Document:

Exhibit
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of October 16, 2008 between Enable Holdings, Inc., a Delaware
      corporation (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Sections 4(2) and 4(6) of the Securities Act of 1933, as amended (the
“Securities
      Act”),
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to each
      Purchaser, and each Purchaser, severally and not jointly, desires to purchase
      from the Company, securities of the Company as more fully described in this
      Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration, the receipt and adequacy of
      which
      are hereby acknowledged, the Company and each Purchaser agree as
      follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1
      Definitions. 
      In addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms that are not otherwise defined herein have the meanings given to such
      terms in the Debentures (as defined herein), and (b) the following terms have
      the meanings set forth in this Section 1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 405 under the Securities
      Act. 

     

    “Board
      of Directors”
means
      the board of directors of the Company.

     

    “Business
      Day”
means
      any day except any Saturday, any Sunday, any day which is a federal legal
      holiday in the United States or any day on which banking institutions in the
      State of Illinois are authorized or required by law or other governmental action
      to close.

     

    “Class
      A Warrants”
means
      the Common Stock purchase warrants delivered to the Purchasers at the Closing
      in
      accordance with Section 2.2(a) hereof, which Warrants shall be exercisable
      immediately and have a term of exercise equal to 5 years, in the form of
Exhibit
      B
      attached
      hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Class
      B Warrants”
means
      the Common Stock purchase warrants delivered to the Purchasers at the Closing
      in
      accordance with Section 2.2(a) hereof, which Warrants shall be exercisable
      immediately and have a term of exercise equal to 5 years, in the form of
Exhibit
      C
      attached
      hereto.

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

     

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $.001 per share, and any other class
      of securities into which such securities may hereafter be reclassified or
      changed into.

     

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

     

    “Company
      Counsel”
means
      Fredrikson & Byron, P.A., with offices located at 200 South Sixth Street,
      Suite 4000, Minneapolis, MN 55402.

     

    “Consent
      and Waiver”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

    “Debentures”
means
      the 18% Senior Secured Debentures due, subject to the terms therein, 3 months
      from their date of issuance, issued by the Company to the Purchasers hereunder,
      in the form of Exhibit
      A
      attached
      hereto.

     

    “Disclosure
      Schedules”
shall
      have the meaning ascribed to such term in Section 3.1.

     

    “Evaluation
      Date”
shall
      have the meaning ascribed to such term in Section 3.1(r).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      for
      such purpose by a majority of the non-employee members of the Board of Directors
      or a majority of the members of a committee of non-employee directors
      established for such purpose, (b) securities upon the exercise, redemption
      or
      exchange of or conversion of any Securities issued hereunder and/or other
      securities exercisable or exchangeable for or convertible into shares of Common
      Stock issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of such securities, and (c) securities issued pursuant to
      acquisitions or strategic transactions approved by a majority of the
      disinterested directors of the Company, provided that any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an operating
      company in a business synergistic with the business of the Company and in which
      the Company receives benefits in addition to the investment of funds, but shall
      not include a transaction in which the Company is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business is
      investing in securities.

     

    “Exercise
      Price”
shall
      have the meaning ascribed to such term in the Warrants.

     

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Indebtedness”
shall
      have the meaning ascribed to such term in Section 3.1(aa).

     

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “Legend
      Removal Date”
shall
      have the meaning ascribed to such term in Section 4.1(c).

     

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

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b).

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Maximum
      Rate”
shall
      have the meaning ascribed to such term in Section 5.17.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an informal investigation or partial proceeding, such as a
      deposition), whether commenced or threatened.

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.10.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

    “Required
      Minimum”
means,
      as of any date, the maximum aggregate number of shares of Common Stock then
      issued or potentially issuable in the future pursuant to the Transaction
      Documents, including any Underlying Shares issuable upon exercise in full of
      all
      Warrants, ignoring any conversion or exercise limits set forth therein, and
      assuming that the Exercise Price is at all times on and after the date of
      determination 75% of the then Exercise Price on the Trading Day immediately
      prior to the date of determination.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities”
means
      the Debentures, the Warrants, and the Underlying Shares.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Security
      Agreement”
means
      the Security Agreement, dated the date hereof, among the Company and the
      Purchasers, in the form of Exhibit
      D
      attached
      hereto.

     

    “Security
      Documents”
shall
      mean the Security Agreement and any other documents and filings required
      thereunder in order to grant the Purchasers a first priority security interest
      in the assets of the Company as provided in the Security Agreement, including
      all UCC-1 filing receipts.

     

    “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but shall not be deemed to include the location and/or reservation of
      borrowable shares of Common Stock). 

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Debentures and
      Warrants purchased hereunder as specified below such Purchaser’s name on the
      signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a)
      and
      shall, where applicable, include any direct or indirect subsidiary of the
      Company formed or acquired after the date hereof.

     

    “Trading
      Day”
means
      a
      day on which the New York Stock Exchange is open for trading.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
      the
      New York Stock Exchange or the OTC Bulletin Board.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Transaction
      Documents”
means
      this Agreement, the Debentures, the Security Agreement, the Warrants, all
      exhibits and schedules thereto and hereto and any other documents or agreements
      executed in connection with the transactions contemplated
      hereunder.

     

    “Transfer
      Agent”
means
      American Pacific Stock Transfer Company, the current transfer agent of the
      Company with a mailing address of 500 E. Warm Springs Road, Suite 240, Las
      Vegas
      NV 89119, and a facsimile number of (702) 433-1979 and any successor transfer
      agent of the Company.

     

    “Underlying
      Shares”
means
      the shares of Common Stock issued and issuable upon exercise of the
      Warrants.

     

    “Variable
      Rate Transaction”
shall
      have the meaning ascribed to such term in Section 4.13(b).

     

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
      from
      9:30 a.m. Central time to 4:02 p.m. Central time); (b)  if the OTC Bulletin
      Board is not a Trading Market, the volume weighted average price of the Common
      Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;
      (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board
      and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink Sheets, LLC (or a similar organization or agency succeeding
      to
      its functions of reporting prices), the most recent bid price per share of
      the
      Common Stock so reported; or (d) in all other cases, the fair market value
      of a share of Common Stock as determined by an independent appraiser selected
      in
      good faith by the Purchasers of a majority in interest of the Securities then
      outstanding and reasonably acceptable to the Company, the fees and expenses
      of
      which shall be paid by the Company.

     

    “Warrants”
means,
      collectively, the Class A Warrants and the Class B Warrants.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      II

    PURCHASE
      AND SALE

     

    2.1
      Closing. 
      On the Closing Date, upon the terms and subject to the conditions set forth
      herein, substantially concurrent with the execution and delivery of this
      Agreement by the parties hereto, the Company agrees to sell, and the Purchasers,
      severally and not jointly, agree to purchase, a minimum of $2,000,000 (“Minimum
      Amount”) and a maximum of $4,000,000 (the “Maximum Amount”) in principal amount
      of the Debentures.  Each Purchaser shall deliver to the Company, via wire
      transfer or a certified check, immediately available funds, or evidence of
      indebtedness which the holder shall agree to cancel, in each case in an amount
      equal to its Subscription Amount and the Company shall deliver to each Purchaser
      its respective Debenture and Warrants, as determined pursuant to Section 2.2(a),
      and the Company and each Purchaser shall deliver the other items set forth
      in
      Section 2.2 deliverable at the Closing.  Upon satisfaction of the
      conditions set forth in Sections 2.3, the Closing shall occur at the offices
      of
      Company Counsel or such other location as the parties shall mutually agree.
      Provided the Minimum Amount has been subscribed for at the Closing (the “Initial
      Closing”), additional Closings of this Offering shall be held thereafter at the
      discretion of the Company for the sixty (60) days thereafter as additional
      subscription proceeds are received and cleared up to the Maximum Amount.

     

    2.2
      Deliveries.

     

    (a)     
      On the Closing Date, the Company shall deliver or cause to be delivered to
      each
      Purchaser the following:

     

    (i) this
      Agreement duly executed by the Company; and

     

    (ii) a
      Debenture with a principal amount equal to such Purchaser’s Subscription Amount,
      registered in the name of such Purchaser; and

     

    (iii) a
      Class A
      Warrant registered in the name of such Purchaser to purchase up to a number
      of
      shares of Common Stock equal to 100% of such Purchaser’s Principal Amount
      divided by the Exercise Price, with an initial Exercise Price equal to $0.20,
      subject to adjustment therein;

     

    (iv) a
      Class B
      Warrant registered in the name of such Purchaser to purchase up to a number
      of
      shares of Common Stock equal to 100% of such Purchaser’s Principal Amount
      divided by the Exercise Price, with an initial Exercise Price equal to $0.10,
      subject to adjustment therein; 

     

    (v) the
      Security Agreement, along with all of the Security Documents, duly executed
      by
      the Company;

     

    (vi) an
      officer’s certificate from the Chief Executive Officer of the Company, dated as
      of the Closing Date, certifying and setting forth (i) the names, signatures
      and
      positions of the Persons authorized to execute this Agreement and any other
      Transaction Documents to which the Company is a party and (ii) a copy of the
      resolutions of the Company authorizing the execution, delivery and performance
      of this Agreement; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)     
      On the Closing Date, each Purchaser shall deliver or cause to be delivered
      to
      the Company the following:

     

    (i)
       this
      Agreement duly executed by such Purchaser; 

     

    (ii) the
      Security Agreement duly executed by such Purchaser; and

     

    (ii)
       such
      Purchaser’s Subscription Amount by wire transfer to the account as specified in
      writing by the Company or by delivery to the Company of evidence of indebtedness
      and an endorsement or acknowledgement that said indebtedness will be cancelled
      upon issuance of the Debentures subscribed for hereunder.

     

    2.3
      Closing
      Conditions.

     

    (a)     
      The obligations of the Company hereunder in connection with the Closing are
      subject to the following conditions being met:

     

    (i)
      the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Purchasers contained herein;

     

    (ii)
      all
      obligations, covenants and agreements of each Purchaser required to be performed
      at or prior to the Closing Date shall have been performed; and

     

    (iii)
      the
      delivery by each Purchaser of the items set forth in Section 2.2 (b) of this
      Agreement.

     

    (b)     
      The respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being met:

     

    (i)
      the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Company contained herein;

     

    (ii)
      all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed;

     

    (iii)
      the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement;

     

    (iv)
      there shall have been no Material Adverse Effect with respect to the Company
      since the date hereof; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (v)
      from
      the date hereof to the Closing Date, trading in the Common Stock shall not
      have
      been suspended by the Commission  or the Company’s principal Trading Market
      (except for any suspension of trading of limited duration agreed to by the
      Company, which suspension shall be terminated prior to the Closing), and, at
      any
      time prior to the Closing Date, trading in securities generally as reported
      by
      Bloomberg L.P. shall not have been suspended or limited, or minimum prices
      shall
      not have been established on securities whose trades are reported by such
      service, or on any Trading Market, nor shall a banking moratorium have been
      declared either by the United States or Illinois State authorities nor shall
      there have occurred any material outbreak or escalation of hostilities or other
      national or international calamity of such magnitude in its effect on, or any
      material adverse change in, any financial market which, in each case, in the
      reasonable judgment of each Purchaser, makes it impracticable or inadvisable
      to
      purchase the Securities at the Closing.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1.
      Representations
      and Warranties of the Company. 
      Except as set forth in the Disclosure Schedules, which Disclosure Schedules
      shall be deemed a part hereof and shall qualify any representation or otherwise
      made herein to the extent of the disclosure contained in the corresponding
      section of the Disclosure Schedules, the Company hereby makes the following
      representations and warranties to each Purchaser:

     

    (a)
      Subsidiaries.  All of the direct and indirect subsidiaries of the Company
      are set forth on Schedule
      3.1(a). 
      The Company owns, directly or indirectly, all of the capital stock or other
      equity interests of each Subsidiary free and clear of any Liens, and all of
      the
      issued and outstanding shares of capital stock of each Subsidiary are validly
      issued and are fully paid, non-assessable and free of preemptive and similar
      rights to subscribe for or purchase securities.

     

    (b)
      Organization
      and Qualification. 
      The Company and each of the Subsidiaries is an entity duly incorporated or
      otherwise organized, validly existing and in good standing under the laws of
      the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted.  Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents.  Each of the Company and the Subsidiaries is duly
      qualified to conduct business and is in good standing as a foreign corporation
      or other entity in each jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary, except
      where the failure to be so qualified or in good standing, as the case may be,
      could not have or reasonably be expected to result in (i) a material adverse
      effect on the legality, validity or enforceability of any Transaction Document,
      (ii) a material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)
      Authorization;
      Enforcement. 
      The Company has the requisite corporate power and authority to enter into and
      to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder.  The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary action on the part of the Company and
      no
      further action is required by the Company, the Board of Directors or the
      Company’s stockholders in connection therewith other than in connection with the
      Required Approvals.  Each Transaction Document has been (or upon delivery
      will have been) duly executed by the Company and, when delivered in accordance
      with the terms hereof and thereof, will constitute the valid and binding
      obligation of the Company enforceable against the Company in accordance with
      its
      terms, except (i) as limited by general equitable principles and applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors’ rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law.

     

    (d)
      No
      Conflicts. 
      The execution, delivery and performance of the Transaction Documents by the
      Company and the consummation by the Company of the other transactions
      contemplated hereby and thereby do not and will not: (i) conflict with or
      violate any provision of the Company’s or any Subsidiary’s certificate or
      articles of incorporation, bylaws or other organizational or charter documents,
      or (ii) conflict with, or constitute a default (or an event that with notice
      or
      lapse of time or both would become a default) under, result in the creation
      of
      any Lien upon any of the properties or assets of the Company or any Subsidiary
      (other than as a result of the Liens imposed by the Secured Parties under the
      Security Agreement contemplated hereby), or give to others any rights of
      termination, amendment, acceleration or cancellation (with or without notice,
      lapse of time or both) of, any agreement, credit facility, debt or other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) subject to the Required Approvals, conflict with or result in a violation
      of any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company or
      a
      Subsidiary is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a Subsidiary
      is bound or affected; except in the case of each of clauses (ii) and (iii),
      such
      as could not have or reasonably be expected to result in a Material Adverse
      Effect.

     

    (e)
      Filings,
      Consents and Approvals. 
      The Company is not required to obtain any consent, waiver, authorization or
      order of, give any notice to, or make any filing or registration with, any
      court
      or other federal, state, local or other governmental authority or other Person
      in connection with the execution, delivery and performance by the Company of
      the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.6,
      (ii) the notice and/or application(s) to each applicable Trading Market for
      the
      issuance and sale of the Securities and the listing of the Underlying Shares
      for
      trading thereon in the time and manner required thereby and (iii) the filing
      of
      Form D with the Commission and such filings as are required to be made under
      applicable state securities laws (collectively, the “Required
      Approvals”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)
      Issuance
      of the Securities. 
      The Securities are duly authorized and, when issued and paid for in accordance
      with the applicable Transaction Documents, will be duly and validly issued,
      fully paid and nonassessable, free and clear of all Liens imposed by the Company
      other than restrictions on transfer provided for in the Transaction
      Documents.  The Underlying Shares, when issued in accordance with the terms
      of the Transaction Documents, will be validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other than
      restrictions on transfer provided for in the Transaction Documents. The Company
      has reserved from its duly authorized capital stock a number of shares of Common
      Stock for issuance of the Underlying Shares in an amount set forth on
Schedule
      3.1(f)
      attached
      hereto. 

     

    (g)
      Capitalization. 
      The capitalization of the Company is as set forth on Schedule
      3.1(g),
      which
Schedule
      3.1(g)
      shall
      also include the number of shares of Common Stock owned beneficially, and of
      record, by Affiliates of the Company as of the date hereof. Except as set forth
      on Schedule
      3.1(g),
      the
      Company has not issued any capital stock since its most recently filed periodic
      report under the Exchange Act, other than pursuant to the exercise of employee
      stock options under the Company’s stock option plans, the issuance of shares of
      Common Stock to employees pursuant to the Company’s employee stock purchase
      plans and pursuant to the conversion or exercise of Common Stock Equivalents
      outstanding as of the date of the most recently filed periodic report under
      the
      Exchange Act.  No Person has any right of first refusal, preemptive right,
      right of participation, or any similar right to participate in the transactions
      contemplated by the Transaction Documents.  Except as set forth on
Schedule
      3.1(g)
      and as a
      result of the purchase and sale of the Securities, there are no outstanding
      options, warrants, scrip rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exercisable or exchangeable for, or giving any Person any
      right to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock
      or
      Common Stock Equivalents. The issuance and sale of the Securities will not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Purchasers) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange or reset
      price under any of such securities. All of the outstanding shares of capital
      stock of the Company are validly issued, fully paid and nonassessable, have
      been
      issued in compliance with all federal and state securities laws, and none of
      such outstanding shares was issued in violation of any preemptive rights or
      similar rights to subscribe for or purchase securities.  No further
      approval or authorization of any stockholder, the Board of Directors or others
      is required for the issuance and sale of the Securities.  There are no
      stockholders agreements, voting agreements or other similar agreements with
      respect to the Company’s capital stock to which the Company is a party or, to
      the knowledge of the Company, between or among any of the Company’s
      stockholders.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (h)
      SEC
      Reports; Financial Statements. 
      Except as set forth on Schedule
      3.1(h),
      the
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by the Company under the Securities Act and the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law or regulation to file such material) (the foregoing materials, including
      the
      exhibits thereto and documents incorporated by reference therein, being
      collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. 
As of their respective dates, the SEC Reports complied in all material respects
      with the requirements of the Securities Act and the Exchange Act, as applicable,
      and none of the SEC Reports, when filed, contained any untrue statement of
      a
      material fact or omitted to state a material fact required to be stated therein
      or necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing. 
Such financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated Subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

    (i)
      Material
      Changes. 
      Since the date of the latest audited financial statements included within the
      SEC Reports, except as specifically disclosed in a subsequent SEC Report filed
      prior to the date hereof, (i) there has been no event, occurrence or development
      that has had or that could reasonably be expected to result in a Material
      Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
      or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Company’s financial statements pursuant to
      GAAP or disclosed in filings made with the Commission, (iii) the Company has
      not
      altered its method of accounting, (iv) the Company has not declared or made
      any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except pursuant to existing Company stock
      option plans. The Company does not have pending before the Commission any
      request for confidential treatment of information.  Except for the issuance
      of the Securities contemplated by this Agreement or as set forth on Schedule
      3.1(i),
      no
      event, liability or development has occurred or exists with respect to the
      Company or its Subsidiaries or their respective business, properties, operations
      or financial condition, that would be required to be disclosed by the Company
      under applicable securities laws at the time this representation is made or
      deemed made that has not been publicly disclosed at least one Trading Day prior
      to the date that this representation is made.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (j)
      Litigation. 
      Except as set forth on Schedule
      3.1(j),
      there
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect.  Neither the Company nor any Subsidiary, nor any director
      or officer thereof, is or has been the subject of any Action involving a claim
      of violation of or liability under federal or state securities laws or a claim
      of breach of fiduciary duty.  There has not been, and to the knowledge of
      the Company, there is not pending or contemplated, any investigation by the
      Commission involving the Company or any current or former director or officer
      of
      the Company.  The Commission has not issued any stop order or other order
      suspending the effectiveness of any registration statement filed by the Company
      or any Subsidiary under the Exchange Act or the Securities
      Act. 

     

    (k)
      Labor
      Relations. 
      No material labor dispute exists or, to the knowledge of the Company, is
      imminent with respect to any of the employees of the Company which could
      reasonably be expected to result in a Material Adverse Effect.  None of the
      Company’s or its Subsidiaries’ employees is a member of a union that relates to
      such employee’s relationship with the Company or such Subsidiary, and neither
      the Company nor any of its Subsidiaries is a party to a collective bargaining
      agreement, and the Company and its Subsidiaries believe that their relationships
      with their employees are good.  No executive officer, to the knowledge of
      the Company, is, or is now expected to be, in violation of any material term
      of
      any employment contract, confidentiality, disclosure or proprietary information
      agreement or non-competition agreement, or any other contract or agreement
      or
      any restrictive covenant in favor of any third party, and the continued
      employment of each such executive officer does not subject the Company or any
      of
      its Subsidiaries to any liability with respect to any of the foregoing
      matters.  The Company and its Subsidiaries are in compliance with all U.S.
      federal, state, local and foreign laws and regulations relating to employment
      and employment practices, terms and conditions of employment and wages and
      hours, except where the failure to be in compliance could not, individually
      or
      in the aggregate, reasonably be expected to have a Material Adverse
      Effect.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (m)
      Regulatory
      Permits. 
      The Company and the Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses as described in
      the
      SEC Reports, except where the failure to possess such permits could not
      reasonably be expected to result in a Material Adverse Effect (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit.

     

    (n)
      Title
      to Assets. 
      Except as set forth on Schedule
      3.1(n),
      the
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them and good and marketable title in all personal
      property owned by them that is material to the business of the Company and
      the
      Subsidiaries, in each case free and clear of all Liens, except for Liens as
      do
      not materially affect the value of such property and do not materially interfere
      with the use made and proposed to be made of such property by the Company and
      the Subsidiaries and Liens for the payment of federal, state or other taxes,
      the
      payment of which is neither delinquent nor subject to penalties.  Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance.

     

    (o)
      Patents
      and Trademarks. 
      The Company and the Subsidiaries have, or have rights to use, all patents,
      patent applications, trademarks, trademark applications, service marks, trade
      names, trade secrets, inventions, copyrights, licenses and other intellectual
      property rights and similar rights necessary or material for use in connection
      with their respective businesses as described in the SEC Reports and which
      the
      failure to so have could have a Material Adverse Effect (collectively, the
      “Intellectual
      Property Rights”). 
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that any of the Intellectual Property Rights used by the Company
      or
      any Subsidiary violates or infringes upon the rights of any Person. To the
      knowledge of the Company, all such Intellectual Property Rights are enforceable
      and there is no existing infringement by another Person of any of the
      Intellectual Property Rights.  The Company and its Subsidiaries have taken
      reasonable security measures to protect the secrecy, confidentiality and value
      of all of their intellectual properties, except where failure to do so could
      not, individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (p)
      Insurance. 
      The Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the aggregate Subscription Amount.  Neither the
      Company nor any Subsidiary has any reason to believe that it will not be able
      to
      renew its existing insurance coverage as and when such coverage expires or
      to
      obtain similar coverage from similar insurers as may be necessary to continue
      its business without a significant increase in cost.

     

    (q)
      Transactions
      with Affiliates and Employees. 
      Except as set forth in the SEC Reports, none of the officers or directors of
      the
      Company and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than for services as employees, officers and directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $100,000
      other than for (i) payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

    (r)
      Sarbanes-Oxley;
      Internal Accounting Controls. 
      The Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act of 2002 which are applicable to it as of the Closing Date.  The Company
      has established disclosure controls and procedures (as defined in Exchange
      Act
      Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting
      (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f) for the Company
      and
      designed such disclosure controls and procedures to ensure that information
      required to be disclosed by the Company in the reports it files or submits
      under
      the Exchange Act is recorded, processed, summarized and reported, within the
      time periods specified in the Commission’s rules and forms.  The Company’s
      certifying officers have evaluated the effectiveness of the Company’s disclosure
      controls and procedures and internal controls over financial reporting (as
      such
      term is defined in Item 307(c) of Regulation S-K) as of the end of the period
      covered by the Company’s most recently filed periodic report under the Exchange
      Act (such date, the “Evaluation
      Date”). 
      The Company presented in its most recently filed periodic report under the
      Exchange Act the conclusions of the certifying officers about the effectiveness
      of the disclosure controls and procedures based on their evaluations as of
      the
      Evaluation Date.  Since the Evaluation Date, there have been no changes in
      the Company’s internal controls over financial reporting that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (s)
      Certain
      Fees. 
      Except as set forth on Schedule
      3.1(s),
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by the Transaction Documents.  The Purchasers shall have no
      obligation with respect to any fees or with respect to any claims made by or
      on
      behalf of other Persons for fees of a type contemplated in this Section that
      may
      be due in connection with the transactions contemplated by the Transaction
      Documents. 

     

    (t)
      Private
      Placement. 
      Assuming the accuracy of the Purchasers’ representations and warranties set
      forth in Section 3.2, no registration under the Securities Act is required
      for
      the offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

    (u)
      Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Securities, will not be or be an Affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as
      amended.  The Company shall conduct its business in a manner so that it
      will not become subject to the Investment Company Act of 1940, as
      amended.

     

    (v)
      Registration
      Rights. 
      Except as set forth in Schedule 3.1(v), no Person has any right to cause the
      Company to effect the registration under the Securities Act of any securities
      of
      the Company. 

     

    (w)
      Listing
      and Maintenance Requirements. 
      The Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act, and the Company has taken no action designed to, or which to
      its
      knowledge is likely to have the effect of, terminating the registration of
      the
      Common Stock under the Exchange Act nor has the Company received any
      notification that the Commission is contemplating terminating such
      registration.  The Company has not, in the 12 months preceding the date
      hereof, received notice from any Trading Market on which the Common Stock is
      or
      has been listed or quoted to the effect that the Company is not in compliance
      with the listing or maintenance requirements of such Trading Market. The Company
      is in compliance with all such listing and maintenance
      requirements.

     

    (x)
      Intentionally
      Omitted.

     

    (y)
      Disclosure. 
      Except with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided any of the Purchasers
      or
      their agents or counsel with any information that it believes constitutes or
      might constitute material, nonpublic information.  The Company understands
      and confirms that the Purchasers will rely on the foregoing representation
      in
      effecting transactions in securities of the Company.  All disclosure
      furnished by or on behalf of the Company to the Purchasers regarding the
      Company, its business and the transactions contemplated hereby, including the
      Disclosure Schedules to this Agreement, is true and correct and does not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading.   The press
      releases disseminated by the Company during the twelve months preceding the
      date
      of this Agreement taken as a whole do not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made and when made, not misleading.  The Company
      acknowledges and agrees that no Purchaser makes or has made any representations
      or warranties with respect to the transactions contemplated hereby other than
      those specifically set forth in Section 3.2 hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (z)
      No
      Integrated Offering.
      Assuming the accuracy of the Purchasers’ representations and warranties set
      forth in Section 3.2, neither the Company, 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 this offering of the Securities to be
      integrated with prior offerings by the Company for purposes of (i) the
      Securities Act which would require the registration of any such securities
      under
      the Securities Act, or (ii) any applicable shareholder approval provisions
      of
      any Trading Market on which any of the securities of the Company are listed
      or
      designated.

     

    (aa)
      Indebtedness. 
      The Company does not intend to incur debts beyond its ability to pay such debts
      as they mature (taking into account the timing and amounts of cash to be payable
      on or in respect of its debt).   Schedule
      3.1(aa)
      sets
      forth as of the date hereof all outstanding secured and unsecured Indebtedness
      of the Company or any Subsidiary, or for which the Company or any Subsidiary
      has
      commitments.  For the purposes of this Agreement, “Indebtedness”
means
      (a) any liabilities for borrowed money or amounts owed in excess of $150,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments in excess of $150,000 due under leases required to be
      capitalized in accordance with GAAP.  Neither the Company nor any
      Subsidiary is in default with respect to any Indebtedness.

     

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

     

    (cc)
      No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising.  The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (dd)
      Foreign
      Corrupt Practices. 
      Neither the Company, nor to the knowledge of the Company, any agent or other
      person acting on behalf of the Company, has (i) directly or indirectly, used
      any
      funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses related to foreign or domestic political activity, (ii) made any
      unlawful payment to foreign or domestic government officials or employees or
      to
      any foreign or domestic political parties or campaigns from corporate funds,
      (iii) failed to disclose fully any contribution made by the Company (or made
      by
      any person acting on its behalf of which the Company is aware) which is  in
      violation of law, or (iv) violated in any material respect any provision of
      the
      Foreign Corrupt Practices Act of 1977, as amended.

     

    (ee)
      Accountants. 
      The Company’s accounting firm is set forth on Schedule
      3.1(ee)
      of the
      Disclosure Schedule.  To the knowledge and belief of the Company, such
      accounting firm (i) is a registered public accounting firm as required by the
      Exchange Act and (ii) shall express its opinion with respect to the financial
      statements to be included in the Company’s Annual Report on Form 10-K for the
      year ending December 31, 2008.

     

    (ff)
      Seniority. 
      As of the Closing Date, except as set forth on Schedule
      3.1(ff),
      no
      Indebtedness or other claim against the Company is senior to the Debentures
      in
      right of payment, whether with respect to interest or upon liquidation or
      dissolution, or otherwise, other than indebtedness secured by purchase money
      security interests (which is senior only as to underlying assets covered
      thereby) and capital lease obligations (which is senior only as to the property
      covered thereby).

     

    (gg)
      No
      Disagreements with Accountants and Lawyers. 
      There are no disagreements of any kind presently existing, or reasonably
      anticipated by the Company to arise, between the Company and the accountants
      and
      lawyers formerly or presently employed by the Company and the Company is current
      with respect to any fees owed to its accountants and lawyers which could affect
      the Company’s ability to perform any of its obligations under any of the
      Transaction Documents.

     

    (hh)
      Acknowledgment
      Regarding Purchasers’ Purchase of Securities. 
      The Company acknowledges and agrees that each of the Purchasers is acting solely
      in the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated thereby.  The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to the Transaction
      Documents and the transactions contemplated thereby and any advice given by
      any
      Purchaser or any of their respective representatives or agents in connection
      with the Transaction Documents and the transactions contemplated thereby is
      merely incidental to the Purchasers’ purchase of the Securities.  The
      Company further represents to each Purchaser that the Company’s decision to
      enter into this Agreement and the other Transaction Documents has been based
      solely on the independent evaluation of the transactions contemplated hereby
      by
      the Company and its representatives.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (ii)
      Acknowledgment
      Regarding Purchasers’ Trading Activity. 
      Notwithstanding anything in this Agreement or elsewhere herein to the contrary
      (except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged
      by the Company that (i) none of the Purchasers has been asked to agree by the
      Company, nor has any Purchaser agreed, to desist from purchasing or selling,
      long and/or short, securities of the Company, or “derivative” securities based
      on securities issued by the Company or to hold the Securities for any specified
      term, (ii) past or future open market or other transactions by any Purchaser,
      specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
      transactions, may negatively impact the market price of the Company’s
      publicly-traded securities, (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or
      indirectly, may presently have a “short” position in the Common Stock, and (iv)
      each Purchaser shall not be deemed to have any affiliation with or control
      over
      any arm’s length counter-party in any “derivative” transaction.  The
      Company further understands and acknowledges that (a) one or more Purchasers
      may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Underlying Shares deliverable with respect to Securities
      are being determined and (b) such hedging activities (if any) could reduce
      the
      value of the existing stockholders’ equity interests in the Company at and after
      the time that the hedging activities are being conducted.  The Company
      acknowledges that such aforementioned hedging activities do not constitute
      a
      breach of any of the Transaction Documents.

     

    (jj)
      Regulation
      M Compliance. 
      The Company has not, and to its knowledge no one acting on its behalf has,
      (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or paid any compensation for soliciting purchases of, any of the
      securities of the Company or (iii) paid or agreed to pay to any Person any
      compensation for soliciting another to purchase any other securities of the
      Company, other than, in the case of clauses (ii) and (iii), compensation paid
      to
      the Company’s placement agent in connection with the placement of the
      Securities.

     

    3.2
      Representations
      and Warranties of the Purchasers.   
      Each Purchaser, for itself and for no other Purchaser hereby, represents and
      warrants as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)
      Organization;
      Authority. 
      Such Purchaser is an entity duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The execution and delivery of
      the
      Transaction Documents and performance by such Purchaser of the transactions
      contemplated by the Transaction Documents have been duly authorized by all
      necessary corporate or similar action on the part of such Purchaser.  Each
      Transaction Document to which it is a party has been duly executed by such
      Purchaser, and when delivered by such Purchaser in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of such
      Purchaser, enforceable against it in accordance with its terms, except (i)
      as
      limited by general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)
      Own
      Account. 
      Such Purchaser understands that the Securities are “restricted securities” and
      have not been registered under the Securities Act or any applicable state
      securities law and is acquiring the Securities as principal for its own account
      and not with a view to or for distributing or reselling such Securities or
      any
      part thereof in violation of the Securities Act or any applicable state
      securities law, has no present intention of distributing any of such Securities
      in violation of the Securities Act or any applicable state securities law and
      has no direct or indirect arrangement or understandings with any other persons
      to distribute or regarding the distribution of such Securities (this
      representation and warranty not limiting such Purchaser’s right to sell the
      Securities pursuant to a registration statement or otherwise in compliance
      with
      applicable federal and state securities laws) in violation of the Securities
      Act
      or any applicable state securities law.  Such Purchaser is acquiring the
      Securities hereunder in the ordinary course of its business.

     

    (c)
      Purchaser
      Status. 
      At the time such Purchaser was offered the Securities, it was, and as of the
      date hereof it is, and on each date on which it exercises any Warrants or
      converts any Debentures it will be either: (i) an “accredited investor” as
      defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
      Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
      the Securities Act.  Such Purchaser is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act.

     

    (d)
      Experience
      of Such Purchaser. 
      Such Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such
      investment.  Such Purchaser is able to bear the economic risk of an
      investment in the Securities and, at the present time, is able to afford a
      complete loss of such investment.

     

    (e)
      General
      Solicitation. 
      Such Purchaser is not purchasing the Securities as a result of any
      advertisement, article, notice or other communication regarding the Securities
      published in any newspaper, magazine or similar media or broadcast over
      television or radio or presented at any seminar or any other general
      solicitation or general advertisement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)
      Short
      Sales and Confidentiality Prior To The Date Hereof. 
      Other than consummating the transactions contemplated hereunder, such Purchaser
      has not directly or indirectly, nor has any Person acting on behalf of or
      pursuant to any understanding with such Purchaser, executed any purchases or
      sales, including Short Sales, of the securities of the Company during the
      period commencing from the time that such Purchaser first received a term sheet
      (written or oral) from the Company or any other Person representing the Company
      setting forth the material terms of the transactions contemplated hereunder
      until the date hereof (“Discussion
      Time”). 
      Notwithstanding the foregoing, in the case of a Purchaser that is a
      multi-managed investment vehicle whereby separate portfolio managers manage
      separate portions of such Purchaser’s assets and the portfolio managers have no
      direct knowledge of the investment decisions made by the portfolio managers
      managing other portions of such Purchaser’s assets, the representation set forth
      above shall only apply with respect to the portion of assets managed by the
      portfolio manager that made the investment decision to purchase the Securities
      covered by this Agreement.  Other than to other Persons party to this
      Agreement, such Purchaser has maintained the confidentiality of all disclosures
      made to it in connection with this transaction (including the existence and
      terms of this transaction).

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1
      Transfer
      Restrictions.

     

    (a)
      The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an Affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement.

     

    (b)
      The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1,
      of a legend on any of the Securities in the following form:

     

    [NEITHER]
      THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE]]
      HAS
      [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY.  THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] OF
      THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      OR
      OTHER LOAN SECURED BY SUCH SECURITIES.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      pursuant to a bona fide margin agreement with a registered broker-dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and, if required under the terms of such arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such
      a pledge or transfer would not be subject to approval of the Company and no
      legal opinion of legal counsel of the pledgee, secured party or pledgor shall
      be
      required in connection therewith. Further, no notice shall be required of such
      pledge. At the appropriate Purchaser’s expense, the Company will execute and
      deliver such reasonable documentation as a pledgee or secured party of
      Securities may reasonably request in connection with a pledge or transfer of
      the
      Securities.

     

    (c)
      Certificates evidencing the Underlying Shares shall not contain any legend
      (including the legend set forth in Section 4.1(b) hereof): (i) while a
      registration statement covering the resale of such security is effective under
      the Securities Act, (ii) following any sale of such Underlying Shares pursuant
      to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule
      144, without the requirement for the Company to be in compliance with the
      current public information required under Rule 144 as to such Underlying Shares
      and without volume or manner-of-sale restrictions or (iv) if such legend is
      not
      required under applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the staff of the Commission).
      Upon
      the receipt of the documentation customary in connection with requests to remove
      legends, except as expressly provided in this Section 4.1, the Company shall
      cause its counsel to issue a legal opinion to the Transfer Agent promptly but
      in
      any event within three (3) Trading Days if required by the Transfer Agent to
      effect the removal of the legend hereunder. If all or any portion of a the
      Underlying Shares are converted by an effective registration statement to cover
      the resale of the Underlying Shares, or if such Underlying Shares may be sold
      under Rule 144, without the requirement for the Company to be in compliance
      with
      the current public information required under Rule 144 as to such Underlying
      Shares and without volume or manner-of-sale restrictions or if such legend
      is
      not otherwise required under applicable requirements of the Securities Act
      (including judicial interpretations and pronouncements issued by the staff
      of
      the Commission) then such Underlying Shares shall be issued free of all legends.
      The Company agrees that at such time as such legend is no longer required under
      this Section 4.1(c), it will, no later than three Trading Days following the
      delivery by a Purchaser to the Company or the Transfer Agent of a certificate
      representing Underlying Shares, as applicable, issued with a restrictive legend
      (such third Trading Day, the “Legend Removal Date”), deliver or cause to be
      delivered to such Purchaser a certificate representing such shares that is
      free
      from all restrictive and other legends. The Company may not make any notation
      on
      its records or give instructions to the Transfer Agent that enlarge the
      restrictions on transfer set forth in this Section 4. Certificates for
      Underlying Shares subject to legend removal hereunder shall be transmitted
      by
      the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s
      prime broker with the Depository Trust Company System as directed by such
      Purchaser.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)
      Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      such
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, and that if Securities are sold
      pursuant to a registration statement, they will be sold in compliance with
      the
      plan of distribution set forth therein, and acknowledges that the removal of
      the
      restrictive legend from certificates representing Securities as set forth in
      this Section 4.1 is predicated upon the Company’s reliance upon this
      understanding.

     

    4.2
      Acknowledgment
      of Dilution. 
      The Company acknowledges that the issuance of the Securities may result in
      dilution of the outstanding shares of Common Stock, which dilution may be
      substantial under certain market conditions.  The Company further
      acknowledges that its obligations under the Transaction Documents, including
      without limitation its obligation to issue the Underlying Shares pursuant to
      the
      Transaction Documents, are unconditional and absolute and not subject to any
      right of set off, counterclaim, delay or reduction, regardless of the effect
      of
      any such dilution or any claim the Company may have against any Purchaser and
      regardless of the dilutive effect that such issuance may have on the ownership
      of the other stockholders of the Company.

     

    4.3
      Furnishing
      of Information. 
      Until the earliest of the time that no Purchaser owns Securities, the Company
      covenants to timely file (or obtain extensions in respect thereof and file
      within the applicable grace period) all reports required to be filed by the
      Company after the date hereof pursuant to the Exchange Act even if the Company
      is not then subject to the reporting requirements of the Exchange
      Act.    As long as any Purchaser owns Securities, if the Company
      is not required to file reports pursuant to the Exchange Act, it will prepare
      and furnish to the Purchasers and make publicly available in accordance with
      Rule 144(c) such information as is required for the Purchasers to sell the
      Securities under Rule 144.  The Company further covenants that it will take
      such further action as any holder of Securities may reasonably request, to
      the
      extent required from time to time to enable such Person to sell such Securities
      without registration under the Securities Act within the requirements of the
      exemption provided by Rule 144.

     

    4.4
      Integration. 
      The Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities to the
      Purchasers in a manner that would require the registration under the Securities
      Act of the sale of the Securities to the Purchasers or that would be integrated
      with the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market.

     

    4.5
      Exercise
      Procedures. 
      The form of Notice of Exercise included in the Warrants set forth the totality
      of the procedures required of the Purchasers in order to exercise the Warrants
      and no additional legal opinion or other information or instructions shall
      be required of the Purchasers to exercise their Warrants.  The Company
      shall honor exercises of the Warrants and shall deliver Underlying Shares in
      accordance with the terms, conditions and time periods set forth in the
      Transaction Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.6
      Securities
      Laws Disclosure; Publicity. 
      The Company shall, by 8:30 a.m. (Central Time) on the second (2nd)
      Trading
      Day following the date hereof, issue a Current Report on Form 8-K disclosing
      the
      material terms of the transactions contemplated hereby and attaching the
      Transaction Documents as exhibits thereto.  Notwithstanding the foregoing,
      the Company shall not publicly disclose the name of any Purchaser, or include
      the name of any Purchaser in any filing with the Commission or any regulatory
      agency or Trading Market, without the prior written consent of such Purchaser,
      except: (a) as required by federal securities law in connection with the filing
      of final Transaction Documents (including signature pages thereto) with the
      Commission and (b) to the extent such disclosure is required by law or Trading
      Market regulations, in which case the Company shall provide the Purchasers
      with
      prior notice of such disclosure permitted under this clause (b).

     

    4.7
      Shareholder
      Rights Plan. 
      No claim will be made or enforced by the Company or, with the consent of the
      Company, any other Person, that any Purchaser is an “Acquiring Person” under any
      control share acquisition, business combination, poison pill (including any
      distribution under a rights agreement) or similar anti-takeover plan or
      arrangement in effect or hereafter adopted by the Company, or that any Purchaser
      could be deemed to trigger the provisions of any such plan or arrangement,
      by
      virtue of receiving Securities under the Transaction Documents or under any
      other agreement between the Company and the Purchasers.

     

    4.8
      Non-Public
      Information. 
      Except with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, and the Transaction Documents which
      will be attached as exhibits to the Form 8-K, the Company covenants and agrees
      that neither it nor any other Person acting on its behalf will provide any
      Purchaser or its agents or counsel with any information that the Company
      believes constitutes material non-public information, unless prior thereto
      such
      Purchaser shall have executed a written agreement regarding the confidentiality
      and use of such information.  The Company understands and confirms that
      each Purchaser shall be relying on the foregoing covenant in effecting
      transactions in securities of the Company.

     

    4.9
      Use
      of
      Proceeds. 
      Except as set forth on Schedule
      4.9
      attached
      hereto, the Company shall use the net proceeds from the sale of the Securities
      hereunder for working capital purposes and shall not use such proceeds for
      (a)
      the satisfaction of any portion of the Company’s debt (other than payment of
      trade payables in the ordinary course of the Company’s business and prior
      practices), (b) the redemption of any Common Stock or Common Stock Equivalents
      or (c) the settlement of any outstanding litigation.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.10
      Indemnification
      of Purchasers.  
      Subject to the provisions of this Section 4.10, the Company will indemnify
      and
      hold each Purchaser and its directors, officers, shareholders, members,
      partners, employees and agents (and any other Persons with a functionally
      equivalent role of a Person holding such titles notwithstanding a lack of such
      title or any other title), each Person who controls such Purchaser (within
      the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act),
      and the directors, officers, shareholders, agents, members, partners or
      employees (and any other Persons with a functionally equivalent role of a Person
      holding such titles notwithstanding a lack of such title or any other title)
      of
      such controlling person (each, a “Purchaser
      Party”)
      harmless from any and all:

     

    (i) losses,
      liabilities, obligations, claims, contingencies, damages, costs and expenses,
      including all judgments, amounts paid in settlements, court costs and reasonable
      attorneys’ fees and costs of investigation that any such Purchaser Party may
      suffer or incur as a result of or relating to (a) any breach of any of the
      representations, warranties, covenants or agreements made by the Company in
      this
      Agreement or in the other Transaction Documents or (b) any action instituted
      against a Purchaser in any capacity, or any of them or their respective
      Affiliates, by any stockholder of the Company who is not an Affiliate of such
      Purchaser, with respect to any of the transactions contemplated by the
      Transaction Documents (unless such action is based upon a breach of such
      Purchaser’s representations, warranties or covenants under the Transaction
      Documents or any agreements or understandings such Purchaser may have with
      any
      such stockholder or any violations by the Purchaser of state or federal
      securities laws or any conduct by such Purchaser which constitutes fraud, gross
      negligence, willful misconduct or malfeasance).

     

    (ii) losses,
      liabilities, obligations, claims, contingencies, damages, costs and expenses,
      including all judgments, amounts paid in settlements, court costs and reasonable
      attorneys’ fees and costs of investigation that any such Purchaser may suffer or
      incur as a result of or relating to, or arising out of or based upon the failure
      of the Company to register shares other than those held by Purchaser or
      otherwise obtain the registration of any holder disclosed in Schedule 3.1(v)
      other than Purchaser whose consent is required to effectuate the Purchaser’s
      right hereunder to be registered prior to and to the exclusion of such holder(s)
      under any registration rights or other similar agreement existing prior to
      this
      Agreement.

     

    If
      any
      action shall be brought against any Purchaser Party in respect of which
      indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
      promptly notify the Company in writing, and the Company shall have the right
      to
      assume the defense thereof with counsel of its own choosing reasonably
      acceptable to the Purchaser Party.  Any Purchaser Party shall have the
      right to employ separate counsel in any such action and participate in the
      defense thereof, but the fees and expenses of such counsel shall be at the
      expense of such Purchaser Party except to the extent that (i) the employment
      thereof has been specifically authorized by the Company in writing, (ii) the
      Company has failed after a reasonable period of time to assume such defense
      and
      to employ counsel or (iii) in such action there is, in the reasonable opinion
      of
      such separate counsel, a material conflict on any material issue between the
      position of the Company and the position of such Purchaser Party, in which
      case
      the Company shall be responsible for the reasonable fees and expenses of no
      more
      than one such separate counsel.  The Company will not be liable to any
      Purchaser Party under this Agreement (i) for any settlement by a Purchaser
      Party
      effected without the Company’s prior written consent, which shall not be
      unreasonably withheld or delayed; or (ii) to the extent, but only to the extent
      that a loss, claim, damage or liability is attributable to any Purchaser Party’s
      breach of any of the representations, warranties, covenants or agreements made
      by such Purchaser Party in this Agreement or in the other Transaction
      Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.11
      Reservation
      and Listing of Securities.

     

    (a)
      The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may then
      be
      required to fulfill its obligations in full under the Transaction
      Documents.

     

    (b)
      If,
      on any date, the number of authorized but unissued (and otherwise unreserved)
      shares of Common Stock is less than the Required Minimum on such date, then
      the
      Board of Directors shall use commercially reasonable efforts to amend the
      Company’s certificate or articles of incorporation to increase the number of
      authorized but unissued shares of Common Stock to at least the Required Minimum
      at such time, as soon as possible and in any event not later than the 75th
      day
      after such date.

     

    (c)
      The
      Company shall, if applicable: (i) in the time and manner required by the
      principal Trading Market, prepare and file with such Trading Market an
      additional shares listing application covering a number of shares of Common
      Stock at least equal to the Required Minimum on the date of such application,
      (ii) take all steps necessary to cause such shares of Common Stock to be
      approved for listing on such Trading Market as soon as possible thereafter,
      (iii) provide to the Purchasers evidence of such listing and (iv) maintain
      the
      listing of such Common Stock on any date at least equal to the Required Minimum
      on such date on such Trading Market or another Trading Market.

     

    4.12
      Board
      of Directors.
      Purchasers holding a majority in principal amount of the Debentures shall have
      the right to appoint one (1) member to the Board of Directors which shall
      constitute a majority of the Board of Directors. Within the fourth (4th) Trading
      Day following the date hereof, issue a Current Report on Form 8-K disclosing
      the
      name and other biographical information concerning such member.

     

    4.13
      Subsequent
      Equity Sales. 

     

    (a)
      From
      the date hereof until such time as no Purchaser holds any of the Securities,
      the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a Variable Rate Transaction.
“Variable
      Rate Transaction”
means
      a
      transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined
      price.   

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)
      Notwithstanding the foregoing, this Section 4.13 shall not apply (i) in respect
      of an Exempt Issuance, except that no Variable Rate Transaction shall be an
      Exempt Issuance.

     

    4.14
      Equal
      Treatment of Purchasers. 
      No consideration (including any modification of any Transaction Document) shall
      be offered or paid to any Person to amend or consent to a waiver or modification
      of any provision of any of the Transaction Documents unless the same
      consideration is also offered to all of the parties to the Transaction
      Documents. Further, the Company shall not make any payment of principal or
      interest on the Debentures in amounts which are disproportionate to the
      respective principal amounts outstanding on the Debentures at any applicable
      time.  For clarification purposes, this provision constitutes a separate
      right granted to each Purchaser by the Company and negotiated separately by
      each
      Purchaser, and is intended for the Company to treat the Purchasers as a class
      and shall not in any way be construed as the Purchasers acting in concert or
      as
      a group with respect to the purchase, disposition or voting of Securities or
      otherwise.

     

    4.15
      Short
      Sales and Confidentiality After The Date Hereof.
      Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      neither it nor any Affiliate acting on its behalf or pursuant to any
      understanding with it will execute any Short Sales during the period commencing
      at the Discussion Time and ending at the time that the transactions contemplated
      by this Agreement are first publicly announced as described in Section
      4.6.  Each Purchaser, severally and not jointly with the other Purchasers,
      covenants that until such time as the transactions contemplated by this
      Agreement are publicly disclosed by the Company as described in Section 4.6,
      such Purchaser will maintain the confidentiality of the existence and terms
      of
      this transaction and the information included in the Disclosure Schedules.
      Notwithstanding the foregoing, no Purchaser makes any representation, warranty
      or covenant hereby that it will not engage in Short Sales in the securities
      of
      the Company after the time that the transactions contemplated by this Agreement
      are first publicly announced as described in Section 4.6; provided, however,
      each Purchaser agrees, severally and not jointly with any other Purchasers,
      that
      they will not enter into any Net Short Sales (as hereinafter defined) from
      the
      period commencing on the Closing Date and ending on the date that is the earlier
      of (x) the 6 month anniversary of the Closing Date or (y) the date that such
      Purchaser no longer holds any Debentures.  For purposes of this
      Section 4.15, a “Net
      Short Sale”
by
      any
      Purchaser shall mean a sale of Common Stock by such Purchaser that is marked
      as
      a short sale and that is made at a time when there is no equivalent offsetting
      long position in Common Stock held by such Purchaser.  For purposes of
      determining whether there is an equivalent offsetting long position in Common
      Stock held by the Purchaser, Underlying Shares that have not yet been converted
      pursuant to the Debentures and Warrant Shares that have not yet been exercised
      pursuant to the Warrants shall be deemed to be held long by the Purchaser,
      and
      the amount of shares of Common Stock held in a long position shall be all
      unconverted Underlying Shares and unexercised Warrant Shares (ignoring any
      exercise limitations included therein) issuable to such Purchaser on such date,
      plus any shares of Common Stock or Common Stock Equivalents otherwise then
      held
      by such Purchaser.  Notwithstanding the foregoing, in the case of a
      Purchaser that is a multi-managed investment vehicle whereby separate portfolio
      managers manage separate portions of such Purchaser’s assets and the portfolio
      managers have no direct knowledge of the investment decisions made by the
      portfolio managers managing other portions of such Purchaser’s assets, the
      covenant set forth above shall only apply with respect to the portion of assets
      managed by the portfolio manager that made the investment decision to purchase
      the Securities covered by this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.16
      Form
      D; Blue Sky Filings. 
      The Company agrees to timely file a Form D with respect to the Securities as
      required under Regulation D and to provide a copy thereof, promptly upon request
      of any Purchaser. The Company shall take such action as the Company shall
      reasonably determine is necessary in order to obtain an exemption for, or to
      qualify the Securities for, sale to the Purchasers at the Closing under
      applicable securities or “Blue Sky” laws of the states of the United States, and
      shall provide evidence of such actions promptly upon request of any
      Purchaser.

     

    4.17
      Capital
      Changes. 
      Until such time that the Debentures are no longer outstanding, the Company
      shall not undertake a reverse stock split of the Common Stock without the prior
      written consent of the Purchasers holding 75% of the principal amount
      outstanding of the Debentures.

     

    4.18
      Most
      Favored Nation Provision. 
      From the date hereof until such time that the Debentures are no longer
      outstanding, if the Company or any Subsidiary proposes to issue any Common
      Stock
      or Common Stock Equivalents (such an issuance, a “Subsequent
      Financing”),
      each
      Purchaser may elect, in its sole discretion, to exchange all or some of the
      Debentures then held by such Purchaser for any securities issued in a Subsequent
      Financing on a $1.00 for $1.00 basis based on the outstanding principal amount
      of such Debentures, along with any liquidated damages and other amounts owing
      thereon, and the effective price at which such securities are to be sold in
      such
      Subsequent Financing; provided,
      however,
      that
      this Section 4.18 shall not apply with respect to (i) an Exempt Issuance or
      (ii)
      an underwritten public offering of Common Stock. At least 10 Trading Days prior
      to the closing of any Subsequent Financing, the Company shall deliver to each
      Purchaser a written notice of its intention to effect a Subsequent Financing
      (“Pre-Notice”),
      which
      Pre-Notice shall ask such Purchaser if it wants to review the details of such
      financing (such additional notice, a “Subsequent
      Financing Notice”). 
      Upon the request of a Purchaser, and only upon a request by such Purchaser,
      for
      a Subsequent Financing Notice, the Company shall promptly, but no later than
      1
      Trading Day after such request, deliver a Subsequent Financing Notice to such
      Purchaser.  The Subsequent Financing Notice shall describe in reasonable
      detail the proposed terms of such Subsequent Financing, the amount of proceeds
      intended to be raised thereunder and the Person or Persons through or with
      whom
      such Subsequent Financing is proposed to be effected and shall include a term
      sheet or similar document relating thereto as an
      attachment.   Any Purchaser desiring to exercise its rights
      pursuant to this Section in respect of  such Subsequent Financing must
      provide written notice to the Company by not later than 5:30 p.m. (Central
      time)
      on the 10th
      Trading
      Day after all of the Purchasers have received the Pre-Notice that the Purchaser
      desires to exercise its rights pursuant to this Section and the amount of
      Debentures as to which it desires to exercise such rights.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.19
      Public
      Information. 
      At any time during the period commencing from the six (6) month anniversary
      of
      the Closing Date and ending at such time that all of the Securities, may be
      sold
      without the requirement for the Company to be in compliance with Rule 144(c)(1)
      and otherwise without restriction or limitation pursuant to Rule 144, if the
      Company shall fail for any reason to satisfy the current public information
      requirement under Rule 144(c) (a “Public
      Information Failure”)
      then,
      in addition to such Purchaser’s other available remedies, the Company shall pay
      to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
      by
      reason of any such delay in or reduction of its ability to sell the Securities,
      an amount in cash equal to two percent (2.0%) of the aggregate Subscription
      Amount of such Purchaser’s Securities on the day of a Public Information Failure
      and on every thirtieth (30th)
      day
      (pro rated for periods totaling less than thirty days) thereafter until the
      earlier of (a) the date such Public Information Failure is cured and (b) such
      time that such public information is no longer required  for the Purchasers
      to transfer the Underlying Shares pursuant to Rule 144.  The payments to
      which a Purchaser shall be entitled pursuant to this Section 4.19 are referred
      to herein as “Public
      Information Failure Payments.” 
      Public Information Failure Payments shall be paid on the earlier of (i) the
      last
      day of the calendar month during which such Public Information Failure Payments
      are incurred and (ii) the third (3rd)
      Business Day after the event or failure giving rise to the Public Information
      Failure Payments is cured. In the event the Company fails to make Public
      Information Failure Payments in a timely manner, such Public Information Failure
      Payments shall bear interest at the rate of 1.5% per month (prorated for partial
      months) until paid in full. Nothing herein shall limit such Purchaser’s right to
      pursue actual damages for the Public Information Failure, and such Purchaser
      shall have the right to pursue all remedies available to it at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief.

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1
      Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the initial Closing has not been consummated on or before October
      15, 2008; provided,
      however,
      that
      such termination will not affect the right of any party to sue for any breach
      by
      the other party (or parties).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.2
      Fees
      and Expenses.  The
      Company shall deliver to each Purchaser, prior to the Closing, a completed
      and
      executed copy of the Closing Statement attached hereto as Annex
      A. 
      Except as expressly set forth in the Transaction Documents to the contrary,
      each
      party shall pay the fees and expenses of its advisers, counsel, accountants
      and
      other experts, if any, and all other expenses incurred by such party incident
      to
      the negotiation, preparation, execution, delivery and performance of this
      Agreement.  The Company shall pay all transfer agent fees, stamp taxes and
      other taxes and duties levied in connection with the delivery of any Securities
      to the Purchasers.

     

    5.3
      Entire
      Agreement. 
      The Transaction Documents, together with the exhibits and schedules thereto,
      contain the entire understanding of the parties with respect to the subject
      matter hereof and supersede all prior agreements and understandings, oral or
      written, with respect to such matters, which the parties acknowledge have been
      merged into such documents, exhibits and schedules.

     

    5.4
      Notices. 
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 5:30 p.m. (Central time) on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 5:30 p.m. (Central time) on any Trading Day, (c) the second
      Trading Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given.  The address for such notices and
      communications shall be as set forth on the signature pages attached
      hereto.

     

    5.5
      Amendments;
      Waivers. 
      No provision of this Agreement may be waived, modified, supplemented or amended
      except in a written instrument signed, in the case of an amendment, by the
      Company and the Purchasers of at least 75% in interest of the Securities still
      held by Purchasers or, in the case of a waiver, by the party against whom
      enforcement of any such waived provision is sought.  No waiver of any
      default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder in any manner impair the exercise of any such
      right.

     

    5.6
      Headings. 
      The headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    5.7
      Successors
      and Assigns.
       This Agreement shall be binding upon and inure to the benefit of the
      parties and their successors and permitted assigns.  The Company may not
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of each Purchaser (other than by merger).  Any Purchaser
      may assign any or all of its rights under this Agreement to any Person to whom
      such Purchaser assigns or transfers any Securities, provided that such
      transferee agrees in writing to be bound, with respect to the transferred
      Securities, by the provisions of the Transaction Documents that apply to the
      “Purchasers.”

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.8
      No
      Third-Party Beneficiaries. 
      This Agreement is intended for the benefit of the parties hereto and their
      respective successors and permitted assigns and is not for the benefit of,
      nor
      may any provision hereof be enforced by, any other Person, except as otherwise
      set forth in Section 4.10.

     

    5.9
      Governing
      Law. 
      All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of Illinois,
      without regard to the principles of conflicts of law thereof.  Each party
      agrees that all legal proceedings concerning the interpretations, enforcement
      and defense of the transactions contemplated by this Agreement and any other
      Transaction Documents (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the City of
      Chicago.  Each party hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the City of Chicago,
      for
      the adjudication of any dispute hereunder or in connection herewith or with
      any
      transaction contemplated hereby or discussed herein (including with respect
      to
      the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or is an inconvenient venue for
      such
      proceeding.  Each party hereby irrevocably waives personal service of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Agreement and agrees that such service
      shall
      constitute good and sufficient service of process and notice thereof. 
Nothing contained herein shall be deemed to limit in any way any right to serve
      process in any other manner permitted by law.   If either party shall
      commence an action or proceeding to enforce any provisions of the Transaction
      Documents, then the prevailing party in such action or proceeding shall be
      reimbursed by the other party for its reasonable attorneys’ fees and other costs
      and expenses incurred with the investigation, preparation and prosecution of
      such action or proceeding.

     

    5.10
      Survival. 
      The representations and warranties shall survive the Closing and the delivery
      of
      the Securities for the applicable statute of limitations.

     

    5.11
      Execution. 
      This Agreement may be executed in two or more counterparts, all of which when
      taken together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart.  In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.12
      Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

     

    5.13
      Rescission
      and Withdrawal Right. 
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) any of the other Transaction Documents, whenever any
      Purchaser exercises a right, election, demand or option under a Transaction
      Document and the Company does not timely perform its related obligations within
      the periods therein provided, then such Purchaser may rescind or withdraw,
      in
      its sole discretion from time to time upon written notice to the Company, any
      relevant notice, demand or election in whole or in part without prejudice to
      its
      future actions and rights; provided,
      however,
      in the
      case of a rescission of an exercise of a Warrant, the Purchaser shall be
      required to return any shares of Common Stock delivered in connection with
      any
      such rescinded exercise notice.

     

    5.14
      Replacement
      of Securities. 
      If any certificate or instrument evidencing any Securities is mutilated, lost,
      stolen or destroyed, the Company shall issue or cause to be issued in exchange
      and substitution for and upon cancellation thereof (in the case of mutilation),
      or in lieu of and substitution therefor, a new certificate or instrument, but
      only upon receipt of evidence reasonably satisfactory to the Company of such
      loss, theft or destruction.  The applicant for a new certificate or
      instrument under such circumstances shall also pay any reasonable third-party
      costs (including customary indemnity) associated with the issuance of such
      replacement Securities.

     

    5.15
      Remedies. 
      In addition to being entitled to exercise all rights provided herein or granted
      by law, including recovery of damages, each of the Purchasers and the Company
      will be entitled to specific performance under the Transaction Documents. 
The parties agree that monetary damages may not be adequate compensation for
      any
      loss incurred by reason of any breach of obligations contained in the
      Transaction Documents and hereby agrees to waive and not to assert in any action
      for specific performance of any such obligation the defense that a remedy at
      law
      would be adequate. 

     

    5.16
      Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or a Purchaser enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.17
      Usury. 
      To the extent it may lawfully do so, the Company hereby agrees not to insist
      upon or plead or in any manner whatsoever claim, and will resist any and all
      efforts to be compelled to take the benefit or advantage of, usury laws wherever
      enacted, now or at any time hereafter in force, in connection with any claim,
      action or proceeding that may be brought by any Purchaser in order to enforce
      any right or remedy under any Transaction Document.  Notwithstanding any
      provision to the contrary contained in any Transaction Document, it is expressly
      agreed and provided that the total liability of the Company under the
      Transaction Documents for payments in the nature of interest shall not exceed
      the maximum lawful rate authorized under applicable law (the “Maximum
      Rate”),
      and,
      without limiting the foregoing, in no event shall any rate of interest or
      default interest, or both of them, when aggregated with any other sums in the
      nature of interest that the Company may be obligated to pay under the
      Transaction Documents exceed such Maximum Rate.  It is agreed that if the
      maximum contract rate of interest allowed by law and applicable to the
      Transaction Documents is increased or decreased by statute or any official
      governmental action subsequent to the date hereof, the new maximum contract
      rate
      of interest allowed by law will be the Maximum Rate applicable to the
      Transaction Documents from the effective date forward, unless such application
      is precluded by applicable law.  If under any circumstances whatsoever,
      interest in excess of the Maximum Rate is paid by the Company to any Purchaser
      with respect to indebtedness evidenced by the Transaction Documents, such excess
      shall be applied by such Purchaser to the unpaid principal balance of any such
      indebtedness or be refunded to the Company, the manner of handling such excess
      to be at such Purchaser’s election.

     

    5.18
      Independent
      Nature of Purchasers’ Obligations and Rights. 
      The obligations of each Purchaser under any Transaction Document are several
      and
      not joint with the obligations of any other Purchaser, and no Purchaser shall
      be
      responsible in any way for the performance or non-performance of the obligations
      of any other Purchaser under any Transaction Document.  Nothing contained
      herein or in any other Transaction Document, and no action taken by any
      Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
      a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Purchasers are in any way acting in concert or
      as
      a group with respect to such obligations or the transactions contemplated by
      the
      Transaction Documents.  Each Purchaser shall be entitled to independently
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement or out of the other Transaction Documents, and it shall
      not be necessary for any other Purchaser to be joined as an additional party
      in
      any proceeding for such purpose.  Each Purchaser has been represented by
      its own separate legal counsel in their review and negotiation of the
      Transaction Documents.  

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.19
      Liquidated
      Damages. 
      The Company’s obligations to pay any partial liquidated damages or other amounts
      owing under the Transaction Documents is a continuing obligation of the Company
      and shall not terminate until all unpaid partial liquidated damages and other
      amounts have been paid notwithstanding the fact that the instrument or security
      pursuant to which such partial liquidated damages or other amounts are due
      and
      payable shall have been canceled.

     

    5.20
      Saturdays,
      Sundays, Holidays, etc.  If
      the last or appointed day for the taking of any action or the expiration of
      any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    5.21
      Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, 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 the Transaction Documents or any amendments hereto.

     

    5.22
      Waiver
      of Jury Trial. 
      In any action, suit or proceeding in any jurisdiction brought by any party
      against any other party, the parties each knowingly and intentionally, to the
      greatest extent permitted by applicable law, hereby absolutely, unconditionally,
      irrevocably and expressly waives forever trial by jury.

     

    (Signature
      Pages Follow)

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

    

      
        	
                ENABLE
                  HOLDINGS, INC.

              
	 
	
                By:

              	 
	
                Name:
                  Jeffrey D. Hoffman

                Title:
                  CEO

              

      

      

      Address
        for Notice:

      

      ENABLE
        HOLDINGS, INC.

      8725
        W.
        Higgins Road, Suite 900

      Chicago,
        Illinois 60631

      Attn:
        Jeffrey D. Hoffman, CEO

      

      With
        a
        copy to (which shall not constitute notice):

      

      Fredrikson
        & Byron, P.A.

      200
        South
        Sixth Street, Suite 4000

      Minneapolis,
        MN 55402

      Attn:
        Thomas F. Steichen, Esq.

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGE

    FOR
      PURCHASERS FOLLOWS]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    [PURCHASER
      SIGNATURE PAGES TO ENABLE SECURITIES PURCHASE

    AGREEMENT]

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Purchaser ________________

     

    Signature
      of Authorized Signatory of Purchaser:
      __________________________________

     

    Name
      of
      Authorized Signatory:
      ____________________________________________________

     

    Title
      of
      Authorized Signatory:
      _____________________________________________________

     

    Email
      Address of Purchaser:
      ________________________________________________

     

    Facsimile
      Number of Purchaser:
      ________________________________________________

     

    Address
      for Notice of Purchaser:

     

    Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

     

    Subscription
      Amount: $___________________

     

    Class
      A
      Warrant Shares: _________________

     

    Class
      B
      Warrants Shares:_________________

     

    EIN
      Number:  [PROVIDE
      THIS UNDER SEPARATE COVER]

     

    [SIGNATURE
      PAGES CONTINUE]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex
      A

     

    CLOSING
      STATEMENT

     

    Pursuant
      to the attached Securities Purchase Agreement, dated as of the date hereto,
      the
      purchasers shall purchase up to $4,000,000 of Debentures and Warrants from
      Enable Holdings, Inc. (the “Company”). 
      All funds will be wired into an account maintained by the Company.  All
      funds will be disbursed in accordance with this Closing
      Statement. 

     

    Disbursement
      Date: 
      October 16, 2008

     

    
      	
              I.  
                PURCHASE
                PRICE

            	 	 	 	 
	 	 	 	 	 
	
              Gross
                Proceeds to be Received

            	 	
              $

            	

            	 
	
               
                 

            	 	 	 	 
	
              II. 
                DISBURSEMENTS

            	 	 	 	 
	
               
                 

            	 	 	

            	 
	
              Enable:

            	 	
              $

            	

            	 
	
               
                 

            	 	 	 	 
	
              Total
                Amount Disbursed:

            	 	
              $

            	
                
                

            	 

    

    
       

      WIRE
        INSTRUCTIONS:Exhibit
      10.2

    SECURITY
      AGREEMENT

    

    This
      SECURITY AGREEMENT, dated as of October 16, 2008 (this “Agreement”), is among
      Enable Holdings, Inc., a Delaware corporation (the “Company”), all of the
      Subsidiaries of the Company (such subsidiaries, the “Guarantors ” and together
      with the Company, the “Debtors”) and the holders of the Company’s 18% Senior
      Secured Debentures due January 16, 2009 and issued on October 16, 2008 in the
      original aggregate Principal Amount of up to $4,000,000 (collectively, the
      “Debentures”) signatory hereto, their endorsees, transferees and assigns
      (collectively, the “Secured Parties”).

     

    WITNESSETH:

    

    WHEREAS,
      pursuant to the Purchase Agreement (as defined in the Debentures), the Secured
      Parties have severally agreed to extend the loans to the Company evidenced
      by
      the Debentures;

    

    WHEREAS,
      pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the
      “Guarantee”) attached hereto as Exhibit
      B,
      the
      Guarantors have jointly and severally agreed to guarantee and act as surety
      for
      payment of such Debentures; and

    

    WHEREAS,
      in order to induce the Secured Parties to extend the loans evidenced by the
      Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
      this Agreement and to grant the Secured Parties, pari
      passu
      with
      each other Secured Party a security interest in certain property of such Debtor
      to secure the prompt payment, performance and discharge in full of all of the
      Company’s obligations under the Debentures and the Guarantors’ obligations under
      the Guarantee.

    

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

    

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1.  Terms used but not otherwise defined in this Agreement
      that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment
      property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
      shall have the respective meanings given such terms in Article 9 of the
      UCC.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) “Collateral”
      “Collateral” means the collateral in which the Secured Parties are granted a
      security interest by this Agreement and which shall include the following
      personal property of the Debtors, whether presently owned or existing or
      hereafter acquired or coming into existence, wherever situated, and all
      additions and accessions thereto and all substitutions and replacements thereof,
      and all proceeds, products and accounts thereof, including, without limitation,
      all proceeds from the sale or transfer of the Collateral and of insurance
      covering the same and of any tort claims in connection therewith , and all
      dividends, interest, cash, notes, securities, equity interest or other property
      at any time and from time to time acquired, receivable or otherwise distributed
      in respect of, or in exchange for, any or all of the Pledged Securities (as
      defined below):

    

    (i) All
      goods, including, without limitation, (A) all machinery, equipment, computers,
      motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
      and
      general tools, fixtures, test and quality control devices and other equipment
      of
      every kind and nature and wherever situated, together with all documents of
      title and documents representing the same, all additions and accessions thereto,
      replacements therefor, all parts therefor, and all substitutes for any of the
      foregoing and all other items used and useful in connection with any Debtor’s
      businesses and all improvements thereto; and (B) all inventory;

    

    (ii) All
      contract rights and other general intangibles, including, without limitation,
      all partnership interests, membership interests, stock or other securities,
      rights under any of the Organizational Documents, agreements related to the
      Pledged Securities, licenses, distribution and other agreements, computer
      software (whether “off-the-shelf”, licensed from any third party or developed by
      any Debtor), computer software development rights, leases, franchises, customer
      lists, quality control procedures, grants and rights, goodwill, trademarks,
      service marks, trade styles, trade names, patents, patent applications,
      copyrights, and income tax refunds;

     

    (iii) All
      accounts, together with all instruments, all documents of title representing
      any
      of the foregoing, all rights in any merchandising, goods, equipment, motor
      vehicles and trucks which any of the same may represent, and all right, title,
      security and guaranties with respect to each account, including any right of
      stoppage in transit;

    

    (iv) All
      documents, letter-of-credit rights, instruments and chattel paper;

    

    (v) All
      commercial tort claims;

    

    (vi) All
      deposit accounts and all cash (whether or not deposited in such deposit
      accounts);

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (vii) All
      investment property;

    

    (viii) All
      supporting obligations;

    

    (ix) All
      files, records, books of account, business papers, and computer programs;
      and

    

    (x) the
      products and proceeds of all of the foregoing Collateral set forth in clauses
      (i)-(ix) above.

    

    Without
      limiting the generality of the foregoing, the “Collateral”
shall
      include all investment property and general intangibles respecting ownership
      and/or other equity interests in each Guarantor, including, without limitation,
      the shares of capital stock and the other equity interests listed on Schedule
      H
      hereto (as the same may be modified from time to time pursuant to the terms
      hereof), and any other shares of capital stock and/or other equity interests
      of
      any other direct or indirect subsidiary of any Debtor obtained in the future,
      and, in each case, all certificates representing such shares and/or equity
      interests and, in each case, all rights, options, warrants, stock, other
      securities and/or equity interests that may hereafter be received, receivable
      or
      distributed in respect of, or exchanged for, any of the foregoing and all rights
      arising under or in connection with the Pledged Securities, including, but
      not
      limited to, all dividends, interest and cash.

    

    Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment of
      any
      asset which, in the event of an assignment, becomes void by operation of
      applicable law or the assignment of which is otherwise prohibited by applicable
      law (in each case to the extent that such applicable law is not overridden
      by
      Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
      provided, however, that to the extent permitted by applicable law, this
      Agreement shall create a valid security interest in such asset and, to the
      extent permitted by applicable law, this Agreement shall create a valid security
      interest in the proceeds of such asset.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) “Intellectual
      Property”
means
      the collective reference to all rights, priorities and privileges relating
      to
      intellectual property, whether arising under United States, multinational or
      foreign laws or otherwise, including, without limitation, (i) all copyrights
      arising under the laws of the United States, any other country or any political
      subdivision thereof, whether registered or unregistered and whether published
      or
      unpublished, all registrations and recordings thereof, and all applications
      in
      connection therewith, including, without limitation, all registrations,
      recordings and applications in the United States Copyright Office, (ii) all
      letters patent of the United States, any other country or any political
      subdivision thereof, all reissues and extensions thereof, and all applications
      for letters patent of the United States or any other country and all divisions,
      continuations and continuations-in-part thereof, (iii) all trademarks, trade
      names, corporate names, company names, business names, fictitious business
      names, trade dress, service marks, logos, domain names and other source or
      business identifiers, and all goodwill associated therewith, now existing or
      hereafter adopted or acquired, all registrations and recordings thereof, and
      all
      applications in connection therewith, whether in the United States Patent and
      Trademark Office or in any similar office or agency of the United States,
      any State thereof or any other country or any political subdivision thereof,
      or
      otherwise, and all common law rights related thereto, (iv) all trade secrets
      arising under the laws of the United States, any other country or any political
      subdivision thereof, (v) all rights to obtain any reissues, renewals or
      extensions of the foregoing, (vi) all licenses for any of the foregoing, and
      (vii) all causes of action for infringement of the foregoing.

    

    (c) “Majority
      in Interest”
means,
      at any time of determination, the majority in interest (based on
      then-outstanding Principal Amounts of Debentures at the time of such
      determination) of the Secured Parties. 

    

    (d) “Necessary
      Endorsement” means
      undated stock powers endorsed in blank or other proper instruments of assignment
      duly executed and such other instruments or documents as the Secured Parties
      may
      reasonably request.

     

    (e) “Obligations” means
      all of the liabilities and obligations (primary, secondary, direct, contingent,
      sole, joint or several) due or to become due, or that are now or may be
      hereafter contracted or acquired, or owing to, of any Debtor to the Secured
      Parties, including, without limitation, all obligations under this Agreement,
      the Debentures, the Guarantee and any other instruments, agreements or other
      documents executed and/or delivered in connection herewith or therewith, in
      each
      case, whether now or hereafter existing, voluntary or involuntary, direct or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later increased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from any of the
      Secured Parties as a preference, fraudulent transfer or otherwise as such
      obligations may be amended, supplemented, converted, extended or modified from
      time to time. Without limiting the generality of the foregoing, the term
“Obligations” shall include, without limitation: (i) principal of, and interest
      on the Debentures and the loans extended pursuant thereto; (ii) any and all
      other fees, indemnities, costs, obligations and liabilities of the Debtors
      from
      time to time under or in connection with this Agreement, the Debentures, the
      Guarantee and any other instruments, agreements or other documents executed
      and/or delivered in connection herewith or therewith; and (iii) all amounts
      (including but not limited to post-petition interest) in respect of the
      foregoing that would be payable but for the fact that the obligations to pay
      such amounts are unenforceable or not allowable due to the existence of a
      bankruptcy, reorganization or similar proceeding involving any
      Debtor.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) “Organizational
      Documents”
means
      with respect to any Debtor, the documents by which such Debtor was organized
      (such as a certificate of incorporation, certificate of limited partnership
      or
      articles of organization, and including, without limitation, any certificates
      of
      designation for preferred stock or other forms of preferred equity) and which
      relate to the internal governance of such Debtor (such as bylaws, a partnership
      agreement or an operating, limited liability or members agreement).

    

    (g) “Pledged
      Interests”
shall
      have the meaning ascribed to such term in Section 4(j).

    

    (h) “Pledged
      Securities”
shall
      have the meaning ascribed to such term in Section 4(i).

    

    (i) “UCC”
means
      the Uniform Commercial Code of the State of Illinois and or any other applicable
      law of any state or states which has jurisdiction with respect to all, or any
      portion of, the Collateral or this Agreement, from time to time.  It
      is the intent of the Party that defined terms in the UCC should
      be construed in their broadest sense so that the term “Collateral” will be
      construed in its broadest sense.  Accordingly if there are, from time
      to time, changes to defined terms in the UCC that broaden the definitions,
      they
      are incorporated herein and if existing definitions in the UCC are broader
      than
      the amended definitions, the existing ones shall be controlling.

     

    2. Grant
      of Security Interest in Collateral.
      As an
      inducement for the Secured Parties to extend the loans as evidenced by the
      Debentures and to secure the complete and timely payment, performance and
      discharge in full, as the case may be, of all of the Obligations, each Debtor
      hereby unconditionally and irrevocably pledges, grants and hypothecates to
      the
      Secured Parties a security interest in and to, a lien upon and a right of
      set-off against all of their respective right, title and interest of whatsoever
      kind and nature in and to, the Collateral (a “Security
      Interest”
and,
      collectively, the “Security
      Interests”).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3. Delivery
      of Certain Collateral.  Contemporaneously
      or prior to the execution of this Agreement, each Debtor shall deliver or cause
      to be delivered to the Secured Parties (a) any and all certificates and other
      instruments representing or evidencing the Pledged Securities, and (b) any
      and
      all certificates and other instruments or documents representing any of the
      other Collateral, in each case, together with all Necessary Endorsements. The
      Debtors are, contemporaneously with the execution hereof, delivering to the
      Secured Parties, or have previously delivered to the Secured Parties, a true
      and
      correct copy of each Organizational Document governing any of the Pledged
      Securities. Throughout the term of this Agreement, so long as no Event of
      Default is incurred and continuing, the Debtors shall have the right to vote
      the
      Pledged Securities in all matters presented to the stockholders of the Pledge
      Securities for vote thereon, except in a manner inconsistent with the terms
      of
      this Agreement or detrimental to the interests of the Secured Parties. The
      Secured Parties shall hold the Pledged Securities in the form in which the
      same
      are delivered herewith, unless there shall occur an Event of Default. To the
      extent that the Secured Parties shall not previously have taken, acquired,
      sold,
      transferred, disposed of or otherwise realized value on the Pledged Securities
      in accordance with this Agreement, on the date on which the Obligations have
      been indefeasibly discharged or satisfied in full, any remaining security
      interest in the Pledged Securities shall automatically terminate, cease to
      exist
      and be released, and the Secured Parties shall forthwith return any remaining
      Pledged Securities to the Company and irrevocably release such Pledge
      Securities.

    

    4. Representations,
      Warranties, Covenants and Agreements of the Debtors. Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Secured Parties concurrently herewith (the “Disclosure
      Schedules”),
      which
      Disclosure Schedules shall be deemed a part hereof, each Debtor represents
      and
      warrants to, and covenants and agrees with, the Secured Parties as
      follows:

    

    (a) Each
      Debtor has the requisite corporate, partnership, limited liability company
      or
      other power and authority to enter into this Agreement and otherwise to carry
      out its obligations hereunder. The execution, delivery and performance by each
      Debtor of this Agreement and the filings contemplated therein have been duly
      authorized by all necessary action on the part of such Debtor and no further
      action is required by such Debtor. This Agreement has been duly executed by
      each
      Debtor. This Agreement constitutes the legal, valid and binding obligation
      of
      each Debtor, enforceable against each Debtor in accordance with its terms except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization and similar laws of general application relating to or affecting
      the rights and remedies of creditors and by general principles of
      equity.

    

    (b) The
      Debtors have no place of business or offices where their respective books of
      account and records are kept (other than temporarily at the offices of its
      attorneys or accountants) or places where Collateral is stored or located,
      except as set forth on Schedule A attached hereto. Except as specifically set
      forth on Schedule
      A,
      each
      Debtor is the record owner of the real property where such Collateral is
      located, and there exist no mortgages or other liens on any such real property
      except for Permitted Liens (as defined in the Debentures). Except as disclosed
      on Schedule A, none of such Collateral is in the possession of any consignee,
      bailee, warehouseman, agent or processor.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) Except
      for Permitted Liens (as defined in the Debentures) and any Liens held by the
      September Purchasers and the June Purchaser and except as set forth on Schedule
      B attached hereto, the Debtors are the sole owner of the Collateral (except
      for
      non-exclusive licenses granted by any Debtor in the ordinary course of
      business), free and clear of any liens, security interests, encumbrances, rights
      or claims, and are fully authorized to grant the Security Interests. Except
      as
      set forth on Schedule
      C
      attached
      hereto, there is not on file in any governmental or regulatory authority, agency
      or recording office an effective financing statement, security agreement,
      license or transfer or any notice of any of the foregoing (other than those
      that
      will be filed in favor of the Secured Parties pursuant to this Agreement)
      covering or affecting any of the Collateral. Except as set forth on Schedule
      C
      attached hereto and except pursuant to this Agreement, as long as this Agreement
      shall be in effect, the Debtors shall not execute and shall not knowingly permit
      to be on file in any such office or agency any other financing statement or
      other document or instrument (except to the extent filed or recorded in favor
      of
      the Secured Parties pursuant to the terms of this Agreement).

    

    (d) No
      written claim has been received that any Collateral or any Debtor’s use of any
      Collateral violates the rights of any third party. There has been no adverse
      decision to any Debtor’s claim of ownership rights in or exclusive rights to use
      the Collateral in any jurisdiction or to any Debtor’s right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding involving
      said rights pending or, to the best knowledge of any Debtor, threatened before
      any court, judicial body, administrative or regulatory agency, arbitrator or
      other governmental authority.

    

    (e) Each
      Debtor shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule A attached hereto and may not relocate such
      books of account and records or tangible Collateral unless it delivers to the
      Secured Parties at least 30 days prior to such relocation (i) written notice
      of
      such relocation and the new location thereof (which must be within the United
      States) and (ii) evidence that appropriate financing statements under the UCC
      and other necessary documents have been filed and recorded and other steps
      have
      been taken to perfect the Security Interests to create in favor of the Secured
      Parties a valid, perfected and continuing perfected first priority lien in
      the
      Collateral.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f) This
      Agreement creates in favor of the Secured Parties a valid security interest
      in
      the Collateral, subject only to Permitted Liens (as defined in the Debentures)
      securing the payment and performance of the Obligations. Upon making the filings
      described in the immediately following paragraph, all security interests created
      hereunder in any Collateral which may be perfected by filing Uniform Commercial
      Code financing statements shall have been duly perfected. Except for the filing
      of the Uniform Commercial Code financing statements referred to in the
      immediately following paragraph, the recordation of the Intellectual Property
      Security Agreement (as defined in Section 4(p) hereof) with respect to
      copyrights and copyright applications in the United States Copyright Office
      referred to in paragraph (m), the execution and delivery of deposit account
      control agreements satisfying the requirements of Section 9-104(a)(2) of the
      UCC
      with respect to each deposit account of the Debtors, and the delivery of the
      certificates and other instruments provided in Section 3, no action is necessary
      to create, perfect or protect the security interests created hereunder. Without
      limiting the generality of the foregoing, except for the filing of said
      financing statements, the recordation of said Intellectual Property Security
      Agreement, and the execution and delivery of said deposit account control
      agreements, no consent of any third parties and no authorization, approval
      or
      other action by, and no notice to or filing with, any governmental authority
      or
      regulatory body is required for (i) the execution, delivery and performance
      of
      this Agreement, (ii) the creation or perfection of the Security Interests
      created hereunder in the Collateral or (iii) the enforcement of the rights
      of
      the Secured Parties hereunder.

    

    (g) Each
      Debtor hereby authorizes the Secured Parties to file one or more financing
      statements under the UCC, with respect to the Security Interests, with the
      proper filing and recording agencies in any jurisdiction deemed proper by
      it.

    

    (h) The
      execution, delivery and performance of this Agreement by the Debtors does not
      (i) violate any of the provisions of any Organizational Documents of any Debtor
      or any judgment, decree, order or award of any court, governmental body or
      arbitrator or any applicable law, rule or regulation applicable to any Debtor
      or
      (ii) conflict with, or constitute a default (or an event that with notice or
      lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing any Debtor’s debt or otherwise) or other understanding to
      which any Debtor is a party or by which any property or asset of any Debtor
      is
      bound or affected. If any, all required consents (including, without limitation,
      from stockholders or creditors of any Debtor) necessary for any Debtor to enter
      into and perform its obligations hereunder have been obtained.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i) The
      capital stock and other equity interests listed on Schedule H hereto (the
“Pledged
      Securities”)
      represent all of the capital stock and other equity interests of the Guarantors,
      and represent all capital stock and other equity interests owned, directly
      or
      indirectly, by the Company. All of the Pledged Securities are validly issued,
      fully paid and nonassessable, and the Company is the legal and beneficial owner
      of the Pledged Securities, free and clear of any lien, security interest or
      other encumbrance except for the security interests created by this Agreement
      and other Permitted Liens (as defined in the
      Debentures).  

    

     (j) The
      ownership and other equity interests in partnerships and limited liability
      companies (if any) included in the Collateral (the “Pledged
      Interests”)
      by
      their express terms do not provide that they are securities governed by Article
      8 of the UCC and are not held in a securities account or by any financial
      intermediary.

    

    (k) Except
      for Permitted Liens (as defined in the Debentures), each Debtor shall at all
      times maintain the liens and Security Interests provided for hereunder as valid
      and perfected first priority liens and security interests in the Collateral
      in
      favor of the Secured Parties until this Agreement and the Security Interest
      hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby
      agrees to defend the same against the claims of any and all persons and
      entities. Each Debtor shall safeguard and protect all Collateral for the account
      of the Secured Parties. At the request of the Secured Parties, each Debtor
      will
      sign and deliver to the Secured Parties at any time or from time to time one
      or
      more financing statements pursuant to the UCC in form reasonably satisfactory
      to
      the Secured Parties and will pay the cost of filing the same in all public
      offices wherever filing is, or is deemed by the Secured Parties to be, necessary
      or desirable to effect the rights and obligations provided for herein. Without
      limiting the generality of the foregoing, each Debtor shall pay all fees, taxes
      and other amounts necessary to maintain the Collateral and the Security
      Interests hereunder, and each Debtor shall obtain and furnish to the Secured
      Parties from time to time, upon demand, such releases and/or subordinations
      of
      claims and liens which may be required to maintain the priority of the Security
      Interests hereunder.

    

    (l) No
      Debtor
      will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose
      of any of the Collateral (except for non-exclusive licenses granted by a Debtor
      in its ordinary course of business and sales of inventory by a Debtor in its
      ordinary course of business) without the prior written consent of a Majority
      in
      Interest.

    

    (m) Each
      Debtor shall keep and preserve its equipment, inventory and other tangible
      Collateral in good condition, repair and order and shall not operate or locate
      any such Collateral (or cause to be operated or located) in any area excluded
      from insurance coverage.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (n) Each
      Debtor shall maintain with financially sound and reputable insurers, insurance
      with respect to the Collateral, including Collateral hereafter acquired, against
      loss or damage of the kinds and in the amounts customarily insured against
      by
      entities of established reputation having similar properties similarly situated
      and in such amounts as are customarily carried under similar circumstances
      by
      other such entities and otherwise as is prudent for entities engaged in similar
      businesses but in any event sufficient to cover the full replacement cost
      thereof. Each Debtor shall cause each insurance policy issued in connection
      herewith to provide, and the insurer issuing such policy to certify to the
      Secured parties, that (a) the Secured Parties will be named as lender loss
      payee
      and additional insured under each such insurance policy; (b) if such insurance
      be proposed to be cancelled or materially changed for any reason whatsoever,
      such insurer will promptly notify the Secured Parties and such cancellation
      or
      change shall not be effective as to the Secured Parties for at least thirty
      (30)
      days after receipt by the Secured Parties of such notice, unless the effect
      of
      such change is to extend or increase coverage under the policy; and (c) the
      Secured Parties will have the right (but no obligation) at its election to
      remedy any default in the payment of premiums within thirty (30) days of notice
      from the insurer of such default. If no Event of Default (as defined in the
      Debentures) exists and if the proceeds arising out of any claim or series of
      related claims do not exceed $100,000, loss payments in each instance will
      be
      applied by the applicable Debtor to the repair and/or replacement of property
      with respect to which the loss was incurred to the extent reasonably feasible,
      and any loss payments or the balance thereof remaining, to the extent not so
      applied, shall be payable to the applicable Debtor; provided, however, that
      payments received by any Debtor after an Event of Default occurs and is
      continuing or in excess of $100,000 for any occurrence or series of related
      occurrences shall be paid to the Secured Parties and, if received by such
      Debtor, shall be held in trust for the Secured Parties and immediately paid
      over
      to the Secured Parties unless otherwise directed in writing by the Secured
      Parties. Copies of such policies or the related certificates, in each case,
      naming the Secured Parties as lender loss payee and additional insured shall
      be
      delivered to the Secured Parties at least annually and at the time any new
      policy of insurance is issued.

    

    (o) Each
      Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
      Secured Parties promptly, in sufficient detail, of any material adverse change
      in the Collateral, and of the occurrence of any event which would have a
      material adverse effect on the value of the Collateral or on the Secured
      Parties’ security interest therein.

    

    (p) Each
      Debtor shall promptly execute and deliver to the Secured Parties such further
      deeds, mortgages, assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Secured Parties may from time to time request and may in their
      sole discretion deem necessary to perfect, protect or enforce the Secured
      Parties’ security interest in the Collateral including, without limitation, if
      applicable, the execution and delivery of a separate security agreement with
      respect to each Debtor’s Intellectual Property (“Intellectual Property Security
      Agreement”) in which the Secured Parties have been granted a security interest
      hereunder, substantially in a form reasonably acceptable to the Secured Parties,
      which Intellectual Property Security Agreement, other than as stated therein,
      shall be subject to all of the terms and conditions hereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (q) Each
      Debtor shall permit the Secured Parties and their representatives and agents
      to
      inspect the Collateral during normal business hours and upon reasonable prior
      notice, and to make copies of records pertaining to the Collateral as may be
      reasonably requested by the Secured Parties from time to time.

    

    (r) Each
      Debtor shall take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Collateral.

    

    (s) Each
      Debtor shall promptly notify the Secured Parties in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by such
      Debtor that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Parties
      hereunder.

    

    (t) All
      information heretofore, herein or hereafter supplied to the Secured Parties
      by
      or on behalf of any Debtor with respect to the Collateral is accurate and
      complete in all material respects as of the date furnished.

    

    (u) The
      Debtors shall at all times preserve and keep in full force and effect their
      respective valid existence and good standing and any rights and franchises
      material to its business.

    

    (v) No
      Debtor
      will change its name, type of organization, jurisdiction of organization,
      organizational identification number (if it has one), legal or corporate
      structure, or identity, or add any new fictitious name unless it provides at
      least 30 days prior written notice to the Secured Parties of such change and,
      at
      the time of such written notification, such Debtor provides any financing
      statements or fixture filings necessary to perfect and continue the perfection
      of the Security Interests granted and evidenced by this Agreement.

    

    (w) Except
      in
      the ordinary course of business, no Debtor may consign any of its inventory
      or
      sell any of its inventory on bill and hold, sale or return, sale on approval,
      or
      other conditional terms of sale without the consent of the Secured Parties,
      which shall not be unreasonably withheld.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (x) No
      Debtor
      may relocate its chief executive office to a new location without providing
      30
      days prior written notification thereof to the Secured Parties and so long
      as,
      at the time of such written notification, such Debtor provides any financing
      statements or fixture filings necessary to perfect and continue the perfection
      of the Security Interests granted and evidenced by this Agreement.

    

    (y) Each
      Debtor was organized and remains organized solely under the laws of the state
      set forth next to such Debtor’s name in Schedule
      D
      attached
      hereto, which Schedule
      D
      sets
      forth each Debtor’s organizational identification number or, if any Debtor does
      not have one, states that one does not exist.

    

    (z) (i)
      The
      actual name of each Debtor is the name set forth in Schedule
      D
      attached
      hereto; (ii) no Debtor has any trade names except as set forth on Schedule
      E
      attached
      hereto; (iii) no Debtor has used any name other than that stated in the preamble
      hereto or as set forth on Schedule
      E
      for the
      preceding five years; and (iv) no entity has merged into any Debtor or been
      acquired by any Debtor within the past five years except as set forth on
Schedule
      E.

    

    (aa) At
      any
      time and from time to time that any Collateral consists of instruments,
      certificated securities or other items that require or permit possession by
      the
      secured party to perfect the security interest created hereby, the applicable
      Debtor shall deliver such Collateral to the Secured Parties.

    

    (bb) Each
      Debtor, in its capacity as issuer, hereby agrees to comply with any and all
      orders and instructions of the Secured Parties regarding the Pledged Interests
      consistent with the terms of this Agreement without the further consent of
      any
      Debtor as contemplated by Section 8-106 (or any successor section) of the UCC.
      Further, each Debtor agrees that it shall not enter into a similar agreement
      (or
      one that would confer “control” within the meaning of Article 8 of the UCC) with
      any other person or entity.

     

    (cc) Each
      Debtor shall cause all tangible chattel paper constituting Collateral to be
      delivered to the Secured Parties, or, if such delivery is not possible, then
      to
      cause such tangible chattel paper to contain a legend noting that it is subject
      to the security interest created by this Agreement. To the extent that any
      Collateral consists of electronic chattel paper, the applicable Debtor shall
      cause the underlying chattel paper to be “marked” within the meaning of Section
      9-105 of the UCC (or successor section thereto).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (dd) If
      there
      is any investment property or deposit account included as Collateral that can
      be
      perfected by “control” through an account control agreement, the applicable
      Debtor shall cause such an account control agreement, in form and substance
      in
      each case satisfactory to the Secured Parties, to be entered into and delivered
      to the Secured Parties.

    

    (ee) To
      the
      extent that any Collateral consists of letter-of-credit rights, the applicable
      Debtor shall cause the issuer of each underlying letter of credit to consent
      to
      an assignment of the proceeds thereof to the Secured Party.

    

    (ff) To
      the
      extent that any Collateral is in the possession of any third party, the
      applicable Debtor shall join with the Secured Parties in notifying such third
      party of the Secured Parties’ security interest in such Collateral and shall use
      its best efforts to obtain an acknowledgement and agreement from such third
      party with respect to the Collateral, in form and substance reasonably
      satisfactory to the Secured Parties.

    

    (gg) If
      any
      Debtor shall at any time hold or acquire a commercial tort claim, such Debtor
      shall promptly notify the Secured Parties in a writing signed by such Debtor
      of
      the particulars thereof and grant to the Secured Parties in such writing a
      security interest therein and in the proceeds thereof, all upon the terms of
      this Agreement, with such writing to be in form and substance satisfactory
      to
      the Secured Parties.

    

    (hh) Each
      Debtor shall immediately provide written notice to the Secured Parties of any
      and all accounts which arise out of contracts with any governmental authority
      and, to the extent necessary to perfect or continue the perfected status of
      the
      Security Interests in such accounts and proceeds thereof, shall execute and
      deliver to the Secured Parties an assignment of claims for such accounts and
      cooperate with the Secured Parties in taking any other steps required, in its
      judgment, under the Federal Assignment of Claims Act or any similar federal,
      state or local statute or rule to perfect or continue the perfected status
      of
      the Security Interests in such accounts and proceeds thereof.

    

    (
      ii
      ) Each
      Debtor shall cause each subsidiary of such Debtor to immediately become a party
      hereto (an “Additional Debtor”), by executing and delivering an Additional
      Debtor Joinder in substantially the form of Annex A attached hereto and comply
      with the provisions hereof applicable to the Debtors. Concurrent therewith,
      the
      Additional Debtor shall deliver replacement schedules for, or supplements to
      all
      other Schedules to (or referred to in) this Agreement, as applicable, which
      replacement schedules shall supersede, or supplements shall modify, the
      Schedules then in effect. The Additional Debtor shall also deliver such opinions
      of counsel, authorizing resolutions, good standing certificates, incumbency
      certificates, organizational documents, financing statements and other
      information and documentation as the Secured Parties may reasonably request.
      Upon delivery of the foregoing to the Secured Parties, the Additional Debtor
      shall be and become a party to this Agreement with the same rights and
      obligations as the Debtors, for all purposes hereof as fully and to the same
      extent as if it were an original signatory hereto and shall be deemed to have
      made the representations, warranties and covenants set forth herein as of the
      date of execution and delivery of such Additional Debtor Joinder, and all
      references herein to the “Debtors” shall be deemed to include each Additional
      Debtor.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (
      jj) Each
      Debtor shall vote the Pledged Securities to comply with the covenants and
      agreements set forth herein and in the Debentures.

    

    (kk) Each
      Debtor shall register the pledge of the applicable Pledged Securities on the
      books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
      to register the pledge of the applicable Pledged Securities in the name of
      the
      Secured Parties on the books of such issuer. Further, except with respect to
      certificated securities delivered to the Secured Parties, the applicable Debtor
      shall deliver to the Secured Parties an acknowledgement of pledge (which, where
      appropriate, shall comply with the requirements of the relevant UCC with respect
      to perfection by registration) signed by the issuer of the applicable Pledged
      Securities, which acknowledgement shall confirm that: (a) it has registered
      the
      pledge on its books and records; and (b) at any time directed by the Secured
      Parties during the continuation of an Event of Default, such issuer will
      transfer the record ownership of such Pledged Securities into the name of any
      designee of the Secured Parties, will take such steps as may be necessary to
      effect the transfer, and will comply with all other instructions of the Secured
      Parties regarding such Pledged Securities without the further consent of the
      applicable Debtor.

    

    (ll) In
      the
      event that, upon an occurrence of an Event of Default, the Secured Parties
      shall
      sell all or any of the Pledged Securities to another party or parties (herein
      called the “Transferee”) or shall purchase or retain all or any of the Pledged
      Securities, each Debtor shall, to the extent applicable: (i) deliver to Secured
      Parties or the Transferee, as the case may be, the articles of incorporation,
      bylaws, minute books, stock certificate books, corporate seals, deeds, leases,
      indentures, agreements, evidences of indebtedness, books of account, financial
      records and all other Organizational Documents and records of the Debtors and
      their direct and indirect subsidiaries; (ii) use its best efforts to obtain
      resignations of the persons then serving as officers and directors of the
      Debtors and their direct and indirect subsidiaries, if so requested; and (iii)
      use its best efforts to obtain any approvals that are required by any
      governmental or regulatory body in order to permit the sale of the Pledged
      Securities to the Transferee or the purchase or retention of the Pledged
      Securities by the Secured Parties and allow the Transferee or the Secured
      Parties to continue the business of the Debtors and their direct and indirect
      subsidiaries.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (mm) Without
      limiting the generality of the other obligations of the Debtors hereunder,
      each
      Debtor shall promptly (i) cause to be registered at the United States Copyright
      Office all of its material copyrights, (ii) cause the security interest
      contemplated hereby with respect to all Intellectual Property registered at
      the
      United States Copyright Office or United States Patent and Trademark Office
      to
      be duly recorded at the applicable office, and (iii) give the Secured Parties
      notice whenever it acquires (whether absolutely or by license) or creates any
      additional material Intellectual Property.

    

    (nn) Each
      Debtor will from time to time, at the joint and several expense of the Debtors,
      promptly execute and deliver all such further instruments and documents, and
      take all such further action as may be necessary or desirable, or as the Secured
      Parties may reasonably request, in order to perfect and protect any security
      interest granted or purported to be granted hereby or to enable the Secured
      Parties to exercise and enforce their rights and remedies hereunder and with
      respect to any Collateral or to otherwise carry out the purposes of this
      Agreement.

    

    (oo) Schedule
      F
      attached
      hereto lists all of the patents, patent applications, trademarks, trademark
      applications, registered copyrights, and domain names owned by any of the
      Debtors as of the date hereof. Schedule F lists all material licenses in favor
      of any Debtor for the use of any patents, trademarks, copyrights and domain
      names as of the date hereof. All material patents and trademarks of the Debtors
      have been duly recorded at the United States Patent and Trademark Office and
      all
      material copyrights of the Debtors have been duly recorded at the United States
      Copyright Office.

    

    (pp) Except
      as
      set forth on Schedule
      G
      attached
      hereto, none of the account debtors or other persons or entities obligated
      on
      any of the Collateral is a governmental authority covered by the Federal
      Assignment of Claims Act or any similar federal, state or local statute or
      rule
      in respect of such Collateral.

    

    5. Effect
      of Pledge on Certain Rights. If
      any of
      the Collateral subject to this Agreement consists of nonvoting equity or
      ownership interests (regardless of class, designation, preference or rights)
      that may be converted into voting equity or ownership interests upon the
      occurrence of certain events (including, without limitation, upon the transfer
      of all or any of the other stock or assets of the issuer), it is agreed that
      the
      pledge of such equity or ownership interests pursuant to this Agreement or
      the
      enforcement of any of the Secured Party’s rights hereunder shall not be deemed
      to be the type of event which would trigger such conversion rights
      notwithstanding any provisions in the Organizational Documents or agreements
      to
      which any Debtor is subject or to which any Debtor is party.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6. Defaults.
      The
      following events shall be “Events
      of Default”:

    

    (a) The
      occurrence of an Event of Default (as defined in the Debentures) under the
      Debentures;

    

    (b) Any
      representation or warranty of any Debtor in this Agreement shall prove to have
      been incorrect in any material respect when made;

    

    (c) The
      failure by any Debtor to observe or perform any of its obligations hereunder
      for
      ten (10) days after delivery to such Debtor of notice of such failure by or
      on
      behalf of a Secured; or

    

    (d) If
      any
      provision of this Agreement shall at any time for any reason be declared to
      be
      null and void, or the validity or enforceability thereof shall be contested
      by
      any Debtor, or a proceeding shall be commenced by any Debtor, or by any
      governmental authority having jurisdiction over any Debtor, seeking to establish
      the invalidity or unenforceability thereof, or any Debtor shall deny that any
      Debtor has any liability or obligation purported to be created under this
      Agreement.

    

    7. Duty
      To Hold In Trust.

    

    (a) Upon
      the
      occurrence of any Event of Default and at any time thereafter, each Debtor
      shall, upon receipt of any revenue, income , dividend, interest or other sums
      subject to the Security Interests, whether payable pursuant to the Debentures
      or
      otherwise, or of any check, draft, note, trade acceptance or other instrument
      evidencing an obligation to pay any such sum, hold the same in trust for the
      Secured Parties and shall forthwith endorse and transfer any such sums or
      instruments, or both, to the Secured Parties, pro-rata in proportion to their
      respective then-currently outstanding Principal Amount of Debentures for
      application to the satisfaction of the Obligations (and if any Debenture is
      not
      outstanding, pro-rata in proportion to the initial purchases of the remaining
      Debentures).

    

    (b) If
      any
      Debtor shall become entitled to receive or shall receive any securities or
      other
      property (including, without limitation, shares of Pledged Securities or
      instruments representing Pledged Securities acquired after the date hereof,
      or
      any options, warrants, rights or other similar property or certificates
      representing a dividend, or any distribution in connection with any
      recapitalization, reclassification or increase or reduction of capital, or
      issued in connection with any reorganization of such Debtor or any of its direct
      or indirect subsidiaries) in respect of the Pledged Securities (whether as
      an
      addition to, in substitution of, or in exchange for, such Pledged Securities
      or
      otherwise), such Debtor agrees to (i) accept the same as the agent of the
      Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
      of
      the Secured Parties; and (iii) to deliver any and all certificates or
      instruments evidencing the same to the Secured Parties on or before the close
      of
      business on the fifth business day following the receipt thereof by such Debtor,
      in the exact form received together with the Necessary Endorsements, to be
      held
      by Secured Parties subject to the terms of this Agreement as
      Collateral.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8. Rights
      and Remedies Upon Default.

    

    (a) Upon
      the
      occurrence of any Event of Default and at any time thereafter, the Secured
      Parties, acting through the Secured Parties, shall have the right to exercise
      all of the remedies conferred hereunder and under the Debentures, and the
      Secured Parties shall have all the rights and remedies of a secured party under
      the UCC. Without limitation, the Secured Parties, shall have the following
      rights and powers:

    

    (i) The
      Secured Parties shall have the right to take possession of the Collateral and,
      for that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove the
      same, and each Debtor shall assemble the Collateral and make it available to
      the
      Secured Parties at places which the Secured Parties shall reasonably select,
      whether at such Debtor's premises or elsewhere, and make available to the
      Secured Parties, without rent, all of such Debtor’s respective premises and
      facilities for the purpose of the Secured Parties taking possession of, removing
      or putting the Collateral in saleable or disposable form.

    

    (ii) Upon
      notice to the Debtors by the Secured Parties, all rights of each Debtor to
      exercise the voting and other consensual rights which it would otherwise be
      entitled to exercise and all rights of each Debtor to receive the dividends
      and
      interest which it would otherwise be authorized to receive and retain, shall
      cease. Upon such notice, the Secured Parties shall have the right to receive
      any
      interest, cash dividends or other payments on the Collateral and, at the option
      of the Secured Parties, to exercise in such Secured Party’s discretion all
      voting rights pertaining thereto. Without limiting the generality of the
      foregoing, the Secured Parties shall have the right (but not the obligation)
      to
      exercise all rights with respect to the Collateral as it were the sole and
      absolute owner thereof, including, without limitation, to vote and/or to
      exchange, at its sole discretion, any or all of the Collateral in connection
      with a merger, reorganization, consolidation, recapitalization or other
      readjustment concerning or involving the Collateral or any Debtor or any of
      its
      direct or indirect subsidiaries.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iii) The
      Secured Parties shall have the right to operate the business of each Debtor
      using the Collateral and shall have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the Collateral, at public
      or
      private sale or otherwise, either with or without special conditions or
      stipulations, for cash or on credit or for future delivery, in such parcel
      or
      parcels and at such time or times and at such place or places, and upon such
      terms and conditions as the Secured Parties may deem commercially reasonable,
      all without (except as shall be required by applicable statute and cannot be
      waived) advertisement or demand upon or notice to any Debtor or right of
      redemption of a Debtor, which are hereby expressly waived. Upon each such sale,
      lease, assignment or other transfer of Collateral, the Secured Parties, may,
      unless prohibited by applicable law which cannot be waived, purchase all or
      any
      part of the Collateral being sold, free from and discharged of all trusts,
      claims, right of redemption and equities of any Debtor, which are hereby waived
      and released.

    

    (iv) The
      Secured Parties shall have the right (but not the obligation) to notify any
      account debtors and any obligors under instruments or accounts to make payments
      directly to the Secured Parties, and to enforce the Debtors’ rights against such
      account debtors and obligors.

    

    (v) The
      Secured Parties, may (but is not obligated to) direct any financial intermediary
      or any other person or entity holding any investment property to transfer the
      same to the Secured Parties, or its designee.

    

    (vi) The
      Secured Parties may (but is not obligated to) transfer any or all Intellectual
      Property registered in the name of any Debtor at the United States Patent and
      Trademark Office and/or Copyright Office into the name of the Secured Parties
      or
      any designee or any purchaser of any Collateral.

    

    (b) The
      Secured Parties shall comply with any applicable law in connection with a
      disposition of Collateral and such compliance will not be considered adversely
      to affect the commercial reasonableness of any sale of the Collateral. The
      Secured Parties may sell the Collateral without giving any warranties and may
      specifically disclaim such warranties. If the Secured Parties sell any of the
      Collateral on credit, the Debtors will only be credited with payments actually
      made by the purchaser. In addition, each Debtor waives any and all rights that
      it may have to a judicial hearing in advance of the enforcement of any of the
      Secured Parties’ rights and remedies hereunder, including, without limitation,
      its right following an Event of Default to take immediate possession of the
      Collateral and to exercise its rights and remedies with respect
      thereto.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) For
      the
      purpose of enabling the Secured Parties to further exercise rights and remedies
      under this Section 8 or elsewhere provided by agreement or applicable law,
      each
      Debtor hereby grants to the Secured Parties, for the benefit of the Secured
      Parties, an irrevocable, nonexclusive license (exercisable without payment
      of
      royalty or other compensation to such Debtor) to use, license or sublicense
      following an Event of Default, any Intellectual Property now owned or hereafter
      acquired by such Debtor, 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 software and programs used for the
      compilation or printout thereof.

    

    9. Applications
      of Proceeds.
      The
      proceeds of any such sale, lease or other disposition of the Collateral
      hereunder or from payments made on account of any insurance policy insuring
      any
      portion of the Collateral shall be applied first, to the expenses of retaking,
      holding, storing, processing and preparing for sale, selling, and the like
      (including, without limitation, any taxes, fees and other costs incurred in
      connection therewith) of the Collateral, to the reasonable attorneys’ fees in
      enforcing the Secured Parties’ rights hereunder and in connection with
      collecting, storing and disposing of the Collateral, and then to satisfaction
      of
      the Obligations pro rata among the Secured Parties (based on then-outstanding
      Principal Amounts of Debentures at the time of any such determination), and
      to
      the payment of any other amounts required by applicable law, after which the
      Secured Parties shall pay to the applicable Debtor any surplus proceeds. If,
      upon the sale, license or other disposition of the Collateral, the proceeds
      thereof are insufficient to pay all amounts to which the Secured Parties are
      legally entitled, the Debtors will be liable for the deficiency, together with
      interest thereon, at the rate of 24% per annum or the lesser amount permitted
      by
      applicable law (the “Default
      Rate”),
      and
      the reasonable fees of any attorneys employed by the Secured Parties to collect
      such deficiency. To the extent permitted by applicable law, each Debtor waives
      all claims, damages and demands against the Secured Parties arising out of
      the
      repossession, removal, retention or sale of the Collateral, unless due solely
      to
      the gross negligence or willful misconduct of the Secured Parties as determined
      by a final judgment (not subject to further appeal) of a court of competent
      jurisdiction.

    

    10. Securities
      Law Provision.  Each
      Debtor recognizes that the Secured Parties may be limited in its ability to
      effect a sale to the public of all or part of the Pledged Securities by reason
      of certain prohibitions in the Securities Act of 1933, as amended, or other
      federal or state securities laws (collectively, the “Securities Laws”), and may
      be compelled to resort to one or more sales to a restricted group of purchasers
      who may be required to agree to acquire the Pledged Securities for their own
      account, for investment and not with a view to the distribution or resale
      thereof. Each Debtor agrees that sales so made may be at prices and on terms
      less favorable than if the Pledged Securities were sold to the public, and
      that
      the Secured Parties have no obligation to delay the sale of any Pledged
      Securities for the period of time necessary to register the Pledged Securities
      for sale to the public under the Securities Laws. Each Debtor shall cooperate
      with the Secured Parties in its attempt to satisfy any requirements under the
      Securities Laws (including, without limitation, registration thereunder if
      requested by Secured Parties) applicable to the sale of the Pledged Securities
      by the Secured Parties.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11. Costs
      and Expenses.
      Each
      Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
      incurred in connection with any filing required hereunder, including without
      limitation, any financing statements pursuant to the UCC, continuation
      statements, partial releases and/or termination statements related thereto
      or
      any expenses of any searches reasonably required by the Secured Parties. The
      Debtors shall also pay all other claims and charges which in the reasonable
      opinion of the Secured Parties is reasonably likely to prejudice, imperil or
      otherwise affect the Collateral or the Security Interests therein. The Debtors
      will also, upon demand, pay to the Secured Parties the amount of any and all
      reasonable expenses, including the reasonable fees and expenses of its counsel
      and of any experts and agents, which the Secured Parties, may incur in
      connection with the creation, perfection, protection, satisfaction, foreclosure,
      collection or enforcement of the Security Interest and the preparation,
      administration, continuance, amendment or enforcement of this Agreement and
      pay
      to the Secured Parties the amount of any and all reasonable expenses, including
      the reasonable fees and expenses of its counsel and of any experts and agents,
      which the Secured Parties may incur in connection with (i) the enforcement
      of
      this Agreement, (ii) the custody or preservation of, or the sale of, collection
      from, or other realization upon, any of the Collateral, or (iii) the exercise
      or
      enforcement of any of the rights of the Secured Parties under the Debentures.
      Until so paid, any fees payable hereunder shall be added to the Principal Amount
      of the Debentures and shall bear interest at the Default Rate.

    

    12. Responsibility
      for Collateral.
      The
      Debtors assume all liabilities and responsibility in connection with all
      Collateral, and the Obligations shall in no way be affected or diminished by
      reason of the loss, destruction, damage or theft of any of the Collateral or
      its
      unavailability for any reason. Without limiting the generality of the foregoing,
      (a) no Secured Party (i) has any duty (either before or after an Event of
      Default) to collect any amounts in respect of the Collateral or to preserve
      any
      rights relating to the Collateral, or (ii) has any obligation to clean-up or
      otherwise prepare the Collateral for sale, and (b) each Debtor shall remain
      obligated and liable under each contract or agreement included in the Collateral
      to be observed or performed by such Debtor thereunder. No Secured Party shall
      have any obligation or liability under any such contract or agreement by reason
      of or arising out of this Agreement or the receipt by any Secured Party of
      any
      payment relating to any of the Collateral, nor shall any Secured Party be
      obligated in any manner to perform any of the obligations of any Debtor under
      or
      pursuant to any such contract or agreement, to make inquiry as to the nature
      or
      sufficiency of any payment received by any Secured Party in respect of the
      Collateral or as to the sufficiency of any performance by any party under any
      such contract or agreement, to present or file any claim, to take any action
      to
      enforce any performance or to collect the payment of any amounts which may
      have
      been assigned to the Secured Parties or to which any Secured Party may be
      entitled at any time or times.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    13. Security
      Interests Absolute.
      All
      rights of the Secured Parties and all obligations of the Debtors hereunder,
      shall be absolute and unconditional, irrespective of: (a) any lack of validity
      or enforceability of this Agreement, the Debentures or any agreement entered
      into in connection with the foregoing, or any portion hereof or thereof; (b)
      any
      change in the time, manner or place of payment or performance of, or in any
      other term of, all or any of the Obligations, or any other amendment or waiver
      of or any consent to any departure from the Debentures or any other agreement
      entered into in connection with the foregoing; (c) any exchange, release or
      nonperfection of any of the Collateral, or any release or amendment or waiver
      of
      or consent to departure from any other collateral for, or any guarantee, or
      any
      other security, for all or any of the Obligations; (d) any action by the Secured
      Parties to obtain, adjust, settle and cancel in its sole discretion any
      insurance claims or matters made or arising in connection with the Collateral;
      or (e) any other circumstance which might otherwise constitute any legal or
      equitable defense available to a Debtor, or a discharge of all or any part
      of
      the Security Interests granted hereby. Until the Obligations shall have been
      paid and performed in full, the rights of the Secured Parties shall continue
      even if the Obligations are barred for any reason, including, without
      limitation, the running of the statute of limitations or bankruptcy. Each Debtor
      expressly waives presentment, protest, notice of protest, demand, notice of
      nonpayment and demand for performance. In the event that at any time any
      transfer of any Collateral or any payment received by the Secured Parties
      hereunder shall be deemed by final order of a court of competent jurisdiction
      to
      have been a voidable preference or fraudulent conveyance under the bankruptcy
      or
      insolvency laws of the United States, or shall be deemed to be otherwise due
      to
      any party other than the Secured Parties, then, in any such event, each Debtor’s
      obligations hereunder shall survive cancellation of this Agreement, and shall
      not be discharged or satisfied by any prior payment thereof and/or cancellation
      of this Agreement, but shall remain a valid and binding obligation enforceable
      in accordance with the terms and provisions hereof. Each Debtor waives all
      right
      to require the Secured Parties to proceed against any other person or entity
      or
      to apply any Collateral which the Secured Parties may hold at any time, or
      to
      marshal assets, or to pursue any other remedy. Each Debtor waives any defense
      arising by reason of the application of the statute of limitations to any
      obligation secured hereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14. Term
      of Agreement.
      This
      Agreement and the Security Interests shall terminate on the date on which all
      payments under the Debentures have been indefeasibly paid in full or otherwise
      satisfied in full and all other Obligations have been paid, discharged or
      satisfied in full; provided, however, that all indemnities of the Debtors
      contained in this Agreement (including, without limitation, Annex B hereto)
      shall survive and remain operative and in full force and effect regardless
      of
      the termination of this Agreement. Upon the termination of this Agreement,
      the
      Secured Parties shall immediately return to the Company any Collateral that
      has
      been delivered to the Secured Parties pursuant to this Agreement.

    

    15. Further
      Assurances.
      On a
      continuing basis, each Debtor will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, with the proper filing and recording agencies in
      any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule C attached hereto, all such instruments, and take all such action
      as
      may reasonably be deemed necessary or advisable, or as reasonably requested by
      the Secured Party, to perfect the Security Interests granted hereunder and
      otherwise to carry out the intent and purposes of this Agreement, or for
      assuring and confirming to the Secured Party the grant or perfection of a
      perfected security interest in all the Collateral under the UCC.

    

    16. Notices.
      All
      notices, requests, demands and other communications hereunder shall be subject
      to the notice provision of the Purchase Agreement (as such term is defined
      in
      the Debentures).

    

    17. Other
      Security.
      To the
      extent that the Obligations are now or hereafter secured by property other
      than the Collateral or by the guarantee, endorsement or property of any other
      person, firm, corporation or other entity, then the Secured Party shall have
      the
      right, in its sole discretion, to pursue, relinquish, subordinate, modify or
      take any other action with respect thereto, without in any way modifying or
      affecting any of the Secured Party’ rights and remedies hereunder.

    

    18. Miscellaneous.

    

    (a) No
      course
      of dealing between the Debtors and the Secured Parties, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Parties,
      any
      right, power or privilege hereunder or under the Debentures shall operate as
      a
      waiver thereof; nor shall any single or partial exercise of any right, power
      or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) All
      of
      the rights and remedies of the Secured Parties with respect to the Collateral,
      whether established hereby or by the Debentures or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

    (c) This
      Agreement, together with the exhibits and schedules hereto, contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior agreements and understandings, oral or written, with respect
      to such matters, which the parties acknowledge have been merged into this
      Agreement and the exhibits and schedules hereto. No provision of this Agreement
      may be waived, modified, supplemented or amended except in a written instrument
      signed, in the case of an amendment, by the Debtors and the Secured Parties
      or,
      in the case of a waiver, by the party against whom enforcement of any such
      waived provision is sought. 

    

    (d) If
      any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (e) No
      waiver
      of any default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder in any manner impair the exercise of any such
      right.

    

    (f) This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company and the Guarantors may
      not
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of each Secured Party (other than by merger). Any Secured Party
      may assign any or all of its rights under this Agreement to any Person (as
      defined in the Purchase Agreement) to whom such Secured Party assigns or
      transfers any Obligations, provided such transferee agrees in writing to be
      bound, with respect to the transferred Obligations, by the provisions of this
      Agreement that apply to the “Secured Parties.”

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

    

    (h)
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Illinois, without regard to the
      principles of conflicts of law thereof. Each Debtor agrees that all proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and the Debentures (whether brought against
      a
      party hereto or its respective affiliates, directors, officers, shareholders,
      partners, members, employees or agents) shall be commenced exclusively in the
      state and federal courts sitting in the City of Chicago. Each Debtor hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of Chicago for the adjudication of any dispute
      hereunder or in connection herewith or with any transaction contemplated hereby
      or discussed herein, and hereby irrevocably waives, and agrees not to assert
      in
      any proceeding, any claim that it is not personally subject to the jurisdiction
      of any such court, that such proceeding is improper. Each party hereto hereby
      irrevocably waives personal service of process and consents to process being
      served in any such proceeding by mailing a copy thereof via registered or
      certified mail or overnight delivery (with evidence of delivery) to such party
      at the address in effect for notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing contained herein shall be deemed to limit in any way any right
      to serve process in any manner permitted by law. Each party hereto hereby
      irrevocably waives, to the fullest extent permitted by applicable law, any
      and
      all right to trial by jury in any legal proceeding arising out of or relating
      to
      this Agreement or the transactions contemplated hereby. If any party shall
      commence a proceeding to enforce any provisions of this Agreement, then the
      prevailing party in such proceeding shall be reimbursed by the other party
      for
      its reasonable attorney’s fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such proceeding.

    

    (i) This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

    

    (j) All
      Debtors shall jointly and severally be liable for the obligations of each Debtor
      to the Secured Parties hereunder.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (k) Each
      Debtor shall indemnify, reimburse and hold harmless the Secured Parties and
      their respective partners, members, shareholders, officers, directors, employees
      and agents (and any other persons with other titles that have similar functions)
      (collectively,
      “Indemnitees”) from and against any and all losses, claims, liabilities,
      damages, penalties, suits, costs and expenses, of any kind or nature, (including
      fees relating to the cost of investigating and defending any of the foregoing)
      imposed on, incurred by or asserted against such Indemnitee in any way related
      to or arising from or alleged to arise from this Agreement or the Collateral,
      except any such losses, claims, liabilities, damages, penalties, suits, costs
      and expenses which result from the gross negligence or willful misconduct of
      the
      Indemnitee as determined by a final, nonappealable decision of a court of
      competent jurisdiction. This indemnification provision is in addition to, and
      not in limitation of, any other indemnification provision in the Debentures,
      the
      Purchase Agreement (as such term is defined in the Debentures) or any other
      agreement, instrument or other document executed or delivered in connection
      herewith or therewith.

    

    (l) Nothing
      in this Agreement shall be construed to subject any Secured Party to liability
      as a partner in any Debtor or any of its direct or indirect subsidiaries that
      is
      a partnership or as a member in any Debtor or any of its direct or indirect
      subsidiaries that is a limited liability company, nor any Secured Party be
      deemed to have assumed any obligations under any partnership agreement or
      limited liability company agreement, as applicable, of any such Debtor or any
      if
      its direct or indirect subsidiaries or otherwise, unless and until any such
      Secured Party exercises its right to be substituted for such Debtor as a partner
      or member, as applicable, pursuant hereto.

    

    (m) To
      the
      extent that the grant of the security interest in the Collateral and the
      enforcement of the terms hereof require the consent, approval or action of
      any
      partner or member, as applicable, of any Debtor or any direct or indirect
      subsidiary of any Debtor or compliance with any provisions of any of the
      Organizational Documents, the Debtors hereby grant such consent and approval
      and
      waive any such noncompliance with the terms of said documents.

    

    [SIGNATURE
      PAGES FOLLOW]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be
      duly executed by their respective authorized signatories as of the date first
      indicated above.

     

    
      	
              ENABLE
                HOLDINGS, INC.

            
	 	 
	
              By:

            	  

	
              Name:
                Jeffrey
                D. Hoffman

            
	
              Title:
                CEO

            

    

    

      
        	
                UBID,
                  INC.

              	 	
                REDTAG
                  LIVE, INC.

              
	 	   	 	 	 
	
                By:

              	  
	 	
                By:

              	  

	
                Name:

              	 	
                Name:

              
	
                Title:

              	 	
                Title:

              
	 	 	 	 	 
	
                DIBU
                  TRADING CORP.

              	 	
                REDTAG,
                  INC.

              
	 	 	 	 	 
	
                By:

              	  
	 	
                By:

              	  

	
                Name:

              	 	
                Name:

              
	
                Title:

              	 	
                Title:

              
	 	 	 	 	 
	
                ENABLE
                  PAYMENT SYSTEMS, INC.

              	 	
                USAAS,
                  INC.

              
	 	 	 	 	 
	
                By:

              	  
	 	
                By:

              	  

	
                Name:

              	 	
                Name:

              
	
                Title:

              	 	
                Title:

              

      

    

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    [SIGNATURE
      PAGE OF HOLDERS TO ENABLE SECURITY AGREEMENT]

    

    Name
      of
      Investing Entity: __________________________

    

    Signature
      of Authorized Signatory of Investing entity:
      _________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      A

    to

    SECURITY

    AGREEMENT

    

    FORM
      OF ADDITIONAL DEBTOR JOINDER

     

    Security
      Agreement dated as of October 16, 2008 made by Enable
      Holdings, Inc., a Delaware corporation
      (the
“Company”)
      and
      its subsidiaries party thereto from time to time, as Debtors to and in favor
      of
      the Secured Party identified therein (the “Security
      Agreement”)

    

    Reference
      is made to the Security Agreement as defined above; capitalized terms used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Security Agreement.

    

    The
      undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
      to the Secured Parties referred to above, the undersigned shall (a) be an
      Additional Debtor under the Security Agreement, (b) have all the rights and
      obligations of the Debtors under the Security Agreement as fully and to the
      same
      extent as if the undersigned was an original signatory thereto and (c) be deemed
      to have made the representations and warranties set forth therein as of the
      date
      of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING
      THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE
      SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH
      IN
      THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL
      PROVISIONS SET FORTH THEREIN.

    

    Attached
      hereto are supplemental and/or replacement Schedules to the Security Agreement,
      as applicable.

    

    An
      executed copy of this Joinder shall be delivered to the Secured Parties, and
      the
      Secured Parties may rely on the matters set forth herein on or after the date
      hereof. This Joinder shall not be modified, amended or terminated without the
      prior written consent of the Secured Parties.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

               IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned.

    

    [Name
      of
      Additional Debtor]

    

    By:

    Name:

    Title:

    

    Address:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     EXHIBIT
      A

    to

    SECURITY

    AGREEMENT

    

    INTELLECTUAL
      PROPERTY SECURITY AGREEMENT

    

    THIS
      INTELLECTUAL PROPERTY SECURITY AGREEMENT is dated as of October 16, 2008 between
      Enable Holdings, Inc. a Delaware corporation (the “Company”),
      all
      of the Subsidiaries of the Company (such subsidiaries, the “Guarantors”
and
      together with the Company, the “Debtors”),
      and
      the holders of the Company’s 18% Senior Secured Debentures due January 16, 2009
      and issued on October 16, 2008 in the original aggregate Principal Amount of
      up
      to $4,000,000 (collectively, the “Debentures”),
      their
      endorsees, transferees and assigns (collectively, the “Secured
      Parties”).

    

    RECITALS

    

    WHEREAS,
      the Secured Parties have agreed to purchase the
      from
      the Company its Debentures
      pursuant
      to that certain Securities
      Purchase Agreement dated as of October 16, 2008 between the Company and the
      Secured Parties signatory thereto (the “Purchase
      Agreement”),
      but
      only upon the condition, among others, that the Debtors shall grant to the
      Secured Parties a security interest in certain Intellectual Property including
      copyrights, trademarks and patents to secure the obligations of the Debtors
      under the Debentures. Capitalized terms used herein and not otherwise defined
      shall have the meaning ascribed to them in that certain Security Agreement
      dated
      as of October 16, 2008 among the Company, the Guarantors and the Secured Parties
      (the “Security
      Agreement”)

    

    NOW,
      THEREFORE, for good and valuable consideration, receipt of which is hereby
      acknowledged, and intending to be legally bound, as collateral security for
      the
      prompt and complete payment when due of its obligations under the Debentures,
      Grantor hereby represents, warrants, covenants and agrees as
      follows:

    

    AGREEMENT

    

    1. To
      secure
      its obligations under the Debentures, the Company and each Debtor grants and
      pledges to the Secured Parties a security interest in all of the right, title
      and interest in, to and under its current and future Copyrights, Patents and
      Trademarks (including without limitation those copyright, patent and trademark
      registrations and applications listed on Schedules A, B and C hereto), and
      including without limitation all proceed thereof (such as, by way of example
      but
      not by way of limitation, license royalties and proceeds of infringement suits),
      the right to sue for past, present and future infringements, all rights
      corresponding thereto throughout the world and all re-issues, divisions
      continuations, renewals, extensions and continuations-in-part
      thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2. This
      security interest is granted in conjunction with the security interest granted
      to the Secured Party under the Security Agreement dated as of the date hereof.
      The rights and remedies of the Secured Party with respect to the security
      interest granted hereby are in addition to those set forth in the Debenture,
      the
      Security Agreement and the other Transaction Documents, and those which are
      now
      or hereafter available to the Secured Party as a matter of law or equity. Each
      right, power and remedy of the Secured Party provided for herein or in the
      Debenture or any of the Transaction Documents, or now or hereafter existing
      at
      law or in equity shall be cumulative and concurrent and shall be in addition
      to
      every right, power or remedy provided for herein and the exercise by the Secured
      Party of any one or more of the rights, powers or remedies provided for in
      this
      Intellectual Property Security Agreement, the Debentures or any of the other
      Transaction Documents, or now or hereafter existing at law or in equity, shall
      not preclude the simultaneous or later exercise by any person, including the
      Secured Party, of any or all other rights, powers or remedies.

    

    3. This
      Intellectual Property Security Agreement may be executed in any number of
      separate counterparts, each of which, when so executed, shall be deemed an
      original, and all of said counterparts taken together shall be deemed to
      constitute but one and the same instrument. 

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof, the parties have caused this Intellectual Property Security
      Agreement to be duly executed by its officers thereunto duly authorized as
      of
      the first date written above.

    

    
      	
              ENABLE
                HOLDINGS, INC.

            
	 
	
              By:

            	 
              
	
              Name:
                Jeffrey D. Hoffman

            
	
              Title:
                CEO

            

    

    

    
      	
              UBID,
                INC.

            	 	
              REDTAG
                LIVE, INC.

            
	 	 	 
	
              By:

            	 
              	 	
              By:

            	 
              
	
              Name:
                

            	 	
              Name:
                

            
	
              Title:

            	 	
              Title:
                

            
	 	 	 	 	 
	
              DIBU
                TRADING CORP.

            	 	
              REDTAG,
                INC.

            
	 	 	 	 	 
	
              By:

            	 
              	 	
              By:

            	 
              
	
              Name:
                

            	 	
              Name:
                

            
	
              Title:

            	 	
              Title:
                

            
	 	 	 	 	 
	
              ENABLE
                PAYMENT SYSTEMS, INC.

            	 	
              USAAS,
                INC.

            
	 	 	 
	
              By:

            	 
              	 	
              By:

            	 
              
	
              Name:
                

            	 	
              Name:
                

            
	
              Title:

            	 	
              Title:
                

            

    

    

    [SIGNATURE
      PAGE OF SECURED PARTIES TO ENABLE INTELLECTUAL 

    PROPERTY
      SECURITY AGREEMENT FOLLOWS]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    [SIGNATURE
      PAGE OF SECURED PARTIES TO ENABLE INTELLECTUAL 

    PROPERTY
      SECURITY AGREEMENT]

    

    Name
      of
      Investing Entity: __________________________

    

    Signature
      of Authorized Signatory of Investing entity:
      _________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      B

    

    SUBSIDIARY
      GUARANTEE

    

    SUBSIDIARY
      GUARANTEE, dated as of October 16, 2008 (this "Guarantee"),
      made
      by each of the signatories hereto (together with any other entity that may
      become a party hereto as provided herein, the "Guarantors"),
      in
      favor of the purchasers signatory (together with their permitted assigns, the
      "Purchasers")
      to
      that certain Securities Purchase Agreement, dated as of the date hereof, between
      Enable Holdings, Inc. a Delaware corporation (the "Company")
      and
      the Purchasers.

    

    WITNESSETH:

    

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement, dated as of the date
      hereof, by and between the Company and the Purchasers (the "Purchase
      Agreement"),
      the
      Company has agreed to sell and issue to the Purchasers, and the Purchasers
      have
      agreed to purchase from the Company the Debentures, subject to the terms and
      conditions set forth therein; and

     

    WHEREAS,
      each Guarantor will directly benefit from the extension of credit to the Company
      represented by the issuance of the Debentures; and
       

     

    NOW,
      THEREFORE, in consideration of the premises and to induce the Purchasers to
      enter into the Purchase Agreement and to carry out the transactions contemplated
      thereby, each Guarantor hereby agrees with the Purchasers as
      follows:

     

    1. Definitions.
      Unless
      otherwise defined herein, terms defined in the Purchase Agreement and used
      herein shall have the meanings given to them in the Purchase Agreement. The
      words "hereof," "herein," "hereto" and "hereunder" and words of similar import
      when used in this Guarantee shall refer to this Guarantee as a whole and not
      to
      any particular provision of this Guarantee, and Section and Schedule references
      are to this Guarantee unless otherwise specified. The meanings given to terms
      defined herein shall be equally applicable to both the singular and plural
      forms
      of such terms.  The following terms shall have the following
      meanings:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    "Guarantee"
      means
      this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise
      modified from time to time.

     

    "Obligations"
      means,
      in addition to all other costs and expenses of collection incurred by Purchasers
      in enforcing any of such Obligations and/or this Guarantee, all of the
      liabilities and obligations (primary, secondary, direct, contingent, sole,
      joint
      or several) due or to become due, or that are now or may be hereafter contracted
      or acquired, or owing to, of the Company or any Guarantor to the Purchasers,
      including, without limitation, all obligations under this Guarantee, the
      Debentures and any other instruments, agreements or other documents executed
      and/or delivered in connection herewith or therewith, in each case, whether
      now
      or hereafter existing, voluntary or involuntary, direct or indirect, absolute
      or
      contingent, liquidated or unliquidated, whether or not jointly owed with others,
      and whether or not from time to time decreased or extinguished and later
      increased, created or incurred, and all or any portion of such obligations
      or
      liabilities that are paid, to the extent all or any part of such payment is
      avoided or recovered directly or indirectly from any of the Purchasers as a
      preference, fraudulent transfer or otherwise as such obligations may be amended,
      supplemented, converted, extended or modified from time to time.  Without
      limiting the generality of the foregoing, the term "Obligations" shall include,
      without limitation: (i) principal of, and interest on the Debentures and the
      loans extended pursuant thereto; (ii) any and all other fees, indemnities,
      costs, obligations and liabilities of the Company or any Guarantor from time
      to
      time under or in connection with this Guarantee, the Debentures and any other
      instruments, agreements or other documents executed and/or delivered in
      connection herewith or therewith; and (iii) all amounts (including but not
      limited to post-petition interest) in respect of the foregoing that would be
      payable but for the fact that the obligations to pay such amounts are
      unenforceable or not allowable due to the existence of a bankruptcy,
      reorganization or similar proceeding involving the Company or any
      Guarantor.

     

    2. Guarantee.

    

    (a) Guarantee.

    

    (i) The
      Guarantors hereby, jointly and severally, unconditionally and irrevocably,
      guarantee to the Purchasers and their respective successors, indorsees,
      transferees and assigns, the prompt and complete payment and performance when
      due (whether at the stated maturity, by acceleration or otherwise) of the
      Obligations.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) Anything
      herein or in any other Transaction Document to the contrary notwithstanding,
      the
      maximum liability of each Guarantor hereunder and under the other Transaction
      Documents shall in no event exceed the amount which can be guaranteed by such
      Guarantor under applicable federal and state laws, including laws relating
      to
      the insolvency of debtors, fraudulent conveyance or transfer or laws affecting
      the rights of creditors generally (after giving effect to the right of
      contribution established in Section 2(b)).

    

    (iii) Each
      Guarantor agrees that the Obligations may at any time and from time to time
      exceed the amount of the liability of such Guarantor hereunder without impairing
      the guarantee contained in this Section 2 or affecting the rights and remedies
      of the Purchasers hereunder.

    

    (iv) The
      guarantee contained in this Section 2 shall remain in full force and effect
      until all the Obligations and the obligations of each Guarantor under the
      guarantee contained in this Section 2 shall have been paid in full or otherwise
      fully satisfied and discharged.

    

    (v) No
      payment made by the Company, any of the Guarantors, any other guarantor or
      any
      other Person or received or collected by the Purchasers from the Company, any
      of
      the Guarantors, any other guarantor or any other Person by virtue of any action
      or proceeding or any set-off or appropriation or application at any time or
      from
      time to time in reduction of or in payment of the Obligations shall be deemed
      to
      modify, reduce, release or otherwise affect the liability of any Guarantor
      hereunder which shall, notwithstanding any such payment (other than any payment
      made by such Guarantor in respect of the Obligations or any payment received
      or
      collected from such Guarantor in respect of the Obligations), remain liable
      for
      the Obligations up to the maximum liability of such Guarantor hereunder until
      the Obligations are indefeasibly paid in full.

    

    (vi) Notwithstanding
      anything to the contrary in this Guarantee, with respect to any defaulted
      non-monetary Obligations the specific performance of which by the Guarantors
      is
      not reasonably possible (e.g. the issuance of the Company's Common Stock),
      the
      Guarantors shall only be liable for making the Purchasers whole on a monetary
      basis for the Company's failure to perform such Obligations in accordance with
      the Transaction Documents.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) Right
      of Contribution.
      Subject
      to Section 2(c), each Guarantor hereby agrees that to the extent that a
      Guarantor shall have paid more than its proportionate share of any payment
      made
      hereunder, such Guarantor shall be entitled to seek and receive contribution
      from and against any other Guarantor hereunder which has not paid its
      proportionate share of such payment. Each Guarantor's right of contribution
      shall be subject to the terms and conditions of Section 2(c). The provisions
      of
      this Section 2(b) shall in no respect limit the obligations and liabilities
      of
      any Guarantor to the Purchasers and each Guarantor shall remain liable to the
      Purchasers for the full amount guaranteed by such Guarantor
      hereunder.

    

    (c) No
      Subrogation.
       Notwithstanding any payment made by any Guarantor hereunder or any set-off
      or application of funds of any Guarantor by the Purchasers, no Guarantor shall
      be entitled to be subrogated to any of the rights of the Purchasers against
      the
      Company or any other Guarantor or any collateral security or guarantee or right
      of offset held by the Purchasers for the payment of the Obligations, nor shall
      any Guarantor seek or be entitled to seek any contribution or reimbursement
      from
      the Company or any other Guarantor in respect of payments made by such Guarantor
      hereunder, until all amounts owing to the Purchasers by the Company on account
      of the Obligations are indefeasibly paid in full. If any amount shall be paid
      to
      any Guarantor on account of such subrogation rights at any time when all of
      the
      Obligations shall not have been paid in full, such amount shall be held by
      such
      Guarantor in trust for the Purchasers, segregated from other funds of such
      Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
      to the Purchasers in the exact form received by such Guarantor (duly indorsed
      by
      such Guarantor to the Purchasers, if required), to be applied against the
      Obligations, whether matured or unmatured, in such order as the Purchasers
      may
      determine.

    

    (d) Amendments,
      Etc. With Respect to the Obligations.
      Each
      Guarantor shall remain obligated hereunder notwithstanding that, without any
      reservation of rights against any Guarantor and without notice to or further
      assent by any Guarantor, any demand for payment of any of the Obligations made
      by the Purchasers may be rescinded by the Purchasers and any of the Obligations
      continued, and the Obligations, or the liability of any other Person upon or
      for
      any part thereof, or any collateral security or guarantee therefor or right
      of
      offset with respect thereto, may, from time to time, in whole or in part, be
      renewed, extended, amended, modified, accelerated, compromised, waived,
      surrendered or released by the Purchasers, and the Purchase Agreement and the
      other Transaction Documents and any other documents executed and delivered
      in
      connection therewith may be amended, modified, supplemented or terminated,
      in
      whole or in part, as the Purchasers may deem advisable from time to time, and
      any collateral security, guarantee or right of offset at any time held by the
      Purchasers for the payment of the Obligations may be sold, exchanged, waived,
      surrendered or released. The Purchasers shall have no obligation to protect,
      secure, perfect or insure any Lien at any time held by them as security for
      the
      Obligations or for the guarantee contained in this Section 2 or any property
      subject thereto.  

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (e) Guarantee
      Absolute and Unconditional.
      Each
      Guarantor waives any and all notice of the creation, renewal, extension or
      accrual of any of the Obligations and notice of or proof of reliance by the
      Purchasers upon the guarantee contained in this Section 2 or acceptance of
      the
      guarantee contained in this Section 2; the Obligations, and any of them, shall
      conclusively be deemed to have been created, contracted or incurred, or renewed,
      extended, amended or waived, in reliance upon the guarantee contained in this
      Section 2; and all dealings between the Company and any of the Guarantors,
      on
      the one hand, and the Purchasers, on the other hand, likewise shall be
      conclusively presumed to have been had or consummated in reliance upon the
      guarantee contained in this Section 2. Each Guarantor waives to the extent
      permitted by law diligence, presentment, protest, demand for payment and notice
      of default or nonpayment to or upon the Company or any of the Guarantors with
      respect to the Obligations. Each Guarantor understands and agrees that the
      guarantee contained in this Section 2 shall be construed as a continuing,
      absolute and unconditional guarantee of payment and performance without regard
      to (a) the validity or enforceability of the Purchase Agreement or any other
      Transaction Document, any of the Obligations or any other collateral security
      therefor or guarantee or right of offset with respect thereto at any time or
      from time to time held by the Purchasers, (b) any defense, set-off or
      counterclaim (other than a defense of payment or performance or fraud by
      Purchasers) which may at any time be available to or be asserted by the Company
      or any other Person against the Purchasers, or (c) any other circumstance
      whatsoever (with or without notice to or knowledge of the Company or such
      Guarantor) which constitutes, or might be construed to constitute, an equitable
      or legal discharge of the Company for the Obligations, or of such Guarantor
      under the guarantee contained in this Section 2, in bankruptcy or in any other
      instance. When making any demand hereunder or otherwise pursuing its rights
      and
      remedies hereunder against any Guarantor, the Purchasers may, but shall be
      under
      no obligation to, make a similar demand on or otherwise pursue such rights
      and
      remedies as they may have against the Company, any other Guarantor or any other
      Person or against any collateral security or guarantee for the Obligations
      or
      any right of offset with respect thereto, and any failure by the Purchasers
      to
      make any such demand, to pursue such other rights or remedies or to collect
      any
      payments from the Company, any other Guarantor or any other Person or to realize
      upon any such collateral security or guarantee or to exercise any such right
      of
      offset, or any release of the Company, any other Guarantor or any other Person
      or any such collateral security, guarantee or right of offset, shall not relieve
      any Guarantor of any obligation or liability hereunder, and shall not impair
      or
      affect the rights and remedies, whether express, implied or available as a
      matter of law, of the Purchasers against any Guarantor. For the purposes hereof,
      "demand" shall include the commencement and continuance of any legal
      proceedings.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (f) Reinstatement.
      The
      guarantee contained in this Section 2 shall continue to be effective, or be
      reinstated, as the case may be, if at any time payment, or any part thereof,
      of
      any of the Obligations is rescinded or must otherwise be restored or returned
      by
      the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or
      reorganization of the Company or any Guarantor, or upon or as a result of the
      appointment of a receiver, intervenor or conservator of, or trustee or similar
      officer for, the Company or any Guarantor or any substantial part of its
      property, or otherwise, all as though such payments had not been
      made.

    

    (g) Payments.
      Each
      Guarantor hereby guarantees that payments hereunder will be paid to the
      Purchasers without set-off or counterclaim in U.S. dollars at the address set
      forth or referred to in the Signature Pages to the Purchase
      Agreement.

    

    3. Representations
      and Warranties.
      Each
      Guarantor hereby makes the following representations and warranties to
      Purchasers as of the date hereof:

    

    (a) Organization
      and Qualification.
      The
      Guarantor is a corporation, duly incorporated, validly existing and in good
      standing under the laws of the applicable jurisdiction set forth on Schedule
      1,
      with the requisite corporate power and authority to own and use its properties
      and assets and to carry on its business as currently conducted. The Guarantor
      has no subsidiaries other than those identified as such on the Disclosure
      Schedules to the Purchase Agreement. The Guarantor is duly qualified to do
      business and is in good standing as a foreign corporation in each jurisdiction
      in which the nature of the business conducted or property owned by it makes
      such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not, individually or in the aggregate,
      (x)
      adversely affect the legality, validity or enforceability of any of this
      Guaranty in any material respect, (y) have a material adverse effect on the
      results of operations, assets, prospects, or financial condition of the
      Guarantor or (z) adversely impair in any material respect the Guarantor's
      ability to perform fully on a timely basis its obligations under this Guaranty
      (a "Material
      Adverse Effect").

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b) Authorization;
      Enforcement.
       The Guarantor has the requisite corporate power and authority to enter
      into and to consummate the transactions contemplated by this Guaranty, and
      otherwise to carry out its obligations hereunder. The execution and delivery
      of
      this Guaranty by the Guarantor and the consummation by it of the transactions
      contemplated hereby have been duly authorized by all requisite corporate action
      on the part of the Guarantor. This Guaranty has been duly executed and delivered
      by the Guarantor and constitutes the valid and binding obligation of the
      Guarantor enforceable against the Guarantor in accordance with its terms, except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors' rights and remedies or by
      other equitable principles of general application.

    

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Guaranty by the Guarantor and the
      consummation by the Guarantor of the transactions contemplated thereby do not
      and will not (i) conflict with or violate any provision of its Certificate
      of
      Incorporation or By-laws or (ii) conflict with, constitute a default (or an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which the Guarantor
      is a party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment, injunction, decree or other restriction of any court or governmental
      authority to which the Guarantor is subject (including Federal and State
      securities laws and regulations), or by which any material property or asset
      of
      the Guarantor is bound or affected, except in the case of each of clauses (ii)
      and (iii), such conflicts, defaults, terminations, amendments, accelerations,
      cancellations and violations as could not, individually or in the aggregate,
      have or result in a Material Adverse Effect. The business of the Guarantor
      is
      not being conducted in violation of any law, ordinance or regulation of any
      governmental authority, except for violations which, individually or in the
      aggregate, do not have a Material Adverse Effect.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Consents
      and Approvals.
      The
      Guarantor is not required to obtain any consent, waiver, authorization or order
      of, or make any filing or registration with, any court or other federal, state,
      local, foreign or other governmental authority or other person in connection
      with the execution, delivery and performance by the Guarantor of this
      Guaranty.

    

    (e) Purchase
      Agreement.
      The
      representations and warranties of the Company set forth in the Purchase
      Agreement as they relate to such Guarantor, each of which is hereby incorporated
      herein by reference, are true and correct as of each time such representations
      are deemed to be made pursuant to such Purchase Agreement, and the Purchasers
      shall be entitled to rely on each of them as if they were fully set forth
      herein, provided that each reference in each such representation and warranty
      to
      the Company's knowledge shall, for the purposes of this Section 3, be deemed
      to
      be a reference to such Guarantor's knowledge.

    

    (f) Foreign
      Law.
       Each Guarantor has consulted with appropriate foreign legal counsel with
      respect to any of the above representations for which non-U.S. law is
      applicable. Such foreign counsel have advised each applicable Guarantor that
      such counsel knows of no reason why any of the above representations would
      not
      be true and accurate. Such foreign counsel were provided with copies of this
      Subsidiary Guarantee and the Transaction Documents prior to rendering their
      advice.

    

    4. Covenants.
       

    

    (a) Each
      Guarantor covenants and agrees with the Purchasers that, from and after the
      date
      of this Guarantee until the Obligations shall have been indefeasibly paid in
      full, such Guarantor shall take, and/or shall refrain from taking, as the case
      may be, each commercially reasonable action that is necessary to be taken or
      not
      taken, as the case may be, so that no Event of Default (as defined in the
      Debentures) is caused by the failure to take such action or to refrain from
      taking such action by such Guarantor.

     

    (b) So
      long
      as any of the Obligations are outstanding, unless Purchasers holding at least
      75% of the aggregate Principal Amount of the then outstanding Debentures shall
      otherwise consent in writing, each Guarantor will not directly or indirectly
      on
      or after the date of this Guarantee:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    i. other
      than Permitted Indebtedness (as defined in the Debentures), enter into, create,
      incur, assume or suffer to exist any indebtedness for borrowed money of any
      kind, including but not limited to, a guarantee, on or with respect to any
      of
      its property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom;

     

    ii. other
      than Permitted Liens (as defined in the Debentures), enter into, create, incur,
      assume or suffer to exist any liens of any kind, on or with respect to any
      of
      its property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom;

    

    iii. amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      adversely affect any rights of any Purchaser;

    

    iv. repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a de
      minimis number of shares of its securities or debt obligations;

    

    v. pay
      cash
      dividends on any equity securities of the Company;

    

    vi. enter
      into any transaction with any Affiliate of the Guarantor which would be required
      to be disclosed in any public filing of the Company with the Commission, unless
      such transaction is made on an arm’s-length basis and expressly approved by a
      majority of the disinterested directors of the Company (even if less than a
      quorum otherwise required for board approval); or

    

    vii. enter
      into any agreement with respect to any of the foregoing.

    

    5. Miscellaneous.

    

    (a) Amendments
      in Writing.
      None of
      the terms or provisions of this Guarantee may be waived, amended, supplemented
      or otherwise modified except in writing by the Purchasers.

    

    (b) Notices.
      All
      notices, requests and demands to or upon the Purchasers or any Guarantor
      hereunder shall be effected in the manner provided for in the Purchase
      Agreement, provided that any such notice, request or demand to or upon any
      Guarantor shall be addressed to such Guarantor at its notice address set forth
      on Schedule
      5(b).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c) No
      Waiver By Course Of Conduct; Cumulative Remedies.
      The
      Purchasers shall not by any act (except by a written instrument pursuant to
      Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived
      any right or remedy hereunder or to have acquiesced in any default under the
      Transaction Documents or Event of Default. No failure to exercise, nor any
      delay
      in exercising, on the part of the Purchasers, any right, power or privilege
      hereunder shall operate as a waiver thereof. No single or partial exercise
      of
      any right, power or privilege hereunder shall preclude any other or further
      exercise thereof or the exercise of any other right, power or privilege. A
      waiver by the Purchasers of any right or remedy hereunder on any one occasion
      shall not be construed as a bar to any right or remedy which the Purchasers
      would otherwise have on any future occasion. The rights and remedies herein
      provided are cumulative, may be exercised singly or concurrently and are not
      exclusive of any other rights or remedies provided by law.

    

    (d) Enforcement
      Expenses; Indemnification.

    

    (i) Each
      Guarantor agrees to pay, or reimburse the Purchasers for, all its costs and
      expenses incurred in collecting against such Guarantor under the guarantee
      contained in Section 2 or otherwise enforcing or preserving any rights under
      this Guarantee and the other Transaction Documents to which such Guarantor
      is a
      party, including, without limitation, the reasonable fees and disbursements
      of
      counsel to the Purchasers.

     

    (ii) Each
      Guarantor agrees to pay, and to save the Purchasers harmless from, any and
      all
      liabilities with respect to, or resulting from any delay in paying, any and
      all
      stamp, excise, sales or other taxes which may be payable or determined to be
      payable in connection with any of the transactions contemplated by this
      Guarantee.

    

    (iii) Each
      Guarantor agrees to pay, and to save the Purchasers harmless from, any and
      all
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses or disbursements of any kind or nature whatsoever with respect
      to the execution, delivery, enforcement, performance and administration of
      this
      Guarantee to the extent the Company would be required to do so pursuant to
      the
      Purchase Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (iv) The
      agreements in this Section shall survive repayment of the Obligations and all
      other amounts payable under the Purchase Agreement and the other Transaction
      Documents.

    

    (e) Successor
      and Assigns.
      This
      Guarantee shall be binding upon the successors and assigns of each Guarantor
      and
      shall inure to the benefit of the Purchasers and their respective successors
      and
      assigns; provided that no Guarantor may assign, transfer or delegate any of
      its
      rights or obligations under this Guarantee without the prior written consent
      of
      the Purchasers.

    

    (f) Set-Off.
      Each
      Guarantor hereby irrevocably authorizes the Purchasers at any time and from
      time
      to time while an Event of Default under any of the Transaction Documents shall
      have occurred and be continuing, without notice to such Guarantor or any other
      Guarantor, any such notice being expressly waived by each Guarantor, to set-off
      and appropriate and apply any and all deposits, credits, indebtedness or claims,
      in any currency, in each case whether direct or indirect, absolute or
      contingent, matured or unmatured, at any time held or owing by the Purchasers
      to
      or for the credit or the account of such Guarantor, or any part thereof in
      such
      amounts as the Purchasers may elect, against and on account of the obligations
      and liabilities of such Guarantor to the Purchasers hereunder and claims of
      every nature and description of the Purchasers against such Guarantor, in any
      currency, whether arising hereunder, under the Purchase Agreement, any other
      Transaction Document or otherwise, as the Purchasers may elect, whether or
      not
      the Purchasers have made any demand for payment and although such obligations,
      liabilities and claims may be contingent or unmatured. The Purchasers shall
      notify such Guarantor promptly of any such set-off and the application made
      by
      the Purchasers of the proceeds thereof, provided that the failure to give such
      notice shall not affect the validity of such set-off and application. The rights
      of the Purchasers under this Section are in addition to other rights and
      remedies (including, without limitation, other rights of set-off) which the
      Purchasers may have.

    

    (g) Counterparts.
      This
      Guarantee may be executed by one or more of the parties to this Guarantee on
      any
      number of separate counterparts (including by telecopy), and all of said
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

    

    (h) Severability.
      Any
      provision of this Guarantee which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (i) Section
      Headings.
      The
      Section headings used in this Guarantee are for convenience of reference only
      and are not to affect the construction hereof or be taken into consideration
      in
      the interpretation hereof.

    

    (j) Integration.
      This
      Guarantee and the other Transaction Documents represent the agreement of the
      Guarantors and the Purchasers with respect to the subject matter hereof and
      thereof, and there are no promises, undertakings, representations or warranties
      by the Purchasers relative to subject matter hereof and thereof not expressly
      set forth or referred to herein or in the other Transaction
      Documents.

    

    (k) Governing
      Laws.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Guarantee shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Illinois, without regard to the
      principles of conflicts of law thereof.  Each of the Company and the
      Guarantors agree that all proceedings concerning the interpretations,
      enforcement and defense of the transactions contemplated by this Guarantee
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, partners, members, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the City of
      Chicago. Each of the Company and the Guarantors hereby irrevocably submits to
      the exclusive jurisdiction of the state and federal courts sitting in the City
      of Chicago for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any proceeding, any
      claim
      that it is not personally subject to the jurisdiction of any such court, that
      such proceeding is improper. Each party hereto hereby irrevocably waives
      personal service of process and consents to process being served in any such
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Guarantee and agrees that such service
      shall
      constitute good and sufficient service of process and notice thereof. Nothing
      contained herein shall be deemed to limit in any way any right to serve process
      in any manner permitted by law.  Each party hereto hereby irrevocably
      waives, to the fullest extent permitted by applicable law, any and all right
      to
      trial by jury in any legal proceeding arising out of or relating to this
      Guarantee or the transactions contemplated hereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (l) Acknowledgements.
       Each Guarantor hereby acknowledges that:

    

    (i) it
      has
      been advised by counsel in the negotiation, execution and delivery of this
      Guarantee and the other Transaction Documents to which it is a
      party;

     

    (ii) the
      Purchasers have no fiduciary relationship with or duty to any Guarantor arising
      out of or in connection with this Guarantee or any of the other Transaction
      Documents, and the relationship between the Guarantors, on the one hand, and
      the
      Purchasers, on the other hand, in connection herewith or therewith is solely
      that of debtor and creditor; and

    

    (iii) no
      joint
      venture is created hereby or by the other Transaction Documents or otherwise
      exists by virtue of the transactions contemplated hereby among the Guarantors
      and the Purchasers.

    

    (m) Additional
      Guarantors.
       The Company shall cause each of its subsidiaries formed or acquired on or
      subsequent to the date hereof to become a Guarantor for all purposes of this
      Guarantee by executing and delivering an Assumption Agreement in the form of
      Annex 1 hereto.

    

    (n) Release
      of Guarantors.
      Each
      Guarantor will be released from all liability hereunder concurrently with the
      indefeasible repayment in full of all amounts owed under the Purchase Agreement,
      the Debentures and the other Transaction Documents.

    

    (o) Seniority.
      The
      Obligations of each of the Guarantors hereunder rank senior in priority to
      any
      other Indebtedness (as defined in the Purchase Agreement) of such
      Guarantor.

    

    (p) WAIVER
      OF JURY TRIAL.
      EACH
      GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY
      IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
      PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM
      THEREIN.

     

    *********************

    (Signature
      Pages Follow)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be duly
      executed and delivered as of the date first above written.

     

    
      
        	
                UBID,
                  INC.

              	 	
                REDTAG
                  LIVE, INC.

              
	 	 	 
	
                By:

              	 
                	 	
                By:

              	 
                
	
                Name:
                  

              	 	
                Name:
                  

              
	
                Title:

              	 	
                Title:
                  

              
	 	 	 	 	 
	
                DIBU
                  TRADING CORP.

              	 	
                REDTAG,
                  INC.

              
	 	 	 	 	 
	
                By:

              	 
                	 	
                By:

              	 
                
	
                Name:
                  

              	 	
                Name:
                  

              
	
                Title:

              	 	
                Title:
                  

              
	 	 	 	 	 
	
                ENABLE
                  PAYMENT SYSTEMS, INC.

              	 	
                USAAS,
                  INC.

              
	 	 	 
	
                By:

              	 
                	 	
                By:

              	 
                
	
                Name:
                  

              	 	
                Name:
                  

              
	
                Title:

              	 	
                Title:
                  

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Annex
      1 to

    SUBSIDIARY
      GUARANTEE

    

    ASSUMPTION
      AGREEMENT, dated as of __________, 200_ made by ____________, a _________
      corporation (the "Additional
      Guarantor"),
      in
      favor of the Purchasers pursuant to the Purchase Agreement referred to below.
      All capitalized terms not defined herein shall have the meaning ascribed to
      them
      in such Purchase Agreement.

     

    WITNESSETH
      :

     

    WHEREAS,
      Enable Holdings, Inc., a Delaware corporation (the "Company")
      and
      the Purchasers have entered into a Securities Purchase Agreement, dated as
      of
      October 16, 2008 (as amended, supplemented or otherwise modified from time
      to
      time, the "Purchase
      Agreement");

     

    WHEREAS,
      in connection with the Purchase Agreement, the Subsidiaries of the Company
      (other than the Additional Guarantor) have entered into the Subsidiary
      Guarantee, dated as of October 16, 2008 (as amended, supplemented or otherwise
      modified from time to time, the "Guarantee")
      in
      favor of the Purchasers;

     

    WHEREAS,
      the Purchase Agreement requires the Additional Guarantor to become a party
      to
      the Guarantee; and

            

    WHEREAS,
      the Additional Guarantor has agreed to execute and deliver this Assumption
      Agreement in order to become a party to the Guarantee;

    

    NOW,
      THEREFORE, IT IS AGREED:

    

    1. Guarantee.
      By
      executing and delivering this Assumption Agreement, the Additional Guarantor,
      as
      provided in Section 5(m) of the Guarantee, hereby becomes a party to the
      Guarantee as a Guarantor thereunder with the same force and effect as if
      originally named therein as a Guarantor and, without limiting the generality
      of
      the foregoing, hereby expressly assumes all obligations and liabilities of
      a
      Guarantor thereunder. The information set forth in Annex 1 hereto is hereby
      added to the information set forth in Schedule 1 to the Guarantee. The
      Additional Guarantor hereby represents and warrants that each of the
      representations and warranties contained in Section 3 of the Guarantee is true
      and correct on and as the date hereof as to such Additional Guarantor (after
      giving effect to this Assumption Agreement) as if made on and as of such
      date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    2. Governing
      Law.
      THIS
      ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
      ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

    

                      IN
      WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
      duly
      executed and delivered as of the date first above written.

    

    [NAME
      OF
      ADDITIONAL GUARANTOR]

    

    
      	
              By:

            	  

	
              Name:
                

            
	
              Title:

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