Document:

SECURITY AGREEMENT
                               ------------------

1.       Identification.
         --------------

         This Security Agreement (the "Agreement"), dated September 25, 2003, is
entered into by and between Tech Laboratories Inc., a New Jersey corporation
("Debtor"), and Barbara Mittman, as collateral agent [acting in the manner and
to the extent described in the Collateral Agent Agreement defined below] (the
"Collateral Agent"), for the benefit of the Collateral Agent and parties
identified on Schedule A hereto (collectively, the "Lenders").

2.       Recitals.
         --------

         2.1 On October 13, 2000, Lenders purchased Convertible Notes ("Notes")
pursuant to Subscription Agreements between Debtor and each Lender dated as of
October 13, 2000 ("Subscription Agreement") in the principal amounts set forth
on Schedule A hereto. Pursuant to Section 10.1(iv) of the Subscription
Agreement, Debtor was to have filed a registration statement with the Securities
and Exchange Commission ("SEC") on or before the Filing Date (as defined in the
Subscription Agreement) which was required to have been declared effective by
the SEC on or before the Effective Date (as defined in the Subscription
Agreement). The registration statement was required to remain effective from the
Effective Date and thereafter as described in the Subscription Agreement. Debtor
acknowledges that a Non-Registration Event has occurred pursuant to Section 10.4
of the Subscription Agreement and therefore the Lenders may exercise their
rights to demand Mandatory Redemption Payments pursuant to Section 9.2 of the
Subscription Agreement in the amount calculated pursuant to the Subscription
Agreement. Debtor and Lenders agree that as of the date of this Agreement, the
Mandatory Redemption Payment for each Lender as of August 31, 2003 is not less
than the amounts set forth on Schedule A hereto. The principal amount and
interest outstanding as of August 31, 2003 are set forth on Schedule A hereto.

         2.2 In order to induce Lenders to forego from exercising their rights
to demand and receive the Mandatory Redemption Payment and as security for the
repayment of Notes and any and all other sums due from Debtor to Lenders whether
arising under the Notes, or pursuant to other written instruments and agreements
entered into by the Debtor and Lenders in connection with the Subscription
Agreement, whether before or after the date hereof (collectively, the
"Obligations"), Debtor, for good and valuable consideration, receipt of which is
acknowledged, has agreed to grant to the Collateral Agent on behalf of the
Lenders, a security interest in the Collateral (as such term is hereinafter
defined), on the terms and conditions hereinafter set forth.

         2.3 The Lenders have appointed Barbara Mittman as Collateral Agent
pursuant to that certain Collateral Agent Agreement dated as of September 25,
2003 ("Collateral Agent Agreement"), among the Lenders and Collateral Agent.

                                       1

<PAGE>

                  Defined Terms. The following defined terms which are defined
in the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, General Intangibles, Instruments, Inventory and Proceeds.

3. Grant of General Security Interest in Collateral and Perfection of Security
Interest.

         3.1 In consideration of the Debtor's grant of the Security Interest in
the Collateral, as provided for herein, Lenders hereby agree to forebear from
the exercise of any of its rights under the Subscription Agreement with respect
to the Mandatory Redemption Payment in connection with an Event of Default
related to the Non-Registration Event described in Section 2.3 above, for so
long as Debtor is not in default under the provisions of this Agreement, the
Note and the Subscription Agreement (or has failed to cure any such default
within the applicable period for such cure).

3.2 As security for the Obligations, Debtor hereby grants the Collateral Agent,
for the benefit of the Lenders, a security interest in the Collateral.

         3.3      "Collateral" shall mean all of the following property of
 Debtor:

                  (a) All now owned and hereafter acquired right, title and
interest of Debtor in, to and in respect of goods, including, but not limited
to:

                           (i) All Inventory, wherever located, whether now
owned or hereafter acquired, of whatever kind, nature
or description, including all raw materials, work-in-process, finished goods,
and materials to be used or consumed in Debtor's business; and all names or
marks affixed to or to be affixed thereto for purposes of selling same by the
seller, manufacturer, lessor or licensor thereof and all Inventory which may be
returned to Debtor by its customers or repossessed by Debtor and all of Debtor's
right, title and interest in and to the foregoing (including all of Debtor's
rights as a seller of goods);

                           (ii) All Equipment and fixtures, wherever located,
whether now owned or hereafter acquired, including, without limitation, all
machinery, motor vehicles, furniture and fixtures, and any and all additions,
substitutions, replacements (including spare parts), and accessions thereof and
thereto (including, but not limited to Debtor's rights to acquire any of the
foregoing, whether by exercise of a purchase option or otherwise);

                  (b) All present and future books and records relating to any
of the above including, without limitation, all computer programs, printed
output and computer readable data in the possession or control of the Debtor,
any computer service bureau or other third party; and

                  (c) All products and Proceeds of the foregoing in whatever
form and wherever located, including, without limitation, all insurance proceeds
and all claims against third parties for loss or destruction of or damage to any
of the foregoing.

                                       2

<PAGE>

         3.4 The Collateral Agent is hereby specifically authorized, after an
Event of Default, to transfer any Collateral into the name of the Collateral
Agent and to take any and all action deemed advisable to the Collateral Agent to
remove any transfer restrictions affecting the Collateral.

         3.5 Debtor shall execute and deliver to the Lender UCC-1 Financing
Statements and other forms of financing statements ("Financing Statements")
relating to the security interests in Debtor's right, title and interest in and
to the Collateral. The Collateral Agent is instructed to file the Financing
Statements at the Debtor's expense, in the following jurisdictions: State of New
Jersey, and any other jurisdiction including local, state, national and
international, deemed advisable to Collateral Agent. These Financing Statements
are deemed to be filed for the benefit of the Lenders.

4.       Additional Consideration.
         ------------------------

         As additional consideration for the grant of the Security Interest
described herein, Lenders agree that:

         (a) If within 180 days from the date of this Agreement ("Calculation
Date") there remains outstanding on the Notes less than $500,000 of principal
and interest in the aggregate (such amount being outstanding vis-a-vis each
Lender in the same proportion as the amount of principal and interest
outstanding on the date of this Agreement ["Proportionate Amount"]), then the
Lenders represented by the Collateral Agent will release the security interest
in the Collateral upon written certification accordingly from the Debtor's
certified public accountant to the Collateral Agent and Lenders. In the event
Debtor has paid within six months from the date of this Agreement to each
Lender, such Lender's Proportionate Amount of $250,000, then the Calculation
Date shall be extended until one year from the date of this Agreement.

         (b) The Notes are prepayable without the consent of the lenders
provided such prepayments are made in the Lenders Proportionate Amounts. No
prepayments may be made in connection with amounts of principal or interest for
which Conversion Notices (as defined in the Notes) have been given. Provided
Debtor makes payments to Lenders of not less than $100,000 in the aggregate per
payment, then Debtor will receive a credit against outstanding principal and
interest equal to one hundred and thirty-three percent (133%) of the amount of
each such payments.

         (c) Provided an Event of Default (as defined in Section 9 of this
Agreement) has not occurred, then the Lenders agree not to convert the Notes for
ninety (90) days after the date of this Agreement.

         (d) Provided an Event of Default (as defined in Section 9 of this
Agreement) does not occur, then the Lenders waive liquidated damages under the
Subscription Agreement and default interest under the Notes accrued as of the
date of this Agreement.

         (e) Debtor agrees that all the Common Stock issuable upon conversion of
the Notes and upon exercise of the Warrants issued pursuant to the Subscription
Agreement may be resold without restriction pursuant to Rule 144(k) under the
Securities Act of 1933.

                                       3

<PAGE>

Provided  Debtor  issues such  shares  without the legends set forth in Sections
1(e), 1(f) and 1(g) of the Subscription Agreement within five days after request
by a Lender, then the Lenders waive liquidated damages accrued as of the date of
this Agreement arising from the occurrence of a Non-Registration  Event (defined
in Section 10.4 of the Subscription Agreement).

         (f) If an Event of Default (as defined in Section 9 of this Agreement)
occurs, then the Lenders shall be restored to their position status quo ante
this Agreement in relation to all liquidated damages, default interest, and
other damages and penalties which will be reinstated.

5.       Distribution on Liquidation.
         ---------------------------

         5.1 If any sum is paid as a liquidating distribution on or with respect
to the Collateral, Debtor shall deliver same to the Collateral Agent to be
applied to the Obligations then due, in accordance with the terms of the Notes.

         5.2 Prior to any Event of Default (as defined herein), Debtor shall be
entitled to exercise all voting power pertaining to any of the Collateral,
provided such exercise is not contrary to the interests of the Lenders and does
not impair the Collateral.

6.       Further Action By Debtor; Covenants and Warranties.
         --------------------------------------------------

         6.1 Collateral Agent at all times shall have a perfected security
interest in the Collateral. Subject to the security interests described herein,
Debtor has and will continue to have full title to the Collateral free from any
liens, leases, encumbrances, judgments or other claims. Collateral Agent's
security interest in the Collateral constitutes and will continue to constitute
a first, prior and indefeasible security interest in favor of Collateral Agent.
Debtor will do all acts and things, and will execute and file all instruments
(including, but not limited to, security agreements, financing statements,
continuation statements, etc.) reasonably requested by Collateral Agent to
establish, maintain and continue the perfected security interest of Collateral
Agent in the Collateral, and will promptly on demand, pay all costs and expenses
of filing and recording, including the costs of any searches reasonably deemed
necessary by Collateral Agent from time to time to establish and determine the
validity and the continuing priority of the security interest of Collateral
Agent, and also pay all other claims and charges that, in the opinion of
Collateral Agent, exercised in good faith, is reasonably likely to materially
prejudice, imperil or otherwise affect the Collateral or its security interest
therein.

         6.2 Debtor will not sell, transfer, assign or pledge those items of
Collateral (or allow any such items to be sold, transferred, assigned or
pledged), without the prior written consent of Collateral Agent. Although
Proceeds of Collateral are covered by this Security Agreement, this shall not be
construed to mean that Collateral Agent consents to any sale of the Collateral,
except as provided herein.

         6.3 Debtor will, at all reasonable times, allow Collateral Agent or its
representatives free and complete access to all of Debtor 's records which in
any way relate to the Collateral, for such inspection and examination as
Collateral Agent reasonably deems necessary.

                                       4

<PAGE>

         6.4 Debtor, at its sole cost and expense, will protect and defend this
Security Agreement, all of the rights of Collateral Agent hereunder, and the
Collateral against the claims and demands of all other parties.

         6.5 Debtor will promptly notify Collateral Agent of any levy, distraint
or other seizure by legal process or otherwise of any part of the Collateral,
and of any threatened or filed claims or proceedings that are reasonably likely
to affect or impair any of the rights of Collateral Agent under this Security
Agreement.

         6.6 Debtor, at its own expense, will obtain and maintain in force
insurance policies covering losses or damage to those items of Collateral which
constitute physical personal property. The insurance policies to be obtained by
Debtor shall be in form and amounts reasonably acceptable to Collateral Agent.
Debtor shall make the Collateral Agent a loss payee thereon to the extent of its
interest. Collateral Agent is hereby irrevocably (until the Obligations are paid
in full) appointed Debtor's attorney-in-fact to endorse any check or draft that
may be payable to Debtor so that Collateral Agent may collect the proceeds
payable for any loss under such insurance. The proceeds of such insurance, less
any costs and expenses incurred or paid by Collateral Agent in the collection
thereof, shall be applied either toward the cost of the repair or replacement of
the items damaged or destroyed, or on account of any sums secured hereby,
whether or not then due or payable.

         6.7 Collateral Agent may, at its option, and without any obligation to
do so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor, upon Debtor's
failure to do so, and all amounts expended by Collateral Agent in so doing shall
become part of the Obligations secured hereby, and shall be immediately due and
payable by Debtor to Collateral Agent upon demand and shall bear interest at 14%
per annum from the dates of such expenditures until paid.

         6.8 Upon the request of Collateral Agent, Debtor will furnish within
five (5) days thereafter to Collateral Agent, or to any proposed assignee of
this Security Agreement, a written statement in form reasonably satisfactory to
Collateral Agent, duly acknowledged, certifying the amount of the principal and
interest then owing under the Obligations, whether to its knowledge any claims,
offsets or defenses exist against the Obligations or against this Security
Agreement, or any of the terms and provisions of any other agreement of Debtor
securing the Obligations. In connection with any assignment by Collateral Agent
of this Security Agreement, Debtor hereby agrees to cause the insurance policies
required hereby to be carried by Debtor, if any, to be endorsed in form
satisfactory to Collateral Agent or to such assignee, with loss payable clauses
in favor of such assignee, and to cause such endorsements to be delivered to
Collateral Agent within ten (10) calendar days after request therefor by
Collateral Agent.

         6.9 The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, as the Collateral Agent may reasonably require to perfect its security
interest hereunder.

                                       5

<PAGE>

         6.10 Debtor represents and warrants that it is the true and lawful
exclusive owner of the Collateral, free and clear of any liens and encumbrances.

         6.11 Debtor hereby agrees not to directly or indirectly divest itself
of any right under the Collateral absent prior written approval of the Lender.
Debtor further agrees to not take any action or suffer any action which would
impair the value of the Collateral or negatively impact the security interest of
the Lenders granted hereby

7.       Power of Attorney.
         -----------------

         Debtor hereby irrevocably constitutes and appoints the Collateral Agent
as the true and lawful attorney of Debtor, with full power of substitution, in
the place and stead of Debtor and in the name of Debtor or otherwise, at any
time or times, in the discretion of the Collateral Agent, to take any action and
to execute any instrument or document which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement which Debtor
fails to take or fails to execute within five (5) business days of the
Collateral Agent's reasonable request therefor. This power of attorney is
coupled with an interest and is irrevocable.

8.       Performance By The Collateral Agent.
         -----------------------------------

         If Debtor fails to perform any material covenant, agreement, duty or
obligation of Debtor under this Agreement, the Collateral Agent may, after any
applicable cure period, at any time or times in its discretion, take action to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtor as provided in Paragraph 12.1 hereof. No discretionary right, remedy
or power granted to the Collateral Agent under any part of this Agreement shall
be deemed to impose any obligation whatsoever on the Collateral Agent with
respect thereto, such rights, remedies and powers being solely for the
protection of the Collateral Agent.

9.       Event of Default.
         ----------------

         An event of default ("Event of Default") shall be deemed to have
occurred hereunder upon the occurrence of any Event of Default as defined in the
Notes and Subscription Agreement, except for an "Event of Default" (as defined
in the Note) arising by virtue of the Company's default under Sections 9.1(c),
9.2 and 10.4 of the Subscription Agreement which has occurred or will occur
prior to 90 days after the date of this Agreement. Upon and after any Event of
Default, after the applicable cure period, if any, any or all of the Obligations
shall become immediately due and payable at the option of the Collateral Agent,
for the benefit of the Lenders, and the Collateral Agent may dispose of
Collateral as provided below. A default by Debtor of any of its obligations
pursuant to this Agreement shall be deemed an Event of Default hereunder and an
event of default as defined in the Obligations.

                                       6

<PAGE>

10.      Disposition of Collateral.
         -------------------------

         Upon and after any Event of Default which is then continuing,

         10.1 The Collateral Agent may exercise its rights with respect to each
and every component of the Collateral, without regard to the existence of any
other security or source of payment for the Obligations. In addition to other
rights and remedies provided for herein or otherwise available to it, the
Collateral Agent shall have all of the rights and remedies of a lender on
default under the Uniform Commercial Code then in effect in the State of New
York.

         10.2 If any notice to Debtor of the sale or other disposition of
Collateral is required by then applicable law, five (5) days' prior notice (or,
if longer, the shortest period of time permitted by then applicable law) to
Debtor of the time and place of any public sale of Collateral or of the time
after which any private sale or any other intended disposition is to be made,
shall constitute reasonable notification.

         10.3 The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree, among other things, that they are
purchasing the Collateral for their own account for investment, and not with a
view to the distribution or resale thereof, or otherwise to restrict such sale
in such other manner as the Collateral Agent deems advisable to ensure such
compliance. Sales made subject to such restrictions shall be deemed to have been
made in a commercially reasonable manner.

         10.4 All cash proceeds received by the Collateral Agent for the benefit
of the Lenders in respect of any sale, collection or other enforcement or
disposition of Collateral, shall be applied (after deduction of any amounts
payable to the Collateral Agent pursuant to Paragraph 12.1 hereof) against the
Obligations pro rata among the Lenders in proportion to their interests in the
Obligations. Upon payment in full of all Obligations, Debtor shall be entitled
to the return of all Collateral, including cash, which has not been used or
applied toward the payment of Obligations or used or applied to any and all
costs or expenses of the Collateral Agent incurred in connection with the
liquidation of the Collateral (unless another person is legally entitled
thereto). Any assignment of Collateral by the Collateral Agent to Debtor shall
be without representation or warranty of any nature whatsoever and wholly
without recourse. Each Lender may purchase the Collateral and pay for such
purchase by offsetting any sums owed to such Lender by Debtor arising under the
Obligations or any other source.

         10.5 The Collateral, if any, is so available after application to
satisfy the Obligations and any other sums due hereunder, shall be released to
the Debtor upon the complete satisfaction of the Obligations.

                                       7

<PAGE>

11.      Waiver of Automatic Stay.
         ------------------------

The Debtor acknowledges and agrees that should a proceeding under any bankruptcy
or insolvency law be commenced by or against the Debtor, or if any of the
Collateral (as defined in this Security Agreement) should become the subject of
any bankruptcy or insolvency proceeding, then the Collateral Agent should be
entitled to, among other relief to which the Collateral Agent may be entitled
under the Notes, Subscription Agreement, Security Agreement, and any other
agreement to which the Debtor, Lenders or Collateral Agent are parties,
(collectively "Loan Documents") and/or applicable law, an order from the court
granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section
362 to permit the Collateral Agent to exercise all of its rights and remedies
pursuant to the Loan Documents and/or applicable law. THE DEBTOR EXPRESSLY WAIVE
THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE,
THE DEBTOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362
NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE COLLATERAL AGENT TO
ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR
APPLICABLE LAW. The Debtor hereby consents to any motion for relief from stay
which may be filed by the Collateral Agent in any bankruptcy or insolvency
proceeding initiated by or against the Debtor, and further agrees not to file
any opposition to any motion for relief from stay filed by the Collateral Agent.
The Debtor represents, acknowledges and agrees that this provision is a specific
and material aspect of this Agreement, and that the Collateral Agent would not
agree to the terms of this Agreement if this waiver were not a part of this
Agreement. The Debtor further represents, acknowledges and agrees that this
waiver is knowingly, intelligently and voluntarily made, that neither the
Collateral Agent nor any person acting on behalf of the Collateral Agent has
made any representations to induce this waiver, that the Debtor has been
represented (or has had the opportunity to be represented) in the signing of
this Agreement and in the making of this waiver by independent legal counsel
selected by the Debtor and that the Debtor has had the opportunity to discuss
this waiver with counsel. The Debtor further agrees that any bankruptcy or
insolvency proceeding initiated by the Debtor will only be brought in the
Federal Court within the Southern District of New York.

12.      Miscellaneous.
         -------------

         12.1 Expenses. Debtor shall pay to the Collateral Agent, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys' fees, legal expenses and brokers' fees, which the Collateral Agent
may incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any the rights,
remedies or powers of the Collateral Agent hereunder or with respect to any or
all of the Obligations; or (c) failure by Debtor to perform and observe any
agreements of Debtor contained herein which are performed by the Collateral
Agent.

         12.2 Waivers, Amendment and Remedies. No course of dealing by the
Collateral Agent and no failure by the Collateral Agent to exercise, or delay by
the Collateral Agent in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power of the Collateral Agent. No amendment, modification or
waiver of any provision of this Agreement and no consent to any departure by
Debtor therefrom, shall, in any event, be effective unless contained in a
writing signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The rights, remedies and powers of the Collateral Agent, not only
hereunder, but also under any instruments and agreements evidencing or securing
the Obligations and under applicable law are cumulative, and may be exercised by
the Collateral Agent from time to time in such order as the Collateral Agent may
elect.

                                       8

<PAGE>

         12.3 Notices. Any notice or other communications under the provisions
of this Agreement shall be given in writing and delivered to the recipient in
person, by reputable overnight courier or delivery service, by facsimile machine
(receipt conformed) with a copy sent by first class mail on the date of
transmission, or by registered or certified mail, return receipt requested,
directed to its address set forth below (or to any new address of which a party
hereto shall have informed the others by the giving of notice in the manner
provided herein):

         To Debtor:                 Tech Laboratories, Inc.
                                    955 Belmont Avenue
                                    North Haledon, NJ 07508
                                    Fax: (973) 427-5455

         With a copy to:            Anslow & Jaclin
                                    4400 Route 9, 2nd Floor
                                    Freehold, NJ 07728
                                    Attn: Greg Jaclin, Esq.
                                    Fax: (732) 577-1188

         To Lenders:                Celeste Trust Reg.
                                    C/o Trevisa-Treuhand-Anstalt
                                    Landstrasse 8
                                    Furstentums 9496
                                    Balzers, Liechtenstein
                                    Fax: 011-431-534-532895

                                    Esquire Trade & Finance, Inc.
                                    Trident Chambers
                                    P.O. Box 146 Road Town,
                                    Tortola, B.V.I. Fax:
                                    011-41-41-760-1031

                                    The Endeavour Capital Investment Funds, S.A.
                                    Cumberland House
                                    27 Cumberland Street, Nassau
                                    New Providence, The Bahamas
                                    Fax: 1-284-494-3917

                                       9

<PAGE>

         To the Collateral Agent:   Barbara R. Mittman
                                    Grushko & Mittman, P.C.
                                    551 Fifth Avenue, Suite 1601
                                    New York, New York 10176
                                    Fax: (212) 697-3575

Any party may change its address by written notice in accordance with this
paragraph.

         12.4 Term; Binding Effect. This Agreement shall (a) remain in full
force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Debtor, and its successors and permitted
assigns; and (c) inure to the benefit of the Collateral Agent, for the benefit
of the Lenders and their respective successors and assigns.

         12.5 Captions. The captions of Paragraphs, Articles and Sections in
this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.

         12.6 Governing Law; Venue; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts or choice of law, except to the extent
that the perfection of the security interest granted hereby in respect of any
item of Collateral may be governed by the law of another jurisdiction. Any legal
action or proceeding against the Debtor with respect to this Agreement may be
brought in the courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Debtor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Debtor hereby irrevocably waives any objection which they may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the aforesaid
courts and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. If any provision of this Agreement, or
the application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provisions which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable and the remaining, valid provisions shall remain of
full force and effect.

         12.7 Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.

                                       10

<PAGE>

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

"DEBTOR"                                     "THE COLLATERAL AGENT"
TECH LABORATORIES INC.                       BARBARA R. MITTMAN
a New Jersey corporation

By:  /s/ BERNARD CIONGOLI                    /s/ BARBARA R. MITTMAN

Its:   PRESIDENT

APPROVED BY "LENDERS":

/s/ Celeste Trust Reg                        /s/  Esquire Trade & Finance, Inc.
CELESTE TRUST REG.                           ESQUIRE TRADE & FINANCE INC.
"Lender"                                     "Lender"

/s/ The Endeavor Capital Investment  Fund, S.A.
THE ENDEAVOUR CAPITAL INVESTMENT
FUND, S.A. - "Lender"

This Security Agreement may be executed by facsimile signature and delivered by
confirmed facsimile transmission.

                                       11

<PAGE>
<TABLE>
<CAPTION>

                                   SCHEDULE A

LENDER                                   NOTE PRINCIPAL     PRINCIPAL AND          MANDATORY REDEMPTION   PROPORTIONATE AMOUNT
                                                            INTEREST OUTSTANDING   AMOUNT AS OF AUGUST
                                                            AS OF AUGUST 31, 2003  31, 2003
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
<S>                                      <C>                <C>                    <C>                    <C>
Celeste Trust Reg.                       $370,000.00        $492,934.30            $591,521.16            33.71%
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
Esquire Trade & Finance, Inc.            $370,000.00        $492,934.30            $591,521.16            33.71%
Trident Chambers
P.O. Box 146 Road Town, Tortola, B.V.I.
Fax: 011-41-41-760-1031
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
The Endeavour Capital Investment         $361,270.00        $476,416.15            $571,699.38            32.58%
Funds, S.A.
C/o Endeavour Advisers Ltd.
P.O. Box 57116 Jerusalem, 91570, Israel
Fax: 011-972-2-500-3318/9
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
TOTALS                                   $1,101,270.00      $1,462,284.70          $1,754,741.60          100%
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
</TABLE>

                                       12COLLATERAL AGENT AGREEMENT
                           --------------------------

         COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of September 25,
2003, among Barbara R. Mittman (the "Collateral Agent"), and the parties
                                     ----------------
identified on Schedule A hereto (each, individually, a "Lender" and
collectively, the "Lenders"), who hold Promissory Notes issued by Tech
Laboratories Inc. ("Tech Labs"), a New Jersey corporation, at or about October
13, 2000 and as described in the Security Agreement referred to in Section 1(a)
below (collectively herein the "Promissory Notes").

         WHEREAS, the Lenders have made loans to Tech Labs to be secured by
certain collateral and are waiving their rights to the immediate repayment of
the Notes; and

         WHEREAS, it is desirable to provide for the orderly administration of
such collateral by requiring each Lender to appoint the Collateral Agent, and
the Collateral Agent has agreed to accept such appointment and to receive, hold
and deliver such collateral, all upon the terms and subject to the conditions
hereinafter set forth; and

         WHEREAS, it is desirable to allocate the enforcement of certain rights
of the Lenders under the Promissory Notes for the orderly administration
thereof.

         NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the parties hereto agree as follows:

         1.       Collateral.
                  ----------

                  (a) Contemporaneously with the execution and delivery of this
Agreement by the Collateral Agent and the Lenders, (i) the Collateral Agent has
or will have entered into a Security Agreement between the Collateral Agent and
Tech Labs (the "Security Agreement"), regarding the grant of a security interest
in assets owned by Tech Labs (such assets are referred to herein as the
"Collateral") to the Collateral Agent, for the benefit of the Lenders and (ii)
Tech Labs is issuing the Promissory Notes to the Lenders.

                  (b) For purposes solely of perfection of the security
interests granted to the Collateral Agent, as agent on behalf of the Lenders,
and on its own behalf under the Security Agreement, the Collateral Agent hereby
acknowledges that any Collateral held by the Collateral Agent is held for the
benefit of the Lenders in accordance with this Agreement and the Security
Agreement. No reference to the Security Agreement or any other instrument or
document shall be deemed to incorporate any term or provision thereof into this
Agreement unless expressly so provided.

                  (c) The Collateral Agent is to distribute in accordance with
the Security Agreement any proceeds received from the Collateral which are
distributable to the Lenders in proportion to their respective interests in the
Obligations (as defined in the Security Agreement).

         2.       Appointment of the Collateral Agent.
                  -----------------------------------

                  The Lenders hereby appoint the Collateral Agent (and the
Collateral Agent hereby accepts such appointment) to take any action including,
without limitation, the registration of any Collateral in the name of the
Collateral Agent or its nominees prior to or during the continuance of an Event
of Default (as defined in the Security Agreement), the exercise of voting rights
upon the occurrence and during the continuance of an Event of Default, the
application of any cash collateral received by the Collateral Agent to the
payment of the Obligations, the exercise of any remedies given to the Collateral
Agent pursuant to the Security Agreement and the exercise of any authority
pursuant to the appointment of the Collateral Agent as an attorney-in-fact
pursuant to the Security Agreement that the Collateral Agent deems necessary or
proper for the administration of the Collateral pursuant to the Security
Agreement.

                                       1

<PAGE>

Upon disposition of the Collateral in accordance with the Security Agreement,
the Collateral Agent shall promptly distribute any cash or Collateral in
accordance with Section 10.4 of the Security Agreement.

         3.       Action by the Majority in Interest.
                  ----------------------------------

                  (a) Certain Actions. Each of the Lenders covenants and agrees
that only a Majority in Interest shall have the right, but not the obligation,
to undertake the following actions (it being expressly understood that less than
a Majority in Interest hereby expressly waive the following rights that they may
otherwise have under the Promissory Notes, but only insofar as such waiver
affects their right to receive proceeds from the Collateral):

                           (i) Acceleration. If an Event of Default occurs,
after the applicable cure
period, if any, a Majority in Interest may, on behalf of all the Lenders,
instruct the Collateral Agent to provide to Tech Labs notice to cure such
default and/or declare the unpaid principal amount of the Promissory Notes to be
due and payable, together with any and all accrued interest thereon and all
costs payable pursuant to such Promissory Notes;

                           (ii) Enforcement. Upon the occurrence of any Event of
Default after the applicable
cure period, if any, a Majority in Interest may instruct the Collateral Agent to
proceed to protect, exercise and enforce, on behalf of all the Lenders, their
rights and remedies under the Promissory Notes against Tech Labs, and such other
rights and remedies as are provided by law or equity;

                           (iii) Waiver of Past Defaults. A Majority in Interest
may instruct the Collateral Agent to waive any Event of Default by written
 notice to Tech Labs, and the other Lenders; and

                           (iv) Amendment. A Majority in Interest may instruct
the Collateral Agent to waive, amend, supplement or modify any term, condition
or other provision in the Promissory Notes or Security Agreement in accordance
with the terms of the Promissory Notes or Security Agreement so long as such
waiver, amendment, supplement or modification is made with respect to all of the
Promissory Notes and with the same force and effect with respect to each of the
Promissory Notes.

                  (b) Permitted Subordination. A Majority in Interest may
instruct the Collateral Agent to agree to subordinate any Collateral to any
claim and may enter into any agreement with Tech Labs to evidence such
subordination; provided, however, that subsequent to any such subordination,
each Note shall remain pari passu with the other Promissory Notes held by the
Lenders.

                  (c) Further Actions. A Majority in Interest may instruct the
Collateral Agent to take any action that it may take under this Agreement by
instructing the Collateral Agent in writing to take such action on behalf of all
the Lenders.

                                       2

<PAGE>

                  (d) Majority in Interest. For so long as any obligations
remain outstanding on the Secured Promissory Notes, Majority in Interest shall
mean Lenders who hold not less than sixty percent (60%) of the Obligations.4.

         4.       Power of Attorney.
                  -----------------

                  (a) To effectuate the terms and provisions hereof, the Lenders
hereby appoint the Collateral Agent as their attorney-in-fact (and the
Collateral Agent hereby accepts such appointment) for the purpose of carrying
out the provisions of this Agreement including, without limitation, taking any
action on behalf of, or at the instruction of, the Majority in Interest at the
written direction of the Majority in Interest and executing any consent
authorized pursuant to this Agreement and taking any action and executing any
instrument that the Collateral Agent may deem necessary or advisable (and
lawful) to accomplish the purposes hereof.

                  (b) All acts done under the foregoing authorization are hereby
ratified and approved and neither the Collateral Agent nor any designee nor
agent thereof shall be liable for any acts of commission or omission, for any
error of judgment, for any mistake of fact or law except for acts of gross
negligence or willful misconduct.

                  (c) This power of attorney, being coupled with an interest, is
irrevocable while this Agreement remains in effect.

         5.       Expenses of the Collateral Agent.
                  --------------------------------

                  The Lenders shall pay any and all costs and expenses incurred
by the Collateral Agent, all waivers, releases, discharges, satisfactions,
modifications and amendments of this Agreement, the administration and holding
of the Collateral, insurance expenses, and the enforcement, protection and
adjudication of the parties' rights hereunder by the Collateral Agent,
including, without limitation, the reasonable disbursements, expenses and fees
of the attorneys the Collateral Agent may retain, if any, each of the foregoing
in proportion to their holdings of the Promissory Notes.

         6.       Reliance on Documents and Experts.
                  ---------------------------------

                  The Collateral Agent shall be entitled to rely upon any
notice, consent, certificate, affidavit, statement, paper, document, writing or
communication (which may be by telegram, cable, telex, telecopier, or telephone)
reasonably believed by it to be genuine and to have been signed, sent or made by
the proper person or persons, and upon opinions and advice of its own legal
counsel, independent public accountants and other experts selected by the
Collateral Agent.

         7.       Duties of the Collateral Agent; Standard of Care.
                  ------------------------------------------------

                  (a) The Collateral Agent's only duties are those expressly set
forth in this Agreement, and the Collateral Agent hereby is authorized to
perform those duties in accordance with commercially reasonable practices. The
Collateral Agent may exercise or otherwise enforce any of its rights, powers,
privileges, remedies and interests under this Agreement and applicable law or
perform any of its duties under this Agreement by or through its officers,
employees, attorneys, or agents.

                  (b) The Collateral Agent shall act in good faith and with that
degree of care that an ordinarily prudent person in a like position would use
under similar circumstances.

                                       3

<PAGE>

                  (c) Any funds held by the Collateral Agent hereunder need not
be segregated from other funds except to the extent required by law. The
Collateral Agent shall be under no liability for interest on any funds received
by it hereunder.

         8.       Resignation.
                  -----------

                  The Collateral Agent may resign and be discharged of its
duties hereunder at any time by giving written notice of such resignation to the
other parties hereto, stating the date such resignation is to take effect.
Within 15 days of the giving of such notice, a successor collateral agent shall
be appointed by the Majority in Interest; provided, however, that if the Lenders
are unable so to agree upon a successor within such time period, and notify the
Collateral Agent during such period of the identity of the successor collateral
agent, the successor collateral agent may be a person designated by the
Collateral Agent, and any and all fees of such successor collateral agent shall
be the joint and several obligation of the Lenders. The Collateral Agent shall
continue to serve until the effective date of the resignation or until its
successor accepts the appointment and receives the Collateral held by the
Collateral Agent but shall not be obligated to take any action hereunder. The
Collateral Agent may deposit any Collateral with the Supreme Court of the State
of New York for New York County or any such other court in New York State that
accepts such Collateral.

         9.       Exculpation.
                  -----------

                  The Collateral Agent and its officers, employees, attorneys
and agents, shall not incur any liability whatsoever for the holding or delivery
of documents or the taking of any other action in accordance with the terms and
provisions of this Agreement, for any mistake or error in judgment, for
compliance with any applicable law or any attachment, order or other directive
of any court or other authority (irrespective of any conflicting term or
provision of this Agreement), or for any act or omission of any other person
engaged by the Collateral Agent in connection with this Agreement, unless
occasioned by the exculpated person's own gross negligence or willful
misconduct; and each party hereto hereby waives any and all claims and actions
whatsoever against the Collateral Agent and its officers, employees, attorneys
and agents, arising out of or related directly or indirectly to any or all of
the foregoing acts, omissions and circumstances.

         10.      Indemnification.
                  ---------------

                  The Lenders hereby agree to indemnify, reimburse and hold
harmless the Collateral Agent and its directors, officers, employees, attorneys
and agents, jointly and severally, from and against any and all claims,
liabilities, losses and expenses that may be imposed upon, incurred by, or
asserted against any of them, arising out of or related directly or indirectly
to this Agreement or the Collateral, except such as are occasioned by the
indemnified person's own gross negligence or willful misconduct.

         11.      Miscellaneous.
                  -------------

                  (a) Rights and Remedies Not Waived. No act, omission or delay
by the Collateral Agent shall constitute a waiver of the Collateral Agent's
rights and remedies hereunder or otherwise. No single or partial waiver by the
Collateral Agent of any default hereunder or right or remedy that it may have
shall operate as a waiver of any other default, right or remedy or of the same
default, right or remedy on a future occasion.

                  (b) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts or choice of law (or any other law that would make
any substantive laws of any state other than the State of New York applicable
hereto).

                  (c) Waiver of Jury Trial and Setoff; Consent to Jurisdiction;
Etc.

                                       4

<PAGE>

                           (i) In any litigation in any court with respect to,
in connection with, or arising out of this Agreement or any instrument or
document delivered pursuant to this Agreement, or the validity, protection,
interpretation, collection or enforcement hereof or thereof, or any other claim
or dispute howsoever arising, between the Collateral Agent and the Lenders or
any Lender, then each Lender, to the fullest extent it may legally do so, (i)
waives the right to interpose any setoff, recoupment, counterclaim or
cross-claim in connection with any such litigation, irrespective of the nature
of such setoff, recoupment, counterclaim or cross-claim, unless such setoff,
recoupment, counterclaim or cross-claim could not, by reason of any applicable
federal or state procedural laws, be interposed, pleaded or alleged in any other
action; and (ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. EACH LENDER AGREES THAT THIS SECTION 11(c) IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE
COLLATERAL AGENT WOULD NOT ENTER THIS AGREEMENT IF THIS SECTION 11(c) WERE NOT
PART OF THIS AGREEMENT.

                           (ii) Each Lender irrevocably consents to the
exclusive jurisdiction of any State or Federal Court located within the County
of New York, State of New York, in connection with any action or proceeding
arising out of or relating to this Agreement or any document or instrument
delivered pursuant to this Agreement or otherwise. In any such litigation, each
Lender waives, to the fullest extent it may effectively do so, personal service
of any summons, complaint or other process and agree that the service thereof
may be made by certified or registered mail directed to such Lender at its
address for notice determined in accordance with Section 11(e) hereof. Each
Lender hereby waives, to the fullest extent it may effectively do so, the
defenses of forum non conveniens and improper venue.

                  (d) Admissibility of this Agreement. Each of the Lenders
agrees that any copy of this Agreement signed by it and transmitted by
telecopier for delivery to the Collateral Agent shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether or
not the original is in existence.

                  (e) Address for Notices. Any notice or other communication
under the provisions of this Agreement shall be given in writing and delivered
in person, by reputable overnight courier or delivery service, by facsimile
machine (receipt confirmed) with a copy sent by first class mail on the date of
transmissions, or by registered or certified mail, return receipt requested,
directed to its addresses set forth below (or to any new address of which any
party hereto shall have informed the others by the giving of notice in the
manner provided herein):

                  In the case of the Collateral Agent, to it at:

                  Barbara R. Mittman
                  551 Fifth Avenue, Suite 1601
                  New York, New York 10176
                  Fax: (212) 697-3575

                  In the case of the Lenders, to:

                  To the address and telecopier number set forth on Schedule A
                  hereto.

                                       5

<PAGE>

                  In the case of Tech Labs, to:

                  Tech Laboratories, Inc.
                  955 Belmont Avenue
                  North Haledon, NJ 07508
                  Fax: (973) 427-5455

                  With a copy by email, fax, or first class mail only to:

                  Anslow & Jaclin
                  4400 Route 9, 2nd Floor
                  Freehold, New Jersey 07728
                  Attn: Greg Jaclin, Esq.
                  Fax: (732) 577-1188

                  (f) Amendments and Modification; Additional Lender. No
provision hereof shall be modified, altered, waived or limited except by written
instrument expressly referring to this Agreement and to such provision, and
executed by the parties hereto. Any transferee of a Note who acquires a Note
after the date hereof will become a party hereto by signing the signature page
and sending an executed copy of this Agreement to the Collateral Agent and
receiving a signed acknowledged from the Collateral Agent.

                  (g) Fee. Upon the occurrence of an Event of Default, the
Lenders collectively shall pay the Collateral Agent the sum of $10,000 to apply
against an hourly fee of $350 to be paid to the Collateral Agent by the Lenders
for services rendered pursuant to this Agreement. All payments due to the
Collateral Agent under this Agreement including reimbursements must be paid when
billed. The Collateral Agent may refuse to act on behalf of or make a
distribution to any Lender who is not current in payments to the Collateral
Agent. Payments required pursuant to this Agreement shall be pari passu to the
Lenders' interests in the Promissory Notes. The Collateral Agent is hereby
authorized to deduct any sums due the Collateral Agent from Collateral in the
Collateral Agent's possession.

                  (h) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
and by facsimile signature and transmission, each of which shall be an original
and all of which shall together constitute one and the same agreement.

                  (i) Successors and Assigns. Whenever in this Agreement
reference is made to any party, such reference shall be deemed to include the
successors, assigns, heirs and legal representatives of such party. No party
hereto may transfer any rights under this Agreement, unless the transferee
agrees to be bound by, and comply with all of the terms and provisions of this
Agreement, as if an original signatory hereto on the date hereof.

                  (j) Captions: Certain Definitions. The captions of the various
sections and paragraphs of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement. As used in this Agreement the term "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.

                                       6

<PAGE>

                  (k) Severability. In the event that any term or provision of
this Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.

                  (l) Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other agreements and understandings,
oral or written, with respect to the matters contained herein.

                  (m) Schedules. The Collateral Agent is authorized to annex
hereto any schedules referred to herein.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       7

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agent Agreement to be signed, by their respective duly authorized officers or
directly, as of the date first written above.

<TABLE>

<S>                                                  <C>
/s/ Celeste Trust Reg                                /s/  Esquire Trade & Finance, Inc.
CELESTE TRUST REG.                                   ESQUIRE TRADE & FINANCE INC.
"Lender"                                             "Lender"

/s/ The Endeavor Capital Investment  Fund, S.A.      /s/ Barbara R. Mittman
THE ENDEAVOUR CAPITAL INVESTMENT                     BARBARA R. MITTMAN - Collateral Agent
FUND, S.A. - "Lender"

Acknowledged:

TECH LABORATORIES INC.

By: /s/ Bernard Ciongoli
Name:   Bernard Ciongoli
Title:  President
</TABLE>

    This Collateral Agent Agreement may be signed by facsimile signature and
                 delivered by confirmed facsimile transmission.

                                       8

<PAGE>

<TABLE>
<CAPTION>

                    SCHEDULE A TO COLLATERAL AGENT AGREEMENT

LENDER                                   NOTE PRINCIPAL     PRINCIPAL AND          MANDATORY REDEMPTION   PROPORTIONATE AMOUNT
                                                            INTEREST OUTSTANDING   AMOUNT AS OF AUGUST
                                                            AS OF AUGUST 31, 2003  31, 2003
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
<S>                                      <C>                <C>                    <C>                    <C>
Celeste Trust Reg.
C/o Trevisa-Treuhand-Anstalt
Landstrasse 8
Furstentums 9496
Balzers, Liechtenstein
Fax: 011-431-534-532895
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
Esquire Trade & Finance, Inc.
Trident Chambers
P.O. Box 146 Road Town, Tortola, B.V.I.
Fax: 011-41-41-760-1031
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
The Endeavour Capital Investment
Funds, S.A.
Cumberland House
27 Cumberland Street, Nassau
New Providence, The Bahamas
Fax: 1-284-494-3917
---------------------------------------- ------------------ ---------------------- ---------------------- --------------------
</TABLE>

                                       9

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