in either the  singular or plural  shall
include the  singular  and the plural,  and  pronouns  stated in the  masculine,
feminine or neuter  gender  shall  include the  masculine,  the feminine and the

                                       1
<PAGE>

neuter.  The  term  "or" is not  exclusive.  The term  "including"  (or any form
thereof)  shall not be limiting or  exclusive.  All  references  to statutes and
related  regulations  shall  include any  amendments  of same and any  successor
statutes and regulations.  All references in this Agreement or in the Schedules,
Addenda,  Annexes  and  Exhibits  to  this  Agreement  to  sections,  schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections,  schedules,  disclosure schedules,  exhibits, and attachments of or to
this  Agreement.  All references to any  instruments  or  agreements,  including
references to any of this  Agreement or the Ancillary  Agreements  shall include
any and all  modifications  or amendments  thereto and any and all extensions or
renewals thereof.

         2. Loans.  (a)(i)  Subject to the terms and conditions set forth herein
and in the  Ancillary  Agreements,  Laurus may make loans (the  "Loans")  to the
Company  from time to time during the Term which,  in the  aggregate at any time
outstanding,  will not  exceed the  lesser of (x) (I) the  Capital  Availability
Amount  minus  (II) such  reserves  as Laurus may  reasonably  in its good faith
judgment deem proper and necessary from time to time (the  "Reserves") or (y) an
amount  equal to (I) the  Accounts  Availability  minus (II) the  Reserves.  The
amount derived at any time from Section 2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall
be referred to as the "Formula  Amount".  Company  shall  execute and deliver to
Laurus on the Closing Date a Minimum Borrowing Note and a Secured Revolving Note
evidencing the Loans funded on the Closing Date.  From time to time  thereafter,
Company  shall  execute  and  deliver to Laurus  immediately  prior to the final
funding  of each  additional  USD$1,000,000  tranche of Loans  (calculated  on a
cumulative  basis for each such tranche) an additional  Minimum  Borrowing  Note
evidencing  such tranche,  in the form of Note delivered by Company to Laurus on
the Closing Date.  Notwithstanding  anything  herein to the  contrary,  whenever
during the Term the  outstanding  balance on the Revolving  Note should equal or
exceed  USD$2,500,000,  to the extent  that the  outstanding  balance on Minimum
Borrowing Note shall be less than USD$1,000,000 (the difference of USD$1,000,000
less the actual balance of the Minimum  Borrowing  Note, the "Available  Minimum
Borrowing"),  such portion of the balance of the  Revolving  Note as shall equal
the  Available   Minimum   Borrowing  shall  be  deemed  to  be   simultaneously
extinguished  on the Revolving  Note and  transferred  to, and evidenced by, the
Minimum Borrowing Note.

         (ii)  Notwithstanding  the limitations set forth above, if requested by
the Company,  Laurus retains the right to lend to Company from time to time such
amounts  in  excess of such  limitations  as Laurus  may  determine  in its sole
discretion.

         (iii) Company  acknowledges that the exercise of Laurus'  discretionary
rights  hereunder  may  result  during  the  Term  in one or more  increases  or
decreases in the advance percentages used in determining  Accounts  Availability
and Company hereby  consents to any such increases or decreases  which may limit
or restrict advances requested by Company.

         (iv) If Company does not pay any  interest,  fees,  costs or charges to
Laurus when due,  Company shall thereby be deemed to have requested,  and Laurus
is hereby authorized at its discretion to make and charge to Company's  account,
a Loan to Company as of such date in an amount  equal to such  unpaid  interest,
fees, costs or charges.

                                       2
<PAGE>

         (v) If  Borrower  at any time fails to  perform  or observe  any of the
covenants  contained in this Agreement or any Ancillary  Agreement,  Laurus may,
but need not,  perform or observe such covenant on behalf and in the name, place
and stead of Borrower (or, at Laurus' option, in Laurus' name) and may, but need
not, take any and all other  actions which Laurus may deem  necessary to cure or
correct such failure (including the payment of taxes, the satisfaction of Liens,
the  performance  of  obligations  owed to  Account  Debtors,  lessors  or other
obligors,  the  procurement  and  maintenance  of  insurance,  the  execution of
assignments,  security agreements and financing statements,  and the endorsement
of  instruments).  The amount of all monies  expended and all costs and expenses
(including  attorneys' fees and legal expenses) incurred by Laurus in connection
with or as a result of the  performance or observance of such  agreements or the
taking of such action by Laurus shall be charged to Company's  account as a Loan
and added to the Obligations. To facilitate Laurus' performance or observance of
such covenants of Borrower,  Borrower hereby  irrevocably  appoints  Laurus,  or
Laurus'  delegate,   acting  alone,  as  Borrower's   attorney  in  fact  (which
appointment  is coupled with an interest) with the right (but not the duty) from
time to time to create, prepare, complete,  execute, deliver, endorse or file in
the  name  and on  behalf  of  Borrower  any  and  all  instruments,  documents,
assignments,   security  agreements,  financing  statements,   applications  for
insurance and other  agreements and writings  required to be obtained,  executed
delivered or endorsed by Borrower.

         (vi) Laurus will  account to Company  monthly  with a statement  of all
Loans and other advances,  charges and payments made pursuant to this Agreement,
and  such  account  rendered  by  Laurus  shall be  deemed  final,  binding  and
conclusive  unless  Laurus is  notified  by Company  in writing to the  contrary
within  thirty (30) days of the date each  account was rendered  specifying  the
item or items to which objection is made.

         (vii) During the Term, Company may borrow and prepay Loans in excess of
the Minimum  Borrowing  Amount,  all in accordance with the terms and conditions
hereof.

         (viii) If any Eligible Account is not paid by the Account Debtor within
ninety (90) days after the date that such  Eligible  Account was  invoiced or if
any Account  Debtor  asserts a  deduction,  dispute,  contingency,  set-off,  or
counterclaim with respect to any Eligible Account, (a "Delinquent Account"), the
Company  shall (i)  reimburse  Laurus  for the  amount of the  Revolving  Credit
Advance made with respect to such  Delinquent  Account plus an adjustment fee in
an amount  equal to one-half of one percent  (0.50%) of the gross face amount of
such Eligible Account or (ii) immediately  replace such Delinquent  Account with
an otherwise Eligible Account.

         (b) Following the occurrence of an Event of Default which  continues to
exist,  Laurus  may,  at its  option,  elect  to  convert  the  credit  facility
contemplated  hereby to an  accounts  receivable  purchase  facility.  Upon such
election by Laurus (subsequent notice of which Laurus shall provide to Company),
Borrower shall be deemed to hereby have sold,  assigned,  transferred,  conveyed
and  delivered  to Laurus,  and  Laurus  shall be deemed to have  purchased  and
received from Borrower,  all right, title and interest of Borrower in and to all
Accounts which shall at any time constitute  Eligible Accounts (the "Receivables
Purchase").  All outstanding  Loans hereunder shall be deemed  obligations under
such  accounts  receivable  purchase  facility.  The  conversion  to an accounts
receivable  purchase  facility in accordance  with the terms hereof shall not be

                                       3
<PAGE>

deemed an exercise by Laurus of its secured  creditor  rights under Article 9 of
the UCC. Immediately following Laurus' request,  Borrower shall execute all such
further  documentation  as may be required by Laurus to more fully set forth the
accounts receivable purchase facility herein  contemplated,  including,  without
limitation,  Laurus' standard form of accounts receivable purchase agreement and
account debtor  notification  letters,  but Borrower's failure to enter into any
such  documentation  shall not impair or affect the Receivables  Purchase in any
manner whatsoever.

         (c)  Minimum   Borrowing   Amount.   After  a  registration   statement
registering the Registrable  Securities has been declared  effective by the SEC,
conversions of the Minimum Borrowing Amount into the Common Stock of the Company
may be  initiated  as set forth in the Note.  From and after the date upon which
any outstanding  principal of the Minimum  Borrowing Amount (as evidenced by the
first  Minimum  Borrowing  Note) is  converted  into  Common  Stock (the  "First
Conversion  Date"),  (i)  corresponding  amounts of all  outstanding  Loans (not
attributable to the then outstanding  Minimum  Borrowing  Amount) existing on or
made after the First Conversion Date will be aggregated until they reach the sum
of  $1,000,000  and (ii)  the  Company  will  issue a new  (serialized)  Minimum
Borrowing Note to Laurus in respect of such  $1,000,000  aggregation,  and (iii)
the Company shall prepare and file a subsequent  registration statement with the
SEC to  register  such  subsequent  Minimum  Borrowing  Note as set forth in the
Registration Rights Agreement.

         3.  Repayment of the Loans.  Company (a) may prepay the  Obligations in
excess of the Minimum  Borrowing Amount from time to time in accordance with the
terms and  provisions of the Notes (and Section 16 hereof if such  prepayment is
due to a termination of this  Agreement);  and (b) shall repay on the expiration
of the Term (i) the then aggregate  outstanding  principal  balance of the Loans
made by Laurus to Company  hereunder  together with accrued and unpaid interest,
fees and charges and (ii) all other amounts owed Laurus under this Agreement and
the Ancillary Agreements. Any payments of principal, interest, fees or any other
amounts payable  hereunder or under any Ancillary  Agreement shall be made prior
to 12:00 noon (New York time) on the due date thereof in  immediately  available
funds.

         4.  Procedure  for  Loans.  Company  may by  written  notice  request a
borrowing  of Loans prior to 12:00 p.m..  (New York time) on the Business Day of
its request to incur,  on the next  business  day, a Loan but no more than twice
per week.  Together with each request for a Loan (or at such other  intervals as
Laurus  may  request),   Company  shall  deliver  to  Laurus  a  Borrowing  Base
Certificate  in the form of  Exhibit  A, which  shall be  certified  as true and
correct by the Chief  Executive  Officer or Chief  Financial  Officer of Company
together with all supporting  documentation relating thereto. All Loans shall be
disbursed from whichever office or other place Laurus may designate from time to
time and shall be charged to Company's account on Laurus' books. The proceeds of
each Loan made by Laurus shall be made  available to Company on the Business Day
following  the Business Day so  requested in  accordance  with the terms of this
Section 4 by way of credit to Company's  operating account  maintained with such
bank as Company  designated  to Laurus.  Any and all  Obligations  due and owing
hereunder may be charged to Company's account and shall constitute Loans.

                                       4
<PAGE>

         5. Interest and Payments.

         (a) Interest.

         (i) Except as modified by Section  5(a)(iii)  below,  Company shall pay
interest at the Contract Rate on the unpaid principal balance of each Loan until
such time as such Loan is  collected  in full in good  funds in  dollars  of the
United States of America.

         (ii)  Interest  and  payments  shall be computed on the basis of actual
days elapsed in a year of 360 days. At Laurus' option, Laurus may charge Company
account for said interest.

         (iii)  Effective upon the occurrence of any Event of Default and for so
long as any Event of  Default  shall be  continuing,  the  Contract  Rate  shall
automatically  be increased by five percent (5%) per annum (such increased rate,
the "Default Rate"), and all outstanding Obligations, including unpaid interest,
shall continue to accrue  interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.

         (iv) In no event shall the aggregate  interest payable hereunder exceed
the maximum rate permitted under any applicable law or regulation,  as in effect
from  time to time (the  "Maximum  Legal  Rate")  and if any  provision  of this
Agreement  or any  Ancillary  Agreement is in  contravention  of any such law or
regulation,  interest payable under this Agreement and each Ancillary  Agreement
shall be computed on the basis of the Maximum  Legal Rate (so that such interest
will not exceed the Maximum Legal Rate).

         (v) Company shall pay principal, interest and all other amounts payable
hereunder,  or under any Ancillary Agreement,  without any deduction whatsoever,
including any deduction for any set-off or counterclaim.

         (b) Payments.

         (i)  Closing/Annual  Payments.  Upon  execution  of this  Agreement  by
Borrower  and Laurus,  Company  shall pay to Laurus  Capital  Management,  LLC a
closing payment in an amount equal to three and one-half  percent (3.50%) of the
Capital  Availability Amount and each subsequent  anniversary an amount equal to
one percent (1.00%) of the Capital  Availability  Amount.  Such payment shall be
deemed  fully  earned on the Closing  Date and shall not be subject to rebate or
proration for any reason.

         (ii) Unused Line Payment.  If, for any month,  the average  outstanding
Loans (the "Average Loan Amount") do not equal the Capital  Availability Amount,
Company shall pay to Laurus at the end of such month a payment  (calculated on a
per annum basis) in an amount equal to one half percent  (0.5%) of the amount by
which  the  Capital   Availability  Amount  exceeds  the  Average  Loan  Amount.
Notwithstanding  the  foregoing,  any  unpaid fee shall be  immediately  due and
payable upon termination of this Agreement.

         (iii) Overadvance  Payment.  Without affecting Laurus' rights hereunder
in  the  event  the  Loans   exceed   the   amounts   permitted   by  Section  2

                                       5
<PAGE>

("Overadvances"),  in the event an Overadvance  occurs or is made by Laurus, all
such  Overadvances  shall bear  interest at an annual rate equal to five percent
(5%) of the amount of such  Overadvances  for each  month or portion  thereof as
such amounts shall be outstanding.

         (iv) Financial  Information  Default.  Without  affecting Laurus' other
rights  and  remedies,  in the event  Borrower  fails to deliver  the  financial
information  required  by  Section  11 on or before  the date  required  by this
Agreement,  Company shall pay Laurus a fee in the amount of $500.00 per week (or
portion  thereof) for each such  failure  until such failure is cured to Laurus'
satisfaction  or waived in  writing  by  Laurus.  Such fee shall be  charged  to
Company's account upon the occurrence of each such failure.

         6. Security Interest.

         (a) To secure the prompt payment to Laurus of the Obligations, Borrower
hereby jointly and severally assigns,  pledges and grants to Laurus a continuing
security  interest  in and Lien upon all of the  Collateral.  All of  Borrower's
Books and Records  relating  to the  Collateral  shall,  until  delivered  to or
removed by Laurus, be kept by Borrower in trust for Laurus until all Obligations
have been paid in full. Each confirmatory  assignment  schedule or other form of
assignment  hereafter  executed  by  Borrower  shall be  deemed to  include  the
foregoing grant, whether or not the same appears therein.

         (b)  Borrower  hereby  (i)  authorizes  Laurus  to file  any  financing
statements,  continuation statements or amendments thereto that (x) indicate the
Collateral (1) as all assets of Borrower or words of similar effect,  regardless
of whether any particular  asset  comprised in the  Collateral  falls within the
scope of Article 9 of the UCC of such jurisdiction,  or (2) as being of an equal
or lesser scope or with greater  detail,  and (y) contain any other  information
required by Part 5 of Article 9 of the UCC for the  sufficiency or filing office
acceptance of any financing statement,  continuation  statement or amendment and
(ii) ratifies its  authorization  for Laurus to have filed any initial financial
statements,  or amendments  thereto if filed prior to the date hereof.  Borrower
acknowledges  that it is not  authorized  to file  any  financing  statement  or
amendment  or  termination  statement  with respect to any  financing  statement
without  the prior  written  consent of Laurus and agrees that it will not do so
without the prior written consent of Laurus,  subject to Borrower's rights under
Section 9-509(d)(2) of the UCC.

         (c)  Borrower  hereby  grants to Laurus an  irrevocable,  non-exclusive
license (exercisable upon the termination of this Agreement due to an occurrence
and during the  continuance of an Event of Default without payment of royalty or
other  compensation  to Borrower) to use,  transfer,  license or sublicense  any
Intellectual Property now owned, licensed to, or hereafter acquired by Borrower,
and wherever the same may be located,  and  including in such license  access to
all media in which any of the  licensed  items may be  recorded or stored and to
all  computer  and  automatic  machinery  software  and  programs  used  for the
compilation or printout  thereof,  and represents,  promises and agrees that any
such  license  or  sublicense  is not  and  will  not be in  conflict  with  the
contractual  or  commercial  rights of any  third  Person;  provided,  that such
license will  terminate on the  termination of this Agreement and the payment in
full of all Obligations.

                                       6
<PAGE>

         7. Representations, Warranties and Covenants Concerning the Collateral.
Borrower represents, warrants (each of which such representations and warranties
shall be deemed  repeated upon the making of each request for a Loan and made as
of the time of each and every Loan hereunder) and covenants as follows:

         (a) all of the  Collateral  (i) is owned by Borrower  free and clear of
all Liens (including any claims of  infringement)  except those in Laurus' favor
and  Permitted  Liens and (ii) is not subject to any agreement  prohibiting  the
granting of a Lien or requiring notice of or consent to the granting of a Lien.

         (b) Borrower shall not encumber,  mortgage, pledge, assign or grant any
Lien in any  Collateral of Borrower or any of Borrower's  other assets to anyone
other than Laurus and except for Permitted Liens.

         (c) The Liens granted  pursuant to this  Agreement,  upon completion of
the filings and other actions listed on Exhibit 7(c) (which,  in the case of all
filings and other documents referred to in said Exhibit,  have been delivered to
Laurus in duly executed form) constitute valid perfected  security  interests in
all of the Collateral in favor of Laurus as security for the prompt and complete
payment and performance of the  Obligations,  enforceable in accordance with the
terms hereof against any and all creditors of and any  purchasers  from Borrower
and such security  interest is prior to all other Liens in existence on the date
hereof.

         (d) No effective security agreement, mortgage, deed of trust, financing
statement,  equivalent  security or Lien  instrument or  continuation  statement
covering all or any part of the Collateral is or will be on file or of record in
any public office, except those relating to Permitted Liens.

         (e)  Borrower  shall not  dispose of any of the  Collateral  whether by
sale, lease or otherwise except for the sale of Inventory in the ordinary course
of  business  and for the  disposition  or transfer  in the  ordinary  course of
business  during any fiscal year of obsolete  and worn-out  Equipment  having an
aggregate fair market value of not more than $75,000 and only to the extent that
(i) the  proceeds  of any  such  disposition  are  used to  acquire  replacement
Equipment  which is subject to Laurus' first priority  security  interest or are
used to repay Loans or to pay general corporate expenses,  or (ii) following the
occurrence of an Event of Default which continues to exist the proceeds of which
are remitted to Laurus to be held as cash collateral for the Obligations.

         (f) Borrower  shall  defend the right,  title and interest of Laurus in
and to the Collateral against the claims and demands of all Persons  whomsoever,
and take such  actions,  including  (i) all actions  necessary  to grant  Laurus
"control" of any Investment Property, Deposit Accounts,  Letter-of-Credit Rights
or electronic Chattel Paper owned by Borrower,  with any agreements establishing
control to be in form and substance satisfactory to Laurus, (ii) the prompt (but
in no event  later  than  five  (5)  Business  Days  following  Laurus'  request
therefor)  delivery  to  Laurus  of all  original  Instruments,  Chattel  Paper,
negotiable Documents and certificated Stock owned by the Borrower (in each case,
accompanied by stock powers,  allonges or other instruments of transfer executed
in blank),  (iii)  notification  of Laurus'  interest in  Collateral  at Laurus'

                                       7
<PAGE>

request,  and (iv) the institution of litigation  against third parties as shall
be prudent in order to protect and preserve  Borrower's  and Laurus'  respective
and several interests in the Collateral.

         (g) Borrower shall promptly,  and in any event within five (5) Business
Days after the same is  acquired by it,  notify  Laurus of any  commercial  tort
claim (as defined in the UCC) acquired by it and unless  otherwise  consented by
Laurus,  Borrower  shall enter into a supplement to this  Agreement  granting to
Laurus a Lien in such commercial tort claim.

         (h) Borrower  shall place  notations upon its Books and Records and any
financial statement of Borrower to disclose Laurus' Lien in the Collateral.

         (i) If Borrower  retains  possession of any Chattel Paper or Instrument
with Laurus'  consent,  upon Laurus'  request such Chattel Paper and Instruments
shall be  marked  with the  following  legend:  "This  writing  and  obligations
evidenced  or secured  hereby are  subject to the  security  interest  of Laurus
Master Fund, Ltd."

         (j)  Borrower  shall  perform  in a  reasonable  time all  other  steps
requested  by Laurus to create and maintain in Laurus'  favor a valid  perfected
first Lien in all Collateral subject only to Permitted Liens.

         (k) Borrower shall notify Laurus promptly and in any event within three
(3) Business Days after obtaining knowledge thereof

         (i) of any event or  circumstance  that to Borrower's  knowledge  would
cause Laurus to consider any then existing Account as no longer  constituting an
Eligible Account; (ii) of any material delay in Borrower's performance of any of
its  obligations  to any Account  Debtor;  (iii) of any assertion by any Account
Debtor of any material claims, offsets or counterclaims; (iv) of any allowances,
credits  and/or  monies  granted by Borrower to any Account  Debtor;  (v) of all
material adverse  information  relating to the financial condition of an Account
Debtor;  (vi) of any material return of goods; and (vii) of any loss,  damage or
destruction of any of the  Collateral.  (l) All Eligible  Accounts (i) which are
billed on a construction  completion  basis but not payable until the project is
completed,  represent  complete bona fide transactions  which require no further
act under any  circumstances on Borrower's part to make such Accounts payable by
the Account  Debtors,  (ii) are not subject to any  present,  future  contingent
offsets  or  counterclaims,  and  (iii) do not  represent  bill and hold  sales,
consignment   sales,   guaranteed   sales,  sale  or  return  or  other  similar
understandings  or  obligations  of any  Affiliate  or  Subsidiary  of Borrower.
Borrower has not made,  and will not make any agreement  with any Account Debtor
for any  extension of time for the payment of any  Account,  any  compromise  or
settlement  for less than the full  amount  thereof,  any release of any Account
Debtor from liability therefor,  or any deduction therefrom except a discount or
allowance for prompt or early payment allowed by Borrower in the ordinary course
of its business consistent with historical practice and as previously  disclosed
to Laurus in writing.

         (m) Borrower  shall keep and maintain its  Equipment in good  operating
condition,  except for  ordinary  wear and tear,  and shall  make all  necessary

                                       8
<PAGE>

repairs  and  replacements  thereof so that the value and  operating  efficiency
shall at all times be maintained  and  preserved.  Borrower shall not permit any
such items to become a Fixture to real estate or  accessions  to other  personal
property.

         (n)  Borrower  shall  maintain  and keep all of its Books  and  Records
concerning  the  Collateral  at Company's  executive  offices  listed in Exhibit
12(d).

         (o) Borrower  shall  maintain and keep the tangible  Collateral  at the
addresses  listed in Exhibit  12(d),  provided,  that  Borrower  may change such
locations or open a new  location,  provided that  Borrower  provides  Laurus at
least thirty (30) days prior written  notice of such changes or new location and
(ii) prior to such change or opening of a new location where Collateral having a
value of more than  $50,000 will be located,  Borrower  executes and delivers to
Laurus such  agreements as Laurus may request,  including  landlord  agreements,
mortgagee  agreements  and  warehouse  agreements,  each in form  and  substance
satisfactory to Laurus.

         (p) Exhibit 7(p) lists all banks and other  financial  institutions  at
which  Borrower  maintains  deposits  and/or  other  accounts,  and such Exhibit
correctly  identifies  the  name,  address  and  telephone  number  of each such
depository,  the name in which the account is held, a description of the purpose
of the  account,  and the  complete  account  number.  The  Borrower  shall  not
establish  any  depository  or other  bank  account  of any  with any  financial
institution  (other than the accounts set forth on Exhibit 7(p)) without Laurus'
prior written consent.

         8. Payment of Accounts.

         (a) UK Subsidiary will irrevocably direct all of its present and future
Account  Debtors  and other  Persons  obligated  to make  payments  constituting
Collateral  to make such  payments  directly  to the  lockbox  maintained  by UK
Subsidiary  (the  "Lockbox") with Barclays Bank (the "Lockbox Bank") pursuant to
the terms of the  Clearing  Account  Agreement  dated  December 30, 2003 or such
other financial  institution accepted by Laurus in writing as may be selected by
Company.  The Company shall open a clearing account with Northfork Bank pursuant
to the terms of the  Clearing  Account  Agreement  dated  December 30, 2003 (the
"Northfork  Account").  On or prior to the Closing Date, UK Subsidiary shall and
shall cause the Lockbox Bank to enter into all such documentation  acceptable to
Laurus  pursuant to which,  among other things,  the Lockbox Bank agrees to: (a)
sweep the Lockbox on a daily  basis and deposit all checks,  wires and all other
amounts received  therein to the Northfork  Account and (b) comply only with the
instructions  or other  directions  of Laurus  concerning  the  Lockbox  and the
proceeds thereof. All of UK Subsidiary's invoices,  account statements and other
written or oral communications directing,  instructing,  demanding or requesting
payment  of any  Account  of UK  Subsidiary  or any  other  amount  constituting
Collateral shall  conspicuously  direct that all payments be made to the Lockbox
or such other address as Laurus may direct in writing.  If,  notwithstanding the
instructions  to Account  Debtors,  Borrower  receives any payments from Account
Debtors,  Borrower  shall  immediately  remit such  payments  to Laurus in their
original form with all necessary endorsements. Until so remitted, Borrower shall
hold all such  payments in trust for and as the property of Laurus and shall not
commingle such payments with any of its other funds or property.

                                       9
<PAGE>

         (b) At  Laurus'  election,  following  the  occurrence  of an  Event of
Default which is continuing,  Laurus may notify UK Subsidiary's  Account Debtors
of Laurus' security  interest in the Accounts,  collect them directly and charge
the collection costs and expenses thereof to Company's account.

         9. Collection and Maintenance of Collateral.

         (a) Laurus may verify UK  Subsidiary's  Accounts from time to time, but
not more often than once every  three (3) months  unless an Event of Default has
occurred  and is  continuing,  utilizing an audit  control  company or any other
agent of Laurus.

         (b) Proceeds of the Accounts of the UK Subsidiary received by Laurus in
the Northfork  Account will be deemed received on the Business Day after Laurus'
receipt of such  proceeds  in good funds in US Dollars in Laurus'  account . The
Company shall convert the proceeds of the Accounts of the UK Subsidiary received
in Lockbox into US dollars for daily deposit in to the Northfork Account, but in
no  event  shall  such  conversion  be at a  rate  lower  than  then  prevailing
conversion  rate on Great British Pounds Sterling to US dollars (as such rate is
quoted in the Wall Street Journal) on the date such funds are  transferred  from
the Lockbox to the Northfork Account.  Any amount received by Laurus after 12:00
noon (New York time) on any  Business  Day shall be deemed  received on the next
Business Day.

         (c)  As  Laurus  receives  the  proceeds  of  the  Accounts  of  the UK
Subsidiary,  it shall remit all such proceeds  (net of interest,  fees and other
amounts then due and owing to Laurus  hereunder) to Company upon request (but no
more often than twice a week).  Notwithstanding  the  foregoing,  following  the
occurrence  and during the  continuance of an Event of Default,  Laurus,  at its
option,  may (a) apply such proceeds to the  Obligations in such order as Laurus
shall elect,  (b) hold such proceeds as cash  collateral for the Obligations and
UK  Subsidiary  hereby  grants  to  Laurus  a  security  interest  in such  cash
collateral amounts as security for the Obligations and/or (c) do any combination
of the foregoing.

         10.  Inspections  and  Appraisals.  At all times during normal business
hours,  Laurus,  and/or  any  agent of Laurus  shall  have the right to (a) have
access to, visit, inspect,  review,  evaluate and make physical verification and
appraisals of Borrower's properties and the Collateral,  (b) inspect,  audit and
copy (or take  originals if necessary) and make extracts from  Borrower's  Books
and Records,  including management letters prepared by independent  accountants,
and (c) discuss with Borrower's principal officers, and independent accountants,
Borrower's  business,  assets,  liabilities,  financial  condition,  results  of
operations  and  business  prospects.   Borrower  will  deliver  to  Laurus  any
instrument  necessary  for  Laurus to obtain  records  from any  service  bureau
maintaining   records  for  Borrower.   If  any  internally  prepared  financial
information, including that required under this Section is unsatisfactory in any
manner to Laurus, Laurus may request that the Accountants review the same.

         11.  Financial  Reporting.  Borrower  will  deliver,  or  cause  to  be
delivered,  to Laurus each of the  following,  which shall be in form and detail
acceptable to Laurus:

                                       10
<PAGE>

         (a) As soon as  available,  and in any event  within  ninety  (90) days
after the end of each  fiscal year of  Borrower,  Borrower's  audited  financial
statements  with  a  report  of  independent  certified  public  accountants  of
recognized   standing  selected  by  Borrower  and  acceptable  to  Laurus  (the
"Accountants"),  which annual  financial  statements  shall  include  Borrower's
balance  sheet as at the end of such fiscal year and the related  statements  of
Borrower's  income,  retained  earnings  and cash flows for the fiscal year then
ended,  prepared,  if Laurus so requests, on a consolidated basis to include all
Subsidiaries and Affiliates, all in reasonable detail and prepared in accordance
with GAAP,  together with (i) if and when  available,  copies of any  management
letters  prepared by such  accountants;  and (ii) a  certificate  of  Borrower's
President,  Chief Executive Officer or Chief Financial Officer stating that such
financial  statements  have been prepared in accordance with GAAP and whether or
not such  officer has  knowledge  of the  occurrence  of any Default or Event of
Default  hereunder  and,  if so,  stating  in  reasonable  detail the facts with
respect thereto;

         (b) As soon as  available  and in any event within forty five (45) days
after  the  end  of  each  quarter,  an  unaudited/internal  balance  sheet  and
statements of income, retained earnings and cash flows of Borrower as at the end
of and for such quarter and for the year to date period then ended, prepared, if
Laurus so requests,  on a  consolidated  basis to include all  Subsidiaries  and
Affiliates, in reasonable detail and stating in comparative form the figures for
the  corresponding  date and  periods in the  previous  year,  all  prepared  in
accordance  with GAAP,  subject to year-end  adjustments  and  accompanied  by a
certificate of Borrower's President,  Chief Executive Officer or Chief Financial
Officer,  stating  (i) that such  financial  statements  have been  prepared  in
accordance with GAAP, subject to year-end audit adjustments, and (ii) whether or
not such  officer has  knowledge  of the  occurrence  of any Default or Event of
Default  hereunder not theretofore  reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto;

         (c)  Within  thirty  (30)  days  after  the end of each  month (or more
frequently if Laurus so requests), agings of UK Subsidiary's Accounts, unaudited
trial balances and their accounts  payable and a calculation of UK  Subsidiary's
Accounts,  Eligible  Accounts  and thirty (30) days after the end of each fiscal
quarter for Inventory ledger as at the end of such month or shorter time period,
provided,  however,  that if Laurus shall request the foregoing information more
often than as set forth in the immediately  preceding clause,  the Company shall
have thirty days from each such request to comply with Laurus' demand; and

         (d) Promptly  after (i) the filing  thereof,  copies of Company's  most
recent registration statements and annual,  quarterly,  monthly or other regular
reports which Company files with the  Securities  and Exchange  Commission  (the
"SEC"),  and (ii) the issuance  thereof,  copies of such  financial  statements,
reports and proxy statements as Company shall send to its stockholders.

         12. Additional Representations and Warranties.  Each of the Company and
the UK Subsidiary  hereby  jointly and  severally  represents  and warrants,  as
applicable,  (each of which such  representations and warranties shall be deemed
repeated upon the making of a request for a Loan and made as of the time of each
Loan made hereunder), as follows:

                                       11
<PAGE>

         (a)  Each  of the  Company  and UK  Subsidiary  is a  corporation  duly
incorporated  and validly  existing  under the laws of the  jurisdiction  of its
incorporation   and  duly   qualified  and  in  good  standing  in  every  other
jurisdiction in which the nature of its' business requires such qualification.

         (b) The execution,  delivery and  performance of this Agreement and the
Ancillary   Agreements  (i)  have  been  duly   authorized,   (ii)  are  not  in
contravention of Company's or the UK Subsidiary's  certificate of incorporation,
by-laws or equivalent,  or of any  indenture,  agreement or undertaking to which
Company or the UK Subsidiary is a party or by which Company or the UK Subsidiary
is bound  and (iii)  are  within  Company's  and the UK  Subsidiary's  corporate
powers.

         (c) This Agreement and the Ancillary  Agreements executed and delivered
by Company constitute the legal, valid and binding  obligations,  of each of the
Company  and the UK  Subsidiary  to  which  it is a  signatory,  enforceable  in
accordance with their terms.

         (d)  Exhibit  12(d)  sets  forth  each  of  the  Company's  and  the UK
Subsidiary's  name as it appears in official  filing in the  jurisdiction of its
incorporation, the type of entity established, the organizational identification
number issued,  or a statement  that no such number has been issued,  Borrower's
respective jurisdictions of incorporation,  and the location of Borrower's chief
executive office, corporate offices,  warehouses,  other locations of Collateral
and locations  where records with respect to Collateral  are kept  (including in
each case the county of such locations) and, except as set forth in such Exhibit
12(d), such locations have not changed during the preceding twelve months. As of
the Closing  Date,  during the prior five years,  except as set forth in Exhibit
12(d),  Borrower has not been known as or  conducted  business in any other name
(including  trade  names).  Each of  Company  and UK  Subsidiary  has  only  one
jurisdiction of incorporation.

         (e) Based upon the  Employee  Retirement  Income  Security  Act of 1974
("ERISA"),  and the regulations and published  interpretations  thereunder:  (i)
Company has not engaged in any Prohibited Transactions as defined in Section 406
of ERISA and Section 4975 of the Internal Revenue Code, as amended; (ii) Company
has met all applicable  minimum funding  requirements under Section 302 of ERISA
in  respect  of its  plans;  (iii)  Company  has no  knowledge  of any  event or
occurrence  which  would  cause the  Pension  Benefit  Guaranty  Corporation  to
institute  proceedings under Title IV of ERISA to terminate any employee benefit
plan(s);  (iv)  Company has no fiduciary  responsibility  for  investments  with
respect to any plan  existing  for the benefit of persons  other than  Company's
employees; and (v) except as disclosed in Exhibit 12(e) attached hereto, Company
has not withdrawn, completely or partially, from any multi-employer pension plan
so as to incur liability under the Multiemployer  Pension Plan Amendments Act of
1980.

         (f)  There  is  no  pending  or  threatened  litigation,  court  order,
judgment, writ, suit, action or proceeding which could reasonably be expected to
have a Material Adverse Effect.

         (g) All balance sheets and income  statements which have been delivered
to Laurus fairly,  accurately and properly state Borrower's  financial condition
on a basis consistent with that of previous  financial  statements and except as

                                       12
<PAGE>

reflected in such financial statements there has been no material adverse change
in  Borrower's  financial  condition as reflected in such  statements  since the
balance  sheet  date  of the  statements  last  delivered  to  Laurus  and  such
statements do not fail to disclose any fact or facts which might have a Material
Adverse Effect on Borrower's financial condition.

         (h) Borrower  possesses or has licenses to use all of the  Intellectual
Property necessary to conduct its business. There has been no assertion or claim
of violation or infringement with respect to any Intellectual Property.  Exhibit
12(i) describes all Intellectual Property of Borrower.

         (i) Neither this  Agreement,  the exhibits and  schedules  hereto,  the
Ancillary  Agreements  nor  any  other  document  delivered  by  Company  or  UK
Subsidiary  to Laurus or its  attorneys  or agents  in  connection  herewith  or
therewith or with the transactions  contemplated hereby or thereby,  contain any
untrue  statement of a material fact nor omit to state a material fact necessary
in order to make the  statements  contained  herein or therein,  in light of the
circumstances in which they are made, not misleading.  The issuance of the Notes
and the Warrants and the shares of common  stock issued upon  conversion  of the
Notes  and  exercise  of the  Warrants  will be  exempt  from  the  registration
requirements of the Securities Act of 1933, as amended (the  "Securities  Act"),
and will have been registered or qualified (or are exempt from  registration and
qualification) under the registration,  permit or qualification  requirements of
all applicable state  securities  laws.  Neither Borrower nor any of Affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation  or general  advertising  (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Securities.

         (j) The common stock of the Company is  registered  pursuant to Section
15(d) of the Exchange Act and,  except with respect to certain matters set forth
on Exhibit  12(j)  attached  hereto,  the  Company  has  timely  filed all proxy
statements,  reports,  schedules, forms, statements and other documents required
to be filed by it under the  Exchange  Act. The Company has filed (i) its Annual
Report on Form 10-KSB for the fiscal year ended  December  31, 2002 and (ii) its
Quarterly  Report on Form 10-QSB for the fiscal quarters ended June 30, 2003 and
September 30, 2003  (collectively,  the "SEC Reports").  Each SEC Report was, at
the time of its filing,  in substantial  compliance with the requirements of its
respective form and none of the SEC Reports,  nor the financial  statements (and
the notes thereto)  included in the SEC Reports,  as of their respective  filing
dates,  contained any untrue  statement of a material fact or omitted to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The financial statements of the Company included in the SEC Reports
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements  and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted  accounting  principles
("GAAP")  applied on a consistent  basis during the periods involved (except (i)
as may be otherwise indicated in such financial  statements or the notes thereto
or (ii) in the case of unaudited interim statements,  to the extent they may not
include  footnotes  or may be  condensed)  and fairly  present  in all  material
respects the financial  condition,  the results of operations and the cash flows
of the Company and its  subsidiaries,  on a consolidated  basis, as of, and for,
the periods presented in each such SEC Report.

                                       13
<PAGE>

         (k) The  common  stock of the  Company  is  tradedon  the NASD Over the
Counter  Bulletin  Board  ("OTCBB")  and  satisfies  all  requirements  for  the
continuation  of such listing.  The Company has not received any notice that its
common stock will be  ineligible  to trade on the OTCBB or that the common stock
does not meet all requirements for the continuation of such trading .

         (l) Neither the  Borrower,  nor any of its  Affiliates,  nor any person
acting on its or their  behalf,  has directly or  indirectly  made any offers or
sales  of any  security  or  solicited  any  offers  to buy any  security  under
circumstances  that would cause the offering of the Securities  pursuant to this
Agreement and the Ancillary  Agreements to be integrated with prior offerings by
the Company for purposes of the  Securities  Act which would prevent the Company
from selling the Securities  pursuant to Rule 506 under the  Securities  Act, or
any applicable  exchange-related  stockholder approval provisions,  nor will the
Company or any of its Affiliates or  Subsidiaries  take any action or steps that
would cause the offering of the Securities to be integrated with other offerings
(other than such concurrent offering to Laurus).

         (m) The Securities are all restricted  securities  under the Securities
Act as of the  date of this  Agreement.  The  Company  will not  issue  any stop
transfer  order or other  order  impeding  the sale and  delivery  of any of the
Securities at such time as such  Securities are registered for public sale or an
exemption from registration is available, except as required by federal or state
securities laws.

         (n) The Company understands the nature of the Securities issuable under
the Ancillary Agreements and recognizes that the issuance of such Securities may
have a potential dilutive effect. The Company specifically acknowledges that its
obligation to issue the  Securities is binding upon the Company and  enforceable
regardless of the dilution such issuance may have on the ownership  interests of
other shareholders of the Company.

         (o) Except for  agreements  made in the  ordinary  course of  business,
there is no agreement  that has not been filed with the Commission as an exhibit
to a  registration  statement  or to a form  required to be filed by the Company
under the Exchange Act, the breach of which could reasonably be expected to have
a Material  Adverse  Effect or would  prohibit or otherwise  interfere  with the
ability of the Company to enter into and perform  any of its  obligations  under
this Agreement the Registration Rights Agreement executed by Company in favor of
Laurus in any material respect.

         12A. REPRESENTATIONS AND WARRANTIES OF LAURUS.

         Laurus hereby  represents and warrants to the Borrower as follows (such
representations  and warranties do not lessen or obviate the representations and
warranties of the Company set forth in this Agreement:

                                       14
<PAGE>

         12A.1 No  Shorting.  Laurus  or any of its  affiliates  and  investment
partners  will not and  will  not  cause  any  person  or  entity,  directly  or
indirectly, to engage in "short sales" of the Company's Common Stock for so long
as the Note shall be outstanding or such persons hold more than two and one half
percent (2.5%) of the then outstanding Common Stock of the Company.

         12A.2 Requisite Power and Authority. Laurus has all necessary power and
authority  under all  applicable  provisions  of law to execute and deliver this
Agreement  and the Related  Agreements  and to carry out their  provisions.  All
corporate  action on Laurus' part required for the lawful execution and delivery
of this  Agreement and the Related  Agreements  have been or will be effectively
taken prior to the Closing.  Upon their  execution and delivery,  this Agreement
and the  Related  Agreements  will be valid and binding  obligations  of Laurus,
enforceable in accordance with their terms,  except (a) as limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws of general
application  affecting  enforcement of creditors'  rights, and (b) as limited by
general  principles  of equity that restrict the  availability  of equitable and
legal remedies.

         12A.3   Investment   Representations.   Laurus   understands  that  the
Securities are being offered and sold pursuant to an exemption from registration
contained  in the  Securities  Act based in part upon  Laurus's  representations
contained in the Agreement,  including,  without  limitation,  that Laurus is an
"accredited  investor"  within the meaning of Regulation D under the  Securities
Act of 1933,  as amended (the  "Securities  Act").  Laurus  confirms that it has
received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the Note and
the Warrant to be purchased by it under this  Agreement  and the Note Shares and
the  Warrant  Shares  acquired  by it upon  the  conversion  of the Note and the
exercise of the Warrant,  respectively.  Laurus further confirms that it has had
an opportunity to ask questions and receive  answers from the Company  regarding
the  Company's  business,  management  and  financial  affairs and the terms and
conditions  of the Offering,  the Note,  the Warrant and the  Securities  and to
obtain  additional  information  (to  the  extent  the  Company  possessed  such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify any  information  furnished to Laurus or to which Laurus had
access.

         12A.4 Laurus Bears Economic Risk. Laurus has substantial  experience in
evaluating  and  investing in private  placement  transactions  of securities in
companies  similar to the Company so that it is capable of evaluating the merits
and risks of its  investment  in the Company and has the capacity to protect its
own interests.  Laurus must bear the economic risk of this investment  until the
Securities are sold pursuant to (i) an effective  registration  statement  under
the  Securities  Act, or (ii) an exemption from  registration  is available with
respect to such sale.

         12A.5  Acquisition  for Own Account.  Laurus is acquiring  the Note and
Warrant and the Note  Shares and the Warrant  Shares for Laurus' own account for
investment  only,  and not as a nominee or agent and not with a view  towards or
for resale in connection with their distribution.

                                       15
<PAGE>

         12A.6 Laurus Can Protect Its Interest. Laurus represents that by reason
of its, or of its management's,  business and financial  experience,  Laurus has
the capacity to evaluate the merits and risks of its investment in the Note, the
Warrant and the Securities  and to protect its own interests in connection  with
the  transactions  contemplated in this Agreement,  and the Related  Agreements.
Further,  Laurus is aware of no publication of any  advertisement  in connection
with the transactions contemplated in the Agreement or the Related Agreements.

         12A.7 Accredited  Investor.  Laurus represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

         12A.8 Legends.

         (a) Each of the Minimum  Borrowing  Notes and the Revolving  Note shall
bear substantially the following legend:

         "THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION OF
         THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED,  OR ANY APPLICABLE,  STATE  SECURITIES LAWS.
         THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION  OF
         THIS  NOTE MAY NOT BE  SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR
         HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
         STATEMENT  AS TO THIS NOTE OR SUCH  SHARES  UNDER SAID ACT AND
         APPLICABLE  STATE  SECURITIES  LAWS OR AN  OPINION  OF COUNSEL
         REASONABLY  SATISFACTORY TO INYX, INC. THAT SUCH  REGISTRATION
         IS NOT REQUIRED."

         The Note  Shares and the Warrant  Shares,  if not issued by DWAC system
(as hereinafter  defined),  shall bear a legend which shall be in  substantially
the  following  form until such shares are covered by an effective  registration
statement filed with the SEC:

         "THE  SHARES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
         REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
         ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
         SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
         OF AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH SECURITIES
         ACT  AND  APPLICABLE  STATE  LAWS  OR AN  OPINION  OF  COUNSEL
         REASONABLY  SATISFACTORY TO INYX, INC. THAT SUCH  REGISTRATION
         IS NOT REQUIRED."

                                       16
<PAGE>

         (b) The Warrant shall bear substantially the following legend:

         "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
         THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS.
         THIS WARRANT AND THE COMMON  SHARES  ISSUABLE UPON EXERCISE OF
         THIS  WARRANT MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR
         HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
         STATEMENT  AS TO THIS  WARRANT  OR THE  UNDERLYING  SHARES  OF
         COMMON STOCK UNDER SAID ACT AND  APPLICABLE  STATE  SECURITIES
         LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO INYX,
         INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

         13. Covenants. Borrower covenants as follows:

         (a) Borrower  will not,  without the prior  written  consent of Laurus,
change (i) its name as it appears  in the  official  filings in the state of its
incorporation  or  formation,  (ii) the type of legal  entity  it is,  (iii) its
organization   identification   number,   if  any,   issued   by  its  state  of
incorporation,  (iv) its state of  incorporation or (v) amend its certificate of
incorporation, by-laws or other organizational document.

         (b) The operation of Borrower's  business is and will continue to be in
compliance in all material respects with all applicable federal, state and local
laws, rules and ordinances, including to all laws, rules, regulations and orders
relating to taxes,  payment  and  withholding  of payroll  taxes,  employer  and
employee  contributions and similar items,  securities,  employee retirement and
welfare benefits, employee health safety and environmental matters.

         (c) Borrower will pay or discharge when due all taxes,  assessments and
governmental  charges or levies  imposed upon Borrower or any of the  Collateral
unless such amounts are being diligently  contested in good faith by appropriate
proceedings  provided  that (i)  adequate  reserves  with  respect  thereto  are
maintained on the books of Borrower in conformity with GAAP and (ii) the related
Lien shall have no effect on the priority of the Liens in favor of Laurus or the
value of the assets in which Laurus has a Lien.

         (d)  Borrower  will  promptly  inform  Laurus in  writing  of:  (i) the
commencement  of all  proceedings  and  investigations  by or before  and/or the
receipt of any notices from, any  governmental or  nongovernmental  body and all
actions and proceedings in any court or before any arbitrator  against or in any
way concerning any event which could reasonable be expected to have singly or in
the  aggregate,  a Material  Adverse  Effect;  (ii) any  amendment of Borrower's
certificate of incorporation,  by-laws or other organizational  document;  (iii)
any change  which has had or could  reasonably  be  expected  to have a Material
Adverse  Effect;  (iv) any Event of Default or  Default;  (v) any default or any

                                       17
<PAGE>

event  which  with  the  passage  of time or  giving  of  notice  or both  would
constitute  a default  under any  agreement  for the  payment  of money to which
Borrower is a party or by which Borrower or any of Borrower's  properties may be
bound the  breach of which  would have a  Material  Adverse  Effect and (vi) any
change  in  Company's  or UK  Subsidiary's  name or any  other  name used in its
respective business.

         (e) The Borrower will not (i) create,  incur, assume or suffer to exist
any  indebtedness  (exclusive of trade debt) whether  secured or unsecured other
than  Borrower's  indebtedness  to Laurus and as set forth on  Exhibit  13(e)(i)
attached  hereto  and made a part  hereof;  (ii)  cancel any debt owing to it in
excess of $50,000 in the  aggregate  during any 12 month  period;  (iii) assume,
guarantee,  endorse or  otherwise  become  directly  or  contingently  liable in
connection with any  obligations of any other Person,  except the endorsement of
negotiable  instruments  by a  Borrower  for  deposit or  collection  or similar
transactions  in the ordinary  course of business;  (iv)  directly or indirectly
declare,  pay or make any  dividend  or  distribution  on any class of its Stock
other than to pay  dividends  on shares of its  outstanding  Preferred  Stock or
apply any of its funds, property or assets to the purchase,  redemption or other
retirement  of any Stock of the Borrower  except as required  under the terms of
the Borrower's  outstanding  Preferred  Stock issued and outstanding on the date
hereof;  (v)  purchase or hold  beneficially  any Stock or other  securities  or
evidences of indebtedness  of, make or permit to exist any loans or advances to,
or make any investment or acquire any interest  whatsoever in, any other Person,
including any  partnership or joint  venture,  except (x) travel  advances,  (y)
loans to  Borrower's  officers and  employees  not  exceeding at any one time an
aggregate of $10,000,  and (z) existing  Subsidiaries of the Company,  except if
such indebtedness is created, incurred, assumed or suffered to exist directly in
connection with Loans made to Borrower hereunder; (vi) create or permit to exist
any  Subsidiary,  other than any  Subsidiary in existence on the date hereof and
listed in Exhibit  13(e)(ii)  unless such new Subsidiary is designated by Laurus
as either a co-borrower or guarantor  hereunder and such  Subsidiary  shall have
entered  into all such  documentation  required  by  Laurus to grant to Laurus a
first priority perfected security interest in such Subsidiary's assets to secure
the Obligations;  (vii) directly or indirectly,  prepay any indebtedness  (other
than to Laurus and in the ordinary course of business),  or repurchase,  redeem,
retire or otherwise  acquire any  indebtedness  (other than to Laurus and in the
ordinary course of business) except to make scheduled  payments of principal and
interest  thereof;  (viii)  enter  into  any  merger,   consolidation  or  other
reorganization  with or into any other Person or acquire all or a portion of the
assets or Stock of any Person or permit any other Person to consolidate  with or
merge with it,  unless (1)  Company is the  surviving  entity of such  merger or
consolidation,  (2) no Event of Default  shall  exist  immediately  prior to and
after  giving  effect to such merger or  consolidation,  (3) Company  shall have
provided  Laurus  copies  of  all  documentation  relating  to  such  merger  or
consolidation  and (4) Company shall have  provided  Laurus with at least thirty
(30) days' prior written notice of such merger or consolidation; (ix) materially
change the nature of the business in which it is presently  engaged;  (x) change
its  fiscal  year or make any  changes in  accounting  treatment  and  reporting
practices  without prior written  notice to Laurus except as required by GAAP or
in the tax reporting treatment or except as required by law; (xi) enter into any
transaction  with any employee,  director or  Affiliate,  except in the ordinary
course on  arms-length  terms;  or (xii) bill Accounts under any name except the
present name of Company or its existing Subsidiaries.

                                       18
<PAGE>

         (f) None of the proceeds of the Loans  hereunder  will be used directly
or indirectly to "purchase" or "carry"  "margin stock" or to repay  indebtedness
incurred to "purchase" or "carry" "margin stock" within the respective  meanings
of each of the quoted terms under  Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.

         (g)  Borrower  will  bear  the full  risk of loss  from any loss of any
nature  whatsoever  with respect to the  Collateral.  At Borrower's own cost and
expense in amounts and with carriers  acceptable to Laurus,  Borrower  shall (i)
keep all its  insurable  properties  and  properties in which it has an interest
insured against the hazards of fire, sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards,  and for such amounts, as is
customary in the case of companies  engaged in businesses  similar to Borrower's
including business interruption insurance;  (ii) maintain a bond in such amounts
as is  customary  in the case of  companies  engaged  in  businesses  similar to
Borrower's   insuring   against   larceny,   embezzlement   or  other   criminal
misappropriation  of insured's  officers and  employees who may either singly or
jointly  with  others at any time have access to the assets or funds of Borrower
either directly or through Governmental  Authority to draw upon such funds or to
direct  generally the  disposition  of such assets;  (iii)  maintain  public and
product  liability  insurance  against  claims  for  personal  injury,  death or
property damage suffered by others; (iv) maintain all such worker's compensation
or  similar  insurance  as may be  required  under  the  laws  of any  state  or
jurisdiction  in which  Borrower is engaged in business;  and (v) furnish Laurus
with (x)  certificates  as to all such  insurance  coverages and evidence of the
maintenance  of such  policies at least  thirty (30) days before any  expiration
date,  (y)  endorsements  to such  policies  naming  Laurus as  "co-insured"  or
"additional  insured"  and  appropriate  loss payable  endorsements  in form and
substance  satisfactory to Laurus, naming Laurus as loss payee, and (z) evidence
that as to Laurus the insurance coverage shall not be impaired or invalidated by
any act or neglect of Borrower and the insurer will provide Laurus with at least
thirty (30) days notice prior to  cancellation or expiration  thereof.  Borrower
shall instruct the insurance  carriers that in the event of any loss thereunder,
the carriers  shall make payment for such loss to Laurus and not to Borrower and
Laurus  jointly.  If any  insurance  losses  are paid by  check,  draft or other
instrument payable to Borrower and Laurus jointly, Laurus may endorse Borrower's
name thereon and do such other things as Laurus may deem advisable to reduce the
same to cash. Laurus is hereby authorized to adjust and compromise  claims.  All
loss recoveries received by Laurus upon any such insurance may be applied to the
Obligations,  in such order as Laurus in its sole discretion  shall determine or
shall  otherwise  be  delivered to the  Borrower.  Any surplus  shall be paid by
Laurus  to  Borrower  or  applied  as may be  otherwise  required  by  law.  Any
deficiency thereon shall be paid by Borrower to Laurus, on demand.

         (h) Company will at all times have authorized and reserved a sufficient
number of shares of Common Stock to provide for the  conversion of the Notes and
exercise of the Warrants.

         (i) Company  owns 100% of the issued and  outstanding  shares of the UK
Subsidiary and will not sell, assign, transfer, pledge, hypothecate or otherwise
dispose  of  or  encumber  such  shares  as  long  as  the  Obligations   remain
outstanding.

                                       19
<PAGE>

         14.  Further  Assurances.  At any time and from time to time,  upon the
written  request of Laurus and at the sole expense of Borrower,  Borrower  shall
promptly and duly execute and deliver any and all such further  instruments  and
documents  and take such further  action as Laurus may request (a) to obtain the
full benefits of this  Agreement and the Ancillary  Agreements,  (b) to protect,
preserve and maintain  Laurus' rights in the Collateral and under this Agreement
or any  Ancillary  Agreement,  or (c) to enable Laurus to exercise all or any of
the rights and powers herein granted or any Ancillary Agreement.

         15. Power of Attorney.  Borrower hereby appoints  Laurus,  or any other
Person whom Laurus may  designate  as  Borrower's  attorney,  with power to: (i)
endorse Borrower's name on any checks, notes, acceptances,  money orders, drafts
or other forms of payment or  security  that may come into  Laurus'  possession;
(ii) sign  Borrower's  name on any  invoice  or bill of lading  relating  to any
Accounts, drafts against Account Debtors, schedules and assignments of Accounts,
notices  of  assignment,   financing   statements  and  other  public   records,
verifications  of Account and notices to or from Account  Debtors;  (iii) verify
the  validity,  amount or any other  matter  relating  to any  Account  by mail,
telephone,  telegraph or  otherwise  with  Account  Debtors;  (iv) do all things
necessary to carry out this Agreement,  any Ancillary  Agreement and all related
documents;  and (v) on or after the occurrence and  continuation  of an Event of
Default,  notify the post office  authorities to change the address for delivery
of Borrower's mail to an address designated by Laurus, and to receive,  open and
dispose of all mail addressed to Borrower. Borrower hereby ratifies and approves
all acts of the attorney.  Neither  Laurus,  nor the attorney will be liable for
any acts or  omissions  or for any error of  judgment or mistake of fact or law,
except for gross  negligence or willful  misconduct.  This power,  being coupled
with an interest shall become  effective only upon the occurrence of an Event of
Default hereunder,  and is irrevocable so long as Laurus has a security interest
and until the Obligations have been fully satisfied.

         16.  Term of  Agreement.  Laurus'  agreement  to make  Loans and extend
financial  accommodations  under  and in  accordance  with  the  terms  of  this
Agreement or any  Ancillary  Agreement  shall  continue in full force and effect
until the  expiration  of the Initial Term.  At Laurus'  election  following the
occurrence of an Event of Default,  Laurus may  terminate  this  Agreement.  The
termination of the Agreement shall not affect any of Laurus' rights hereunder or
any Ancillary  Agreement and the provisions hereof and thereof shall continue to
be fully  operative  until all  transactions  entered into,  rights or interests
created and the  Obligations  have been  disposed of,  concluded or  liquidated.
Notwithstanding  the foregoing,  Laurus shall release its security  interests at
any time after thirty (30) days notice upon payment to it of all  Obligations if
Companies shall have (i) provided Laurus with an executed release of any and all
claims which  Companies may have or thereafter have under this Agreement and all
Ancillary  Agreements  and (ii) paid to Laurus an early payment fee in an amount
equal to (1)  three  percent  (3%) of the  Capital  Availability  Amount if such
payment  occurs  prior  to the  first  anniversary  of the  Initial  Term or any
applicable renewal term, and (2) two (2%) of the Capital  Availability Amount if
such payment  occurs on or after the first  anniversary  and prior to the second
anniversary of the Initial Term or any  applicable  renewal term and one percent
(1%) if such  termination  occurs  thereafter  during the Initial Term; such fee

                                       20
<PAGE>

being  intended  to  compensate  Laurus for its costs and  expenses  incurred in
initially  approving  this Agreement or extending  same.  Such early payment fee
shall be due and payable by Borrower to Laurus upon  termination by acceleration
of this Agreement by Laurus due to the occurrence and continuance of an Event of
Default.

         17.  Termination  of Lien.  The  Liens  and  rights  granted  to Laurus
hereunder and any Ancillary  Agreements  and the financing  statements  filed in
connection  herewith  or  therewith  shall  continue  in full force and  effect,
notwithstanding  the  termination of this Agreement or the fact that  Borrower's
account may from time to time be temporarily in a zero or credit position, until
(a) all of the Obligations of Borrower have been paid or performed in full after
the  termination  of  this  Agreement.  Laurus  shall  not be  required  to send
termination  statements  to  Borrower,  or to file them with any filing  office,
unless and until this  Agreement  and the Ancillary  Agreements  shall have been
terminated in accordance  with their terms and all  Obligations  paid in full in
immediately available funds.

         18. Events of Default.  The  occurrence  of any of the following  shall
constitute an Event of Default:

         (a) failure to make  payment of any of the  Obligations  when  required
hereunder;

         (b)  failure  to pay any taxes  when due  unless  such  taxes are being
contested  in good faith by  appropriate  proceedings  and with respect to which
adequate reserves have been provided on Borrower's books;

         (c)  failure  to perform  under  and/or  committing  any breach of this
Agreement or any Ancillary Agreement or any other agreement between Borrower and
Laurus  which  shall  continue  for a period  of  fifteen  (15)  days  after the
occurrence thereof;

         (d) the  occurrence of a default under any agreement to which  Borrower
is a party with third parties which has a Material Adverse Effect;

         (e)  any  representation,   warranty  or  statement  made  by  Borrower
hereunder,  in any Ancillary Agreement,  any certificate,  statement or document
delivered  pursuant to the terms hereof,  or in connection with the transactions
contemplated by this Agreement  should at any time be false or misleading in any
material respect;

         (f) an  attachment  or levy is made upon  Borrower's  assets  having an
aggregate value in excess of $100,000 or a judgment is rendered against Borrower
or Borrower's  property  involving a liability of more than $100,000 which shall
not have been vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof;

         (g) any  change  in  Borrower's  condition  or  affairs  (financial  or
otherwise) which in Laurus' reasonable,  good faith opinion, could reasonably be
expected to have a Material Adverse Effect;

         (h) any Lien created hereunder or under any Ancillary Agreement for any
reason ceases to be or is not a valid and perfected Lien having a first priority
interest in favor of Laurus or a Permitted Lien;

                                       21
<PAGE>

         (i) if Borrower shall (i) apply for,  consent to or suffer to exist the
appointment of, or the taking of possession by, a receiver,  custodian,  trustee
or liquidator of itself or of all or a  substantial  part of its property,  (ii)
make a general  assignment  for the  benefit  of  creditors,  (iii)  commence  a
voluntary  case  under  the  federal  bankruptcy  laws (as now or  hereafter  in
effect),  (iv) be  adjudicated  a  bankrupt  or  insolvent,  (v) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have  dismissed,  within forty five (45) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

         (j)  Borrower  shall admit in writing its  inability,  or be  generally
unable to pay its debts as they  become due or cease  operations  of its present
business;

         (k) any Affiliate or  Subsidiary  of the Borrower  shall (i) apply for,
consent to or suffer to exist the appointment of, or the taking possession by, a
receiver,  custodian, trustee or liquidator of itself or of all or a substantial
part of its  property,  (ii) admit in writing  its  inability,  or be  generally
unable,  to pay its debts as they become due or cease  operations of its present
business,  (iii) make a general  assignment  for the benefit of creditors,  (iv)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect),  (v) be  adjudicated a bankrupt or  insolvent,  (vi) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vii)  acquiesce to, or fail to have  dismissed,  within  thirty (30) days,  any
petition filed against it in any involuntary  case under such bankruptcy laws or
(viii) take any action for the purpose of effecting any of the foregoing;

         (l) Borrower directly or indirectly sells, assigns, transfers, conveys,
or suffers or permits to occur any sale,  assignment,  transfer or conveyance of
any assets of Borrower or any interest therein, except as permitted herein;

         (m) the  occurrence  of a change in the  controlling  ownership  of the
Borrower;

         (n) a default by Borrower in the payment, when due, of any principal of
or interest on any other  indebtedness  for money  borrowed in an amount greater
than $50,000,  which is notcured within any applicable cure or grace period,  or
being contested in good faith by the Borrower;

         (o)  the  indictment  or  threatened  indictment  of  Borrower  or  any
executive  officer of Borrower under any criminal  statute,  or  commencement or
threatened  commencement of criminal or civil proceeding against Borrower or any
executive officer of Borrower pursuant to which statute or proceeding  penalties
or remedies  sought or available  include  forfeiture  of any of the property of
Borrower; or

         (p) if an Event of  Default  shall  occur  under and as  defined in any
Note.

         19. Remedies.  Following the occurrence of an Event of Default,  Laurus
shall have the right to demand repayment in full of all Obligations,  whether or
not otherwise due. Until all Obligations have been fully satisfied, Laurus shall
retain its Lien in all  Collateral.  Laurus shall have, in addition to all other

                                       22
<PAGE>

rights provided herein and in each Ancillary Agreement,  the rights and remedies
of a secured  party under the UCC,  and under other  applicable  law,  all other
legal and equitable rights to which Laurus may be entitled,  including the right
to take immediate possession of the Collateral,  to require Borrower to assemble
the Collateral,  at Borrower's expense,  and to make it available to Laurus at a
place designated by Laurus which is reasonably convenient to both parties and to
enter any of the  premises  of  Borrower or  wherever  the  Collateral  shall be
located, with or without force or process of law, and to keep and store the same
on said  premises  until sold (and if said premises be the property of Borrower,
Borrower  agrees not to charge  Laurus for  storage  thereof),  and the right to
apply for the appointment of a receiver for Borrower's property. Further, Laurus
may, at any time or times after the occurrence of an Event of Default,  sell and
deliver all Collateral held by or for Laurus at public or private sale for cash,
upon  credit or  otherwise,  at such  prices and upon such  terms as Laurus,  in
Laurus' sole  discretion,  deems advisable or Laurus may otherwise  recover upon
the  Collateral in any  commercially  reasonable  manner as Laurus,  in its sole
discretion,  deems advisable.  The requirement of reasonable notice shall be met
if such notice is mailed  postage  prepaid to Borrower at Borrower's  address as
shown in Laurus' records, at least ten (10) days before the time of the event of
which notice is being given.  Laurus may be the  purchaser at any sale, if it is
public.  In connection  with the exercise of the foregoing  remedies,  Laurus is
granted permission to use all of Borrower's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights.
The  proceeds of sale shall be applied  first to all costs and expenses of sale,
including  attorneys'  fees, and second to the payment (in whatever order Laurus
elects) of all Obligations.  After the indefeasible  payment and satisfaction in
full in cash of all of the  Obligations,  and after the payment by Laurus of any
other amount required by any provision of law,  including  Section  608(a)(1) of
the Code (but only after Laurus has received  what Laurus  considers  reasonable
proof of a subordinate party's security interest), the surplus, if any, shall be
paid to Borrower or its representatives or to whosoever may be lawfully entitled
to  receive  the  same,  or as a court of  competent  jurisdiction  may  direct.
Borrower shall remain liable to Laurus for any deficiency. In addition, Borrower
shall pay Laurus a  liquidation  fee  ("Liquidation  Fee") in the amount of five
percent  (5%)  of the  actual  amount  collected  in  respect  of  each  Account
outstanding  at any time during a  "liquidation  period".  For purposes  hereof,
"liquidation  period" means a period:  (i) beginning on the earliest date of (x)
an  event  referred  to in  Section  18(i) or  18(j),  or (y) the  cessation  of
Borrower's  business;  and (ii) ending on the date on which  Laurus has actually
received all Obligations due and owing it under this Agreement and the Ancillary
Agreements.  The  Liquidation  Fee  shall be paid on the  date on  which  Laurus
collects  the  applicable  Account  by  deduction  from the  proceeds  thereof..
Borrower and Laurus  acknowledge  that the actual damages that would be incurred
by Laurus  after the  occurrence  of an Event of Default  would be  difficult to
quantify and that Borrower and Laurus have agreed that the fees and  obligations
set  forth in this  Section  and in this  Agreement  would  constitute  fair and
appropriate liquidated damages in the event of any such termination.

         20. Waivers.  To the full extent permitted by applicable law,  Borrower
waives (a) presentment, demand and protest, and notice of presentment, dishonor,
intent to accelerate,  acceleration,  protest,  default,  nonpayment,  maturity,
release,  compromise,  settlement,  extension  or  renewal of any or all of this
Agreement and the Ancillary  Agreements  or any other notes,  commercial  paper,
Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties at any
time held by Laurus  on which  Borrower  may in any way be  liable,  and  hereby

                                       23
<PAGE>

ratifies and confirms  whatever Laurus may do in this regard;  (b) all rights to
notice and a hearing  prior to Laurus'  taking  possession  or control of, or to
Laurus' replevy, attachment or levy upon, any Collateral or any bond or security
that might be required by any court prior to allowing  Laurus to exercise any of
its  remedies;  and (c) the benefit of all  valuation,  appraisal  and exemption
laws.  Borrower  acknowledges that it has been advised by counsel of its choices
and decisions with respect to this Agreement,  the Ancillary  Agreements and the
transactions evidenced hereby and thereby.

         21.   Expenses.   Borrower   shall  pay  all  of   Laurus'   reasonable
out-of-pocket costs and expenses, including reasonable fees and disbursements of
in-house or outside counsel and appraisers,  in connection with the preparation,
execution and delivery of this  Agreement and the Ancillary  Agreements,  and in
connection with the prosecution or defense of any action, contest, dispute, suit
or  proceeding  concerning  any matter in any way arising out of,  related to or
connected  with this Agreement or any Ancillary  Agreement.  Borrower shall also
pay all of Laurus' reasonable fees,  charges,  out-of-pocket costs and expenses,
including fees and  disbursements of counsel and appraisers,  in connection with
(a) the preparation, execution and delivery of any waiver, any amendment thereto
or consent proposed or executed in connection with the transactions contemplated
by this Agreement or the Ancillary Agreements, (b) Laurus' obtaining performance
of the Obligations under this Agreement and any Ancillary Agreements, including,
but not limited to, the  enforcement or defense of Laurus'  security  interests,
assignments of rights and Liens hereunder as valid perfected security interests,
(c) any  attempt to  inspect,  verify,  protect,  collect,  sell,  liquidate  or
otherwise dispose of any Collateral,  (d) any appraisals or re-appraisals of any
property (real or personal)  pledged to Laurus by Borrower as Collateral for, or
any other Person as security for, Borrower's  Obligations  hereunder and (e) any
consultations  in connection with any of the foregoing.  Borrower shall also pay
Laurus' customary bank charges for all bank services  (including wire transfers)
performed or caused to be performed by Laurus for Borrower at Borrower's request
or in connection with  Borrower's  loan account with Laurus.  All such costs and
expenses together with all filing, recording and search fees, taxes and interest
payable by Borrower to Laurus  (expressly  excluding  any federal  income tax to
which Laurus may be subject in connection with Loans made hereunder or any state
franchise  taxes to which Laurus may be subject)  shall be payable on demand and
shall be secured by the Collateral.  If any tax by any Governmental Authority is
or may be  imposed on or as a result of any  transaction  between  Borrower  and
Laurus which Laurus is or may be required to withhold or pay, Borrower agrees to
indemnify and hold Laurus  harmless in respect of such taxes,  and Borrower will
repay to  Laurus  the  amount  of any such  taxes  which  shall  be  charged  to
Borrower's  account;  and until  Borrower  shall furnish  Laurus with  indemnity
therefor (or supply Laurus with evidence  satisfactory  to it that due provision
for the payment  thereof has been made),  Laurus may hold  without  interest any
balance  standing to Borrower's  credit and Laurus shall retain its Liens in any
and all Collateral.

         22.  Assignment  By  Laurus.  Laurus  may  assign  any  or  all  of the
Obligations  together  with any or all of the  security  therefor  to any Person
which is not a competitor of the Borrower and any such transferee  shall succeed
to all of Laurus' rights with respect thereto. Upon such transfer,  Laurus shall
be released  from all  responsibility  for the  Collateral to the extent same is
assigned to any transferee. Laurus may from time to time sell or otherwise grant
participations   in  any  of  the   Obligations  and  the  holder  of  any  such

                                       24
<PAGE>

participation  shall,  subject to the terms of any agreement  between Laurus and
such  holder,  be  entitled to the same  benefits as Laurus with  respect to any
security for the  Obligations  in which such holder is a  participant.  Borrower
agrees that each such holder may exercise  any and all rights of banker's  lien,
set-off and counterclaim with respect to its participation in the Obligations as
fully as though Borrower were directly  indebted to such holder in the amount of
such participation.

         23. No Waiver;  Cumulative Remedies.  Failure by Laurus to exercise any
right,  remedy or option under this  Agreement,  any Ancillary  Agreement or any
supplement  hereto or thereto or any other agreement between Borrower and Laurus
or delay by Laurus in  exercising  the same,  will not  operate as a waiver;  no
waiver by Laurus will be effective  unless it is in writing and then only to the
extent specifically stated. Laurus' rights and remedies under this Agreement and
the Ancillary Agreements will be cumulative and not exclusive of any other right
or remedy which Laurus may have.

         24. Application of Payments.  Borrower  irrevocably waives the right to
direct the  application  of any and all payments at any time or times  hereafter
received by Laurus from or on Borrower's behalf and Borrower hereby  irrevocably
agrees  that  Laurus  shall  have the  continuing  exclusive  right to apply and
reapply any and all payments received at any time or times hereafter against the
Obligations   hereunder   in  such   manner   as  Laurus   may  deem   advisable
notwithstanding any entry by Laurus upon any of Laurus' books and records.

         25.  Indemnity.  Borrower agrees to indemnify and hold Laurus,  and its
respective  affiliates,  employees,  attorneys and agents (each, an "Indemnified
Person"),  harmless  from and against any and all suits,  actions,  proceedings,
claims,  damages,  losses,  liabilities  and  expenses  of any  kind  or  nature
whatsoever  (including  attorneys'  fees and  disbursements  and other  costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit  having  been  extended,  suspended  or  terminated  under this
Agreement or any of the Ancillary  Agreements or with respect to the  execution,
delivery,  enforcement,  performance and  administration of, or in any other way
arising out of or relating to, this Agreement,  the Ancillary  Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and any actions or failures to act with respect to any of the foregoing,  except
to the extent that any such  indemnified  liability is finally  determined  by a
court of competent  jurisdiction to have resulted  solely from such  Indemnified
Person's gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE  OR LIABLE TO BORROWER  OR TO ANY OTHER  PARTY OR TO ANY  SUCCESSOR,
ASSIGNEE  OR THIRD  PARTY  BENEFICIARY  OR ANY  OTHER  PERSON  ASSERTING  CLAIMS
DERIVATIVELY   THROUGH  SUCH  PARTY,  FOR  INDIRECT,   PUNITIVE,   EXEMPLARY  OR
CONSEQUENTIAL  DAMAGES  WHICH MAY BE ALLEGED AS A RESULT OF CREDIT  HAVING  BEEN
EXTENDED,  SUSPENDED  OR  TERMINATED  UNDER  THIS  AGREEMENT  OR  ANY  ANCILLARY
AGREEMENT  OR AS A RESULT OF ANY OTHER  TRANSACTION  CONTEMPLATED  HEREUNDER  OR
THEREUNDER.

         26. Revival.  Borrower further agrees that to the extent Borrower makes
a payment or payments to Laurus,  which  payment or payments or any part thereof
are subsequently  invalidated,  declared to be fraudulent or  preferential,  set
aside  and/or  required  to be repaid to a trustee,  receiver or any other party

                                       25
<PAGE>

under any bankruptcy act, state or federal law,  common law or equitable  cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.

         27. Notices.  Any notice or request  hereunder may be given to Borrower
or Laurus at the  respective  addresses  set forth below or as may  hereafter be
specified in a notice designated as a change of address under this Section.  Any
notice or request  hereunder  shall be given by  registered  or certified  mail,
return receipt requested,  hand delivery,  overnight mail or telecopy (confirmed
by mail).  Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when  delivered to any officer of the party to whom it
is  addressed,  in the case of those by mail or overnight  mail,  deemed to have
been given three (3) business days after the date when  deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.

Notices shall be provided as follows:

                 If to Laurus:                Laurus Master Fund, Ltd.
                                              c/o Laurus Capital Management, LLC
                                              825 Third Avenue 14th Fl.
                                              New York, New York 10022
                                              Attention:  John E. Tucker, Esq.
                                              Telephone:  (212) 541-4434
                                              Telecopier:  (212) 541-5800

                 If to Company:               INyX, Inc
                                              801 Brickell Avenue - 9th Floor
                                              Miami, FL 33131
                                              Attention: Chief Financial Officer
                                              Telephone:
                                              Telecopier: (416) 250-2663
                 With a copy to:              Ronald L. Brown, Esq.
                                              Andrews Kurth LLP
                                              1717 Main Street, Suite 3700
                                              Dallas, TX  75201
                                              Tel: 214.659.4469
                                              Fax: 214.659.4819

or such other address as may be  designated  in writing  hereafter in accordance
with this Section 27 by such Person.

                                       26
<PAGE>

         28.  Governing  Law,  Jurisdiction  and Waiver of Jury Trial.  (a) THIS
AGREEMENT  AND THE ANCILLARY  AGREEMENTS  SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE.

         (b)  BORROWER  HEREBY  CONSENTS  AND  AGREES  THAT THE STATE OR FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES  BETWEEN  BORROWER AND
LAURUS PERTAINING TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY
MATTER  ARISING  OUT OF OR RELATED  TO THIS  AGREEMENT  OR ANY OF THE  ANCILLARY
AGREEMENTS; PROVIDED, THAT LAURUS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE  COURTS MAY HAVE TO BE HEARD BY A COURT  LOCATED  OUTSIDE OF THE COUNTY OF
NEW  YORK,  STATE OF NEW  YORK;  AND  FURTHER  PROVIDED,  THAT  NOTHING  IN THIS
AGREEMENT  SHALL BE DEEMED OR OPERATE TO PRECLUDE  LAURUS FROM  BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER  JURISDICTION TO COLLECT THE OBLIGATIONS,
TO REALIZE ON THE  COLLATERAL OR ANY OTHER SECURITY FOR THE  OBLIGATIONS,  OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS.  BORROWER  EXPRESSLY
SUBMITS  AND  CONSENTS  IN  ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT,  AND BORROWER  HEREBY WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER VENUE OR FORUM NON
CONVENIENS.  BORROWER HEREBY WAIVES PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT
AND OTHER  PROCESS  ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL  ADDRESSED  TO  BORROWER  AT THE  ADDRESS  SET FORTH IN SECTION 27 AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S  ACTUAL
RECEIPT  THEREOF  OR THREE (3) DAYS  AFTER  DEPOSIT  IN THE U.S.  MAILS,  PROPER
POSTAGE PREPAID.

         (c) THE  PARTIES  DESIRE  THAT THEIR  DISPUTES  BE  RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION,  SUIT, OR  PROCEEDING  BROUGHT TO RESOLVE
ANY DISPUTE,  WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS AND
BORROWER  ARISING  OUT  OF,  CONNECTED  WITH,   RELATED  OR  INCIDENTAL  TO  THE
RELATIONSHIP  ESTABLISHED  BETWEEN THEM IN CONNECTION WITH THIS  AGREEMENT,  ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED THERETO.

         29. Limitation of Liability. Borrower acknowledges and understands that
in order to assure repayment of the Obligations hereunder Laurus may be required

                                       27
<PAGE>

to exercise  any and all of Laurus'  rights and  remedies  hereunder  and agrees
that,  except as limited by applicable  law,  neither  Laurus nor any of Laurus'
agents shall be liable for acts taken or omissions  made in connection  herewith
or therewith except for actual bad faith.

         30. Entire  Understanding.  This Agreement and the Ancillary Agreements
contain the entire  understanding  between Borrower and Laurus as to the subject
matter  hereof and  thereof and any  promises,  representations,  warranties  or
guarantees  not  herein  contained  shall  have no force  and  effect  unless in
writing,  signed by Borrower's  and Laurus'  respective  officers.  Neither this
Agreement,  the Ancillary Agreements,  nor any portion or provisions thereof may
be changed, modified, amended, waived,  supplemented,  discharged,  cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged.

         31. Severability. Wherever possible each provision of this Agreement or
the Ancillary  Agreements shall be interpreted in such manner as to be effective
and valid under  applicable  law, but if any provision of this  Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.

         32. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.

         33. Counterparts; Telecopier Signatures. This Agreement may be executed
in one or more counterparts,  each of which shall constitute an original and all
of  which  taken  together  shall  constitute  one and the same  agreement.  Any
signature delivered by a party via telecopier transmission shall be deemed to be
any original signature hereto.

         34.  Construction.  The  parties  acknowledge  that each  party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         35.  Publicity.  Borrower hereby  authorizes Laurus to make appropriate
announcements of the financial  arrangement entered into by and between Borrower
and Laurus,  including,  without  limitation,  announcements  which are commonly
known as tombstones, in such publications and to such selected parties as Laurus
shall in its sole and absolute  discretion deem  appropriate,  or as required by
applicable law.

         36. Legends. The Securities shall bear legends as follows;

         (a) The Note shall bear substantially the following legend:

         "THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION OF
         THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
         1933, AS AMENDED,  OR ANY APPLICABLE,  STATE  SECURITIES LAWS.
         THIS NOTE AND THE COMMON STOCK  ISSUABLE  UPON  CONVERSION  OF

                                       28
<PAGE>

         THIS  NOTE MAY NOT BE  SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR
         HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
         STATEMENT  AS TO THIS NOTE OR SUCH  SHARES  UNDER SAID ACT AND
         APPLICABLE  STATE  SECURITIES  LAWS OR AN  OPINION  OF COUNSEL
         REASONABLY  SATISFACTORY TO INYX, INC. THAT SUCH  REGISTRATION
         IS NOT REQUIRED."

         (b) Any shares of Common Stock  issued  pursuant to  conversion  of the
Note or  exercise  of the  Warrants,  shall  bear a  legend  which  shall  be in
substantially  the following  form until such shares are covered by an effective
registration statement filed with the SEC:

         "THE  SHARES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
         REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
         ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
         SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
         OF AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH SECURITIES
         ACT  AND  APPLICABLE  STATE  LAWS  OR AN  OPINION  OF  COUNSEL
         REASONABLY  SATISFACTORY TO INYX, INC. THAT SUCH  REGISTRATION
         IS NOT REQUIRED."

         (c) The Warrants shall bear substantially the following legend:

         "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
         THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS.
         THIS WARRANT AND THE COMMON  SHARES  ISSUABLE UPON EXERCISE OF
         THIS  WARRANT MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR
         HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
         STATEMENT  AS TO THIS  WARRANT  OR THE  UNDERLYING  SHARES  OF
         COMMON STOCK UNDER SAID ACT AND  APPLICABLE  STATE  SECURITIES
         LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO INYX,
         INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

      [Balance of page intentionally left blank; signature page follows.]

                                       29
<PAGE>

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

COMPANY:                                           UK SUBSIDIARY:

INYX, INC.                                         INYX PHARMA, LTD.

By: /s/ Jack Kachkar                               By: /s/ Steven Handley
   -------------------------                          --------------------------
   Jack Kachkar, Chairman                             Steven Handley, President

LAURUS MASTER FUND, LTD.

By: /s/ Eugene Grim
   -------------------------
   Eugene Grim, Director

                                       30
<PAGE>

                              Annex A - Definitions

         "Account  Debtor"  means any  Person  who is or may be  obligated  with
respect to, or on account of, an Account.

         "Accountants" has the meaning given to such term in Section 11(a).

         "Accounts" means all "accounts",  as such term is defined in the UCC or
its  equivalent  under the law of  England  and  Wales,  now owned or  hereafter
acquired  by  any  Person,   including:  (a)  all  accounts  receivable,   other
receivables,  book debts and other  forms of  obligations  (other  than forms of
obligations  evidenced  by Chattel  Paper or  Instruments)  (including  any such
obligations  that may be characterized as an account or contract right under the
UCC);  (b) all of such Person's  rights in, to and under all purchase  orders or
receipts for goods or  services;  (c) all of such  Person's  rights to any goods
represented  by  any of the  foregoing  (including  unpaid  sellers'  rights  of
rescission,  replevin,  reclamation  and  stoppage  in  transit  and  rights  to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance  issued or to be issued,  for a secondary
obligation  incurred or to be incurred,  for energy  provided or to be provided,
for the use or hire of a vessel under a charter or other  contract,  arising out
of the use of a credit card or charge card,  or for  services  rendered or to be
rendered by such Person or in connection with any other transaction  (whether or
not  yet  earned  by  performance  on the  part  of  such  Person);  and (e) all
collateral  security of any kind given by any Account Debtor or any other Person
with respect to any of the foregoing.

         "Accounts  Availability"  means the  amount of Loans  against  Eligible
Accounts  Laurus may from time to time make  available to Company ninety percent
(90%) of the net face amount of Eligible Accounts based on Accounts of Company.

         "Affiliate"   of  any  Person  means  (a)  any  Person  (other  than  a
Subsidiary) which,  directly or indirectly,  is in control of, is controlled by,
or is under common control with such Person, (b) any Person who is a director or
officer (i) of such Person,  (ii) of any  Subsidiary  of such Person or (iii) of
any Person  described in clause (a) above.  For the purposes of this definition,
control of a Person shall mean the power (direct or indirect) to direct or cause
the direction of the  management and policies of such Person whether by contract
or otherwise.

         "Ancillary Agreements" means, the Notes, Warrants,  Registration Rights
Agreement, and all other agreements, instruments, documents, mortgages, pledges,
powers  of  attorney,  consents,   assignments,   contracts,  notices,  security
agreements, trust agreements and guarantees whether heretofore, concurrently, or
hereafter  executed by or on behalf of Borrower or any other Person or delivered
to Laurus,  relating to this Agreement or to the  transactions  contemplated  by
this Agreement or otherwise  relating to the  relationship  between the Borrower
and Laurus.

         "Books and Records" means all books, records, board minutes, contracts,
licenses,  insurance  policies,  environmental  audits,  business plans,  files,
computer  files,  computer  discs and other data and software  storage and media

                                       31
<PAGE>

devices,  accounting  books and records,  financial  statements  (actual and pro
forma),  filings  with  Governmental  Authorities  and any and all  records  and
instruments  relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.

         "Borrower"  means  each of the  Company  and the UK  Subsidiary,  whose
obligations hereunder shall be joint and several.

         "Business  Day" means a day on which  Laurus is open for  business  and
that is not a  Saturday,  a Sunday or other day on which  banks are  required or
permitted to be closed in the State of New York.

         "Capital Availability Amount" means $3,500,000.

         "Chattel  Paper" means all "chattel  paper," as such term is defined in
the UCC, including  electronic chattel paper, now owned or hereafter acquired by
any Person.

         "Closing  Date" means the date on which  Company  shall  first  receive
proceeds of the initial Loans.

         "Collateral" means all of Borrower's property and assets,  whether real
or  personal,  tangible  or  intangible,  and  whether  now  owned or  hereafter
acquired,  or in which it now has or at any time in the future may  acquire  any
right,  title or interests  including all of the following  property in which it
now has or at any time in the future may acquire any right, title or interest:

         (a) all Inventory;

         (b) all Equipment;

         (c) all Fixtures;

         (d) all General Intangibles;

         (e) all Accounts;

         (f) all Deposit Accounts,  other bank accounts and all funds on deposit
therein;

         (g) all Investment Property;

         (h) all Stock of INYX Pharma Ltd.;

         (i) all Chattel Paper;

         (j) all Letter-of-Credit Rights;

         (k) all Instruments;

         (l) all commercial tort claims set forth on Exhibit 1(A);

                                       32
<PAGE>

         (m) all Books and Records;

         (n)  all  Supporting   Obligations  including  letters  of  credit  and
guarantees issued in support of Accounts, Chattel Paper, General Intangibles and
Investment Property;

         (o) (i) all money,  cash and cash equivalents and (ii) all cash held as
cash collateral to the extent not otherwise constituting  Collateral,  all other
cash or property  at any time on deposit  with or held by Laurus for the account
of  Borrower  (whether  for  safekeeping,   custody,  pledge,   transmission  or
otherwise); and

         (p) all  products  and  Proceeds of all or any of the  foregoing,  tort
claims and all claims and other  rights to payment  including  insurance  claims
against  third  parties  for loss of,  damage  to, or  destruction  of, and (ii)
payments due or to become due under  leases,  rentals and hires of any or all of
the foregoing and Proceeds  payable under, or unearned  premiums with respect to
policies of insurance in whatever form.

         "Contract  Rate"  means an  interest  rate per annum equal to the Prime
Rate plus three  percent  (3.00%)  per  annum,  but  subject to the  immediately
following  sentence,  the  Contract  Rate shall not be less than  seven  percent
(7.00%).  The Contract  Rate shall be subject to  adjustment  if (i) the Company
shall have  registered the shares of the Company's  common stock  underlying the
conversion  of all the Minimum  Borrowing  Notes issued by the Company to Laurus
and that certain warrant issued to Laurus on a registration  statement  declared
effective by the SEC, and (ii) the volume  weighted  average price of the Common
Stock as reported by Bloomberg,  L.P. on the principal market for any of the ten
(10) trading  days  immediately  preceding an interest  payment date exceeds the
then applicable  Fixed  Conversion  Price in such percentages as outlined in the
table  below,  the  Contract  Rate  for  the  succeeding  calendar  month  shall
automatically be adjusted:

         -------------------------------------------------- --------------------
                                                            Contract Rate
         -------------------------------------------------- --------------------
         125% of the Fixed Conversion Price                 Prime plus 2.75%
         -------------------------------------------------- --------------------
         150% of the Fixed Conversion Price                 Prime plus 2.5%
         -------------------------------------------------- --------------------
         175% of the Fixed Conversion Price                 Prime plus 2.25%
         -------------------------------------------------- --------------------
         For each  incremental  25% increase such Contract Rate shall be reduced
         by an additional 25 basis points.
         -----------------------------------------------------------------------

         In no event shall the Contract Rate be less than zero (0.00%).

         "Default"  means any act or event  which,  with the giving of notice or
passage of time or both, would constitute an Event of Default.

         "Default Rate" has the meaning given to such term in Section 5(a)(iii).

         "Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Person, including,  without
limitation, the Lockbox Account.

                                       33
<PAGE>

         "Documents" means all "documents",  as such term is defined in the UCC,
now owned or hereafter acquired by any Person,  wherever located,  including all
bills of lading, dock warrants,  dock receipts,  warehouse  receipts,  and other
documents of title, whether negotiable or non-negotiable.

         "Eligible   Accounts"  means  and  includes  each  Account  of  the  UK
Subsidiary  which  conforms  to the  following  criteria:  (a)  shipment  of the
merchandise  or the  rendition  of services has been  completed;  (b) no return,
rejection or repossession  of the  merchandise has occurred;  (c) merchandise or
services  shall not have been  rejected or  disputed  by the Account  Debtor and
there shall not have been  asserted  any offset,  defense or  counterclaim;  (d)
continues to be in full conformity with the  representations and warranties made
by Borrower to Laurus with respect thereto;  (e) Laurus is, and continues to be,
satisfied  with the credit  standing  of the  Account  Debtor in relation to the
amount of credit  extended;  (f) there are no facts existing or threatened which
are  likely to result in any  adverse  change in an Account  Debtor's  financial
condition;  (g) is  documented  by an invoice in a form  approved  by Laurus and
shall not be unpaid more than ninety (90) days from invoice  date;  (h) not more
than  twenty-five  percent  (25%) of the unpaid amount of invoices due from such
Account  Debtor remains unpaid more than ninety (90) days from invoice date; (i)
is not  evidenced by chattel  paper or an instrument of any kind with respect to
or in payment of the Account  unless such  instrument is duly endorsed to and in
possession  of Laurus or  represents  a check in payment  of a Account;  (j) the
Account  Debtor is located  in the United  Kingdom  and is  invoiced  in British
Pounds  Sterling;  provided,  however,  Laurus  may,  from time to time,  in the
exercise  of  its  sole  discretion  and  based  upon  satisfaction  of  certain
conditions  to be determined  at such time by Laurus,  deem certain  Accounts as
Eligible  Accounts  notwithstanding  that such  Account  is due from an  Account
Debtor located  outside of the United  Kingdom;  (k) Laurus has a first priority
perfected Lien in such Account and such Account is not subject to any Lien other
than Permitted Liens; (l) does not arise out of transactions  with any employee,
officer,  director,  stockholder  or  Affiliate  of  Company;  (m) is payable to
Company;  (n) does not arise out of a bill and hold sale prior to  shipment  and
does not arise out of a sale to any Person to which Company is indebted;  (o) is
net of any returns,  discounts,  claims,  credits and  allowances;  (p) does not
arise out of government  contracts or any department,  agency or instrumentality
of the  government;  (q) is a good and valid account  representing an undisputed
bona fide indebtedness incurred by the Account Debtor therein named, for a fixed
sum  as  set  forth  in  the  invoice   relating  thereto  with  respect  to  an
unconditional  sale and delivery  upon the stated terms of goods sold by Company
or work,  labor and/or services  rendered by Company;  (r) does not arise out of
progress  billings  prior to  completion  of the  order;  (s) the  total  unpaid
Accounts from such Account Debtor does not exceed  twenty-five  percent (25%) of
all  Eligible  Accounts;  (t)  Company's  right to payment is  absolute  and not
contingent upon the fulfillment of any condition whatsoever; (u) Company is able
to bring suit and  enforce its  remedies  against  the  Account  Debtor  through
judicial  process;  (v) does not represent  interest  payments,  late or finance
charges  owing  to  Company  and (w) is  otherwise  satisfactory  to  Laurus  as
determined  by  Laurus  in the  exercise  of its sole  discretion.  In the event
Company  requests that Laurus include within Eligible  Accounts certain Accounts
of one or more of  Company's  acquisition  targets,  Laurus shall at the time of
such request  consider such  inclusion,  but any such inclusion  shall be at the
sole  option of Laurus and shall at all times be subject  to the  execution  and
delivery to Laurus of all such  documentation  (including,  without  limitation,
guaranty  and  security  documentation)  as  Laurus  may  require  in  its  sole
discretion.

                                       34
<PAGE>

         "Equipment"  means all  "equipment" as such term is defined in the UCC,
now owned or hereafter acquired by any Person,  wherever located,  including any
and all machinery,  apparatus,  equipment,  fittings, furniture, fixtures, motor
vehicles and other tangible  personal  property  (other than Inventory) of every
kind  and  description  that  may be now or  hereafter  used  in  such  Person's
operations  or that are owned by such Person or in which such Person may have an
interest,  and all parts,  accessories and accessions  thereto and substitutions
and replacements therefor.

         "ERISA" shall have the meaning given to such term in Section 12(g).

         "Event of Default"  means the occurrence of any of the events set forth
in Section 18.

         "Fixed Conversion Price" has the meaning given such term in the Minimum
Borrowing Note.

         "Fixtures" means all "fixtures" as such term is defined in the UCC, now
owned or hereafter acquired by any Person.

         "Formula Amount" has the meaning set forth in Section 2(a)(i).

         "GAAP" means generally accepted  accounting  principles,  practices and
procedures in effect from time to time in the United States of America.

         "General  Intangibles" means all "general  intangibles" as such term is
defined in the UCC, now owned or hereafter  acquired by any Person including all
right, title and interest that such Person may now or hereafter have in or under
any contract, all Payment Intangibles,  customer lists,  Licenses,  Intellectual
Property,   interests  in  partnerships,   joint  ventures  and  other  business
associations,  permits,  proprietary  or  confidential  information,  inventions
(whether or not  patented or  patentable),  technical  information,  procedures,
designs,  knowledge,  know-how,  Software,  data bases, data, skill,  expertise,
experience,  processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual  Property),  all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property,  tangible
rights or intangible  rights,  all  liability,  life,  key-person,  and business
interruption insurance, and all unearned premiums),  uncertificated  securities,
choses in action,  deposit  accounts,  rights to receive  tax  refunds and other
payments,  rights to received dividends,  distributions,  cash,  Instruments and
other  property in respect of or in exchange  for pledged  Stock and  Investment
Property, and rights of indemnification.

         "Goods"  means all  "goods",  as such term is defined  in the UCC,  now
owned or hereafter acquired by any Person, wherever located,  including embedded
software to the extent  included in "goods" as defined in the UCC,  manufactured
homes,  standing  timber that is cut and  removed  for sale and unborn  young of
animals.

         "Goodwill"   means  all  goodwill,   trade   secrets,   proprietary  or
confidential information,  technical information,  procedures, formulae, quality
control standards,  designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

                                       35
<PAGE>

         "Guarantor"   means  and  any  Person  who  may  guarantee  payment  of
performance of the whole or any part of the Obligations.

         "Governmental  Authority" means any nation or government,  any state or
other political subdivision thereof, and any agency,  department or other entity
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions of or pertaining to government.

         "Indemnified  Person"  shall  have the  meaning  given to such  term in
Section 25.

         "Initial  Term" means the Closing Date through the close of business on
the day  immediately  preceding  the second  anniversary  of the  Closing  Date,
subject to  acceleration at the option of Laurus upon the occurrence of an Event
of Default hereunder or other termination hereunder.

         "Instruments"  means all "instruments",  as such term is defined in the
UCC, now owned or hereafter acquired by any Person, wherever located,  including
all  certificated  securities  and all promissory  notes and other  evidences of
indebtedness,  other than instruments that constitute,  or are a part of a group
of writings that constitute, Chattel Paper.

         "Intellectual  Property"  means any and all Licenses,  patents,  patent
registrations,   copyrights,  copyright  registrations,   trademarks,  trademark
registrations, trade secrets and customer lists.

         "Inventory" means all "inventory",  as such term is defined in the UCC,
now owned or hereafter acquired by any Person,  wherever located,  including all
inventory, merchandise, goods and other personal property that are held by or on
behalf of such Person for sale or lease or are  furnished or are to be furnished
under a contract of service or that  constitute raw materials,  work in process,
finished goods,  returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person's business
or in the processing,  production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

         "Investment Property" means all "investment property",  as such term is
defined in the UCC,  now owned or  hereafter  acquired by any  Person,  wherever
located.

         "Letter-of-Credit  Rights" means "letter-of-credit rights" as such term
is defined in the UCC, now owned or hereafter acquired by any Person,  including
rights to payment or performance  under a letter of credit,  whether or not such
Person,  as  beneficiary,  has  demanded  or is  entitled  to demand  payment or
performance.

         "License" means any rights under any written agreement now or hereafter
acquired by any Person to use any trademark, trademark registration,  copyright,
copyright  registration or invention for which a patent is in existence or other
license of rights or interests now held or hereafter acquired by any Person.

                                       36
<PAGE>

         "Lien"  means any  mortgage,  security  deed,  deed of  trust,  pledge,
hypothecation,   assignment,  security  interest,  lien  (whether  statutory  or
otherwise),  charge,  claim or  encumbrance,  or  preference,  priority or other
security  agreement or preferential  arrangement  held or asserted in respect of
any asset of any kind or nature  whatsoever  including any  conditional  sale or
other  title  retention  agreement,  any  lease  having  substantially  the same
economic  effect as any of the  foregoing,  and the filing of, or  agreement  to
give,  any  financing   statement  under  the  UCC  or  comparable  law  of  any
jurisdiction.

         "Loans"  shall have the meaning set forth in Section  2(a)(i) and shall
include  all other  extensions  of  credit  hereunder  and  under any  Ancillary
Agreement.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
condition,  operations,  assets, business or prospects of Company, (b) Company's
ability to pay or perform the Obligations in accordance with the terms hereof or
any  Ancillary  Agreement,  (c) the  value of the  Collateral,  the Liens on the
Collateral or the priority of any such Lien or (d) the practical  realization of
the  benefits  of Laurus'  rights and  remedies  under  this  Agreement  and the
Ancillary Agreements.

         "Maximum  Legal  Rate"  shall  have the  meaning  given to such term in
Section 5(a)(iv).

         "Minimum  Borrowing  Amount"  means One Million  Dollars  ($1,000,000),
which such aggregate amount shall be evidenced by Minimum Borrowing Notes.

         "Minimum  Borrowing  Notes" shall mean each Secured  Convertible  Note,
which  shall be issued in a series,  made by the  Company  in favor of Laurus to
evidence the Minimum Borrowing Amount.

         "Notes"  means each of the Minimum  Borrowing  Notes and the  Revolving
Note made by  Company  in favor of Laurus in  connection  with the  transactions
contemplated hereby, as the same may be amended,  modified and supplemented from
time to time, as applicable.

         "Obligations"  means  all  Loans,  all  advances,  debts,  liabilities,
obligations, covenants and duties owing by Company to Laurus (or any corporation
that  directly or  indirectly  controls or is  controlled  by or is under common
control with Laurus) of every kind and description  (whether or not evidenced by
any note or other  instrument and whether or not for the payment of money or the
performance  or  non-performance  of any act),  direct or indirect,  absolute or
contingent,  due or to  become  due,  contractual  or  tortious,  liquidated  or
unliquidated,  whether existing by operation of law or otherwise now existing or
hereafter arising including any debt, liability or obligation owing from Company
to others which Laurus may have  obtained by assignment or otherwise and further
including all interest  (including interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then  applicable  rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like  proceeding,  whether  or not a  claim  for  post-filing  or  post-petition
interest is allowed in such  proceeding),  charges or any other payments Company
is required  to make by law or  otherwise  arising  under or as a result of this

                                       37
<PAGE>

Agreement and the Ancillary  Agreements,  together with all reasonable  expenses
and reasonable  attorneys' fees  chargeable to Company's  account or incurred by
Laurus in connection with Company's  account  whether  provided for herein or in
any Ancillary Agreement.

         "Payment  Intangibles" means all "payment  intangibles" as such term is
defined in the UCC, now owned or hereafter acquired by any Person,  including, a
General  Intangible under which the Account Debtor's  principal  obligation is a
monetary obligation.

         "Permitted Liens" means (a) Liens of carriers, warehousemen,  artisans,
bailees,  mechanics and materialmen  incurred in the ordinary course of business
securing sums not overdue; (b) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment insurance or other forms
of governmental insurance or benefits, relating to employees,  securing sums (i)
not  overdue or (ii) being  diligently  contested  in good faith  provided  that
adequate  reserves  with  respect  thereto  are  maintained  on the books of the
applicable  Company in conformity  with GAAP; (c) Liens in favor of Laurus;  (d)
Liens for taxes (i) not yet due or (ii) being diligently contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are  maintained on the books of the applicable  Company in conformity  with GAAP
provided,  that, the Lien shall have no effect on the priority of Liens in favor
of Laurus or the value of the assets in which  Laurus has a Lien;  (e)  Purchase
Money Liens securing Purchase Money Indebtedness to the extent permitted in this
Agreement and (f) Liens specified on Exhibit 2 hereto.

         "Person"  means  any  individual,  sole  proprietorship,   partnership,
limited   liability   partnership,    joint   venture,   trust,   unincorporated
organization,  association, corporation, limited liability company, institution,
public  benefit  corporation,  entity or  government  (whether  federal,  state,
county, city, municipal or otherwise,  including any instrumentality,  division,
agency, body or department thereof),  and shall include such Person's successors
and assigns.

         "Prime  Rate"  means the  "prime  rate"  published  in The Wall  Street
Journal from time to time. The Prime Rate shall be increased or decreased as the
case may be for each  increase or decrease in the Prime Rate in an amount  equal
to such  increase or decrease in the Prime Rate;  each change to be effective as
of the day of the change in such rate.

         "Proceeds" means "proceeds", as such term is defined in the UCC and, in
any event, shall include: (a) any and all proceeds of any insurance,  indemnity,
warranty  or guaranty  payable to Company or any other  Person from time to time
with  respect  to any  Collateral;  (b)  any  and  all  payments  (in  any  form
whatsoever)  made or due and payable to Company from time to time in  connection
with any requisition,  confiscation,  condemnation, seizure or forfeiture of any
Collateral by any governmental body,  governmental  authority,  bureau or agency
(or any person acting under color of governmental  authority);  (c) any claim of
Company  against third parties (i) for past,  present or future  infringement of
any Intellectual  Property or (ii) for past,  present or future  infringement or
dilution of any  trademark  or  trademark  license or for injury to the goodwill
associated  with any trademark,  trademark  registration  or trademark  licensed
under any trademark License; (d) any recoveries by Company against third parties
with respect to any litigation or dispute  concerning any Collateral,  including
claims arising out of the loss or nonconformity  of,  interference  with the use

                                       38
<PAGE>

of, defects in, or infringement of rights in, or damage to, Collateral;  (e) all
amounts collected on, or distributed on account of, other Collateral,  including
dividends,  interest,  distributions  and Instruments with respect to Investment
Property  and  pledged  Stock;  and (f) any and all  other  amounts  , rights to
payment or other property  acquired upon the sale, lease,  license,  exchange or
other disposition of Collateral and all rights arising out of Collateral.

         "Purchase Money Indebtedness"  means (a) any indebtedness  incurred for
the  payment  of all or any  part of the  purchase  price  of any  fixed  asset,
including  indebtedness under capitalized leases, (b) any indebtedness  incurred
for the sole purpose of financing or refinancing all or any part of the purchase
price of any fixed  asset,  and (c) any  renewals,  extensions  or  refinancings
thereof (but not any increases in the principal  amounts thereof  outstanding at
that time).

         "Purchase Money Lien" means any Lien upon any fixed assets that secures
the Purchase Money  Indebtedness  related thereto but only if such Lien shall at
all  times be  confined  solely to the  asset  the  purchase  price of which was
financed or refinanced through the incurrence of the Purchase Money Indebtedness
secured  by such Lien and only if such Lien  secures  only such  Purchase  Money
Indebtedness.

         "Registration   Rights  Agreements"  means  those  registration  rights
agreements  from time to time  entered  into  between  Company  and  Laurus,  as
amended, modified and supplemented from time to time.

         "Revolving Note" means that secured  revolving note made by the Company
in favor of Laurus in the aggregate  principal  amount of up to Two Million Five
Hundred Thousand United States Dollars (USD$2,500,000).

         "Securities"  means  the  Notes and the  Warrants  being  issued by the
Company to Laurus  pursuant to this  Agreement and the Ancillary  Agreements and
the shares of the common  stock of the Company  which may be issued  pursuant to
conversion of such Notes in whole or in part or exercise of such Warrants.

         "Software" means all "software" as such term is defined in the UCC, now
owned or hereafter  acquired by any Person,  including all computer programs and
all supporting  information provided in connection with a transaction related to
any program.

         "Stock" means all  certificated  and  uncertificated  shares,  options,
warrants,  membership  interests,  general  or  limited  partnership  interests,
participation  or other  equivalents  (regardless of how  designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting,  including  common  stock,  preferred  stock,  or any other
"equity  security"  (as such term is defined in Rule 3a11-1 of the General Rules
and  Regulations  promulgated  by the SEC under the  Securities  Exchange Act of
1934).

         "Subsidiary"  of any Person means a  corporation  or other entity whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership  interests having such power only by reason of the
happening  of a  contingency)  to  elect a  majority  of the  directors  of such

                                       39
<PAGE>

corporation,  or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

         "Supporting  Obligations"  means all  "supporting  obligations" as such
term is defined in the UCC.

         "Term" means, as applicable, the Initial Term and any Renewal Term.

         "UCC" means the Uniform  Commercial  Code as the same may, from time be
in effect in the State of New York; provided,  that in the event that, by reason
of mandatory  provisions  of law, any or all of the  attachment,  perfection  or
priority of, or remedies  with respect to,  Laurus'  Lien on any  Collateral  is
governed by the Uniform  Commercial  Code as in effect in a  jurisdiction  other
than the State of New York,  the term "UCC"  shall mean the  Uniform  Commercial
Code as in effect in such other  jurisdiction  for purposes of the provisions of
this Agreement relating to such attachment, perfection, priority or remedies and
for purposes of definitions related to such provisions;  provided further,  that
to the  extent  that UCC is used to define any term  herein or in any  Ancillary
Agreement  and  such  term is  defined  differently  in  different  Articles  or
Divisions  of the UCC,  the  definition  of such term  contained  in  Article or
Division 9 shall govern.

         "Warrants" has the meaning set forth in the Registration
Rights Agreements.

                                       40

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