Document:

Exhibit 4.1

                               SECURITY AGREEMENT

This Security Agreement is made as of August 31, 2006 by and among LAURUS MASTER
FUND, LTD., a Cayman Islands company ("Laurus"), TRINITY LEARNING CORPORATION, a
                                       ------
Utah  corporation  ("the  Parent"),  and each party listed on Exhibit A attached
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hereto  (each  an  "Eligible  Subsidiary"  and  collectively,  the  "Eligible
                    --------------------                             --------
Subsidiaries")  the  Parent  and  each Eligible Subsidiary, each a "Company" and
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collectively,  the  "Companies").

                                   BACKGROUND
                                   ----------

The  Companies  have  requested  that  Laurus  make  advances  available  to the
Companies;  and

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

                                    AGREEMENT
                                    ---------

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

1.     General  Definitions  and  Terms;  Rules  of  Construction.
       ----------------------------------------------------------

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

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

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

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

                                     -1-
<PAGE>

schedules,  disclosure  schedules,  exhibits, and attachments shall refer to the
corresponding  sections,  schedules,  disclosure  schedules,  exhibits,  and
attachments  of  or  to  this  Agreement.  All  references to any instruments or
agreements,  including  references  to  any  of  this Agreement or the Ancillary
Agreements shall include any and all modifications or amendments thereto and any
and  all  extensions  or  renewals  thereof.

2.     Loan  Facility;  7%  Preferred  Stock;  Closing.
       -----------------------------------------------

(a)     Revolving  Loans.
        ----------------

(i)     Subject  to  the  terms  and  conditions  set  forth  herein  and in the
Ancillary Agreements, Laurus may make revolving loans (the "Revolving Loans") to
                                                                      -----
the  Companies  from time to time during the Term which, in the aggregate at any
time outstanding, will not exceed the lesser of (x) (I) the Capital Availability
Amount  minus  (II)  such  reserves  as  Laurus may reasonably in its good faith
judgment  deem  proper  and  necessary  from  time  to  time  (the  "Reserves")
                                                                     --------
(including,  without  limitation,  reserves  with  respect  to (i) sums that the
Companies  are  required to pay (such as taxes, assessments, insurance premiums,
or,  in  the  case  of  leased assets, rents or other amounts payable under such
leases)  and have failed to pay under any Section of this Agreement or any other
Ancillary  Agreement,  (ii) amounts owing by the Companies or their Subsidiaries
to  any  Person  to  the  extent secured by a Lien on, or trust over, any of the
Collateral,  (such  as  Liens  or  trusts  in  favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad  valorem,  excise,  sales,  or other taxes) or (iii) any deterioration in the
financial  condition or credit quality of any Account Debtor), and (y) an amount
equal  to  (I)  the  Accounts Availability plus (II) the Inventory Availability,
minus  (III)  the  Reserves.  The  amount  derived  at  any  time  from  Section
2(a)(i)(y)(I)  plus  Section  2(a)(i)(y)(II)  minus  2(a)(i)(y)(III)  shall  be
referred  to  as  the  "Formula  Amount."  The  Companies  shall,  jointly  and
                        ---------------
severally,  execute  and  deliver  to  Laurus  on  the  Closing Date the Secured
Revolving Note and the Secured Term Note.  The Companies hereby each acknowledge
and agree that Laurus' obligation to purchase the Secured Revolving Note and the
Secured  Term  Note  from  the Companies on the Closing Date shall be contingent
upon  the satisfaction (or waiver by Laurus in its sole discretion) of the items
and  matters  set  forth  in  the  closing  checklist  provided by Laurus to the
Companies  on  or  prior to the Closing Date.  The Companies hereby each further
acknowledge  and  agree  that, immediately prior to each borrowing hereunder and
immediately  after  giving effect thereto, the Companies shall be deemed to have
certified  to  Laurus  that at the time of each such proposed borrowing and also
after  giving effect thereto (i) there shall exist no Event of Default, (ii) all
representations,  warranties  and  covenants made by the Companies in connection
with  this Agreement and the Ancillary Agreements are true, correct and complete
and  (iii)  all  of  each  Company's  and  its respective Subsidiaries' covenant
requirements  under  this  Agreement and the Ancillary Agreements have been met.
The  Companies  hereby  agree  to provide a certificate confirming the foregoing
concurrently  with  each  request  for  a  borrowing  hereunder.

(ii)     Notwithstanding  the  limitations  set forth above, if requested by any
Company, Laurus retains the right to lend to such Company from time to time such
amounts  in  excess  of  such  limitations  as  Laurus may determine in its sole
discretion.  In  connection with each such request by one or more Companies, the
Companies  shall  be  deemed  to  have  certified,

                                     -2-
<PAGE>

as  of  the  time of such proposed borrowing and immediately after giving effect
thereto,  to  the  satisfaction  of  all  Overadvance  Conditions.  For purposes
hereof,  "Overadvance  Conditions" means (i) no Event of Default shall exist and
          -----------------------
be  continuing  as  of  such  date; and (ii) all representations, warranties and
covenants  made  by  the Companies in connection with the Security Agreement and
the  Ancillary  Agreements  shall be true, correct and complete as of such date.
The  Companies hereby agree to provide a certificate confirming the satisfaction
of  the  Overadvance  Conditions  concurrently  with  the  request  for  same.

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

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

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

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

                                     -3-
<PAGE>

(vii)     During  the  Term,  the  Companies  may  borrow  and  prepay  Loans in
accordance  with  the  terms  and  conditions  hereof.

(viii)     If  any  Eligible  Account  is  not paid by the Account Debtor within
ninety  (90)  days  after the date that such Eligible Account was invoiced or if
any  Account  Debtor  asserts  a  deduction,  dispute,  contingency, set-off, or
counterclaim with respect to any Eligible Account, (a "Delinquent Account"), the
                                                       ------------------
Companies shall jointly and severally (i) reimburse Laurus for the amount of the
Loans  made  with respect to such Delinquent Account or (ii) immediately replace
such  Delinquent  Account  with  an  otherwise  Eligible  Account.

(b)     Term  Loan.  Subject to the terms and conditions set forth herein and in
        ----------
the  Ancillary  Agreements,  Laurus  shall make a term loan (the "Term Loan") to
                                                                  ---------
Company Agent (for the benefit of Companies) in an aggregate amount equal to Two
Million  Five  Hundred  Thousand  Dollars  $2,500,000.  The  Term  Loan shall be
advanced on the Closing Date and shall be, with respect to principal, payable in
consecutive  monthly installments of principal commencing on January 2, 2007 and
on  the  first  day  of  each month thereafter, subject to acceleration upon the
occurrence  of  an  Event  of Default or termination of this Agreement. The Term
Loan  shall  be  evidenced  by  the  Secured  Term  Note.

(c)     7% Preferred Stock. Subject to the terms and conditions set forth herein
        ------------------
and in the Ancillary Agreements, Laurus shall purchase from the Parent 1,500,000
shares  of  7%  Preferred  Stock.

3.     Repayment  of  the  Loans.  The  Companies (a) may prepay the Obligations
       -------------------------
from  time to time in accordance with the terms and provisions of the Notes (and
Section 17 hereof if such prepayment is due to a termination of this Agreement);
(b)  shall  repay on the Maturity Date (as defined in the Secured Term Note) (i)
the  then aggregate outstanding principal balance of the Term Loan together with
accrued  and  unpaid interest, fees and charges and: (ii) all other amounts owed
Laurus  under  the  Secured  Term Note; (c) shall repay on the expiration of the
Term (i) the then aggregate outstanding principal balance of the Revolving Loans
together  with accrued and unpaid interest, fees and charges and; (ii) all other
amounts  owed  Laurus under this Agreement and the Ancillary Agreements; and (c)
subject  to Section 2(a)(ii), shall repay on any day on which the then aggregate
outstanding  principal  balance of the Loans are in excess of the Formula Amount
at  such  time,  Loans  in  an  amount  equal  to  such  excess. Any payments of
principal,  interest,  fees  or any other amounts payable hereunder or under any
Ancillary Agreement shall be made prior to 12:00 noon (New York time) on the due
date  thereof  in  immediately  available  funds.

4.     Procedure  for  Revolving  Loans.  Company  Agent  may  by written notice
       --------------------------------
request  a  borrowing  of Revolving Loans prior to 12:00 noon (New York time) on
the  Business Day of its request to incur, on the next Business Day, a Revolving
Loan.  Together  with  each  request  for  a  Revolving  Loan  (or at such other
intervals  as  Laurus  may  request),  Company  Agent  shall deliver to Laurus a
Borrowing Base Certificate in the form of Exhibit B attached hereto, which shall
                                          ---------
be  certified  as  true  and  correct  by  the  Chief Executive Officer or Chief
Financial  Officer  of  Company Agent together with all supporting documentation
relating  thereto.  All Revolving Loans shall be disbursed from whichever office
or  other  place  Laurus  may  designate

                                     -4-
<PAGE>

from  time  to  time  and  shall be charged to the Companies' account on Laurus'
books.  The  proceeds  of  each  Revolving  Loan  made  by  Laurus shall be made
available  to  Company  Agent  on the Business Day following the Business Day so
requested in accordance with the terms of this Section 4 by way of credit to the
applicable  Company's  operating  account  maintained  with such bank as Company
Agent  designated to Laurus. Any and all Obligations due and owing hereunder may
be  charged  to  the  Companies'  account  and shall constitute Revolving Loans.

5.     Interest  and  Payments.
       -----------------------

(a)     Interest.
        --------

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

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

(iii)     Effective  upon the occurrence of any Event of Default and for so long
as  any  Event  of  Default  shall  be  continuing,  the  Contract  Rate  shall
automatically  be  increased as set forth in the Notes (such increased rate, the
"Default  Rate"),  and  all  outstanding Obligations, including unpaid interest,
 -------------
shall  continue to accrue interest from the date of such Event of Default at the
Default  Rate  applicable  to  such  Obligations.

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

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

(b)     Payment;  Certain  Closing  Conditions.
        --------------------------------------

(i)     Payment.  Upon  execution  of this Agreement by each Company and Laurus,
        -------
the Companies shall jointly and severally pay to Laurus Capital Management, LLC,
the  investment advisor of Laurus ("LCM"), a non-refundable payment in an amount
                                    ---
equal  to  three  and six-tenths percent (3.60%) of the Total Investment Amount.
The  foregoing payment is referred to herein as the "LCM Payment."  Such payment
                                                     -----------
shall  be  deemed  fully  earned on the Closing Date and shall not be subject to
rebate  or  proration  for  any  reason.

                                     -5-
<PAGE>

(ii)     Overadvance Payment.  Without affecting Laurus' rights hereunder in the
         -------------------
event  the  Loans exceed the Formula Amount (each such event, an "Overadvance"),
                                                                  -----------
all such Overadvances shall bear additional interest at a rate equal to one-half
percent  (0.5%)  per month of the amount of such Overadvances for all times such
amounts shall be in excess of the Formula Amount.  All amounts that are incurred
pursuant  to  this  Section  5(b)(ii)  shall be due and payable by the Companies
monthly,  in  arrears, on the first business day of each calendar month and upon
expiration  of  the  Term.

(iii)     Expenses.  The  Companies shall jointly and severally reimburse Laurus
          --------
for  its  expenses  (including  reasonable  legal fees and expenses) incurred in
connection  with  the  entering  into  of  this  Agreement  and  the  Ancillary
Agreements,  and  expenses  incurred  in  connection  with Laurus' due diligence
review  of  each  Company and its Subsidiaries and all related matters.  Amounts
required  to  be  paid  under this Section 5(b)(iii) will be paid on the Closing
Date  and  shall be the sum of (I) $45,000 for such expenses referred to in this
Section 5(b)(iii) (net of deposits previously paid by the Company) plus (II) the
cost  of  all  reasonable  third-party  appraisals  of  the  Companies and their
respective  Subsidiaries  to  the extent required by Laurus as determined in its
sole  discretion,  not  to  exceed  $30,000.

     (iv)     Closing.     Subject  to  the  terms  and  conditions  of  this
     ----     --------
Agreement,  the closing of the transactions contemplated hereby (the "Closing"),
     ----
shall  take  place on the Closing Date, at such time or place as the Company and
Purchaser  may  mutually  agree.  Furthermore,            pursuant to the Escrow
Agreement, at the Closing Laurus will deliver to the Company or such third party
as may be identified by the Company in writing in the Disbursement Letter, among
other  things,  the  amounts  set  forth in the Disbursement Letter by certified
funds  or  wire  transfer.

6.     Security  Interest.
       ------------------

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

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

                                     -6-
<PAGE>

so without the prior written consent of Laurus, subject to such Company's rights
under  Section  9-509(d)(2)  of  the  UCC.

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

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

(a)     all  of  the  Collateral  (i) is owned by it free and clear of all Liens
(including  any  claims  of  infringement)  except  those  in  Laurus' favor and
Permitted  Liens  and  (ii)  except as set forth on Schedule 7(a) hereto, is not
subject  to any agreement prohibiting the granting of a Lien or requiring notice
of  or  consent  to  the  granting  of  a  Lien.

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

(c)     the Liens granted pursuant to this Agreement, upon due completion of the
filings  of  UCC-1 financing statements in respect of each grantor of such Liens
in  the  applicable filing offices of the states of organization of such grantor
and  the  completion  of  the  other filings and actions listed on Schedule 7(c)
(which,  in  the  case  of  all  filings and other documents referred to in said
Schedule,  have been delivered to Laurus in duly executed form) constitute valid
perfected  security  interests  in  all  of the Collateral in favor of Laurus as
security for the prompt and complete payment and performance of the Obligations,
enforceable  in  accordance  with  the  terms  hereof against any and all of its
creditors  and purchasers and such security interest is prior to all other Liens
in  existence  on  the  date  hereof  other  than  Permitted  Liens.

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

(e)     it  shall not dispose of any of the Collateral whether by sale, lease or
otherwise  except  for  the sale of Inventory in the ordinary course of business
and  for  the  disposition or transfer in the ordinary course of business during
any  fiscal  year  of  obsolete  and

                                     -7-
<PAGE>

worn-out  Equipment  having  an  aggregate  fair  market  value of not more than
$50,000 and only to the extent that (i) the proceeds of any such disposition are
used to acquire replacement Equipment which is subject to Laurus' first priority
security  interest  or  are  used  to  repay  Loans  or to pay general corporate
expenses,  or  (ii)  following  the  occurrence  of  an  Event  of Default which
continues  to  exist  the proceeds of which are remitted to Laurus to be held as
cash  collateral  for  the  Obligations.

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

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

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

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

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

(k)     it  shall  notify  Laurus  promptly  and  in  any  event within ten (10)
Business Days after obtaining knowledge thereof (i) of any event or circumstance
that, to its knowledge, would cause Laurus to consider any then existing Account
and/or  Inventory]  as  no  longer constituting an Eligible Account [or Eligible
Inventory, as the case may be]; (ii) of any material delay in its performance of
any  of  its  obligations  to  any Account Debtor; (iii) of any assertion by any
Account  Debtor  of  any  material claims, offsets or counterclaims; (iv) of any
allowances,  credits  and/or  monies granted by it to any Account Debtor; (v) of
all  material  adverse  information  relating  to  the financial condition of an
Account  Debtor;  (vi)  of  any material return of goods; and (vii) of any loss,
damage  or  destruction  of  any  of  the  Collateral.

                                     -8-
<PAGE>

(l)     all  Eligible  Accounts  (i)  represent  complete bona fide transactions
which  require  no  further act under any circumstances on its part to make such
Accounts  payable  by  the Account Debtors, (ii) are not subject to any present,
future  contingent offsets or counterclaims, and (iii) do not represent bill and
hold sales, consignment sales, guaranteed sales, sale or return or other similar
understandings  or  obligations  of any Affiliate or Subsidiary of such Company.
It has not made, nor will it make, any agreement with any Account Debtor for any
extension  of  time for the payment of any Account, any compromise or settlement
for  less  than  the full amount thereof, any release of any Account Debtor from
liability  therefor,  or  any deduction therefrom except a discount or allowance
for prompt or early payment allowed by it in the ordinary course of its business
consistent  with  historical  practice  and as previously disclosed to Laurus in
writing.

(m)     it  shall  keep  and maintain its Equipment in good operating condition,
except  for  ordinary  wear  and  tear, and shall make all necessary repairs and
replacements  thereof  so  that  the value and operating efficiency shall at all
times be maintained and preserved.  It shall not permit any such items to become
a  Fixture  to  real  estate  or  accessions  to  other  personal  property.

(n)     it  shall  maintain and keep all of its Books and Records concerning the
Collateral  at  its  executive  offices  listed  in  Schedule  12(aa).
                                                     ----------------

(o)     it  shall  maintain  and  keep  the tangible Collateral at the addresses
listed in Schedule 12(aa), provided, that it may change such locations or open a
          ---------------
new  location,  provided that it provides Laurus at least thirty (30) days prior
written  notice of such changes or new location and (ii) prior to such change or
opening  of  a new location where Collateral having a value of more than $75,000
will  be  located,  it  executes  and  delivers to Laurus such agreements deemed
reasonably  necessary  or  prudent  by  Laurus,  including  landlord agreements,
mortgagee  agreements  and  warehouse  agreements,  each  in  form and substance
satisfactory  to  Laurus,  to  adequately  protect and maintain Laurus' security
interest  in  such  Collateral.

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

(q)     All  Inventory  manufactured by it in the United States of America shall
be  produced  in  accordance  with  the  requirements  of the Federal Fair Labor
Standards  Act of 1938, as amended and all rules, regulations and orders related
thereto  or  promulgated  thereunder.

8.     Payment  of  Accounts.
       ---------------------

(a)     Each  Company  will  irrevocably  direct  all  of its present and future
Account  Debtors  and  other  Persons  obligated  to  make payments constituting
Collateral  to  make  such payments directly to the lockboxes maintained by such
Company  (the  "Lockboxes")  with  Col  Taylor  Bank  or  such  other  financial
                ---------
institution  accepted  by  Laurus  in  writing  as  may  be  selected

                                     -9-
<PAGE>

by  such  Company  (the  "Lockbox  Bank")  pursuant  to the terms of the certain
                          -------------
agreements  among one or more Companies, Laurus and/or the Lockbox Bank dated as
of ------- August __, 2006.  On or prior to the Closing Date, each Company shall
and shall cause the Lockbox Bank to enter into all such documentation acceptable
to  Laurus  pursuant  to  which, among other things, the Lockbox Bank agrees to:
(a)  sweep  the Lockbox on a daily basis and deposit all checks received therein
to  an  account  designated  by  Laurus  in writing and (b) comply only with the
instructions  or other directions of Laurus concerning the Lockbox.  All of each
Company's  invoices, account statements and other written or oral communications
directing,  instructing,  demanding  or requesting payment of any Account of any
Company  or  any other amount constituting Collateral shall conspicuously direct
that  all  payments  be  made to the Lockbox or such other address as Laurus may
direct in writing.  If, notwithstanding the instructions to Account Debtors, any
Company  receives  any  payments,  such  Company  shall  immediately  remit such
payments  to  Laurus  in  their  original  form with all necessary endorsements.
Until so remitted, such Company shall hold all such payments in trust for and as
the  property  of  Laurus  and shall not commingle such payments with any of its
other  funds  or  property.

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

9.     Collection  and  Maintenance  ofCollateral.
       ------------------------------------------

(a)     Laurus  may  verify  each  Company's Accounts from time to time, but not
more  often  than  once  every  six  (6)  months, unless an Event of Default has
occurred  and  is  continuing  or  Laurus  believes  that  such  verification is
necessary  to  preserve  or  protect  the Collateral, utilizing an audit control
company  or any other agent of Laurus, provided that Laurus shall not charge the
Companies  for  the  costs  of  verifying  the  Companies' Accounts in excess of
$10,000  per  each  such  verification.

(b)     Proceeds  of  Accounts received by Laurus will be deemed received on the
Business  Day after Laurus' receipt of such proceeds in good funds in dollars of
the  United  States  of  America to an account designated by Laurus.  Any amount
received by Laurus after 12:00 noon (New York time) on any Business Day shall be
deemed  received  on  the  next  Business  Day.

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

                                      -10-
<PAGE>

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

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

(a)     As soon as available, and in any event within ninety (90) days after the
end of each fiscal year of the Parent, except to the extent permitted under Rule
12b-25  promulgated  under  the  Securities  Exchange  Act  of 1934, as amended,
Parent's  audited consolidated financial statements with a report of independent
certified  public  accountants of recognized standing selected by the Parent and
acceptable  to  Laurus  (the  "Accountants"),  which annual financial statements
                               -----------
shall  be  without  qualification  and  shall  include the Parent's consolidated
balance  sheet  as  at the end of such fiscal year and the related statements of
the  Parent's, including Subsidiaries', income, retained earnings and cash flows
for  the  fiscal  year  then ended, prepared on a consolidating and consolidated
basis  to  include  the  Parent, each Subsidiary of the Parent and each of their
respective  affiliates, all in reasonable detail and prepared in accordance with
GAAP,  together with (i) if and when available, copies of any management letters
prepared  by  the Accountants; and (ii) a certificate of the Parent's President,
Chief  Executive  Officer or Chief Financial Officer stating that such financial
statements  have  been  prepared in accordance with GAAP and whether or not such
officer  has  knowledge  of  the  occurrence  of any Default or Event of Default
hereunder  and,  if  so,  stating  in  reasonable  detail the facts with respect
thereto;

(b)     As  soon as available and in any event within forty five (45) days after
the  end  of  each  fiscal quarter of the Parent, except to the extent permitted
under  Rule  12b-25  promulgated  under  the Securities Exchange Act of 1934, as
amended,  an unaudited/internal balance sheet and statements of income, retained
earnings and cash flows of each of the Parent's and each of its Subsidiaries' as
at  the  end of and for such quarter and for the year to date period then ended,
prepared  on  a consolidating and consolidated basis to include the Parent, each
Subsidiary  of the Parent and each of their respective affiliates, in reasonable
detail  and  stating  in comparative form the figures for the corresponding date
and  periods in the previous year, all prepared in accordance with GAAP, subject
to  year-end  adjustments  and  accompanied  by  a  certificate  of the Parent's
President,  Chief Executive Officer or Chief Financial Officer, stating (i) that
such financial statements have been prepared in accordance with GAAP, subject to
year-end  audit  adjustments, and (ii) whether or not such officer has knowledge
of  the  occurrence  of

                                      -11-
<PAGE>

any  Default or Event of Default hereunder not theretofore reported and remedied
and,  if  so,  stating  in  reasonable  detail  the  facts with respect thereto;

(c)     Within  thirty  (30)  days  after  the  end  of  each calendar month, an
unaudited/internal balance sheet and statements of income, retained earnings and
cash  flows  of each of the Parent and its Subsidiaries as at the end of and for
such  month  and  for  the  year  to  date  period  then  ended,  prepared  on a
consolidating  and  consolidated basis to include the Parent, each Subsidiary of
the  Parent  and  each  of their respective affiliates, in reasonable detail and
stating  in  comparative form the figures for the corresponding date and periods
in  the previous year, all prepared in accordance with GAAP, subject to year-end
adjustments  and  accompanied  by a certificate of the Parent's President, Chief
Executive  Officer  or  Chief Financial Officer, stating (i) that such financial
statements have been prepared in accordance with GAAP, subject to year-end audit
adjustments,  and  (ii)  whether  or  not  such  officer  has  knowledge  of the
occurrence of any Default or Event of Default hereunder not theretofore reported
and  remedied  and,  if  so, stating in reasonable detail the facts with respect
thereto;

(d)     Within fifteen (15) days after the end of each month (or more frequently
if  Laurus  so  requests),  agings  of  each Company's Accounts, unaudited trial
balances  and  their  accounts  payable  and  a  calculation  of  each Company's
Accounts,  Eligible  Accounts,  Inventory  and/or  Eligible Inventory, provided,
however,  that if Laurus shall request the foregoing information more often than
as  set  forth  in  the  immediately  preceding  clause, each Company shall have
fifteen  (15)  days  from  each  such request to comply with Laurus' demand; and

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

Notwithstanding  the foregoing, neither the Company's Agent, the Company nor any
of  its Subsidiaries will provide any material, non-public information to Laurus
unless  Laurus  signs  a  confidentiality  agreement and otherwise complies with
Regulation  FD,  under  the  federal  securities  laws.

(f)     The  Parent  shall  deliver,  or  cause the applicable Subsidiary of the
Parent  to  deliver,  such  other  public  information  as  the  Purchaser shall
reasonably  request.

12.     Additional  Representations  and  Warranties.  Each  Company  hereby
        --------------------------------------------
represents  and  warrants  to  Laurus  as  follows:

(a)     Organization,  Good  Standing  and  Qualification.  It  and  each of its
        -------------------------------------------------
Subsidiaries  is a corporation, partnership or limited liability company, as the
case  may  be,  duly  organized, validly existing and in good standing under the
laws  of  its jurisdiction of organization.  It and each of its Subsidiaries has
the  corporate,  limited liability company or partnership, as the   case may be,
power and authority to own and operate its properties and assets and, insofar as
it is or shall be a party thereto, to (i) execute and deliver this Agreement and
the  Ancillary  Agreements, (ii) to issue and sell the Notes, (iii) to issue and
sell  the  7%  Preferred  Stock  and  the

                                      -12-
<PAGE>

shares  of  Common Stock issuable upon conversion of the 7% Preferred Stock (the
"Preferred  Conversion  Shares"),  and  to (iv) carry out the provisions of this
 -----------------------------
Agreement and the Ancillary Agreements and to carry on its business as presently
conducted.  It  and each of its Subsidiaries is duly qualified and is authorized
to  do business and is in good standing as a foreign corporation, partnership or
limited liability company, as the case may be, in all jurisdictions in which the
nature  or  location  of  its  activities  and of its properties (both owned and
leased)  makes  such  qualification necessary, except for those jurisdictions in
which failure to do so has not had, or could not reasonably be expected to have,
individually  or  in  the  aggregate,  a  Material  Adverse  Effect.

(b)     Subsidiaries.  Each  of its direct and indirect Subsidiaries, the direct
        ------------
owner of each such Subsidiary and its percentage ownership thereof, is set forth
on  Schedule  12(b).  No  Inactive  Subsidiary  owns  any  assets  (other  than
    ---------------
immaterial  assets)  or  has  any  significant  operations

(c)     Capitalization;  Voting  Rights.
        -------------------------------

(i)     The  authorized  capital  stock  of  the  Parent,  as of the date hereof
consists of 110,000,000 shares, of which 100,000,000 are shares of Common Stock,
no  par  value per share, 42,855,513 shares of which are issued and outstanding,
and  10,000,000  are  shares of preferred stock, no par value per share of which
1,000,000  shares  of  7%  preferred  stock  are  issued  and  outstanding.  The
authorized,  issued  and  outstanding  capital  stock of each Subsidiary of each
Company  is  set  forth  on  Schedule  12(c).
                             ---------------

(ii)     Except  as  disclosed  on  Schedule  12(c), other than:  (i) the shares
                                    ---------------
reserved  for  issuance  under  the Parent's stock option plans; and (ii) shares
which  may  be  issued  pursuant to this Agreement and the Ancillary Agreements,
there  are  no  outstanding  options,  warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or  arrangements  or agreements of any kind for the purchase or acquisition from
the  Parent  of  any  of its securities.  Except as disclosed on Schedule 12(c),
                                                                 --------------
neither  the  offer,  issuance  or  sale of any of the Notes or the 7% Preferred
Stock  or  the  issuance  of  any  of  the  Preferred Conversion Shares, nor the
consummation  of  any transaction contemplated hereby will result in a change in
the  price  or  number  of  any  securities  of  the  Parent  outstanding, under
anti-dilution  or  other  similar  provisions contained in or affecting any such
securities.

(iii)     All  issued  and outstanding shares of the Parent's Common Stock:  (i)
have  been  duly  authorized  and  validly  issued  and  are  fully  paid  and
non-assessable; and (ii) were issued in compliance with all applicable state and
federal  laws  concerning  the  issuance  of  securities.

(iv)     The  rights,  preferences, privileges and restrictions of the shares of
the  Common  Stock  are as stated in the Parent's Articles of Incorporation (the
"Charter").  The Preferred Conversion Shares have been duly and validly reserved
  ------
for  issuance; it being understood that, notwithstanding the foregoing, prior to
October  2,  2006  (the  "Authorization Deadline Date"), the number of shares of
                          ---------------------------
Common  Stock  otherwise  required  to  be  reserved  by

                                      -13-
<PAGE>

the  Issuer  hereunder  may  be  less  than  that  sufficient to provide for the
issuance  of  Preferred  Conversion  Shares  upon  the full conversion of the 7%
Preferred  Stock;  provided  that, on and after the Authorization Deadline Date,
                   --------  ----
100%  of  the  required  Preferred  Conversion  Shares shall be duly and validly
authorized  and  reserved  for  issuance.  When  issued  in  compliance with the
provisions  of  this  Agreement and the Parent's Charter, the Securities will be
validly  issued,  fully paid and nonassessable, and will be free of any liens or
encumbrances;  provided,  however,  that  the  Securities  may  be  subject  to
               --------   -------
restrictions on transfer under state and/or federal securities laws as set forth
herein or as otherwise required by such laws at the time a transfer is proposed.

(d)     Authorization;  Binding  Obligations.  All  corporate,  partnership  or
        ------------------------------------
limited  liability  company,  as  the  case  may  be,  action  on  its  and  its
Subsidiaries' part (including their respective officers and directors) necessary
for  the  authorization  of  this  Agreement  and  the Ancillary Agreements, the
performance  of all of its and its Subsidiaries' obligations hereunder and under
the  Ancillary  Agreements  on the Closing Date and, the authorization, issuance
and  delivery  of the Notes and the 7% Preferred Stock has been taken or will be
taken  prior  to the Closing Date.  This Agreement and the Ancillary Agreements,
when executed and delivered and to the extent it is a party thereto, will be its
and  its  Subsidiaries'  valid  and binding obligations enforceable against each
such  Person  in  accordance  with  their  terms,  except:

(i)     as  limited  by  applicable  bankruptcy,  insolvency,  reorganization,
moratorium  or  other  laws  of  general  application  affecting  enforcement of
creditors'  rights;  and

(ii)     general  principles  of  equity  that  restrict  the  availability  of
equitable  or  legal  remedies.

The  issuance  of  the  Notes  is  not and will not be subject to any preemptive
rights or rights of first refusal that have not been properly waived or complied
with.  The  issuance  of the 7% Preferred Stock and the subsequent conversion of
the  7%  Preferred Stock into Preferred Conversion Shares is not and will not be
subject  to  any preemptive rights or rights of first refusal that have not been
properly  waived  or  complied  with.

(e)     Liabilities;  Solvency.  Except  as  set  forth  on  Schedule  12(e) (i)
        ----------------------
neither  it  nor  any  of  its  Subsidiaries has any liabilities, except current
liabilities  incurred  in  the  ordinary  course  of  business  and  liabilities
disclosed  in  any  Exchange  Act  Filings.

(ii)     Both  before  and  after giving effect to (a) the Loans incurred on the
Closing  Date  or  such  other  date  as  Loans  requested hereunder are made or
incurred,  (b)  the  disbursement  of  the proceeds of, or the assumption of the
liability in respect of, such Loans pursuant to the instructions or agreement of
any  Company, (c) the payment and accrual of all transaction costs in connection
with  the  foregoing,  and (d) the consummation of the transactions contemplated
herein and in the Ancillary Agreements, each Company and each Subsidiary of each
Company,  is  and  will  be,  Solvent.

                                      -14-
<PAGE>

(f)     Agreements;  Action.  Except as set forth on Schedule 12(f) or Permitted
        -------------------                          --------------
Liens  or  as  disclosed  in  any  Exchange  Act  Filings:

(i)     There  are  no  agreements,  understandings,  instruments,  contracts,
proposed transactions, judgments, orders, writs or decrees to which it or any of
its  Subsidiaries  is a party or to its knowledge by which it is bound which may
involve:  (i)  obligations  (contingent  or otherwise) of, or payments to, it or
any  of  its  Subsidiaries  in  excess of $75,000 (other than obligations of, or
payments  to,  it  or  any  of  its  Subsidiaries  arising from purchase or sale
agreements  entered  into  in  the  ordinary  course  of  business); or (ii) the
transfer  or license of any patent, copyright, trade secret or other proprietary
right  to  or from it (other than licenses arising from the purchase of "off the
shelf"  or  other  standard  products);  or  (iii)  provisions  restricting  the
development,  manufacture  or  distribution  of  its or any of its Subsidiaries'
products  or  services; or (iv) indemnification by it or any of its Subsidiaries
with  respect  to  infringements  of  proprietary  rights.

(ii)     Except  for  Permitted  Liens,  since June 30, 2005 (the "Balance Sheet
                                                                   -------------
Date")  neither  it  nor  any of its Subsidiaries has:  (i) declared or paid any
dividends,  or  authorized  or made any distribution upon or with respect to any
class  or  series of its capital stock; (ii) incurred any indebtedness for money
borrowed  or  any  other  liabilities  (other  than ordinary course obligations)
individually  in  excess  of  $50,000  or,  in  the  case of indebtedness and/or
liabilities  individually  less  than  $50,000,  in  excess  of  $100,000 in the
aggregate;  (iii)  made  any  loans  or  advances  to  any Person not in excess,
individually  or in the aggregate, of $100,000, other than ordinary advances for
travel  expenses;  or  (iv)  sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its Inventory in the ordinary course of
business.

(iii)     For  the  purposes  of subsections (i) and (ii) of this Section 12(f),
all  indebtedness,  liabilities,  agreements,  understandings,  instruments,
contracts and proposed transactions involving the same Person (including Persons
it  or  any  of its applicable Subsidiaries has reason to believe are affiliated
therewith or with any Subsidiary thereof) shall be aggregated for the purpose of
meeting  the  individual  minimum  dollar  amounts  of  such  subsections.

(iv)     the  Parent  maintains  disclosure controls and procedures ("Disclosure
                                                                      ----------
Controls")  designed  to ensure that information required to be disclosed by the
  ------
Parent  in  the  reports  that  it  files  or  submits under the Exchange Act is
recorded, processed, summarized, and reported, within the time periods specified
in  the  rules  and  forms  of  the  SEC.

(v)     The  Parent  makes  and  keeps  books,  records,  and  accounts that, in
reasonable  detail,  accurately  and  fairly  reflect  the  transactions  and
dispositions  of  its  assets.  It  maintains  internal  control  over financial
reporting ("Financial Reporting Controls") designed by, or under the supervision
            ----------------------------
of,  its  principal  executive and principal financial officers, and effected by
its  board  of directors, management, and other personnel, to provide reasonable
assurance  regarding  the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP, including
that:

                                      -15-
<PAGE>

(1)     transactions  are  executed  in  accordance with management's general or
specific  authorization;

(2)     unauthorized  acquisition,  use,  or  disposition of the Parent's assets
that  could  have a material effect on the financial statements are prevented or
timely  detected;

(3)     transactions  are  recorded  as  necessary  to  permit  preparation  of
financial  statements  in  accordance  with  GAAP,  and  that  its  receipts and
expenditures  are  being  made  only  in  accordance  with authorizations of the
Parent's  management  and  board  of  directors;

(4)     transactions  are  recorded  as necessary to maintain accountability for
assets;  and

(5)     the  recorded  accountability  for  assets is compared with the existing
assets  at reasonable intervals, and appropriate action is taken with respect to
any  differences.

(vi)     There  is  no  weakness  in any of its Disclosure Controls or Financial
Reporting  Controls  that is required to be disclosed in any of the Exchange Act
Filings,  except  as  so  disclosed.

(g)     Obligations  to Related Parties.  Except as set forth on Schedule 12(g),
        -------------------------------                          --------------
neither  it  nor any of its Subsidiaries has any obligations to their respective
officers,  directors,  stockholders  or  employees  other  than:

(i)     for  payment  of  salary  for  services rendered and for bonus payments;

(ii)     reimbursement  for  reasonable  expenses  incurred  on  its  or  its
Subsidiaries'  behalf;

(iii)     for  other  standard employee benefits made generally available to all
employees  (including stock option agreements outstanding under any stock option
plan  approved  by its and its Subsidiaries' Board of Directors, as applicable);
and

(iv)     obligations  listed  in  its  and  each  of  its Subsidiary's financial
statements  or  disclosed  in  any  of  the  Parent's  Exchange  Act  Filings.

Except  as described above or set forth on Schedule 12(g), none of its officers,
                                           --------------
directors  or,  to the best of its knowledge, key employees or stockholders, any
of  its Subsidiaries or any members of their immediate families, are indebted to
it  or  any  of its Subsidiaries, individually or in the aggregate, in excess of
$100,000  or  have  any direct or indirect ownership interest in any Person with
which it or any of its Subsidiaries is affiliated or with which it or any of its
Subsidiaries  has  a business relationship, or any Person which competes with it
or  any  of  its Subsidiaries, other than passive investments in publicly traded
companies  (representing  less  than one percent (1%) of such company) which may
compete  with  it  or  any  of  its  Subsidiaries.  Except  as  described

                                      -16-
<PAGE>

above,  none  of its officers, directors or stockholders, or any member of their
immediate  families,  is,  directly  or  indirectly,  interested in any material
contract with it or any of its Subsidiaries and no agreements, understandings or
proposed transactions are contemplated between it or any of its Subsidiaries and
any  such  Person.  Except as set forth on Schedule 12(g), neither it nor any of
                                           --------------
its  Subsidiaries  is a guarantor or indemnitor of any indebtedness of any other
Person.

(h)     Changes.  Except as set forth on Schedule 12(h), since the Balance Sheet
        -------
Date,  except  as  disclosed  in any Schedule to this Agreement or to any of the
Ancillary  Agreements,  there  has  not  been:

(i)     any  change  in  its  or  any  of  its  Subsidiaries'  business, assets,
liabilities,  condition  (financial  or  otherwise),  properties,  operations or
prospects, which, individually or in the aggregate, has had, or could reasonably
be  expected  to  have,  a  Material  Adverse  Effect;

(ii)     any  resignation  or  termination  of  any  of its or its Subsidiaries'
officers,  key  employees  or  groups  of  employees;

(iii)     any material change, except in the ordinary course of business, in its
or  any  of  its  Subsidiaries'  contingent  obligations  by  way  of  guaranty,
endorsement,  indemnity,  warranty  or  otherwise;

(iv)     any  damage,  destruction or loss, whether or not covered by insurance,
which  has  had, or could reasonably be expected to have, individually or in the
aggregate,  a  Material  Adverse  Effect;

(v)     any  waiver by it or any of its Subsidiaries of a valuable right or of a
material  debt  owed  to  it;

(vi)     any  direct  or  indirect  material  loans  made  by  it  or any of its
Subsidiaries  to any of its or any of its Subsidiaries' stockholders, employees,
officers  or  directors,  other  than  advances  made  in the ordinary course of
business;

(vii)     any  material change in any compensation arrangement or agreement with
any  employee,  officer,  director  or  stockholder;

(viii)     any  declaration  or payment of any dividend or other distribution of
its  or  any  of  its  Subsidiaries'  assets;

(ix)     any  labor  organization  activity  related  to  it  or  any  of  its
Subsidiaries;

(x)     any  debt, obligation or liability incurred, assumed or guaranteed by it
or  any of its Subsidiaries, except those for immaterial amounts and for current
liabilities  incurred  in  the  ordinary  course  of  business;

(xi)     any  sale, assignment or transfer of any Intellectual Property or other
intangible  assets;

                                      -17-
<PAGE>

(xii)     any  change  in  any  material  agreement  to  which  it or any of its
Subsidiaries  is  a  party  or  by which either it or any of its Subsidiaries is
bound  which,  either  individually  or  in  the  aggregate,  has  had, or could
reasonably  be  expected  to  have, individually or in the aggregate, a Material
Adverse  Effect;

(xiii)     any  other  event  or  condition  of  any  character  that,  either
individually  or  in  the aggregate, has had, or could reasonably be expected to
have,  individually  or  in  the  aggregate,  a  Material  Adverse  Effect;  or

(xiv)     any  arrangement  or commitment by it or any of its Subsidiaries to do
any  of  the  acts  described  in  subsection (i) through (xiii) of this Section
12(h).

(i)     Title  to  Properties  and  Assets;  Liens, Etc.  Except as set forth on
        -----------------------------------------------
Schedule 12(i), it and each of its Subsidiaries has good and marketable title to
    ----------
their  respective  properties  and  assets,  and  good  title  to  its leasehold
interests,  in  each  case  subject  to  no  Lien,  other  than Permitted Liens.

All facilities, Equipment, Fixtures, vehicles and other properties owned, leased
or  used  by  it  or any of its Subsidiaries are in good operating condition and
repair  and  are  reasonably  fit and usable for the purposes for which they are
being  used.  Except  as  set  forth  on  Schedule  12(i),  it  and  each of its
                                          ---------------
Subsidiaries  is in compliance with all material terms of each lease to which it
is  a  party  or  is  otherwise  bound.

(j)     Intellectual  Property.
        ----------------------

(i)     It  and  each  of  its  Subsidiaries  owns or possesses sufficient legal
rights to all Intellectual Property necessary for their respective businesses as
now  conducted  and,  to  its  knowledge  as presently proposed to be conducted,
without  any  known  infringement  of  the  rights  of  others.  There  are  no
outstanding  options,  licenses or agreements of any kind relating to its or any
of  its Subsidiary's Intellectual Property, nor is it or any of its Subsidiaries
bound  by  or  a  party  to any options, licenses or agreements of any kind with
respect  to  the  Intellectual  Property  of  any  other  Person other than such
licenses  or agreements arising from the purchase of "off the shelf" or standard
products.

(ii)     Neither  it nor any of its Subsidiaries has received any communications
alleging that it or any of its Subsidiaries has violated any of the Intellectual
Property  or  other  proprietary rights of any other Person, nor is it or any of
its  Subsidiaries  aware  of  any  basis  therefor.

(iii)     Neither  it  nor  any  of  its  Subsidiaries believes it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any  of  its  employees  made  prior  to  their  employment  by it or any of its
Subsidiaries,  except  for  inventions, trade secrets or proprietary information
that  have  been  rightfully  assigned  to  it  or  any  of  its  Subsidiaries.

(k)     Compliance  with  Other  Instruments.  Neither  it  nor  any  of  its
        ------------------------------------
Subsidiaries  is  in  violation  or  default  of  (x) any term of its Charter or
Bylaws,  or  (y)  any  provision  of  any

                                      -18-
<PAGE>

indebtedness, mortgage, indenture, contract, agreement or instrument to which it
is  party  or  by  which  it is bound or of any judgment, decree, order or writ,
which  violation  or  default, in the case of this clause (y), has had, or could
reasonably  be  expected  to  have,  either  individually or in the aggregate, a
Material  Adverse  Effect.  The  execution,  delivery  and  performance  of  and
compliance  with  this  Agreement  and the Ancillary Agreements to which it is a
party,  and  the  issuance  of  the Notes and the other Securities each pursuant
hereto  and  thereto, will not, with or without the passage of time or giving of
notice,  result  in  any  such  material  violation,  or  be in conflict with or
constitute a default under any such term or provision, or result in the creation
of  any  Lien upon any of its or any of its Subsidiary's properties or assets or
the  suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license,  authorization or approval applicable to it or any of its Subsidiaries,
their  businesses  or  operations  or  any  of  their  assets  or  properties.

(l)     Litigation.  Except  as set forth on Schedule 12(l), there is no action,
        ----------                           --------------
suit,  proceeding  or  investigation  pending  or,  to  its knowledge, currently
threatened  against it or any of its Subsidiaries that prevents it or any of its
Subsidiaries  from  entering into this Agreement or the Ancillary Agreements, or
from  consummating the transactions contemplated hereby or thereby, or which has
had,  or  could  reasonably  be  expected to have, either individually or in the
aggregate,  a  Material  Adverse Effect, or could result in any change in its or
any of its Subsidiaries' current equity ownership, nor is it aware that there is
any  basis  to  assert  any  of  the  foregoing.  Neither  it  nor  any  of  its
Subsidiaries  is  a  party  to  or subject to the provisions of any order, writ,
injunction,  judgment  or  decree  of  any  court  or  government  agency  or
instrumentality.  There is no action, suit, proceeding or investigation by it or
any of its Subsidiaries currently pending or which it or any of its Subsidiaries
intends  to  initiate.

(m)     Tax Returns and Payments.  Except as set forth on Schedule 12(m), it and
        ------------------------
each  of  its  Subsidiaries has timely filed all tax returns (federal, state and
local)  required  to  be  filed by it.  All taxes shown to be due and payable on
such returns, any assessments imposed, and all other taxes due and payable by it
and  each  of  its Subsidiaries on or before the Closing Date, have been paid or
will  be  paid prior to the time they become delinquent.  Except as set forth on
Schedule  12(m),  neither  it  nor  any  of  its  Subsidiaries has been advised:
 --------------

(i)     that any of its returns, federal, state or other, have been or are being
audited  as  of  the  date  hereof;  or

(ii)     of  any adjustment, deficiency, assessment or court decision in respect
of  its  federal,  state  or  other  taxes.

Neither it nor any of its Subsidiaries has any knowledge of any liability of any
tax to be imposed upon its properties or assets as of the date of this Agreement
that  is  not  adequately  provided  for.

(n)     Employees.  Except as set forth on Schedule 12(n), neither it nor any of
        ---------                          --------------
its  Subsidiaries  has  any  collective  bargaining  agreements  with any of its
employees.  There  is  no  labor  union  organizing  activity pending or, to its
knowledge,  threatened with respect to it or any of its Subsidiaries.  Except as
disclosed  in  the Exchange Act Filings or on Schedule 12(n), neither it nor any
                                              --------------
of its Subsidiaries is a party to or bound by any currently effective employment

                                      -19-
<PAGE>

contract,  deferred compensation arrangement, bonus plan, incentive plan, profit
sharing  plan,  retirement  agreement  or  other  employee  compensation plan or
agreement.  To its knowledge, none of its or any of its Subsidiaries' employees,
nor any consultant with whom it or any of its Subsidiaries has contracted, is in
violation  of  any  term  of  any  employment  contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be  employed  by,  or to contract with, it or any of its Subsidiaries because of
the nature of the business to be conducted by it or any of its Subsidiaries; and
to  its  knowledge  the continued employment by it and its Subsidiaries of their
present  employees,  and  the  performance of its and its Subsidiaries contracts
with  its  independent  contractors,  will  not  result  in  any such violation.
Neither  it  nor  any of its Subsidiaries is aware that any of its or any of its
Subsidiaries'  employees  is  obligated  under any contract (including licenses,
covenants  or  commitments  of any nature) or other agreement, or subject to any
judgment,  decree  or  order  of  any  court or administrative agency that would
interfere  with  their  duties to it or any of its Subsidiaries.  Neither it nor
any of its Subsidiaries has received any notice alleging that any such violation
has  occurred.  Except  for  employees  who  have a current effective employment
agreement  with  it  or  any  of  its  Subsidiaries,  none  of its or any of its
Subsidiaries' employees has been granted the right to continued employment by it
or any of its Subsidiaries or to any material compensation following termination
of  employment  with  it  or  any  of  its Subsidiaries.  Except as set forth on
Schedule  12(n),  neither  it  nor  any  of  its  Subsidiaries is aware that any
      ---------
officer,  key  employee  or  group of employees intends to terminate his, her or
their  employment with it or any of its Subsidiaries, as applicable, nor does it
or  any of its Subsidiaries have a present intention to terminate the employment
of  any  officer,  key  employee  or  group  of  employees.

(o)     Registration  Rights and Voting Rights.  Except as set forth on Schedule
        --------------------------------------                          --------
12(o) and except as disclosed in Exchange Act Filings, neither it nor any of its
-----
Subsidiaries  is  presently  under any obligation, and neither it nor any of its
Subsidiaries  has  granted  any  rights,  to  register  any of its or any of its
Subsidiaries' presently outstanding securities or any of its securities that may
hereafter  be  issued.  Except  as  set  forth  on  Schedule 12(o) and except as
                                                    --------------
disclosed  in  Exchange Act Filings, to its knowledge, none of its or any of its
Subsidiaries' stockholders has entered into any agreement with respect to its or
any  of  its  Subsidiaries'  voting  of  equity  securities.

(p)     Compliance  with  Laws; Permits.  Neither it nor any of its Subsidiaries
        -------------------------------
is  in violation of the Sarbanes-Oxley Act of 2002 or any SEC related regulation
or  rule or any rule of the Principal Market promulgated thereunder or any other
applicable  statute,  rule,  regulation, order or restriction of any domestic or
foreign  government  or  any instrumentality or agency thereof in respect of the
conduct  of  its  business  or the ownership of its properties which has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material  Adverse  Effect.  No  governmental  orders,  permissions,  consents,
approvals  or authorizations are required to be obtained and no registrations or
declarations  are  required  to  be  filed  in connection with the execution and
delivery of this Agreement or any Ancillary Agreement and the issuance of any of
the  Securities, except such as have been duly and validly obtained or filed, or
with respect to any filings that must be made after the Closing Date, as will be
filed  in  a  timely  manner.  It  and each of its Subsidiaries has all material
franchises,  permits,  licenses  and  any  similar  authority  necessary for the
conduct  of  its  business  as  now  being  conducted  by  it,  the  lack

                                      -20-
<PAGE>

of  which could, either individually or in the aggregate, reasonably be expected
to  have  a  Material  Adverse  Effect.

(q)     Environmental  and  Safety Laws.  Neither it nor any of its Subsidiaries
        -------------------------------
is  in  violation  of  any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures  are  or will be required in order to comply with any such existing
statute, law or regulation.  Except as set forth on Schedule 12(q), no Hazardous
                                                    --------------
Materials  (as defined below) are used or have been used, stored, or disposed of
by  it  or  any of its Subsidiaries or, to its knowledge, by any other Person on
any  property  owned,  leased or used by it or any of its Subsidiaries.  For the
purposes  of  the  preceding  sentence,  "Hazardous  Materials"  shall  mean:
                                          --------------------

(i)     materials  which  are  listed  or  otherwise  defined  as "hazardous" or
"toxic"  under  any  applicable  local,  state,  federal and/or foreign laws and
regulations  that  govern  the  existence  and/or  remedy  of  contamination  on
property,  the  protection of the environment from contamination, the control of
hazardous  wastes, or other activities involving hazardous substances, including
building  materials;  and

(ii)     any  petroleum  products  or  nuclear  materials.

(r)     Valid  Offering.  Assuming  the  accuracy  of  the  representations  and
        ---------------
warranties  of Laurus contained in this Agreement, the offer and issuance of the
Securities  will  be exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and will have been registered or
                              --------------
qualified  (or  are  exempt  from  registration  and  qualification)  under  the
registration,  permit  or  qualification  requirements  of  all applicable state
securities  laws.

(s)     Full  Disclosure.  It  and  each of its Subsidiaries has provided Laurus
        ----------------
with  all information requested by Laurus in connection with Laurus' decision to
enter  into  this  Agreement,  including  all  information  each Company and its
Subsidiaries  believe  is reasonably necessary to make such investment decision.
Neither  this Agreement, the Ancillary Agreements nor the exhibits and schedules
hereto  and  thereto  nor  any  other  document  delivered  by  it or any of its
Subsidiaries  to  Laurus  or  its  attorneys or agents in connection herewith or
therewith  or  with the transactions contemplated hereby or thereby, contain any
untrue  statement of a material fact nor omit to state a material fact necessary
in  order  to  make  the statements contained herein or therein, in light of the
circumstances  in which they are made, not misleading. Any financial projections
and  other  estimates  provided  to Laurus by it or any of its Subsidiaries were
based on its and its Subsidiaries' experience in the industry and on assumptions
of  fact and opinion as to future events which it or any of its Subsidiaries, at
the  date  of  the  issuance  of  such  projections or estimates, believed to be
reasonable.

(t)     Insurance.  It  and  each  of  its  Subsidiaries has general commercial,
        ---------
product  liability, fire and casualty insurance policies with coverages which it
believes  are  customary  for  companies  similarly  situated  to  it  and  its
Subsidiaries  in  the  same  or  similar  business.

(u)     SEC  Reports  and Financial Statements.  Except as set forth on Schedule
        --------------------------------------                          --------
12(u),  it  and each of its Subsidiaries has filed all proxy statements, reports
and  other

                                      -21-
<PAGE>

documents  required  to  be  filed by it under the Exchange Act.  The Parent has
furnished  Laurus  with copies of:  (i) its Annual Report on Form 10-KSB for its
fiscal  years ended June 30, 2005; and (ii) its Quarterly Reports on Form 10-QSB
for  its  fiscal  quarters ended September 30, 2005, December 31, 2005 and March
31, 2006, and the Form 8-K filings which it has made during its fiscal year 2006
to  date  (collectively,  the  "SEC  Reports").  Except as set forth on Schedule
                                ------------                            --------
12(u), each SEC Report was, at the time of its filing, in substantial compliance
-----
with  the  requirements  of its respective form and none of the SEC Reports, nor
the financial statements (and the notes thereto) included in the SEC Reports, as
of  their  respective filing dates, contained any untrue statement of a material
fact  or  omitted  to  state  a  material  fact required to be stated therein or
necessary  to  make  the statements therein, in light of the circumstances under
which  they  were  made,  not  misleading.  Such  financial statements have been
prepared  in  accordance  with  GAAP  applied  on  a consistent basis during the
periods  involved  (except  (i)  as may be otherwise indicated in such financial
statements  or  the  notes  thereto  or  (ii)  in  the case of unaudited interim
statements,  to  the  extent they may not include footnotes or may be condensed)
and fairly present in all material respects the financial condition, the results
of  operations  and  cash  flows  of  the  Parent  and  its  Subsidiaries,  on a
consolidated  basis,  as  of,  and  for,  the periods presented in each such SEC
Report.

(v)     Listing.  The  Parent's Common Stock is listed or quoted, as applicable,
        -------
on  the  Principal Market and satisfies all requirements for the continuation of
such  listing  or  quotation,  as applicable, and the Parent shall do all things
necessary for the continuation of such listing or quotation, as applicable.  The
Parent  has not received any notice that its Common Stock will be delisted from,
or  no  longer quoted on, as applicable, the Principal Market or that its Common
Stock  does  not  meet  all  requirements  for  such  listing  or  quotation, as
applicable.

(w)     No Integrated Offering.  Neither it, nor any of its Subsidiaries nor any
        ----------------------
of its Affiliates, nor any Person acting on its or their behalf, has directly or
indirectly  made  any offers or sales of any security or solicited any offers to
buy  any  security  under  circumstances  that  would  cause the offering of the
Securities  pursuant  to  this  Agreement  or  any  Ancillary  Agreement  to  be
integrated  with  prior offerings by it for purposes of the Securities Act which
would  prevent  it  from  issuing  the Securities pursuant to Rule 506 under the
Securities  Act,  or  any  applicable  exchange-related  stockholder  approval
provisions, nor will it or any of its Affiliates or Subsidiaries take any action
or  steps  that would cause the offering of the Securities to be integrated with
other  offerings.

(x)     Stop  Transfer.  The Securities are restricted securities as of the date
        --------------
of  this  Agreement.  Neither it nor any of its Subsidiaries will issue any stop
transfer  order  or  other  order  impeding  the sale and delivery of any of the
Securities  at  such time as the Securities are registered for public sale or an
exemption  from  registration  is  available,  except  as  required by state and
federal  securities  laws.

(y)     Dilution.  It  specifically acknowledges that the Parent's obligation to
        --------
issue  the  shares of Common Stock upon conversion of the 7% Preferred Stock is,
upon  receipt  of  the  Stockholder  Approval,  binding  upon  the  Parent  and
enforceable  regardless  of the dilution such issuance may have on the ownership
interests  of  other  shareholders  of  the  Parent.

                                      -22-
<PAGE>

(z)     Patriot  Act.  It  certifies that, to the best of its knowledge, neither
        ------------
it  nor any of its Subsidiaries has been designated, nor is or shall be owned or
controlled,  by a "suspected terrorist" as defined in Executive Order 13224.  It
hereby  acknowledges  that  Laurus  seeks  to  comply  with  all applicable laws
concerning  money  laundering  and  related activities.  In furtherance of those
efforts,  it  hereby  represents,  warrants and covenants that:  (i) none of the
cash  or property that it or any of its Subsidiaries will pay or will contribute
to Laurus has been or shall be derived from, or related to, any activity that is
deemed  criminal under United States law; and (ii) no contribution or payment by
it  or any of its Subsidiaries to Laurus, to the extent that they are within its
or  any  such  Subsidiary's control shall cause Laurus to be in violation of the
United States Bank Secrecy Act, the United States International Money Laundering
Control  Act  of  1986  or  the  United  States  International  Money Laundering
Abatement  and  Anti-Terrorist  Financing Act of 2001.  It shall promptly notify
Laurus  if  any  of these representations, warranties and covenants ceases to be
true  and  accurate  regarding  it or any of its Subsidiaries.  It shall provide
Laurus  with any additional information regarding it and each Subsidiary thereof
that  Laurus  deems  necessary  or  convenient  to  ensure  compliance  with all
applicable  laws  concerning  money  laundering  and  similar  activities.  It
understands  and  agrees  that  if  at any time it is discovered that any of the
foregoing  representations,  warranties  and  covenants  are  incorrect,  or  if
otherwise  required  by applicable law or regulation related to money laundering
or  similar  activities,  Laurus  may  undertake  appropriate  actions to ensure
compliance  with  applicable  law  or  regulation,  including but not limited to
segregation  and/or  redemption  of  Laurus'  investment  in  it.  It  further
understands  that  Laurus  may release confidential information about it and its
Subsidiaries  and,  if  applicable,  any underlying beneficial owners, to proper
authorities if Laurus, in its sole discretion, determines that it is in the best
interests  of  Laurus  in light of relevant rules and regulations under the laws
set  forth  in  subsection  (ii)  above.

(aa)     Company  Name;  Locations of Offices, Records and Collateral.  Schedule
         ------------------------------------------------------------   --------
12(aa)  sets  forth each Company's name as it appears in official filings in the
 -----
state  of  its  organization,  the  type  of  entity  of  each  Company,  the
organizational  identification  number  issued  by  each  Company's  state  of
organization  or a statement that no such number has been issued, each Company's
state  of  organization,  and  the  location  of  each Company's chief executive
office,  corporate  offices,  warehouses,  other  locations  of  Collateral  and
locations  where  records with respect to Collateral are kept (including in each
case  the  county  of  such locations) and, except as set forth in such Schedule
                                                                        --------
12(aa),  such locations have not changed during the preceding twelve months.  As
------
of  the  Closing  Date,  during  the  prior  five  years, except as set forth in
Schedule 12(aa), no Company has been known as or conducted business in any other
       --------
name  (including trade names).  Each Company has only one state of organization.

(bb)     ERISA.  Based  upon the Employee Retirement Income Security Act of 1974
         -----
("ERISA"),  and  the  regulations and published interpretations thereunder:  (i)
  -----
neither  it  nor  any  of  its  Subsidiaries  has  engaged  in  any  Prohibited
Transactions  (as defined in Section 406 of ERISA and Section 4975 of the Code);
(ii)  it  and  each  of  its Subsidiaries has met all applicable minimum funding
requirements  under  Section 302 of ERISA in respect of its plans; (iii) neither
it  nor  any  of  its  Subsidiaries has any knowledge of any event or occurrence
which  would  cause  the  Pension  Benefit  Guaranty  Corporation  to  institute
proceedings  under  Title IV of ERISA to terminate any employee benefit plan(s);
(iv) neither it nor any of its Subsidiaries has any fiduciary responsibility for
investments  with  respect  to  any  plan  existing  for  the  benefit  of

                                      -23-
<PAGE>

persons  other  than  its or such Subsidiary's employees; and (v) neither it nor
any  of  its  Subsidiaries  has  withdrawn,  completely  or  partially, from any
multi-employer  pension  plan  so  as to incur liability under the Multiemployer
Pension  Plan  Amendments  Act  of  1980.

13.     Covenants.  Each  Company,  as  applicable,  covenants  and  agrees with
        ---------
Laurus  as  follows:

(a)     Stop-Orders.  The Parent shall advise Laurus, promptly after it receives
        -----------
notice  of  issuance  by  the  SEC, any state securities commission or any other
regulatory  authority of any stop order or of any order preventing or suspending
any  offering  of  any  securities  of  the  Parent, or of the suspension of the
qualification  of  the  Common  Stock  of the Parent for offering or sale in any
jurisdiction,  or  the  initiation  of  any  proceeding  for  any  such purpose.

(b)     Listing.  The  Parent shall promptly secure the listing or quotation, as
        -------
applicable,  of  the  shares  of Common Stock issuable upon conversion of the 7%
Preferred  Stock  on  the Principal Market upon which shares of Common Stock are
listed  or  quoted,  as applicable, (subject to official notice of issuance) and
shall  maintain  such  listing or quotation, as applicable, so long as any other
shares  of Common Stock shall be so listed or quoted, as applicable.  The Parent
shall  maintain  the listing or quotation, as applicable, of its Common Stock on
the Principal Market, and will comply in all material respects with the Parent's
reporting,  filing  and  other  obligations  under  the  bylaws  or rules of the
National  Association  of  Securities  Dealers  ("NASD")  and such exchanges, as
                                                  ----
applicable.

(c)     Market  Regulations.  It shall notify the SEC, NASD and applicable state
        -------------------
authorities,  in  accordance  with  their  requirements,  of  the  transactions
contemplated  by  this  Agreement, and shall take all other necessary action and
proceedings  as  may  be  required  and  permitted  by  applicable law, rule and
regulation,  for  the  legal  and valid issuance of the Securities to Laurus and
promptly  provide  copies  thereof  to  Laurus.

(d)     Reporting  Requirements.  It  shall timely file with the SEC all reports
        -----------------------
required  to  be filed pursuant to the Exchange Act and refrain from terminating
its  status as an issuer required by the Exchange Act to file reports thereunder
even  if  the  Exchange  Act or the rules or regulations thereunder would permit
such  termination.

(e)     Use  of  Funds.  It  shall  use  the  proceeds  of the Loans for general
        --------------
working  capital  purposes  only.

(f)     Access  to  Facilities.  It  shall,  and  shall  cause  each  of  its
        ----------------------
Subsidiaries  to,  permit  any  representatives  designated  by  Laurus  (or any
successor  of  Laurus), upon reasonable notice and during normal business hours,
at  Company's  expense  and  accompanied  by  a  representative of Company Agent
(provided  that  no  such prior notice shall be required to be given and no such
representative  shall  be  required  to  accompany  Laurus  in  the event Laurus
believes  such  access  is  necessary  to  preserve or protect the Collateral or
following the occurrence and during the continuance of an Event of Default), to:

(i)     visit  and  inspect  any  of  its  or  any such Subsidiary's properties;

                                      -24-
<PAGE>

(ii)     examine  its  or  any such Subsidiary's corporate and financial records
(unless  such  examination is not permitted by federal, state or local law or by
contract)  and  make  copies  thereof  or  extracts  therefrom;  and

(iii)     discuss  its  or  any such Subsidiary's affairs, finances and accounts
with  its  or  any  such  Subsidiary's  directors,  officers  and  Accountants.

Notwithstanding  the  foregoing,  neither  it  nor any of its Subsidiaries shall
provide  any  material,  non-public  information to Laurus unless Laurus signs a
confidentiality  agreement  and otherwise complies with Regulation FD, under the
federal  securities  laws.

(g)     Taxes.  It  shall, and shall cause each of its Subsidiaries to, promptly
        -----
pay and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon it and
its  Subsidiaries'  income,  profits,  property or business, as the case may be;
provided,  however,  that  any  such tax, assessment, charge or levy need not be
paid  currently  if  (i)  the validity thereof shall currently and diligently be
contested  in  good faith by appropriate proceedings, (ii) such tax, assessment,
charge  or levy shall not result in the imposition of a security interest and/or
lien  on  the Collateral, and (iii) if it and/or such Subsidiary, as applicable,
shall  have  set  aside  on its and/or such Subsidiary's books adequate reserves
with  respect  thereto  in  accordance with GAAP; and provided, further, that it
shall,  and  shall  cause  each  of  its  Subsidiaries  to,  pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose  any  lien  which  may  have  attached  as  security  therefor.

(h)     Insurance.  (i) It shall bear the full risk of loss from any loss of any
        ---------
nature  whatsoever  with  respect  to  the  Collateral  and  it  and each of its
Subsidiaries  will,  jointly  and severally, bear the full risk of loss from any
loss  of  any  nature whatsoever with respect to the assets pledged to Laurus as
security  for  the  Obligations.   Furthermore,  it  will  insure  or  cause the
Collateral  to  be  insured  in Laurus' name as an additional insured and lender
loss  payee,  with an appropriate loss payable endorsement in form and substance
satisfactory  to  Laurus,  against  loss  or  damage  by  fire, flood, sprinkler
leakage, theft, burglary, pilferage, loss in transit and other risks customarily
insured  against  by  companies in similar business similarly situated as it and
its  Subsidiaries  including but not limited to workers compensation, public and
product  liability  and  business interruption, and such other hazards as Laurus
shall  specify  in  amounts  and  under insurance policies and bonds by insurers
acceptable  to Laurus and all premiums thereon shall be paid by such Company and
the  policies  delivered  to  Laurus.  If  any  such Company fails to obtain the
insurance and in such amounts of coverage as otherwise required pursuant to this
Section  (h),  Laurus  may  procure such insurance and the cost thereof shall be
promptly  reimbursed  by  the  Companies,  jointly  and  severally,  and  shall
constitute  Obligations.

(ii)     No Company's insurance coverage shall be impaired or invalidated by any
act  or  neglect  of any Company or any of its Subsidiaries and the insurer will
provide  Laurus with no less than thirty (30) days notice prior of cancellation;

                                      -25-
<PAGE>

(iii)     Laurus,  in connection with its status as a lender loss payee, will be
assigned  at  all  times  to a first lien position until such time as all Laurus
Obligations  have  been  indefeasibly  satisfied  in  full.

(i)     Intellectual  Property.  It  shall,  and  shall  cause  each  of  its
        ----------------------
Subsidiaries  to,  maintain  in  full  force and effect its corporate existence,
rights  and  franchises  and  all  licenses and other rights to use Intellectual
Property  owned  or possessed by it and reasonably deemed to be necessary to the
conduct  of  its  business.

(j)     Properties.  It shall, and shall cause each of its Subsidiaries to, keep
        ----------
its  properties in good repair, working order and condition, reasonable wear and
tear  excepted,  and  from  time  to  time  make all needful and proper repairs,
renewals,  replacements,  additions  and improvements thereto; and it shall, and
shall cause each of its Subsidiaries to, at all times comply with each provision
of  all leases to which it is a party or under which it occupies property if the
breach of such provision could reasonably be expected to have a Material Adverse
Effect.

(k)     Confidentiality.  It  shall  not,  and  shall  not  permit  any  of  its
        ---------------
Subsidiaries  to, disclose, and will not include in any public announcement, the
name  of  Laurus,  unless expressly agreed to by Laurus or unless and until such
disclosure  is  required  by  law or applicable regulation, and then only to the
extent of such requirement.  Notwithstanding the foregoing, each Company and its
Subsidiaries  may  disclose  Laurus' identity and the terms of this Agreement to
its  current  and  prospective  debt  and  equity  financing  sources.

(l)     Required  Approvals.  It  shall  not,  and  shall  not permit any of its
        -------------------
Subsidiaries to, without the prior written consent of Laurus, (i) create, incur,
assume  or  suffer  to  exist any indebtedness (exclusive of trade debt) whether
secured or unsecured other than each Company's indebtedness to Laurus and as set
forth  on  Schedule 13(l)(i) attached hereto and made a part hereof; (ii) cancel
           -----------------
any  debt owing to it in excess of $100,000 in the aggregate during any 12 month
period;  (iii)  assume,  guarantee,  endorse  or  otherwise  become  directly or
contingently  liable  in  connection  with  any obligations of any other Person,
except  the  endorsement of negotiable instruments by it or its Subsidiaries for
deposit  or  collection  or  similar  transactions  in  the  ordinary  course of
business;  (iv)  directly  or  indirectly  declare,  pay or make any dividend or
distribution  on  any  class of its Stock or apply any of its funds, property or
assets  to  the  purchase,  redemption  or other retirement of any of its or its
Subsidiaries'  Stock,  or  issue  any  preferred  stock;  (v)  purchase  or hold
beneficially any Stock or other securities or evidences of indebtedness of, make
or  permit  to exist any loans or advances to, or make any investment or acquire
any interest whatsoever in, any other Person, including any partnership or joint
venture,  except  (x)  travel  advances,  (y) loans to its and its Subsidiaries'
officers  and  employees  not exceeding at any one time an aggregate of $25,000,
and  (z)  loans  to  its  existing Subsidiaries so long as such Subsidiaries are
designated  as  either a co-borrower hereunder or has entered into such guaranty
and security documentation required by Laurus, including, without limitation, to
grant  to  Laurus  a first priority perfected security interest in substantially
all of such Subsidiary's assets to secure the Obligations; (vi) create or permit
to  exist  any  Subsidiary,  other  than any Subsidiary in existence on the date
hereof and listed in Schedule 12(b) unless such new Subsidiary is a wholly-owned
                     --------------
Subsidiary  and  is  designated  by  Laurus as either a co-borrower or guarantor
hereunder  and  such  Subsidiary  shall have entered into all such documentation
required

                                      -26-
<PAGE>

by  Laurus,  including,  without limitation, to grant to Laurus a first priority
perfected  security interest in substantially all of such Subsidiary's assets to
secure  the  Obligations;  (vii) directly or indirectly, prepay any indebtedness
(other  than  to  Laurus and in the ordinary course of business), or repurchase,
redeem,  retire  or otherwise acquire any indebtedness (other than to Laurus and
in  the  ordinary  course  of  business)  except  to  make scheduled payments of
principal  and  interest thereof; (viii) enter into any merger, consolidation or
other  reorganization  with or into any other Person or acquire all or a portion
of  the  assets or Stock of any Person or permit any other Person to consolidate
with  or  merge with it, unless (1) such Company is the surviving entity of such
merger  or  consolidation, (2) no Event of Default shall exist immediately prior
to  and  after  giving  effect to such merger or consolidation, (3) such Company
shall  have  provided Laurus copies of all documentation relating to such merger
or  consolidation  and (4) such Company shall have provided Laurus with at least
thirty  (30)  days'  prior  written notice of such merger or consolidation; (ix)
materially  change  the nature of the business in which it is presently engaged;
(x)  become subject to (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would (under any
circumstances)  restrict  its  or  any of its Subsidiaries' right to perform the
provisions of this Agreement or any of the Ancillary Agreements; (xi) change its
fiscal  year or make any changes in accounting treatment and reporting practices
without  prior written notice to Laurus except as required by GAAP or in the tax
reporting  treatment  or  except  as  required  by  law;  (xii)  enter  into any
transaction  with  any  employee,  director or Affiliate, except in the ordinary
course  on  arms-length  terms;  (xiii)  bill Accounts under any name except the
present  name  of  such  Company;  or  (xiv)  sell, lease, transfer or otherwise
dispose  of  any of its properties or assets, or any of the properties or assets
of  its  Subsidiaries, except for (1) sales, leases, transfer or dispositions by
any  Company  to  any  other  Company, (2) the sale of Inventory in the ordinary
course of business and (3) the disposition or transfer in the ordinary course of
business  during  any fiscal year of obsolete and worn-out Equipment and only to
the  extent  that  (x)  the proceeds of any such disposition are used to acquire
replacement  Equipment  which  is  subject  to  Laurus'  first priority security
interest or are used to repay Loans or to pay general corporate expenses, or (y)
following  the  occurrence  of an Event of Default which continues to exist, the
proceeds  of  which are remitted to Laurus to be held as cash collateral for the
Obligations.

(m)     Reissuance  of  Securities.  The  Parent  shall  reissue  certificates
        --------------------------
representing the Securities without the legends set forth in Section 39 below at
such  time  as:

(i)     the  holder  thereof is permitted to dispose of such Securities pursuant
to  Rule  144(k)  under  the  Securities  Act;  or

(ii)     upon  resale  subject to an effective registration statement after such
Securities  are  registered  under  the  Securities  Act.

The  Parent  agrees  to  cooperate  with  Laurus  in connection with all resales
pursuant  to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to
allow  such  resales  provided  the  Parent  and  its counsel receive reasonably
requested  representations  from  Laurus  and  broker,  if  any.

                                      -27-
<PAGE>

(n)     Opinion.  On  the  Closing  Date,  it shall deliver to Laurus an opinion
        -------
acceptable  to  Laurus  from  each  Company's  legal counsel.  Each Company will
provide,  at the Companies' joint and several expense, such other legal opinions
in  the  future as are reasonably necessary for the resale and conversion of the
7%  Preferred  Stock.

(o)     Legal  Name,  etc.  Except as set forth on Schedule 13(o), it shall not,
        -----------------
without  providing Laurus with 30 days prior written notice, change (i) its name
as it appears in the official filings in the state of its organization, (ii) the
type  of  legal  entity  it is, (iii) its organization identification number, if
any,  issued by its state of organization, (iv) its state of organization or (v)
amend  its  certificate  of  incorporation,  by-laws  or  other  organizational
document.  In  connection with Parent's proposal to change its name from Trinity
Learning  Corporation  to  TWL  Corporation,  it shall provide written notice to
Laurus  within five (5) days of effectiveness of such name change and shall have
taken  on  or  prior to the date of effectiveness of such name change all action
necessary  to  ensure  that  Laurus'  security  interest  in  the  Collateral is
unaffected  by  the  effectiveness  of  such  name  change,  including,  without
limitation,  assisting  Laurus  in  the  preparation  of  amendment filings with
respect to UCC-1 on file for the benefit of Laurus, as well as amendment filings
with  the  United  States  Patent  and  Trademark  Office.

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

(q)     Notices.  It  and  each of its Subsidiaries shall promptly inform Laurus
        -------
in writing of:  (i) the commencement of all proceedings and investigations by or
before  and/or  the  receipt  of  any  notices  from,  any  governmental  or
nongovernmental  body and all actions and proceedings in any court or before any
arbitrator  against or in any way concerning any event which could reasonably be
expected to have singly or in the aggregate, a Material Adverse Effect; (ii) any
change  which  has  had,  or  could  reasonably  be expected to have, a Material
Adverse  Effect;  (iii) any Event of Default or Default; and (iv) any default or
any  event  which  with  the  passage  of time or giving of notice or both would
constitute a default under any agreement for the payment of money to which it or
any  of its Subsidiaries is a party or by which it or any of its Subsidiaries or
any  of its or any such Subsidiary's properties may be bound the breach of which
would  have  a  Material  Adverse  Effect.

(r)     Margin Stock.  It shall not permit any of the proceeds of the Loans made
        ------------
hereunder  to  be  used  directly or indirectly to "purchase" or "carry" "margin
stock" or to repay indebtedness incurred to "purchase" or "carry" "margin stock"
within the respective meanings of each of the quoted terms under Regulation U of
the  Board  of  Governors  of the Federal Reserve System as now and from time to
time  hereafter  in  effect.

(s)     Offering  Restrictions.  Except  as  previously  disclosed  in  the  SEC
        ----------------------
Reports or in the Exchange Act Filings, or stock or stock options granted to its
employees  or  directors, neither it nor any of its Subsidiaries shall, prior to
the  full  repayment  of  the  Notes  (together  with

                                      -28-
<PAGE>

all  accrued  and  unpaid interest and fees related thereto), the termination of
this  Agreement and the full redemption of the 7% Preferred Stock (or in lieu of
full  redemption,  the  full conversion of the 7% Preferred Stock into Preferred
Conversion  Shares),  (x)  enter  into  any  equity  line of credit agreement or
similar  agreement  with a floorless pricing feature or (y) issue, or enter into
any  agreement  to  issue,  any  securities  with  a floorless variable/floating
conversion  and/or  pricing  feature  which  are  or  could be (by conversion or
registration)  free-trading  securities  (i.e.  common  stock  subject  to  a
registration  statement).

(t)     Authorization  and Reservation of Shares.  The Parent shall at all times
        ----------------------------------------
have  authorized  and  reserved a sufficient number of shares of Common Stock to
provide  for  the full conversion of the 7% Preferred Stock; it being understood
that,  notwithstanding  the foregoing, prior to the Authorization Deadline Date,
the  number  of  shares of Common Stock otherwise required to be reserved by the
Issuer hereunder may be less than that sufficient to provide for the issuance of
Preferred  Conversion Shares upon the full conversion of the 7% Preferred Stock;
provided  that,  on  and  after  the  Authorization  Deadline  Date, 100% of the
--------  ----
required  Preferred  Conversion  Shares shall be duly and validly authorized and
reserved  for  issuance.

(u)     FIRPTA.  Neither  it,  nor  any of its Subsidiaries, is a "United States
        ------
real  property holding corporation" as such term is defined in Section 897(c)(2)
of  the  Code and Treasury Regulation Section 1.897-2 promulgated thereunder and
it  and  each  of its Subsidiaries shall at no time take any action or otherwise
acquire  any interest in any asset or property to the extent the effect of which
shall  cause  it  and/or  such  Subsidiary,  as the case may be, to be a "United
States  real  property  holding  corporation" as such term is defined in Section
897(c)(2)  of  the  Code  and  Treasury  Regulation  Section 1.897-2 promulgated
thereunder.

(v)     No  Restrictions  on  Addition  Financings.
        ------------------------------------------

On  or  prior  to the second (2nd) anniversary of the date of this Agreement, it
shall  not,  and  shall  not  permit  its  Subsidiaries  to,  agree, directly or
indirectly, to any restriction with any Person which materially limits it or any
of  its  Subsidiaries  from  consummating  the  incurrence  of  any  additional
indebtedness  and/or  the  sale  or  issuance of any equity interests from or to
Laurus.

(w)     Prohibition  of Amendments to Subordinated Debt Documentation.  It shall
        -------------------------------------------------------------
not,  without  the  prior written consent of Laurus, amend, modify or in any way
alter  the  terms  of  any  of  the  Subordinated  Debt  Documentation.

(x)     Prohibitions  of Payment Under Subordinated Debt Documentation.  Neither
        --------------------------------------------------------------
it  nor  any  of  its  Subsidiaries  shall, without the prior written consent of
Laurus,  make  any  payments  in  respect  of  the indebtedness evidenced by the
Subordinated  Debt  Documentation  other  than  as  permitted  pursuant  to  the
Subordination  Agreement.

(y)     Inactive  Subsidiaries.     Neither  it nor any of its Subsidiaries will
        ----------------------
not  permit  its Inactive Subsidiaries to hold significant assets or liabilities
or  engage  in  any  business  activities.

                                      -29-
<PAGE>

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

15.     Representations,  Warranties  and  Covenants  of  Laurus.  Laurus hereby
        --------------------------------------------------------
represents,  warrants  and  covenants  to  each  Company  as  follows:

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

(b)     Investment  Representations.  Laurus understands that the Securities are
        ---------------------------
being  offered  pursuant  to  an  exemption  from  registration contained in the
Securities  Act  based  in  part  upon Laurus' representations contained in this
Agreement,  including,  without  limitation,  that  Laurus  is  an  "accredited
investor"  within  the meaning of Regulation D under the Securities Act.  Laurus
has  received  or  has  had  full  access  to  all  the information it considers
necessary or appropriate to make an informed investment decision with respect to
the Notes and 7% Preferred Stock to be issued to it under this Agreement and the
Securities  acquired  by  it  upon  the  conversion  of  the 7% Preferred Stock.

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

(d)     Investment  for  Own Account.  The Securities are being issued to Laurus
        ----------------------------
for  its  own account for investment only, and not as a nominee or agent and not
with  a  view  towards  or  for  resale  in  connection with their distribution.

(e)     Laurus  Can  Protect  Its Interest.  Laurus represents that by reason of
        ----------------------------------
its,  or  of its management's, business and financial experience, Laurus has the
capacity  to  evaluate  the merits and risks of its investment in the Notes, and
the  Securities  and  to  protect  its  own  interests  in  connection  with the
transactions  contemplated  in  this  Agreement,  and  the  Ancillary

                                      -30-
<PAGE>

Agreements.  Further,  Laurus is aware of no publication of any advertisement in
connection  with the transactions contemplated in the Agreement or the Ancillary
Agreements.

(f)     Accredited  Investor.  Laurus  represents  that  it  is  an  accredited
        --------------------
investor  within  the  meaning  of  Regulation  D  under  the  Securities  Act.

(g)     Shorting.  Neither  Laurus  nor  any  of  its  Affiliates  or investment
        --------
partners  has,  will,  or  will  cause  any Person, to directly engage in "short
sales"  of  the Parent's Common Stock as long as any amount under any Note shall
remain  outstanding.

(h)     Patriot  Act.  Laurus  certifies that, to the best of Laurus' knowledge,
        ------------
Laurus  has not been designated, and is not owned or controlled, by a "suspected
terrorist" as defined in Executive Order 13224.  Laurus seeks to comply with all
applicable  laws  concerning  money  laundering  and  related  activities.  In
furtherance  of  those efforts, Laurus hereby represents, warrants and covenants
that:  (i)  none  of the cash or property that Laurus will use to make the Loans
has  been  or  shall be derived from, or related to, any activity that is deemed
criminal  under  United  States  law;  and (ii) no disbursement by Laurus to any
Company  to  the  extent  within  Laurus'  control,  shall cause Laurus to be in
violation of the United States Bank Secrecy Act, the United States International
Money  Laundering  Control  Act of 1986 or the United States International Money
Laundering  Abatement  and  Anti-Terrorist  Financing Act of 2001.  Laurus shall
promptly  notify  the Company Agent if any of these representations ceases to be
true  and  accurate  regarding Laurus.  Laurus agrees to provide the Company any
additional  information  regarding  Laurus  that  the Company deems necessary or
convenient  to  ensure  compliance  with  all  applicable  laws concerning money
laundering and similar activities.  Laurus understands and agrees that if at any
time  it  is discovered that any of the foregoing representations are incorrect,
or  if  otherwise  required  by  applicable  law  or regulation related to money
laundering  similar  activities,  Laurus  may  undertake  appropriate actions to
ensure  compliance  with applicable law or regulation, including but not limited
to  segregation  and/or  redemption of Laurus' investment in the Parent.  Laurus
further understands that the Parent may release information about Laurus and, if
applicable,  any  underlying  beneficial  owners,  to  proper authorities if the
Parent,  in  its sole discretion, determines that it is in the best interests of
the  Parent  in light of relevant rules and regulations under the laws set forth
in  subsection  (ii)  above.

(i)     Limitation  on Acquisition of Common Stock.  Notwithstanding anything to
        ------------------------------------------
the  contrary  contained  in  this  Agreement,  any  Ancillary Agreement, or any
document,  instrument  or  agreement  entered  into in connection with any other
transaction  entered  into  by  and  between  Laurus  and  any  Company  (and/or
Subsidiaries  or  Affiliates  of any Company), Laurus shall not acquire stock in
the  Parent  (including, without limitation, pursuant to a contract to purchase,
by  exercising  an  option  or  warrant,  by  converting  any  other security or
instrument,  by  acquiring  or  exercising any other right to acquire, shares of
stock  or  other  security  convertible  into  shares of stock in the Parent, or
otherwise,  and  such options, warrants, conversion or other rights shall not be
exercisable)  to  the  extent  such  stock  acquisition would cause any interest
(including  any original issue discount) payable by any Company to Laurus not to
qualify  as  portfolio  interest, within the meaning of Section 881(c)(2) of the
Internal  Revenue  Code  of  1986,  as amended (the "Code") by reason of Section
                                                     ----
881(c)(3)  of  the  Code,  taking  into account the constructive ownership rules
under  Section  871(h)(3)(C)  of  the  Code  (the  "Stock  Acquisition
                                                    ------------------

                                      -31-
<PAGE>

Limitation").  The  Stock Acquisition Limitation shall automatically become null
----------
and  void  without any notice to any Company upon the earlier to occur of either
(a) the Parent's delivery to Laurus of a Notice of Redemption (as defined in the
Secured  Term  Note)  or (b) the existence of an Event of Default at a time when
the  average closing price of the Common Stock as reported by Bloomberg, L.P. on
the  Principal Market for the immediately preceding five trading days is greater
than  or equal to 150% of the Fixed Conversion Price (as defined in 7% Preferred
Stock).

16.     Power  of  Attorney.  Each  Company hereby appoints Laurus, or any other
        -------------------
Person  whom  Laurus  may  designate  as such Company's attorney, with power to:
(a)(i)  execute  any security related documentation on such Company's behalf and
to  supply  any  omitted  information and correct patent errors in any documents
executed  by  such  Company  or on such Company's behalf; (ii) to file financing
statements against such Company covering the Collateral (and, in connection with
the  filing  of  any  such financing statements, describe the Collateral as "all
assets  and  all personal property, whether now owned and/or hereafter acquired"
(or  any  substantially  similar  variation thereof)); (iii) sign such Company's
name  on  any invoice or bill of lading relating to any Accounts, drafts against
Account  Debtors,  schedules and assignments of Accounts, notices of assignment,
financing  statements  and  other  public  records, verifications of Account and
notices to or from Account Debtors; and (iv) to do all other things Laurus deems
necessary to carry out the terms of Section 6 of this Security Agreement and (b)
upon  the  occurrence  and  during  the  continuance of an Event of Default; (v)
endorse  such  Company's  name  on any checks, notes, acceptances, money orders,
drafts  or  other  forms  of  payment  or  security  that  may come into Laurus'
possession; (vi) verify the validity, amount or any other matter relating to any
Account  by  mail, telephone, telegraph or otherwise with Account Debtors; (vii)
do  all  other  things  necessary  to  carry  out  this Agreement, any Ancillary
Agreement  and  all  related  documents;  and  (viii)  notify  the  post  office
authorities  to  change  the  address  for delivery of such Company's mail to an
address  designated  by  Laurus,  and  to  receive, open and dispose of all mail
addressed  to  such Company.  Each Company hereby ratifies and approves all acts
of  the  attorney.  Neither Laurus, nor the attorney will be liable for any acts
or  omissions or for any error of judgment or mistake of fact or law, except for
gross  negligence  or  willful  misconduct.  This  power,  being coupled with an
interest, is irrevocable so long as Laurus has a security interest and until the
Obligations  have  been  fully  satisfied.

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

                                      -32-
<PAGE>

occurs  prior to the first anniversary of the Closing Date, (2) two percent (2%)
of  the Capital Availability Amount if such payment occurs on or after the first
anniversary  of  the  Closing  Date  and  prior to the second anniversary of the
Closing Date and (3) one percent (1%) of the Capital Availability Amount if such
termination  occurs  thereafter  during  the  Term;  such  fee being intended to
compensate  Laurus  for  its  costs and expenses incurred in initially approving
this  Agreement  or  extending  same.  Such  early  payment fee shall be due and
payable  jointly  and  severally  by the Companies to Laurus upon termination by
acceleration  of  this Agreement by Laurus due to the occurrence and continuance
of  an  Event  of  Default;  provided  that,  in  the  event  of  termination by
acceleration  on  account  of  the  occurrence  and  continuance  of an Event of
Default,  the  lesser  of  (x)  the  applicable  early  payment  fee and (y) the
remainder of (I) the aggregate amount of the Default Payments (as defined in the
Notes)  less  (II) the then outstanding principal balance of the Notes, shall be
waived  by  Laurus.

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

19.     Events  of  Default.  The  occurrence of any of the following beyond any
        -------------------
applicable  grace  period  shall  constitute  an  "Event  of  Default":
                                                   ------------------

(a)     failure  to  make  payment  of  any  of  the  Obligations  when required
hereunder  (the "Obligation Failure"), and, in any such case, such failure shall
continue  for  a  period of five (5) days following the date upon which any such
payment  was  due;

(b)     failure  by any Company or any of its Subsidiaries to pay and discharge,
or  cause  to  be  paid  and discharged, when due and payable, all lawful taxes,
assessments  and  governmental  charges  or  levies  imposed  upon  it  and  its
Subsidiaries'  income,  profits,  property  or  business,  as  the  case may be;
provided,  however,  that  any  such tax, assessment, charge or levy need not be
paid  currently  if  (i)  the validity thereof shall currently and diligently be
contested  in  good faith by appropriate proceedings, (ii) such tax, assessment,
charge  or levy shall not result in the imposition of a security interest and/or
lien  on  the Collateral, and (iii) if it and/or such Subsidiary, as applicable,
shall  have  set  aside  on its and/or such Subsidiary's books adequate reserves
with  respect  thereto  in  accordance  with  GAAP;

(c)     failure  to  perform  under,  and/or  committing  any  breach of, in any
material respect, this Agreement or any covenant contained herein, which failure
or  breach  (collectively  the  "Failure")  shall  continue without remedy for a
period  of  thirty  (30)  days  after  the  occurrence  thereof;

                                      -33-
<PAGE>

(d)     any  representation, warranty or statement made by any Company or any of
its  Subsidiaries  hereunder,  in  any  Ancillary  Agreement,  any  certificate,
statement  or  document delivered pursuant to the terms hereof, or in connection
with the transactions contemplated by this Agreement should prove to be false or
misleading  in any material respect on the date as of which made or deemed made;

(e)     the  occurrence  of  any  default (or similar term) in the observance or
performance  of any other agreement or condition relating to any indebtedness or
contingent  obligation  of  any  Company  or any of its Subsidiaries (including,
without  limitation,  the  indebtedness  evidenced  by  the  Subordinated  Debt
Documentation)  beyond the period of grace (if any), the effect of which default
is to cause, or permit the holder or holders of such indebtedness or beneficiary
or  beneficiaries  of  such contingent obligation to cause, such indebtedness to
become  due prior to its stated maturity or such contingent obligation to become
payable  solely to the extent that the principal amount of any such indebtedness
or  contingent  obligation exceeds (x) $50,000 in respect of any single instance
and  (y),  when  aggregated  together with all other defaulted (or similar term)
indebtedness  and  contingent  oblugations,  $100,000  in  the  aggregate;

(f)     attachments  or  levies  in excess of $100,000 in the aggregate are made
upon  any  Company's  assets  or  a  judgment  is rendered against any Company's
property  involving  a liability of more than $100,000 which shall not have been
vacated, discharged, stayed or bonded within forty-five (45) days from the entry
thereof;

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

(h)     any Lien created hereunder or under any Ancillary Agreement ceases to be
or  is  not  a  valid  and  perfected  Lien  having  a  first priority interest;

(i)     any  Company  or any of its Subsidiaries shall (i) apply for, consent to
or  suffer  to  exist  the  appointment  of,  or  the taking of possession by, a
receiver,  custodian, trustee or liquidator of itself or of all or a substantial
part  of  its  property,  (ii)  make  a  general  assignment  for the benefit of
creditors, (iii) commence a voluntary case under the federal bankruptcy laws (as
now  or  hereafter  in effect), (iv) be adjudicated a bankrupt or insolvent, (v)
file  a  petition  seeking  to take advantage of any other law providing for the
relief  of debtors, (vi) acquiesce to without challenge within fifteen (15) days
of  the  filing  thereof, or fail to have dismissed within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii)  take  any  action  for  the  purpose  of  effecting any of the foregoing;

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

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

                                      -34-
<PAGE>

(l)     any "Person" or "group" (as such terms are defined in Sections 13(d) and
14(d)  of  the Exchange Act, as in effect on the date hereof), other than Laurus
and  Palisades  Master  Fund,  L.P.,  is  or  becomes the "beneficial owner" (as
defined  in  Rules  13(d)-3  and  13(d)-5  under  the Exchange Act), directly or
indirectly,  of  35%  or  more  on a fully diluted basis of the then outstanding
voting  equity interest of the Parent, (ii) the Board of Directors of the Parent
shall  cease to consist of a majority of the Board of Directors of the Parent on
the  date hereof (or directors appointed by a majority of the board of directors
in  effect  immediately prior to such appointment) or (iii) the Parent or any of
its  Subsidiaries merges or consolidates with, or sells all or substantially all
of  its  assets  to,  any  other  person  or  entity;

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

(n)     an  Event  of Default (or similar term) shall occur under and as defined
in  any  Note  or  in  any  other  Ancillary  Agreement;

(o)     any  Company  or  any  of  its  Subsidiaries  shall  breach  any term or
provision  of any Ancillary Agreement to which it is a party (including, without
limitation,  Section 7(e) of the Registration Rights Agreement), in any material
respect  which  breach  is  not cured within any applicable cure or grace period
provided  in  respect  thereof  (if  any);

(p)     any Company or any of its Subsidiaries attempts to terminate, challenges
the  validity  of,  or  its  liability  under  this  Agreement  or any Ancillary
Agreement, or any proceeding shall be brought to challenge the validity, binding
effect  of  any  Ancillary  Agreement  or any Ancillary Agreement ceases to be a
valid,  binding  and  enforceable  obligation  of  such  Company  or  any of its
Subsidiaries  (to  the  extent  such  Persons  are  a  party  thereto);

(q)     an  SEC  stop  trade order or Principal Market trading suspension of the
Common  Stock  shall be in effect for five (5) consecutive days or five (5) days
during  a  period  of  ten  (10)  consecutive  days,  excluding  in  all cases a
suspension  of all trading on a Principal Market, provided that the Parent shall
not  have  been  able to cure such trading suspension within thirty (30) days of
the  notice  thereof or list the Common Stock on another Principal Market within
sixty  (60)  days  of  such  notice;  or

(r)     Subject  to Stockholder Approval, the Parent's failure to deliver Common
Stock  to  Laurus pursuant to and in the form required by the 7% Preferred Stock
and  this  Agreement, if such failure to deliver Common Stock shall not be cured
within three (3) Business Days or any Company is required to issue a replacement
Note  to  Laurus  and  such  Company shall fail to deliver such replacement Note
within  ten  (10)  Business  Days;  or

(s)     any Company, or any of its Subsidiaries shall take or participate in any
action which would be prohibited under the provisions of any of the Subordinated
Debt  Documentation  or  make  any  payment on the indebtedness evidenced by the
Subordinated  Debt

                                      -35-
<PAGE>

Documentation  to  a Person that was not entitled to receive such payments under
the  subordination  provisions of applicable Subordinated Debt Documentation; or

(t)     the  Issuer  shall  not  have  caused,  on or prior to the Authorization
Deadline  Date,  (x)  a  duly  authorized increase (through shareholder vote and
otherwise  required  to effect such increase) in its authorized shares of common
stock  to  no less than 750,000,000 shares of Common Stock (or such other number
as  may  be  acceptable to Laurus) or (y) its board of directors to reserve that
number  of  shares of Common Stock that is necessary to provide for the issuance
of  Preferred  Conversion  Shares  upon  the full conversion of the 7% Preferred
Stock.

20.     Remedies.  Following the occurrence of an Event of Default, Laurus shall
        --------
have  the  right  to demand repayment in full of all Obligations, whether or not
otherwise  due.  Until  all  Obligations  have  been  fully  and  indefeasibly
satisfied,  Laurus  shall retain its Lien in all Collateral.  Laurus shall have,
in addition to all other rights provided herein and in each Ancillary Agreement,
the  rights  and  remedies  of  a  secured  party under the UCC, and under other
applicable  law,  all  other  legal  and equitable rights to which Laurus may be
entitled, including the right to take immediate possession of the Collateral, to
require each Company to assemble the Collateral, at Companies' joint and several
expense,  and  to  make  it  available to Laurus at a place designated by Laurus
which  is reasonably convenient to both parties and to enter any of the premises
of  any  Company  or  wherever  the Collateral shall be located, with or without
force  or  process of law, and to keep and store the same on said premises until
sold  (and  if said premises be the property of any Company, such Company agrees
not  to  charge  Laurus  for  storage  thereof),  and the right to apply for the
appointment  of a receiver for such Company's property.  Further, Laurus may, at
any  time or times after the occurrence of an Event of Default, sell and deliver
all  Collateral  held  by or for Laurus at public or private sale for cash, upon
credit  or  otherwise,  at such prices and upon such terms as Laurus, in Laurus'
sole  discretion,  deems  advisable  or  Laurus  may  otherwise recover upon the
Collateral  in  any  commercially  reasonable  manner  as  Laurus,  in  its sole
discretion,  deems advisable.  The requirement of reasonable notice shall be met
if  such  notice  is  mailed postage prepaid to Company Agent at Company Agent's
address  as  shown in Laurus' records, at least twenty (20) days before the time
of the event of which notice is being given.  Laurus may be the purchaser at any
sale,  if  it  is  public.  In  connection  with  the  exercise of the foregoing
remedies, Laurus is granted permission to use all of each Company's Intellectual
Property.  The proceeds of sale shall be applied first to all costs and expenses
of sale, including attorneys' fees, and second to the payment (in whatever order
Laurus  elects)  of  all  Obligations.  After  the  indefeasible  payment  and
satisfaction  in full of all of the Obligations, and after the payment by Laurus
of  any  other  amount  required  by  any  provision  of  law, including Section
9-608(a)(1) of the UCC (but only after Laurus has received what Laurus considers
reasonable  proof  of  a subordinate party's security interest), the surplus, if
any,  shall  be  paid  to  Company  Agent  (for  the  benefit  of the applicable
Companies)  or  its  representatives or to whosoever may be lawfully entitled to
receive  the  same,  or  as  a  court of competent jurisdiction may direct.  The
Companies  shall  remain  jointly  and  severally  liable  to  Laurus  for  any
deficiency.  Each  Company  and  Laurus acknowledge that the actual damages that
would be incurred by Laurus after the occurrence of an Event of Default would be
difficult to quantify and that such Company and Laurus have agreed that the fees
and obligations set forth in this Section and in this Agreement would constitute
fair  and  appropriate  liquidated damages in the event of any such termination.
The  parties  hereto  each  hereby  agree  that the exercise by any party hereto

                                      -36-
<PAGE>

of  any  right  granted  to it or the exercise by any party hereto of any remedy
available  to  it  (including,  without  limitation, the issuance of a notice of
redemption,  a  borrowing  request  and/or  a  notice of default), in each case,
hereunder  or  under  any  Ancillary Agreement shall not constitute confidential
information and no party shall have any duty to the other party to maintain such
information  as  confidential,  except  for  the portions of such publicly filed
documents  that  are  subject  to  confidential  treatment  request  made by the
Companies  to  the  SEC.

21.     Waivers.  To  the  full extent permitted by applicable law, each Company
        -------
hereby  waives  (a)  presentment, demand and protest, and notice of presentment,
dishonor,  intent  to  accelerate,  acceleration,  protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all of
this  Agreement  and  the  Ancillary  Agreements  or any other notes, commercial
paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties
at  any  time held by Laurus on which such Company may in any way be liable, and
hereby  ratifies  and  confirms  whatever  Laurus may do in this regard; (b) all
rights to notice and a hearing prior to Laurus' taking possession or control of,
or  to  Laurus'  replevy, attachment or levy upon, any Collateral or any bond or
security  that  might  be  required  by  any  court  prior to allowing Laurus to
exercise  any  of  its remedies; and (c) the benefit of all valuation, appraisal
and  exemption  laws.  Each  Company  acknowledges  that  it has been advised by
counsel  of  its  choices  and  decisions  with  respect  to this Agreement, the
Ancillary  Agreements  and  the  transactions  evidenced  hereby  and  thereby.

22.     Expenses.  The  Companies shall jointly and severally pay all of Laurus'
        --------
out-of-pocket costs and expenses, including reasonable fees and disbursements of
in-house  or  outside  counsel and appraisers, in connection with (x) subject to
the  limitations  set forth in Section 5(b)(iii), the preparation, execution and
delivery  of  this Agreement and the Ancillary Agreements, and (y) in connection
with  the  prosecution  or  defense  of  any  action,  contest, dispute, suit or
proceeding  concerning  any  matter  in  any  way  arising out of, related to or
connected  with  this Agreement or any Ancillary Agreement.  The Companies shall
also  jointly  and  severally  pay  all  of  Laurus'  reasonable  fees, charges,
out-of-pocket  costs  and  expenses, including fees and disbursements of counsel
and  appraisers,  in connection with (a) the preparation, execution and delivery
of  any  waiver,  any  amendment  thereto  or  consent  proposed  or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements,  (b)  Laurus'  obtaining  performance  of the Obligations under this
Agreement  and  any  Ancillary  Agreements,  including,  but not limited to, the
enforcement  or defense of Laurus' security interests, assignments of rights and
Liens  hereunder  as  valid  perfected  security  interests,  (c) any attempt to
inspect,  verify,  protect, collect, sell, liquidate or otherwise dispose of any
Collateral,  (d)  any  appraisals  or  re-appraisals  of  any  property (real or
personal)  pledged  to  Laurus  by  any  Company  or  any of its Subsidiaries as
Collateral  for,  or any other Person as security for, the Obligations hereunder
and  (e)  any  consultations  in  connection  with  any  of  the foregoing.  The
Companies  shall  also  jointly and severally pay Laurus' customary bank charges
for  all  bank  services  (including  wire  transfers) performed or caused to be
performed  by Laurus for any Company or any of its Subsidiaries at any Company's
or  such  Subsidiary's  request or in connection with any Company's loan account
with  Laurus.  All  such  costs and expenses together with all filing, recording
and  search fees, taxes and interest payable by the Companies to Laurus shall be
payable  on  demand  and  shall be secured by the Collateral.  If any tax by any
Governmental Authority is or may be imposed on or as a result of any transaction
between  any

                                      -37-
<PAGE>

Company  and/or any Subsidiary thereof, on the one hand, and Laurus on the other
hand, which Laurus is or may be required to withhold or pay  (including, without
limitation, as a result of a breach by any Company or any of its Subsidiaries of
Section  13(u)  herein),  the Companies hereby jointly and severally indemnifies
and holds Laurus harmless in respect of such taxes, and the Companies will repay
to  Laurus the amount of any such taxes which shall be charged to the Companies'
account;  and  until  the Companies shall furnish Laurus with indemnity therefor
(or  supply  Laurus  with evidence satisfactory to it that due provision for the
payment  thereof  has  been  made), Laurus may hold without interest any balance
standing  to  each Company's credit and Laurus shall retain its Liens in any and
all  Collateral.

23.     Assignment  By  Laurus.  Laurus may assign any or all of the Obligations
        ----------------------
together  with  any  or  all of the security therefor to any Person and any such
assignee  shall  succeed to all of Laurus' rights with respect thereto; provided
that Laurus shall not be permitted to effect any such assignment to a competitor
of  any  Company unless an Event of Default has occurred and is continuing. Upon
such  assignment,  Laurus  shall  be  released  from  all responsibility for the
Collateral  to  the  extent same is assigned to any transferee.  Laurus may from
time  to  time  sell or otherwise grant participations in any of the Obligations
and  the  holder  of  any  such participation shall, subject to the terms of any
agreement  between  Laurus  and such holder, be entitled to the same benefits as
Laurus  with respect to any security for the Obligations in which such holder is
a  participant.  Each  Company agrees that each such holder may exercise any and
all  rights  of  banker's  lien,  set-off  and  counterclaim with respect to its
participation  in  the Obligations as fully as though such Company were directly
indebted  to  such  holder  in  the  amount  of  such  participation.

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

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

26.     Indemnity.  Each  Company  hereby  jointly and severally indemnifies and
        ---------
holds  Laurus,  and  its  respective affiliates, employees, attorneys and agents
(each,  an  "Indemnified  Person"), harmless from and against any and all suits,
             -------------------
actions,  proceedings,  claims, damages, losses, liabilities and expenses of any
kind or nature whatsoever (including attorneys' fees and disbursements and other
costs  of  investigation  or  defense, including those incurred upon any appeal)
which  may be instituted or asserted against or incurred by any such Indemnified
Person  as  the  result  of credit having been extended, suspended or terminated
under  this

                                      -38-
<PAGE>

Agreement  or  any of the Ancillary Agreements or with respect to the execution,
delivery,  enforcement,  performance  and administration of, or in any other way
arising  out  of or relating to, this Agreement, the Ancillary Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and  any actions or failures to act with respect to any of the foregoing, except
to  the  extent  that  any such indemnified liability is finally determined by a
court  of  competent  jurisdiction to have resulted solely from such Indemnified
Person's  gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE  OR LIABLE TO ANY COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE  OR  THIRD  PARTY  BENEFICIARY  OR  ANY  OTHER  PERSON ASSERTING CLAIMS
DERIVATIVELY  THROUGH  SUCH  PARTY,  FOR  INDIRECT,  PUNITIVE,  EXEMPLARY  OR
CONSEQUENTIAL  DAMAGES  WHICH  MAY  BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED,  SUSPENDED  OR  TERMINATED  UNDER  THIS  AGREEMENT  OR  ANY  ANCILLARY
AGREEMENT  OR  AS  A  RESULT  OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.

27.     Revival.  The  Companies  further  agree  that to the extent any Company
        -------
makes  a  payment  or  payments to Laurus, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under  any  bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as  if  said  payment  had  not  been  made.

28.     Borrowing  Agency  Provisions.
        -----------------------------

(a)     Each  Company  hereby  irrevocably  designates  Company  Agent to be its
attorney  and  agent and in such capacity to borrow, sign and endorse notes, and
execute  and deliver all instruments, documents, writings and further assurances
now  or  hereafter  required  hereunder,  on  behalf of such Company, and hereby
authorizes  Laurus  to  pay  over  or  credit  all  loan  proceeds  hereunder in
accordance  with  the  request  of  Company  Agent.

(b)     The  handling  of this credit facility as a co-borrowing facility with a
borrowing  agent  in  the  manner  set  forth  in this Agreement is solely as an
accommodation to the Companies and at their request.  Laurus shall not incur any
liability  to any Company as a result thereof.  To induce Laurus to do so and in
consideration  thereof,  each Company hereby indemnifies Laurus and holds Laurus
harmless from and against any and all liabilities, expenses, losses, damages and
claims of damage or injury asserted against Laurus by any Person arising from or
incurred  by  reason  of  the  handling  of  the  financing  arrangements of the
Companies  as  provided herein, reliance by Laurus on any request or instruction
from  Company  Agent  or  any  other action taken by Laurus with respect to this
Paragraph  28.

(c)     All Obligations shall be joint and several, and the Companies shall make
payment  upon  the maturity of the Obligations by acceleration or otherwise, and
such  obligation  and  liability on the part of the Companies shall in no way be
affected  by  any  extensions, renewals and forbearance granted by Laurus to any
Company,  failure  of  Laurus  to  give  any

                                      -39-
<PAGE>

Company notice of borrowing or any other notice, any failure of Laurus to pursue
to  preserve  its  rights  against  any  Company,  the  release by Laurus of any
Collateral  now  or  thereafter acquired from any Company, and such agreement by
any  Company to pay upon any notice issued pursuant thereto is unconditional and
unaffected by prior recourse by Laurus to any Company or any Collateral for such
Company's  Obligations  or  the  lack  thereof.

(d)     Each  Company  expressly  waives  any  and  all  rights  of subrogation,
reimbursement,  indemnity,  exoneration,  contribution  or any other claim which
such  Company  may  now  or  hereafter  have  against  the other or other Person
directly  or contingently liable for the Obligations, or against or with respect
to  any  other's  property (including, without limitation, any property which is
Collateral  for  the  Obligations), arising from the existence or performance of
this  Agreement,  until  all Obligations have been indefeasibly paid in full and
this  Agreement  has  been  irrevocably  terminated.

(e)     Each  Company  represents and warrants to Laurus that (i) Companies have
one or more common shareholders, directors and officers, (ii) the businesses and
corporate  activities  of  Companies  are  closely related to, and substantially
benefit, the business and corporate activities of Companies, (iii) the financial
and  other  operations  of  Companies  are  performed  on a combined basis as if
Companies  constituted  a  consolidated  corporate  group,  (iv)  Companies will
receive  a  substantial  economic  benefit from entering into this Agreement and
will  receive  a  substantial economic benefit from the application of each Loan
hereunder,  in  each  case,  whether  or not such amount is used directly by any
Company  and  (v)  all requests for Loans hereunder by the Company Agent are for
the  exclusive  and indivisible benefit of the Companies as though, for purposes
of  this  Agreement,  the  Companies  constituted  a  single  entity.

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

Notices  shall  be  provided  as  follows:

If  to  Laurus:

Laurus  Master  Fund,  Ltd.
c/o  M&C  Corporate  Services  Limited
P.O.  Box  309  GT
Ugland  House
George  Town
South  Church  Street
Grand  Cayman,  Cayman  Islands
Facsimile:     345-949-8080

                                      -40-
<PAGE>
With  a  copy  to:

Laurus  Capital  Management,  LLC
825  Third  Avenue,  17th  Fl.
New  York,  New  York  10022
Attention:     Portfolio  Services
Telephone:     (212)  541-5800
Telecopier:     (212)  541-4410

If  to  any  Company,
or  Company  Agent:

Trinity  Learning  Corporation
4101  International  Parkway
Carrollton,  Texas  75007

Attention:     Pat  Quinn
Telephone:     (972)  309-5108
Facsimile:     (972)  309-5105

With  a  copy  to:

Sichenzia  Ross  Friedman  Ference  LLP
1065  Avenue  of  The  Americas,  21st  Floor
New  York,  NY  10018
Attention:     Darrin  M.  Ocasio
Telephone:     (212)  930-9700
Facsimile:     (212)  930-9725

or  such  other  address as may be designated in writing hereafter in accordance
with  this  Section  29  by  such  Person.

30.     Governing  Law,  Jurisdiction  and  Waiver  of  Jury  Trial.
        -----------------------------------------------------------

(a)     THIS  AGREEMENT  AND  THE  ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND
CONSTRUED  AND  ENFORCED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE  TO  CONTRACTS  MADE  AND  PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES  OF  CONFLICTS  OF  LAW.

(b)     EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED  IN  THE  COUNTY  OF  NEW  YORK,  STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION  TO  HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY,
ON  THE ONE HAND, AND LAURUS, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR
ANY  OF  THE  ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO
THIS  AGREEMENT  OR  ANY  OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT LAURUS AND
                                                       --------
EACH COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY  A  COURT  LOCATED  OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER  PROVIDED,  THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
   ----  --------
PRECLUDE  LAURUS  FROM  BRINGING  SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION  TO  COLLECT  THE  OBLIGATIONS,  TO

                                      -41-
<PAGE>

REALIZE  ON  THE  COLLATERAL  OR  ANY  OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE  A  JUDGMENT  OR  OTHER  COURT  ORDER  IN FAVOR OF LAURUS.  EACH COMPANY
EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT  COMMENCED  IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY OBJECTION
THAT  IT  MAY  HAVE  BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM  NON  CONVENIENS.  EACH  COMPANY  HEREBY  WAIVES  PERSONAL  SERVICE OF THE
   -------------------
SUMMONS,  COMPLAINT  AND  OTHER  PROCESS  ISSUED  IN ANY SUCH ACTION OR SUIT AND
AGREES  THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY AGENT AT THE ADDRESS SET FORTH
IN  SECTION  29  AND  THAT  SERVICE  SO  MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER  OF  COMPANY  AGENT'S  ACTUAL  RECEIPT  THEREOF  OR THREE (3) DAYS AFTER
DEPOSIT  IN  THE  U.S.  MAILS,  PROPER  POSTAGE  PREPAID.

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

31.     Limitation of Liability.  Each Company acknowledges and understands that
        -----------------------
in order to assure repayment of the Obligations hereunder Laurus may be required
to  exercise  any  and  all  of Laurus' rights and remedies hereunder and agrees
that,  except  as  limited  by applicable law, neither Laurus nor any of Laurus'
agents  shall  be liable for acts taken or omissions made in connection herewith
or  therewith  except  for  actual  bad  faith.

32.     Entire  Understanding;  Maximum  Interest.  This  Agreement  and  the
        -----------------------------------------
Ancillary  Agreements  contain  the  entire understanding among each Company and
Laurus  as  to  the  subject  matter  hereof  and  thereof  and  any  promises,
representations,  warranties  or  guarantees  not herein contained shall have no
force  and  effect  unless  in  writing,  signed  by  each Company's and Laurus'
respective  officers.  Neither this Agreement, the Ancillary Agreements, nor any
portion  or  provisions  thereof  may  be  changed,  modified,  amended, waived,
supplemented,  discharged,  cancelled  or  terminated orally or by any course of
dealing,  or  in any manner other than by an agreement in writing, signed by the
party  to  be  charged.  Nothing  contained  in  this  Agreement,  any Ancillary
Agreement  or  in  any  document  referred  to herein or delivered in connection
herewith  shall  be  deemed  to  establish  or  require the payment of a rate of
interest  or other charges in excess of the maximum rate permitted by applicable
law.  In the event that the rate of interest or dividends required to be paid or
other  charges  hereunder  exceed  the  maximum  rate permitted by such law, any
payments in excess of such maximum shall be credited against amounts owed by the
Companies  to  Laurus  and  thus  refunded  to  the  Companies.

                                      -42-
<PAGE>

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

34.     Survival.  The  representations,  warranties,  covenants  and agreements
        --------
made  herein  shall  survive any investigation made by Laurus and the closing of
the  transactions  contemplated  hereby  to  the  extent  provided therein.  All
statements  as  to  factual  matters  contained  in  any  certificate  or  other
instrument  delivered  by  or  on  behalf  of  the  Companies pursuant hereto in
connection  with  the  transactions  contemplated  hereby  shall be deemed to be
representations  and warranties by the Companies hereunder solely as of the date
of  such  certificate  or  instrument.  All  indemnities  set forth herein shall
survive  the  execution,  delivery  and  termination  of  this Agreement and the
Ancillary  Agreements  and  the  making  and  repaying  of  the  Obligations.

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

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

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

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

39.     Joinder.  It  is  understood  and agreed that any Person that desires to
        -------
become  a  Company  hereunder,  or  is required to execute a counterpart of this
Agreement  after  the date hereof pursuant to the requirements of this Agreement
or  any Ancillary Agreement, shall become a Company hereunder by (a) executing a
Joinder  Agreement  in form and substance satisfactory to Laurus, (b) delivering
supplements  to  such  exhibits  and annexes to this Agreement and the Ancillary
Agreements  as  Laurus  shall  reasonably  request and (c) taking all actions as
specified in this Agreement as would have been taken by such Company had it been
an  original  party  to this Agreement, in each case with all documents required
above  to  be  delivered  to  Laurus and with all documents and actions required
above  to  be  taken  to  the  reasonable  satisfaction  of  Laurus.

                                      -43-
<PAGE>

40.     Legends.  The  Securities  shall  bear  legends  as  follows;
        -------

(a)     The  7%  Preferred  Stock shall bear substantially the following legend:

"THIS  7%  PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE  HAVE  NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY  APPLICABLE, STATE SECURITIES LAWS.  THIS NOTE AND THE COMMON STOCK ISSUABLE
UPON  CONVERSION  OF  THIS  NOTE  MAY  NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED  IN  THE  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
NOTE  OR  SUCH  SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION  OF COUNSEL REASONABLY SATISFACTORY TO TRINITY LEARNING CORPORATION THAT
SUCH  REGISTRATION  IS  NOT  REQUIRED."

(b)     Any  shares  of  Common  Stock  issued  pursuant to conversion of the 7%
Preferred  Stock,  shall  bear  a  legend  which  shall  be in substantially the
following  form  until  such  shares  are  covered  by an effective registration
statement  filed  with  the  SEC:

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

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

                                      -44-
<PAGE>

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

TRINITY  LEARNING  CORPORATION

   By:
 Name:
Title:

TRINITY  WORKPLACE  LEARNING  CORPORATION

   By:
 Name:
Title:

LAURUS  MASTER  FUND,  LTD.

By:
Name:
Title:

                                      -45-
                                     -1-
<PAGE>

                              ANNEX A - DEFINITIONS
                              ---------------------

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

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

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

"Accounts  Availability"  means  ninety  percent (90%) of the net face amount of
 ----------------------
Eligible  Accounts.

"Affiliate"  means, with respect to any Person, (a) any other Person (other than
 ---------
a Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, (b) any other Person that, directly
or  indirectly,  owns or controls, whether beneficially, or as trustee, guardian
or other fiduciary, 25% or more of the Stock having ordinary voting power in the
election  of  directors  of such Person, (c) any other Person who is a director,
officer, joint venturer or partner (i) of such Person, (ii) of any Subsidiary of
such  Person  or (iii) of any Person described in clause (a) above or (d) in the
case  of  the  Companies,  the  immediate  family  members,  spouses  and lineal
descendants  of  individuals  who  are  Affiliates  of  such Companies.  For the
purposes of this definition, control of a Person shall mean the power (direct or
indirect)  to  direct  or  cause the direction of the management and policies of
such  Person  whether  by contract or otherwise; provided however, that the term
"Affiliate"  shall  specifically  exclude  Laurus.

"Ancillary Agreements" means the Notes, the 7% Preferred Stock, the Registration
 --------------------
Rights  Agreements,  the  Subordination  Agreement,  each Security Document, the
Escrow  Agreement  and  all other agreements, instruments, documents, mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, trust agreements and guarantees whether heretofore, concurrently, or
hereafter  executed  by  or on behalf of any Company, any of its Subsidiaries or
any  other  Person  or  delivered  to  Laurus,

                                     -2-
<PAGE>

relating to this Agreement or to the transactions contemplated by this Agreement
or  otherwise  relating  to  the  relationship  between or among any Company and
Laurus,  as each of the same may be amended, supplemented, restated or otherwise
modified  from  time  to  time.

"Authorization  Deadline  Date"  has  the  meaning  given  such  term in Section
 -----------------------------
12(c)(iv).
 ------

"Balance  Sheet  Date"  has  the  meaning  given such term in Section 12(f)(ii).
 --------------------

"Books  and  Records"  means  all  books,  records,  board  minutes,  contracts,
 -------------------
licenses,  insurance  policies,  environmental  audits,  business  plans, files,
computer  files,  computer  discs  and other data and software storage and media
devices,  accounting  books  and  records,  financial statements (actual and pro
forma),  filings  with  Governmental  Authorities  and  any  and all records and
instruments  relating to the Collateral or otherwise necessary or helpful in the
collection  thereof  or  the  realization  thereupon.

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

"Capital  Availability  Amount"  means  $5,000,000.
 -----------------------------

"Charter"  has  the  meaning  given  such  term  in  Section  12(c)(iv).
 -------

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

"Closing  Date" means the date on which any Company shall first receive proceeds
 -------------
of  the  initial Loans or the date hereof, if no Loan is made under the facility
on  the  date  hereof.

"Code"  has  the  meaning  given  such  term  in  Section  15(i).
 ----

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

(a)     all  Inventory;

(b)     all  Equipment;

(c)     all  Fixtures;

(d)     all  Goods;

(e)     all  General  Intangibles;

                                     -3-
<PAGE>

(f)     all  Accounts;

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

(h)     all  Investment  Property;

(i)     all  Stock;

(j)     all  Chattel  Paper;

(k)     all  Letter-of-Credit  Rights;

(l)     all  Instruments;

(m)     all  commercial  tort  claims  set  forth  on  Schedule  1(A);
                                                       --------------

(n)     all  Books  and  Records;

(o)     all  Intellectual  Property;

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

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

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

"Common Stock" means the shares of stock representing the Parent's common equity
 ------------
interests.

"Company  Agent"  means  Trinity  Learning  Corporation.
 --------------

"Contract  Rate"  has  the  meaning  given  such  term  in  the respective Note.
 --------------

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

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

                                     -4-
<PAGE>

"Disclosure  Controls"  has  the  meaning  given such term in Section 12(f)(iv).
 --------------------

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

"Eligible  Accounts"  means  each  Account of each Company which conforms to the
 ------------------
following  criteria:  (a)  shipment  of  the  merchandise  or  the  rendition of
services  has  been  completed;  (b) no return, rejection or repossession of the
merchandise  has  occurred;  (c)  merchandise  or  services  shall not have been
rejected  or  disputed  by  the  Account  Debtor  and  there shall not have been
asserted  any  offset,  defense  or  counterclaim;  (d)  continues to be in full
conformity  with  the  representations  and  warranties  made by such Company to
Laurus  with respect thereto; (e) Laurus is, and continues to be, satisfied with
the  credit  standing  of the Account Debtor in relation to the amount of credit
extended;  (f)  there  are  no  facts existing or threatened which are likely to
result  in any adverse change in an Account Debtor's financial condition; (g) is
documented  by  an  invoice in a form approved by Laurus and shall not be unpaid
more  than  ninety  (90)  days  from invoice date; (h) not more than twenty-five
percent  (25%)  of  the  unpaid  amount of invoices due from such Account Debtor
remains  unpaid  more  than  ninety  (90)  days  from  invoice  date; (i) is not
evidenced  by  chattel  paper or an instrument of any kind with respect to or in
payment  of  the  Account  unless  such  instrument  is  duly endorsed to and in
possession  of  Laurus  or  represents a check in payment of an Account; (j) the
Account  Debtor  is located in the United States; provided, however, Laurus may,
                                                  --------  -------
from  time  to  time,  in  the  exercise  of  its sole discretion and based upon
satisfaction of certain conditions to be determined at such time by Laurus, deem
certain  Accounts  as Eligible Accounts notwithstanding that such Account is due
from  an  Account  Debtor located outside of the United States; (k) Laurus has a
first priority perfected Lien in such Account and such Account is not subject to
any Lien other than Permitted Liens; (l) does not arise out of transactions with
any employee, officer, director, stockholder or Affiliate of any Company; (m) is
payable to such Company; (n) does not arise out of a bill and hold sale prior to
shipment and does not arise out of a sale to any Person to which such Company is
indebted;  (o) is net of any returns, discounts, claims, credits and allowances;
(p)  if  the  Account  arises  out of contracts between such Company, on the one
hand,  and  the  United States, on the other hand, any state, or any department,
agency  or  instrumentality of any of them, such Company has so notified Laurus,
in writing, prior to the creation of such Account, and there has been compliance
with any governmental notice or approval requirements, including compliance with
the  Federal  Assignment  of  Claims  Act;  (q)  is  a  good  and  valid account
representing an undisputed bona fide indebtedness incurred by the Account Debtor
therein named, for a fixed sum as set forth in the invoice relating thereto with
respect  to  an  unconditional  sale and delivery upon the stated terms of goods
sold  by  such  Company or work, labor and/or services rendered by such Company;
(r)  does  not  arise out of progress billings prior to completion of the order;
(s)  the  total  unpaid  Accounts  from  such  Account  Debtor  does  not exceed
twenty-five  percent (25%) of all Eligible Accounts; (t) such Company's right to
payment  is  absolute  and  not contingent upon the fulfillment of any condition
whatsoever;  (u)  such  Company  is  able to bring suit and enforce its remedies
against  the  Account  Debtor  through  judicial process; (v) does not represent
interest  payments,  late  or  finance charges owing to such Company, and (w) is
otherwise satisfactory to Laurus as reasonably determined by Laurus to be proper
and  necessary  in  the  exercise  of  its  good

                                     -5-
<PAGE>

faith  judgment.  In  the  event any Company requests that Laurus include within
Eligible  Accounts certain Accounts of one or more of such Company's acquisition
targets,  Laurus  shall at the time of such request consider such inclusion, but
any  such inclusion shall be at the sole option of Laurus and shall at all times
be  subject  to  the  execution and delivery to Laurus of all such documentation
(including,  without  limitation, guaranty and security documentation) as Laurus
may  require  in  its  sole  discretion.

"Eligible  Inventory"  means  Inventory  owned by a Company which Laurus, in its
 -------------------
sole  and absolute discretion, reasonably determines:  (a) is subject to a first
priority  perfected  Lien  in  favor  of Laurus and is subject to no other Liens
whatsoever (other than Permitted Liens); (b) is located on premises with respect
to  which  Laurus has received a landlord or mortgagee waiver acceptable in form
and  substance  to  Laurus;  (c) is not in transit; (d) is in good condition and
meets  all  standards  imposed  by  any  governmental  agency,  or department or
division  thereof  having regulatory Governmental Authority over such Inventory,
its  use  or  sale  including  the  Federal  Fair Labor Standards Act of 1938 as
amended,  and  all  rules,  regulations  and orders thereunder; (e) is currently
either usable or salable in the normal course of such Company's business; (f) is
not placed by such Company on consignment or held by such Company on consignment
from  another  Person;  (g)  is  in  conformity  with  the  representations  and
warranties  made  by  such  Company  to  Laurus with respect thereto; (h) is not
subject  to  any  licensing, patent, royalty, trademark, trade name or copyright
agreement with any third parties; (i) does not require the consent of any Person
for  the  completion of manufacture, sale or other disposition of such Inventory
and such completion, manufacture or sale does not constitute a breach or default
under  any  contract  or  agreement to which such Company is a party or to which
such  Inventory is or may be subject; (j) is not work-in-process; (k) is covered
by casualty insurance acceptable to Laurus and under which Laurus has been named
as  a  lender's  loss payee and additional insured; and (l) not to be ineligible
for  any  other  reason.

"Eligible  Subsidiary"  means each Subsidiary of the Parent set forth on Exhibit
 --------------------                                                    -------
Ahereto,  as  the  same  may  be  updated from time to time with Laurus' written
consent.

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

"ERISA"  has  the  meaning  given  such  term  in  Section  12(bb).
 -----

"Event  of  Default"  means  the  occurrence  of  any of the events set forth in
 ------------------
Section  19.

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

"Exchange  Act  Filings"  means the Parent's filings under the Exchange Act made
 ----------------------
prior  to  the  date  of  this  Agreement.

                                     -6-
<PAGE>

 "Financial  Reporting  Controls"  has  the  meaning  given such term in Section
  ------------------------------
12(f)(v).

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

"Formula  Amount"  has  the  meaning  given  such  term  in  Section  2(a)(i).
 ---------------

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

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

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

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

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

"Inactive  Subsidiaries"  shall  have  the  meaning  set forth on Schedule 12(b)
hereto.

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

                                     -7-
<PAGE>

"Intellectual  Property"  means  any and all patents, trademarks, service marks,
 ----------------------
trade  names,  copyrights,  trade  secrets,  Licenses,  information  and  other
proprietary  rights  and  processes.

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

"Inventory  Availability"  means  the  lesser of (a) thirty percent (30%) of the
 -----------------------
value  of Companies' Eligible Inventory (calculated on the basis of the lower of
cost  or  market,  on  a  first-in  first-out  basis)  and  (b)  $1,000,000.

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

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

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

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

"Loans" has the meaning given such term in Section 2(a)(i) and shall include all
 -----
other  extensions  of  credit  hereunder  and  under  any  Ancillary  Agreement.

"Lockboxes"  has  the  meaning  given  such  term  in  Section  8(a).
 ---------

"Material  Adverse  Effect" means a material adverse effect on (a) the business,
 -------------------------
assets,  liabilities, condition (financial or otherwise), properties, operations
or  prospects  of any Company or any of its Subsidiaries (taken individually and
as  a  whole),  (b)  any  Company's or any of its Subsidiary's ability to pay or
perform  the  Obligations  in  accordance  with  the  terms

                                     -8-
<PAGE>

hereof  or  any  Ancillary  Agreement,  (c)  the sufficiency and/or value of the
Collateral,  the Liens on the Collateral or the priority of any such Lien or (d)
the  practical  realization of the benefits of Laurus' rights and remedies under
this  Agreement  and  the Ancillary Agreements.  Without limiting the foregoing,
any  event or occurrence adverse to any Company that results or could reasonably
be  expected  to  result  in  costs  and/or  liabilities  or  loss  of revenues,
individually  or  in  the  aggregate  to  such  Company in excess of 30% of such
Company's  revenue  shall  constitute  a  Material  Adverse  Effect.

 "NASD"  has  the  meaning  given  such  term  in  Section  13(b).
  ----

"Notes"  means  the  Secured  Revolving  Note  and the Secured Term Note made by
 -----
Companies  in  favor  of Laurus in connection with the transactions contemplated
hereby,  as  each  of  the  same  may  be amended, supplemented, restated and/or
otherwise  modified  from  time  to  time.

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

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

"Permitted  Liens" means (a) Liens of carriers, warehousemen, artisans, bailees,
 ----------------
mechanics  and  materialmen incurred in the ordinary course of business securing
sums  not  overdue;  (b)  Liens  incurred  in the ordinary course of business in
connection  with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i) not
overdue  or (ii) being diligently contested in good faith provided that adequate
reserves  with  respect thereto are maintained on the books of the Companies and
their  Subsidiaries,  as applicable, in conformity with GAAP; (c) Liens in favor
of  Laurus;  (d)  Liens  for  taxes  (i)  not  yet  due or (ii) being diligently
contested  in  good  faith  by

                                     -9-
<PAGE>

appropriate  proceedings,  provided  that adequate reserves with respect thereto
are  maintained  on  the  books  of  the  Companies  and  their Subsidiaries, as
applicable, in conformity with GAAP; and which have no effect on the priority of
Liens  in favor of Laurus or the value of the assets in which Laurus has a Lien;
(e)  Purchase  Money  Liens  securing  Purchase Money Indebtedness to the extent
permitted  in  this  Agreement  and  (f)  Liens  specified on Schedule 2 hereto.
                                                              ----------

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

"Preferred  Conversion Shares" has the meaning given such term in Section 12(a).
 ----------------------------

"Principal  Market"  means  the  NASD  Over  The  Counter Bulletin Board, NASDAQ
 -----------------
Capital  Market,  NASDAQ  National Market System, American Stock Exchange or New
York  Stock  Exchange  (whichever  of the foregoing is at the time the principal
trading  exchange  or  market  for  the  Common  Stock).

"Proceeds"  means  "proceeds",  as  such  term is defined in the UCC and, in any
 --------
event,  shall  include:  (a)  any  and all proceeds of any insurance, indemnity,
warranty  or  guaranty  payable  to any Company or any other Person from time to
time  with  respect  to  any  Collateral;  (b) any and all payments (in any form
whatsoever)  made  or  due  and  payable  to  any  Company  from time to time in
connection  with  any  requisition,  confiscation,  condemnation,  seizure  or
forfeiture  of  any Collateral by any governmental body, governmental authority,
bureau  or  agency (or any person acting under color of governmental authority);
(c)  any  claim  of  any  Company against third parties (i) for past, present or
future  infringement  of  any Intellectual Property or (ii) for past, present or
future  infringement  or  dilution  of any trademark or trademark license or for
injury  to the goodwill associated with any trademark, trademark registration or
trademark  licensed  under  any  trademark  License;  (d)  any recoveries by any
Company  against  third  parties  with  respect  to  any  litigation  or dispute
concerning  any  Collateral,  including  claims  arising  out  of  the  loss  or
nonconformity  of,  interference with the use of, defects in, or infringement of
rights  in,  or  damage  to,  Collateral;  (e)  all  amounts  collected  on,  or
distributed  on  account  of,  other  Collateral, including dividends, interest,
distributions  and  Instruments  with respect to Investment Property and pledged
Stock;  and  (f)  any and all other amounts, rights to payment or other property
acquired  upon  the  sale,  lease,  license,  exchange  or  other disposition of
Collateral  and  all  rights  arising  out  of  Collateral.

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

                                      -10-
<PAGE>

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

"Registration  Rights  Agreements"  means  that  certain  Registration  Rights
 --------------------------------
Agreement  dated as of the Closing Date by and between the Parent and Laurus and
each  other  registration rights agreement by and between the Parent and Laurus,
as each of the same may be amended, modified and supplemented from time to time.

"Revolving  Loans"  shall  have  the meaning given such term in Section 2(a)(i).
 ----------------

 "SEC"  means  the  Securities  and  Exchange  Commission.
  ---

"SEC  Reports"  has  the  meaning  given  such  term  in  Section  12(u).
 ------------

"Secured  Revolving  Note" means that certain Secured Revolving Note dated as of
 ------------------------
the  Closing  Date made by the Companies in favor of Laurus in the original face
amount  of  Five  Million  Dollars  ($5,000,000),  as  the  same may be amended,
supplemented,  restated  and/or  otherwise  modified  from  time  to  time.

"Secured Term Note" means that certain Secured Term Note dated as of the Closing
 -----------------
Date made by the Companies in favor of Laurus in the original face amount of Two
Million  Five Hundred Thousand Dollars ($2,500,000), as the same may be amended,
supplemented,  restated  and/or  otherwise  modified  from  time  to  time.

"Securities" means the Notes and the 7% Preferred Stock and the shares of Common
 ----------
Stock  which  may  be issued pursuant to conversion of the 7% Preferred Stock in
whole  or  in  part.

"Securities  Act"  has  the  meaning  given  such  term  in  Section  12(r).
 ---------------

"Security  Documents"  means all security agreements, mortgages, cash collateral
 -------------------
deposit  letters, pledges and other agreements which are executed by any Company
or  any  of  its  Subsidiaries  in  favor  of  Laurus.

"7%  PreferredStock"  means  the  1,500,000 shares of the Company's 7% preferred
 ------------------
stock  issued  to  Laurus.

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

"Solvent"  means,  with respect to any Person on a particular date, that on such
 -------
date (a) the fair value of the property of such Person is greater than the total
amount of liabilities, including contingent liabilities, of such Person; (b) the
present  fair  salable  value  of  the  assets  of

                                      -11-
<PAGE>

such  Person  is  not  less  than  the  amount  that will be required to pay the
probable  liability  of  such  Person  on  its debts as they become absolute and
matured;  (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities  mature;  and  (d)  such  Person  is  not  engaged  in a business or
transaction,  and is not about to engage in a business or transaction, for which
such  Person's  property  would  constitute and unreasonably small capital.  The
amount  of  contingent  liabilities  (such as litigation, guaranties and pension
plan  liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that
can  reasonably  be  expected  to  become  an  actual  or  matured  liability.

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

"Stockholder  Approval"  shall  mean  the  approval  required  from the Parent's
 ---------------------
majority  shareholders  as  of August 11, 2006, in order for the Parent to amend
its  Articles of Incorporation, as amended, as set forth in the proposals of the
Proxy  Statement  on  Schedule  14(a)  filed  with  the  SEC on August 18, 2006.

"Subordinated Debt Documentation" shall mean  the Securities Purchase Agreement,
 -------------------------------
dated  as  of  March 31, 2006, among the Parent and each purchaser identified on
the  signature  pages  thereto (including, without limitation, Palidaides Master
Fund,  LP)  together  with each other Transaction Document (as defined therein).

"Subsidiary"  means,  with  respect  to  any  Person, (i) any other Person whose
 ----------
shares of stock or other ownership interests having ordinary voting power (other
than  stock or other ownership interests having such power only by reason of the
happening  of  a  contingency)  to  elect  a  majority of the directors or other
governing  body of such other Person, are owned, directly or indirectly, by such
Person  or  (ii)  any  other  Person  in  which  such  Person  owns, directly or
indirectly,  more  than  50%  of  the  equity  interests  at  such  time.

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

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

"Term  Loan"  has  the  meaning  given  such  term  in  Section  2(a)(c).
 ----------

"Total  Investment  Amount"  means  Seven  Million Five Hundred Thousand Dollars
 -------------------------
($7,500,000).

                                      -12-
<PAGE>

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

                                      -13-
<PAGE>

                                    Exhibit A
                                    ---------

                              Eligible Subsidiaries
                              ---------------------

         Trinity Workplace Learning Corporation, a Delaware corporation
<PAGE>

                                    Exhibit B
                                    ---------
                           Borrowing Base Certificate
                           --------------------------
                           As of  __________ __, 200__

<TABLE>
<CAPTION>

<S>                                                              <C>  <C>   <C>   <C>
ACCOUNTS RECEIVABLE PER __________ AGING                                                    0.00

INELIGIBLE ACCOUNTS:
Accounts over 90 days from Invoice Date                               0.00
---------------------------------------------------------------
Credit Balances Over 90 days from Invoice Date                        0.00
Intercompany and Affiliate Accounts                                   0.00
__% Concentration Cap                                                 0.00
Contra Accounts                                                       0.00
Cash Sales and COD Accounts                                           0.00
Foreign Receivables                                                   0.00
Government Receivables (without Assignment of Claims)                 0.00
Discounts, Credits and Allowances                                     0.00
Cross-age (__% Past Due)                                              0.00
Bill and Hold Invoices                                                0.00
Finance/Service/Late Charges                                          0.00
Other:                                                                0.00                  0.00

ELIGIBLE ACCOUNTS RECEIVABLE                                                                0.00

Accounts Receivable Advance Rate                                 90%

ACCOUNTS RECEIVABLE AVAILABILITY                                                            0.00

INVENTORY PER __________ BALANCE SHEET                                                      0.00

INELIGIBLE INVENTORY:
Work-in-Process                                                       0.00
---------------------------------------------------------------
Excess/Slow Moving                                                    0.00
Supplies/Packaging                                                    0.00
Damaged                                                               0.00
Other:                                                                0.00                  0.00

ELIGIBLE INVENTORY                                                                          0.00

Inventory Advance Rate                                           50%

Inventory Cap                                                                     [1,000,000.00]

INVENTORY AVAILABILITY                                                                      0.00

TOTAL AVAILABILITY                                                                          0.00

LESS RESERVES                                                                               0.00

NET AVAILABILITY                                                                            0.00

REVOLVING CREDIT LINE                                                 0.00
MINIMUM BORROWING NOTE                                                0.00

NET BORROWING AVAILABILITY (LESSER OF LINE OR NET AVAILABILITY)             0.00

LESS:  LAURUS LOANS                                                                         0.00

EXCESS/(DEFICIT) AVAILABILITY                                                               0.00

</TABLE>

The undersigned hereby certifies that all of the foregoing information regarding
the  Eligible  Accounts  and Eligible Inventory are true and correct on the date
hereof  and  all  such  Accounts  and  Inventory listed as Eligible are Eligible
within  the  meaning  given such term in the Security Agreement dated August __,
2006  among  Trinity Learning Corporation, the other companies named therein and
Laurus  Master  Fund,  Ltd.

_____________,  COMPANY  AGENT

By:  ___________________________________

                                      Name:
                                     Title:

<PAGE>

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

                            LAURUS MASTER FUND, LTD.

                          TRINITY LEARNING CORPORATION

                                       and

                     TRINITY WORKPLACE LEARNING CORPORATION

                             Dated: August __, 2006

<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                                                   <C>

1.      General Definitions and Terms; Rules of Construction.                 1
        --------------------------------------------------------------------
2.      Loan Facility.                                                        2
        --------------------------------------------------------------------
3.      Repayment of the Loans.                                               4
        --------------------------------------------------------------------
4.      Procedure for Revolving Loans.                                        4
        --------------------------------------------------------------------
5.      Interest and Payments.                                                5
        --------------------------------------------------------------------
6.      Security Interest.                                                    6
        --------------------------------------------------------------------
7.      Representations, Warranties and Covenants Concerning the Collateral.  7
        --------------------------------------------------------------------
8.      Payment of Accounts.                                                  9
        --------------------------------------------------------------------
9.      Collection and Maintenance of Collateral.                            10
        --------------------------------------------------------------------
10.     Inspections and Appraisals.                                          10
        --------------------------------------------------------------------
11.     Financial Reporting.                                                 11
        --------------------------------------------------------------------
12.     Additional Representations and Warranties.                           12
        --------------------------------------------------------------------
13.     Covenants.                                                           23
        --------------------------------------------------------------------
14.     Further Assurances.                                                  29
        --------------------------------------------------------------------
15.     Representations, Warranties and Covenants of Laurus.                 29
        --------------------------------------------------------------------
16.     Power of Attorney.                                                   31
        --------------------------------------------------------------------
17.     Term of Agreement.                                                   31
        --------------------------------------------------------------------
18.     Termination of Lien.                                                 32
        --------------------------------------------------------------------
19.     Events of Default.                                                   35
        --------------------------------------------------------------------
20.     Remedies.                                                            36
        --------------------------------------------------------------------
21.     Waivers.                                                             37
        --------------------------------------------------------------------
22.     Expenses.                                                            37
        --------------------------------------------------------------------
23.     Assignment By Laurus.                                                37
        --------------------------------------------------------------------
24.     No Waiver; Cumulative Remedies.                                      38
        --------------------------------------------------------------------
25.     Application of Payments.                                             38
        --------------------------------------------------------------------
26.     Indemnity.                                                           38
        --------------------------------------------------------------------
27.     Revival.                                                             39
        --------------------------------------------------------------------
28.     Borrowing Agency Provisions.                                         40
        --------------------------------------------------------------------
29.     Notices.                                                             41
        --------------------------------------------------------------------
30.     Governing Law, Jurisdiction and Waiver of Jury Trial.                41
        --------------------------------------------------------------------
31.     Limitation of Liability.                                             42
        --------------------------------------------------------------------
32.     Entire Understanding; Maximum Interest.                              42
        --------------------------------------------------------------------
33.     Severability.                                                        42
        --------------------------------------------------------------------
34.     Survival.                                                            42
        --------------------------------------------------------------------
35.     Captions.                                                            42
        --------------------------------------------------------------------
36.     Counterparts; Telecopier Signatures.                                 42
        --------------------------------------------------------------------
37.     Construction.                                                        42
        --------------------------------------------------------------------
38.     Publicity.                                                           42
        --------------------------------------------------------------------
39.     Joinder.                                                             42
        --------------------------------------------------------------------
40.     Legends.                                                             43
        --------------------------------------------------------------------
</TABLE>Exhibit 4.2

                     INTELLECTUAL PROPERTY SECURITY AGREEMENT
                    -----------------------------------------

THIS  INTELLECTUAL  PROPERTY  SECURITY  AGREEMENT (the "Agreement"), dated as of
                                                        ---------
August  31,  2006, is made by TRINITY WORKPLACE LEARNING CORPORATION, a Delaware
corporation  ("Grantor"),  in  favor  of  LAURUS  MASTER  FUND, LTD. ("Laurus").
               -------                                                 ------

WHEREAS, pursuant to that certain Security Agreement dated as of the date hereof
by  and  between  Grantor,  certain other companies party thereto and Laurus (as
from  time  to  time  amended, restated, supplemented or otherwise modified, the
"Security  Agreement"), Laurus has agreed to provide financial accommodations to
   -----------------
Grantor  and  certain  of  its  subsidiaries;

WHEREAS,  Laurus  is willing to enter into the Security Agreement, but only upon
the  condition,  among others, that Grantor shall have executed and delivered to
Laurus  this  Agreement;

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

Section  1.     DEFINED  TERMS.
                --------------

(a)     When  used herein the following terms shall have the following meanings:

"Copyrights"  means  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 all
registrations,  recordings  and  applications  in  the  United  States Copyright
Office,  and  the  right  to  obtain  all  renewals  of  any  of  the foregoing.

"Copyright Licenses" means all written agreements naming any Grantor as licensor
 ------------------
or  licensee,  granting  any  right  under any Copyright, including the grant of
rights  to  manufacture, distribute, exploit and sell materials derived from any
Copyright.

"General  Intangibles"  shall have the meaning provided thereto in Section 9-102
 --------------------
of  the  UCC,  as  amended,  restated  or  otherwise modified from time to time.

"Obligations" shall have the meaning provided thereto in the Security Agreement.
 -----------

"Patents"  means  (a) all letters patent of the United States, any other country
 -------
or  any  political  subdivision thereof, and all reissues and extensions of such
letters  patent, (b) all applications for letters patent of the United States or
any  other  county  and  all  divisions, continuations and continuations-in-part
thereof,  and  (c)  all  rights  to  obtain  any  reissues  or extensions of the
foregoing.

<PAGE>

"Patent  Licenses"  means all agreements, whether written or oral, providing for
 ----------------
the  grant  by  or  to  any Grantor of any right to manufacture, use or sell any
invention  covered  in  whole  or  in  part  by  a  Patent.

"Trademarks"  means  (a)  all trademarks, trade names, corporate names, business
 ----------
names,  fictitious business names, trade styles, services marks, logos 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 political subdivision
thereof,  or  otherwise, and all common-law rights thereto, and (b) the right to
obtain  all  renewals  thereof.

"Trademark  Licenses"  means,  collectively,  each agreement, whether written or
 -------------------
oral,  providing  for  the  grant  by  or to any Grantor of any right to use any
Trademark.

"UCC"  shall have the meaning provided thereto in the Master Security Agreement.
 ---

(b)     All  capitalized  terms  used  but not otherwise defined herein have the
meanings  given  to  them  in  the  Security  Agreement.

Section  2.     GRANT  OF SECURITY INTEREST IN INTELLECTUAL PROPERTY COLLATERAL.
                ---------------------------------------------------------------
To  secure the complete and timely payment of all the Obligations of the Grantor
now  or  hereafter existing from time to time, Grantor hereby grants to Laurus a
continuing first priority security interest in all of Grantor's right, title and
interest in, to and under the following, whether presently existing or hereafter
created  or  acquired  (collectively,  the  "Collateral"):
                                             ----------

(a)     all  of its Patents and Patent Licenses to which it is a party including
those  referred  to  on  Schedule  I  hereto;
                         -----------

(b)     all  of  its  Trademarks  and  Trademark Licenses to which it is a party
including  those  referred  to  on  Schedule  II  hereto;
                                    ------------

(c)     all  of  its  Copyrights  and  Copyright Licenses to which it is a party
including  those  referred  to  on  Schedule  III  hereto;
                                    -------------

(d)     all  reissues,  continuations  or  extensions  of  the  foregoing;

(e)     all  goodwill  of the business connected with the use of, and symbolized
by,  each  Patent,  each Patent License, each Trademark, each Trademark License,
each  Copyright  and  each  Copyright  License;  and

(f)     all  products  and  proceeds  of  the  foregoing,  including,  without
limitation,  any  claim  by  Grantor  against third parties for past, present or
future  (i)  infringement or dilution of any Patent or Patent licensed under any
Patent  License,  (ii)  injury to the goodwill associated with any Patent or any
Patent  licensed under any Patent License, (iii) infringement or dilution of any
Trademark

<PAGE>

or  Trademark  licensed under any Trademark License, (iv) injury to the goodwill
associated  with  any  Trademark  or  any Trademark licensed under any Trademark
License,  (v)  infringement  or  dilution of any Copyright or Copyright licensed
under any Copyright License, and (vi) injury to the goodwill associated with any
Copyright  or  any  Copyright  licensed  under  any  Copyright  License.

Section  3.     REPRESENTATIONS AND WARRANTIES.  Grantor represents and warrants
                ------------------------------
that  Grantor  does not have any interest in, or title to, any Patent, Trademark
or  Copyright  except  as set forth in Schedule I, Schedule II and Schedule III,
                                       ----------  -----------     ------------
respectively,  hereto.  Grantor's  Patents,  Trademarks and Copyrights are valid
and  enforceable, are solely owned by Grantor and there is no claim that the use
of  any  of  them  violates  the  rights of any third person.  This Agreement is
effective  to  create  a  valid  and  continuing  lien on and perfected security
interests  in  favor  of  Laurus  in  all  of  Grantor's Patents, Trademarks and
Copyrights  and  such  perfected  security  interests are enforceable as such as
against  any and all creditors of, and purchasers from, Grantor.  Upon filing of
this  Intellectual Property Security Agreement with the United States Patent and
Trademark  Office  and  the  United  States  Copyright  Office and the filing of
appropriate  financing  statements, all action necessary or desirable to protect
and  perfect  Laurus'  Lien on each Grantor's Patents, Trademarks and Copyrights
shall  have  been  duly  taken.

Section  4.     COVENANTS.  Grantor  covenants  and agrees with Laurus that from
                ---------
and  after  the  date  of  this  Agreement:

(a)     Grantor  shall  notify  Laurus  immediately if it knows or has reason to
know  that  any application or registration relating to any Patent, Trademark or
Copyright  (now  or hereafter existing) may become abandoned or dedicated, or of
any  adverse  determination or development (including the institution of, or any
such determination or development in, any proceeding in the United States Patent
and Trademark Office, the United States Copyright Office or any court) regarding
Grantor's ownership of any Patent, Trademark or Copyright, its right to register
the  same,  or  to  keep  and  maintain  the  same.

(b)     In  no  event  shall  Grantor,  either  directly  or  through any agent,
employee,  licensee or designee, file an application for the registration of any
Patent,  Trademark  or  Copyright  with  the  United States Patent and Trademark
Office,  the  United  States  Copyright  Office  or any similar office or agency
without giving Laurus prior written notice thereof, and, upon request of Laurus,
Grantor  shall  execute  and  deliver a supplement hereto (in form and substance
satisfactory  to  Laurus)  to evidence Laurus' lien on such Patent, Trademark or
Copyright,  and  the  General  Intangibles  of  Grantor  relating  thereto  or
represented  thereby.

(c)     Grantor  shall  take  all  actions  necessary  or requested by Laurus to
maintain and pursue each application, to obtain the relevant registration and to
maintain the registration of each of the Patents or Trademarks (now or hereafter
existing),  including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference and cancellation
proceedings.

<PAGE>

(d)     In  the  event  that  any  of  the  Collateral  is  infringed  upon,  or
misappropriated  or  diluted  by  a  third  party,  Grantor  shall notify Laurus
promptly  after  Grantor  learns  thereof.  Grantor  shall,  unless  it  shall
reasonably  determine  that such Collateral is in no way material to the conduct
of  its  business or operations, promptly sue for infringement, misappropriation
or  dilution  and  to  recover  any  and  all  damages  for  such  infringement,
misappropriation  or dilution, and shall take such other actions as Laurus shall
deem  appropriate  under  the  circumstances  to  protect  such  Collateral.

Section  5.     SECURITY  AGREEMENT.  The security interests granted pursuant to
                -------------------
this Agreement are granted in conjunction with the security interests granted to
Laurus  by  Grantor  pursuant  to  the  Security  Agreement.  Grantor  hereby
acknowledges  and affirms that the rights and remedies of Laurus with respect to
the  security  interest in the Collateral made and granted hereby are more fully
set  forth  in  the  Security  Agreement,  the terms and provisions of which are
incorporated  by  reference  herein  as  if  fully  set  forth  herein.

Section  6.     REINSTATEMENT.  This  Agreement  shall  remain in full force and
                -------------
effect  and  continue to be effective should any petition be filed by or against
Grantor  for  liquidation  or reorganization, should Grantor become insolvent or
make  an  assignment  for  the  benefit of any creditor or creditors or should a
receiver  or  trustee  be appointed for all or any significant part of Grantor's
assets, and shall continue to be effective or be reinstated, as the case may be,
if  at any time payment and performance of the Obligations, or any part thereof,
is,  pursuant  to  applicable  law,  rescinded  or  reduced  in  amount, or must
otherwise  be restored or returned by any obligee of the Obligations, whether as
a  "voidable  preference,"  "fraudulent conveyance," or otherwise, all as though
such  payment  or performance had not been made.  In the event that any payment,
or  any  part  thereof,  is  rescinded,  reduced,  restored  or  returned,  the
Obligations  shall be reinstated and deemed reduced only by such amount paid and
not  so  rescinded,  reduced,  restored  or  returned.

Section  7.     INDEMNIFICATION.  (A)  Grantor  assumes  all  responsibility and
                ---------------
liability  arising from the use of the Patents, Trademarks and/or Copyrights and
Grantor hereby indemnifies and holds Laurus harmless from and against any claim,
suit,  loss,  damage  or expense (inclu-ding reasonable attorneys' fees) arising
out  of  Grantor's  operations  of  its  business  from  the use of the Patents,
Trademarks  and/or Copyrights.  (B) In any suit, proceeding or action brought by
Laurus  under any Patent License, Trademark License or Copyright License for any
sum owing thereunder, or to enforce any provisions of such license, Grantor will
indemnify  and keep Laurus harmless from and against all expense, loss or damage
suffered  by  reason  of  any  defense,  set  off,  counterclaim,  recoupment or
reduction  or  liability  whatsoever of the obligee thereunder, arising out of a
breach  of  Grantor  of  any  obligation  thereunder or arising out of any other
agreement,  indebtedness  or  liability at any time owing to or in favor of such
obligee  or  its  successors  from  Grantor, and all such obligations of Grantor
shall  be  and remain enforceable against and only against Grantor and shall not
be  enforceable  against  Laurus.

Section 8.     NOTICES.  Whenever it is provided herein that any notice, demand,
               -------
request,  consent,  approval, declaration or other communication shall or may be
given  to  or served upon any of the parties by any other party, or whenever any
of  the  parties  desires  to  give

<PAGE>

and serve upon any other party any communication with respect to this Agreement,
each  such  notice,  demand,  request,  consent,  approval, declaration or other
communication  shall  be in writing and shall be given in the manner, and deemed
received,  as  provided  for  in  the  Security  Agreement.

Section 9.     TERMINATION OF THIS AGREEMENT.  Subject to Section 6 hereof, this
               -----------------------------              ---------
Agreement  shall  terminate  upon payment in full in cash of all Obligations and
irrevocable  termination  of  the  Security  Agreement.

                           [Signature Page to Follow]

<PAGE>

IN  WITNESS  WHEREOF,  Grantor  has  caused  this Intellectual Property Security
Agreement  to be executed and delivered by its duly authorized officer as of the
date  first  set  forth  above.

     TRINITY  WORKPLACE  LEARNING  CORPORATION

     By:____________________________
     Name:  Dennis  J.  Cagan
     Title:  Chief  Executive  Officer

ACCEPTED  and  ACKNOWLEDGED  by:

LAURUS  MASTER  FUND,  LTD.

By:
     Name:
     Title:

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