PROMISSORY NOTE
--------------------------------------------------------------------------------
Principal        Loan      Maturity     Loan     Call   Account Officer Initials
                 Date                    No.     /Coll
$7,500,000.00  07-01-2007  07-01-2008  281001273                 GPB
--------------------------------------------------------------------------------

  References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.
             Any item above containing "***" has been omitted due to
                            text length limitations.
--------------------------------------------------------------------------------
 Borrower: NEW FRONTIER MEDIA, INC.         Lender: First Community Bank
           7007 WINCHESTER CIR. STE 200              Denver Tech Consumer
           BOULDER, CO 80301                          Servicing Center
                                                    4582 South Ulster Street,
                                                      Suite 650
                                                    Denver, CO 80237
                                                    (303) 729-3502

================================================================================
Principal Amount:                 Initial Rate:             Date of Note:
 $7,500,000.00                        8.120%                July 1, 2007

PROMISE TO PAY. NEW FRONTIER MEDIA, INC. ("Borrower") promises to pay to First
Community Bank ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Seven Million Five Hundred Thousand & 00/100
Dollars ($7,500,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each
advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on July 1, 2008. In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment
date, beginning August 1, 2007, with all subsequent interest payments to be due
on the same day of each month after that. Unless otherwise agreed or required by
applicable law, payments will be applied first to any accrued unpaid interest;
then to principal; then to any late charges; and then to any unpaid collection
costs. The annual interest rate for this Note is computed on a 365/360 basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the The Prime
Rate as quoted in the Money Section of the Wall Street Journal, when a range of
rates is published the highest rate will be applied (the "Index"). The Index is
not necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notifying Borrower. Lender will tell Borrower the current
Index rate upon Borrower's request. The interest rate change will not occur more
often than each day. Borrower understands that Lender may make loans based on
other rates as well. The Index currently is 8.250% per annum. The interest rate
to be applied to the unpaid principal balance during this Note will be at a rate
of 0.130 percentage points under the Index, resulting in an initial rate of
8.120% per annum. NOTICE: Under no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $25.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
"paid in full", "without recourse", or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
"payment in full" of the amount awed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: First Community Bank, Loan Administration Service Center, PO Box
3017 Albuquerque, NM 87190.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $10.00,
whichever is greater.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the Interest rate on this Note shall be increased by adding a 3.000
percentage point margin ("Default Rate Margin"). The Default Rate Margin shall
also apply to each succeeding interest rate change that would have applied had
there been no default. However, in no event will the interest rate exceed the
maximum interest rate limitations under applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:


     Payment Default. Borrower fails to make any payment when due under this
     Note.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Note or in any of the
     related documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     Default in Favor of Third Parties. Borrower or any Grantor defaults under
     any loan, extension of credit, security agreement, purchase or sales
     agreement or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's ability
     to repay this Note or perform Borrower's obligations under this Note or any
     of the related documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or an Borrower's behalf under this Note or
     the related documents is false or misleading in any materiel respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, This Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any guarantor, endorser, surety, or accommodation party of any of the
     indebtedness or any guarantor, endorser. surety, or accommodation party
     dies or becomes incompetent, or revokes or disputes the validity of, or
     liability under, any guaranty of the indebtedness evidenced by this Note.

     Change In Ownership. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

     Adverse Change. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of
     this Note is impaired.

     Insecurity. Lender in good faith believes itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender the reasonable
costs of such collection. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses, whether or not there
is a lawsuit, including without limitation attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction, and appeals. If not prohibited by applicable law, Borrower
also will pay any court costs, in addition to all other sums provided by law. /

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
Colorado without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of Colorado.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Denver County. State of Colorado.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether chocking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any

<PAGE>

                                 PROMISSORY NOTE
 Loan No: 281001273                (Continued)                           Page 2


and all such accounts, and, at Lender's option, to administratively freeze all
such accounts to allow Lender to protect Lender's charge and setoff rights
provided in this paragraph.

COLLATERAL Borrower acknowledges this Note is secured by ALL CHATTEL PAPER,
ACCOUNTS AND GENERAL INTANGIBLES AS MORE COMPLETELY DESCRIBED IN THE COMMERCIAL
SECURITY AGREEMENT OF EVEN DATE HEREWITH TOGETHER WITH ALL MODIFICATIONS OF,
CONSOLIDATIONS OF, ADDITIONS OF, REPLACEMENTS OF AND SUBSTITUTIONS OF THE
COLLATERAL.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
his or her authority: MICHAEL WEINER, CEO of NEW FRONTIER MEDIA. INC. Borrower
agrees to be liable for all sums either: (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (A) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (D)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (E) Lender in good faith believes itself
insecure.

CONSENT TO LOAN PARTICIPATION AND CONSENT TO RELEASE OF INFORMATION TO
PURCHASERS AND POTENTIAL PURCHASERS. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation interests
in the loan to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the Loan, and Borrower
hereby waives any rights to privacy Borrower may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as absolute owners of such interests
in the loan and will have all rights granted under the participation agreement
or agreements governing the sale of such participation interests. Borrower
further waives all rights of offset or counterclaim that it may have now or
later against Lender or against any purchaser of such participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan. Borrower further agrees that the
purchaser of any such participation interest may enforce its interest
irrespective of any personal claims or defenses that the Borrower may have
against the Lender.

CERTIFICATION OF FINANCIAL INFORMATION. Borrower certifies that all financial
statements supplied to Lender are true, complete and correct and fairly present
the financial condition of the Borrower as of such dates for the periods covered
by such statements, and there has been no materiel adverse change in the
condition (financial or otherwise), business or operations of the Borrower.
There are no liabilities of the Borrower, fixed or contingent, which are
material but are not reflected in the financial statements or in the notes
thereto. No information, exhibit, or report furnished by the Borrower to Lender
in connection with the Note and Related Documents contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading. Borrower
warrants and represents that financial statements and other information
furnished to Lender in the future in connection with Borrower's obligations
under the Note and Related Documents shall meet the foregoing standards of
correctness, completeness and accuracy.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and he successors and assigns.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly) and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE. BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.

BORROWER:
NEW FRONTIER MEDIA, INC.

By: /s/ Michael Weiner
---------------------------
MICHAEL WEINER, CEO of NEW FRONTIER MEDIA, INC.


<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)

--------------------------------------------------------------------------------
Principal        Loan      Maturity     Loan     Call   Account Officer Initials
                 Date                    No.     /Coll
$7,500,000.00  07-01-2007  07-01-2008  281001273                 GPB
--------------------------------------------------------------------------------

  References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.
             Any item above containing "***" has been omitted due to
                            text length limitations.
--------------------------------------------------------------------------------
 Borrower: NEW FRONTIER MEDIA, INC.         Lender: First Community Bank
           7007 WINCHESTER CIR. STE 200              Denver Tech Consumer
           BOULDER, CO 80301                          Servicing Center
                                                    4582 South Ulster Street,
                                                      Suite 650
                                                    Denver, CO 80237
                                                    (303) 729-3502

================================================================================


THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated July 1, 2007, is made and
executed between NEW FRONTIER MEDIA. INC. ("Borrower") and First Community Bank
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement ("Loan"). Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loan,
Lender is relying upon Borrower's representations, warranties, and agreements as
set forth in this Agreement; (B) the granting, renewing, or extending of any
Loan by Lender at all times shall be subject to Lender's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of July 1, 2007, and shall continue
in full force and effect until such time as all of Borrower's Loans in favor of
Lender have been paid in full, including principal, interest, costs, expenses,
attorneys' fees, and other fees and charges, or until such time as the parties
may agree in writing to terminate this Agreement.

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:

     Conditions Precedent to each Advance. Lender's obligation to make any
     Advance to or for the account of Borrower under this Agreement is subject
     to the following conditions precedent, with all documents, instruments,
     opinions, reports, and other items required under this Agreement to be in
     form and substance satisfactory to Lender:

          (1) Lender shall have received evidence that this Agreement and all
          Related Documents have been duly authorized, executed, and delivered
          by Borrower to Lender.

          (2) Lender shall have received such opinions of counsel, supplemental
          opinions, and documents as Lender may request

          (3) The security interests in the Collateral shall have been duly
          authorized, created, and perfected with first lien priority and shall
          be in full force and effect.

          (4) All guaranties required by Lender for the credit facility(ies)
          shall have been executed by each Guarantor, delivered to Lender, and
          be in full force and effect.

          (5) Lender, at its option and for its own benefit, shall have
          conducted an audit of Borrower's Accounts, books, records, and
          operations, and Lender shall be satisfied as to their condition.

          (6) Borrower shall have paid to Lender all fees, costs, and expenses
          specified in this Agreement and the Related Documents as are then due
          and payable.

          (7) There shall not exist at the time of any Advance a condition which
          would constitute an Event of Default under this Agreement, and
          Borrower shall have delivered to Lender the compliance certificate
          called for in the paragraph below titled "Compliance Certificate."

     Making Loan Advances. Advances under this credit facility, as well as
     directions for payment from Borrower's accounts, may be requested orally or
     in writing by authorized persons. Lender may, but need not, require that
     all oral requests be confirmed in writing. Each Advance shall be
     conclusively deemed to have been made at the request of and for the benefit
     of Borrower (1) when credited to any deposit account of Borrower maintained
     with Lender or (2) when advanced in accordance with the instructions of an
     authorized person. Lender, at its option, may set a cutoff time, after
     which all requests for Advances will be treated as having been requested on
     the next succeeding Business Day.

     Mandatory Loan Repayments. If at any time the aggregate principal amount of
     the outstanding Advances shall exceed the applicable Borrowing Base,
     Borrower, immediately upon written or oral notice from Lender, shall pay to
     Lender an amount equal to the difference between the outstanding principal
     balance of the Advances and the Borrowing Base. On the Expiration Date.
     Borrower shall pay to Lender in full the aggregate, unpaid principal amount
     of all Advances then outstanding and all accrued unpaid interest, together
     with all other applicable fees, costs and charges, if any, not yet paid.

     Loan Account. Lender shall maintain on its books a record of account in
     which Lender shall make entries for each Advance and such ether debits and
     credits as shall be appropriate in connection with the credit facility.
     Lender shall provide Borrower with periodic statements of Borrower's
     account, which statements shall be considered to be correct and
     conclusively binding on Borrower unless Borrower notifies Lender to the
     contrary within thirty (30) days after Borrower's receipt of any such
     statement which Borrower deems to be incorrect

COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loans, obligations and duties owed by Borrower to Lender, Borrower
land others, if required, shall grant to Lender Security Interests in such
property and assets as Lender may require. Lender's Security Interests in the
Collateral shall be continuing liens and shall include the proceeds and products
of the Collateral, including without limitation the proceeds of any insurance.
With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:

     Perfection of Security Interests. Borrower agrees to execute all documents
     perfecting Lender's Security Interest and to take whatever actions are
     requested by Lender to perfect and continue Lender's Security Interests in
     the Collateral. Upon request of Lender, Borrower will deliver to Lender any
     and all of the documents evidencing or constituting the Collateral, and
     Borrower will note Lender's interest upon any and all chattel paper and
     instruments if not delivered to Lender for possession by Lender.
     Contemporaneous with the execution of this Agreement Borrower will execute
     one or more UCC financing statements and any similar statements as may be
     required by applicable law, and Lender will file such financing statements
     and all such similar statements in the appropriate location or locations.
     Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the
     purpose of executing any documents necessary to perfect or to continue any
     Security Interest. Lender may at any time, and without further
     authorization from Borrower, file a carbon, photograph, facsimile, or other
     reproduction of any financing statement for use as a financing statement.
     Borrower will reimburse Lender for all expenses for the perfection,
     termination, and the continuation of the perfection of Lender's security
     interest in the Collateral. Borrower promptly will notify Lender before any
     change in Borrower's name including any change to the assumed business
     names of Borrower. Borrower also promptly will notify Lender before any
     change in Borrower's Social Security Number or Employer Identification
     Number. Borrower further agrees to notify Lender in writing prior to any
     change in address or location of Borrower's principal governance office or
     should Borrower merge or consolidate with any other entity.

     Collateral Records. Borrower does now, and at all times hereafter shall,
     keep correct and accurate records of the Collateral, all of which records
     shall be available to Lender or Lender's representative upon demand for
     inspection and copying at any reasonable time. With respect to the
     Accounts, Borrower agrees to keep and maintain such records as Lender may
     require, including without limitation information concerning Eligible
     Accounts and Account balances and agings. Records related to Accounts
     (Receivables) are or will be located at 7007 Winchester Circle, Suite 200,
     Boulder, CO 80301. The above is an accurate and complete list of all
     locations at which Borrower keeps or maintains business records concerning
     Borrower's collateral.

     Collateral Schedules. Concurrently with the execution and delivery of this
     Agreement, Borrower shall execute and deliver to Lender schedules of
     Accounts and schedules of Eligible Accounts in form and substance
     satisfactory to the Lender. Thereafter supplemental schedules shall be
     delivered according to the following schedule:

     Representations and Warranties Concerning Accounts. With respect to the
     Accounts, Borrower represents and warrants to Lender: (1) Each Account
     represented by Borrower to be an Eligible Account for purposes of this
     Agreement conforms to the requirements of the definition of an Eligible
     Account; (2) All Account information listed on schedules delivered to
     Lender will be true and correct, subject to immaterial variance; and (3)
     Lender, its assigns, or agents shall have the right at any time and at
     Borrower's expense to inspect, examine, and audit Borrower's records and to
     confirm with Account Debtors the accuracy of such Accounts.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions sat forth in this
Agreement and in the Related Documents.

     Loan Documents. Borrower shall provide to Lender the following documents
     for the Loan: (1) the Note; (2) Security Agreements


<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 2
================================================================================

     granting to Lender security interests in the Collateral; (3) financing
     statements and all other documents perfecting Lender's Security Interests;
     (4) evidence of insurance as required below; (5) together with all such
     Related Documents as Lender may require for the Loan; all in form and
     substance satisfactory to Lender and Lender's counsel.

     Borrower's Authorization. Borrower shall have provided in form and
     substance satisfactory to Lender properly certified resolutions, duly
     authorizing the execution and delivery of this Agreement, the Note and the
     Related Documents. In addition, Borrower shall have provided such other
     resolutions, authorizations, documents and instruments as Lender or its
     counsel, may require.

     Fees and Expenses Under This Agreement. Borrower shall have paid to Lender
     all fees, costs, and expenses specified in this Agreement and the Related
     Documents as are then due and payable,

     Representations and Warranties. The representations and warranties set
     forth in this Agreement, in the Related Documents, and in any document or
     certificate delivered to Lender under this Agreement as true and correct.

     No Event of Default. There shall not exist at the time of any Advance a
     condition which would constitute an Event of Default under this Agreement
     or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

     Organization. Borrower is a corporation for profit which is, and at all
     times shall be, duly organized, validly existing, and in good standing
     under and by virtue of the laws of the State of Colorado. Borrower is duly
     authorized to transact business in all other states in which Borrower is
     doing business, having obtained all necessary filings, governmental
     licenses and approvals for each state in which Borrower is doing business.
     Specifically, Borrower is, and at all times shall be, duly qualified as a
     foreign corporation in all states in which the failure to so qualify would
     have a material adverse effect on its business or financial condition.
     Borrower has the full power and authority to own its properties and to
     transact the business in which it is presently engaged or presently
     proposes to engage. Borrower maintains its principal office at 7007
     WINCHESTER CIR, STE 200, BOULDER, CO 80301. Unless Borrower has designated
     otherwise in writing, this is the principal office at which Borrower keeps
     its books and records including its records concerning the Collateral.
     Borrower will notify Lender prior to any change in the location of
     Borrower's state of organization or any change in Borrower's name. Borrower
     shall do all things necessary to preserve and to keep in full force and
     effect its existence, rights and privileges, and shall comply with all
     regulations, rules, ordinances, statutes, orders and decrees of any
     governmental or quasi-governmental authority or court applicable to
     Borrower and Borrower's business activities.

     Assumed Business Names. Borrower has filed or recorded all documents or
     filings required by law relating to all assumed business names used by
     Borrower. Excluding the name of Borrower, the following is a complete list
     of all assumed business names under which Borrower does business: None.

     Authorization. Borrower's execution, delivery, and performance of this
     Agreement and all the Related Documents have been duly authorized by all
     necessary action by Borrower and do not conflict with, result in a
     violation of, or constitute a default under (1) any provision of (a)
     Borrower's articles of incorporation or organization, or bylaws, or (b) any
     agreement or other instrument binding upon Borrower or (2) any law,
     governmental regulation, court decree, or order applicable to Borrower or
     to Borrower's properties.

     Financial Information. Each of Borrower's financial statements supplied to
     Lender truly and completely disclosed Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     Legal Effect. This Agreement constitutes, and any instrument or agreement
     Borrower is required to give under this Agreement when delivered will
     constitute legal, valid, and binding obligations of Borrower enforceable
     against Borrower in accordance with their respective terms.

     Properties. Except as contemplated by this Agreement or as previously
     disclosed In Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not
     presently due and payable, Borrower owns and has good title to all of
     Borrower's properties free and clear of all Security Interests, and has not
     executed any security documents or financing statements relating to such
     properties. All of Borrower's properties are titled In Borrower's legal
     name, and Borrower has not used or filed a financing statement under any
     other name for at least the last five (5) years.

     Hazardous Substances. Except as disclosed to and acknowledged by Lender in
     writing, Borrower represents and warrants that: (1) During the period of
     Borrower's ownership of the Collateral, there has been no use, generation,
     manufacture, storage, treatment, disposal, release or threatened release of
     any Hazardous Substance by any person on, under, about or from any of the
     Collateral. (2) Borrower has no knowledge of, or reason to believe that
     there has been (a) any breach or violation of any Environmental Laws; (b)
     any use, generation, manufacture, storage, treatment, disposal, release or
     threatened release of any Hazardous Substance on, under, about or from the
     Collateral by any prior owners or occupants of any of the Collateral: or
     (c) any actual or threatened litigation or claims of any kind by any person
     relating to such matters. (3) Neither Borrower nor any tenant, contractor,
     agent or other authorized user of any of the Collateral shall use,
     generate, manufacture, store, treat, dispose of or release any Hazardous
     Substance on, under, about or from any of the Collateral; and any such
     activity shall be conducted in compliance with all applicable federal,
     state, and local laws, regulations, and ordinances, including without
     limitation all Environmental Laws. Borrower authorizes Lender and its
     agents to enter upon the Collateral to make such Inspections and tests as
     Lender may deem appropriate to determine compliance of the Collateral with
     this section of the Agreement. Any inspections or tests made by Lender
     shall be at Borrower's expense and for Lender's purposes only and shall not
     be construed to create any responsibility or liability on the part of
     Lender to Borrower or to any other person. The representations and
     warranties contained herein are based on Borrower's due diligence in
     investigating the Collateral for hazardous waste and Hazardous Substances.
     Borrower hereby (1) releases and waives any future claims against Lender
     for indemnity or contribution in the event Borrower becomes liable for
     cleanup or other costs under any such laws, and (2) agrees to indemnify,
     defend, and hold harmless Lender against any and all claims, losses,
     liabilities, damages, penalties, and expenses which Lender may directly or
     indirectly sustain or suffer resulting from a breach of this section of the
     Agreement or as a consequence of any use, generation, manufacture, storage,
     disposal, release or threatened release of a hazardous waste or substance
     on the Collateral. The provisions of this section of the Agreement,
     including the obligation to indemnity and defend, shall survive the payment
     of the Indebtedness and the termination, expiration or satisfaction of this
     Agreement and shall not be affected by Lender's acquisition of any interest
     in any of the Collateral, whether by foreclosure or otherwise.

     Litigation and Claims. No litigation, claim, investigation, administrative
     proceeding or similar action including those for unpaid taxes against
     Borrower is pending or threatened, and no other event has occurred which
     may materially adversely affect Borrower's financial condition or
     properties, other than litigation, claims, or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns
     and reports that are or were required to be filed, have been filed, and all
     taxes, assessments and other governmental charges have been paid in full,
     except those presently being or to be contested by Borrower in good faith
     in the ordinary course of business and for which adequate reserves have
     been provided.

     Lien Priority. Unless otherwise previously disclosed to Lender in writing,
     Borrower has not entered into or granted any Security Agreements, or
     permitted the filing or attachment of any Security Interests on or
     affecting any of the Collateral directly or indirectly securing repayment
     of Borrower's Loan and Note, that would be prior or that may in any way be
     superior to Lender's Security Interests and rights in and to such
     Collateral.

     Binding Effect. This Agreement, the Note, all Security Agreements (if any),
     and all Related Documents are binding upon the signers thereof, as well as
     upon their successors, representatives and assigns, and are legally
     enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

     Notices of Claims and Litigation. Promptly inform Lender in writing of (1)
     all material adverse changes in Borrower's financial condition, and (2) all
     existing and all threatened litigation, claims, investigations,
     administrative proceedings or similar actions affecting Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     or the financial condition of any Guarantor.

     Financial Records. Maintain its books and records in accordance with CAAP,
     applied on a consistent basis, and permit Lender to examine and audit
     Borrower's books and records at all reasonable times,

     Financial Statements. Furnish Lender with the following:

          Annual Statements. As soon as available, but in no event later than
          ninety (90) days after the end of each fiscal year, Borrower's balance
          sheet and income statement for the year ended, audited by a certified
          public accountant satisfactory to Lender.

          Interim Statements. As soon as available, but in no event later than
          thirty (30) days after the end of each fiscal quarter, Borrower's


<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 3
================================================================================

          balance sheet and profit and loss statement for the period ended,
          prepared by Borrower.

     All financial reports required to be provided under this Agreement shall be
     prepared in accordance with GAAP, applied on a consistent basis, and
     certified by Borrower as being true and correct

     Additional Information. Furnish such additional information and statements,
     as Lender may request from time to time.

     Financial Covenants and Ratios. Comply with the following covenants and
     ratios:

          Working Capital Requirements. Borrower shall comply with the following
          working capital ratio requirements:

               Current Ratio. Maintain a Current Ratio in excess of 1.250 to
               1.000. The term "Current Ratio" means Borrower's total Current
               Assets divided by Borrower's total Current Liabilities.

          Tangible Net Worth Requirements. Other Net Worth requirements are as
          follows: Total Liabilities to Tangible Net Worth. Customer's "Leverage
          Ratio" shall not at any time exceed 1.0 to 1.0. For purposes hereof,
          "Leverage Ratio" shall mean the ratio of (i) Customer's total
          liabilities less any subordinated debt of customer, to (ii) the sum of
          Customer's Tangible Net Worth plus any subordinated debt of customer.
          The term "Tangible Net Worth" shall mean Customer's net worth as shown
          as Customer's regular financial statements prepared in accordance with
          GAAP, including net prepaid distribution rights, but excluding an
          amount equal to: (i) any Intangible Assets, and (ii) any amounts now
          or hereafter directly or indirectly owing to Customer by officers,
          shareholders or affiliates of Customer. "Intangible Assets" shall mean
          the total amount of goodwill, patents, trade names, trade or service
          marks, copyrights, experimental expense, organization expense,
          un-amortized debt discount and expense, the excess of cost of shares
          acquired over book value of related assets, and such other assets as
          are properly classified as "intangible assets" of the Customer
          determined in accordance with GAAP. Subordinated debt shall mean any
          debt of Customer for borrowed money which is subordinated in right of
          payment and is payable on terms and conditions junior to First
          Community Bank. and in a form and manner acceptable to First Community
          Bank..

          Other Requirements. Fixed Charge Coverage. Customer's "Fixed Charge
          Coverage Ratio" shall be equal to or exceed 2.Ox at all times, to be
          measured on a quarterly basis. For purposes hereof, "Fixed Charge
          Coverage Ratio" shall mean the ratio of: (a) income before interest
          (including payments in the nature of interest under capital leases),
          taxes, depreciation, amortization, and other non-cash charges, to (b)
          the sum of the aggregate principal and interest paid or accrued, the
          aggregate rental under capital leases paid or accrued, all as
          determined on a as set forth in customer's regular quarter end
          financial statements prepared in accordance with GAAP.

          Except as provided above, all computations made to determine
          compliance with the requirements contained in this paragraph shall be
          made in accordance with generally accepted accounting principles,
          applied on a consistent basis, and certified by Borrower as being true
          and correct.

     Insurance. Maintain fire and other risk insurance, public liability
     insurance, and such ether insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, coverages and with
     insurance companies acceptable to Lender. Borrower, upon request of Lender,
     will deliver to Lender from time to time the policies or certificates of
     insurance in form satisfactory to Lender, including stipulations that
     coverages will not be cancelled or diminished without at least fifteen (15)
     days prior written notice to Lender. Each insurance policy also shall
     include an endorsement providing that coverage in favor of Lender will not
     be impaired in any way by any act, omission or default of Borrower or any
     other person. In connection with all policies covering assets in which
     Lender holds or is offered a security interest for the Loans, Borrower
     will provide Lender with such Lender's loss payable or other endorsements
     as Lender may require.

     Insurance Reports. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (1) the
     name of the insurer; (2) the risks insured; (3) the amount of the policy;
     (4) the properties insured; (5) the then current property values on the
     basis of which insurance has bean obtained, and the manner of determining
     those values; and (6) the expiration date of the policy. In addition, upon
     request of Lender (however not more often than annually), Borrower will
     have an independent appraiser satisfactory to Lender determine, as
     applicable, the actual cash value or replacement cost of any Collateral.
     The cost of such appraisal shall be paid by Borrower.

     Other Agreements. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     Loan Proceeds. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     Taxes, Charges and Liens. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits.

     Performance. Perform and comply, in a timely manner, with all terms,
     conditions, and provisions set forth in this Agreement, in the Related
     Documents, and in all other instruments and agreements between Borrower and
     Lender. Borrower shall notify Lender immediately in writing of any default
     in connection with any agreement.

     Operations. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner.

     Environmental Studies. Promptly conduct and complete, at Borrower's
     expense, all such investigations, studies, samplings and testings as may be
     requested by Lender or any governmental authority relative to any
     substance, or any waste or by-product of any substance defined as toxic or
     a hazardous substance under applicable federal, state, or local law, rule,
     regulation, order or directive, at or effecting any property or any
     facility owned, leased or used by Borrower.

     Compliance with Governmental Requirements. Comply with all laws,
     ordinances, and regulations, now or hereafter in effect, of all
     governmental authorities applicable to the conduct of Borrower's
     properties, businesses and operations, and to the use or occupancy of the
     Collateral, including without limitation, the Americans With Disabilities
     Act. Borrower may contest in good faith any such law, ordinance, or
     regulation and withhold compliance during any proceeding, including
     appropriate appeals, so long as Borrower has notified Lender in writing
     prior to doing so and so long as, in Lender's sole opinion, Lender's
     interests in the Collateral are not jeopardized. Lender may require
     Borrower to post adequate security or a surety bond, reasonably
     satisfactory to Lender, to protect Lenders interest.

     Inspection. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records in the possession of a
     third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at all reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

     Compliance Certificates. Unless waived In writing by Lender, provide Lender
     at least annually, with a certificate executed by Borrower's chief
     financial officer, or other officer or person acceptable to Lender,
     certifying that the representations and warranties set forth in this
     Agreement are true and correct as of the date of the certificate and
     further certifying that, as of the date of the certificate, no Event of
     Default exists under this Agreement.

     Environmental Compliance and Reports. Borrower shall comply in all respects
     with any and all Environmental Laws; not cause or permit to exist, as a
     result of an intentional or unintentional action or omission on Borrower's
     part or on the part of any third party, on property owned and/or occupied
     by Borrower, any environmental activity where damage may result to the
     environment unless such environmental activity is pursuant to and in
     compliance with the conditions of a permit issued by the appropriate
     federal, state or local governmental authorities; shall furnish to Lender
     promptly and in any event within thirty (30) days after receipt thereof a
     copy of any notice, summons, lien, citation, directive, letter or other
     communication from any governmental agency or instrumentality concerning
     any intentional or unintentional action or omission on Borrower's part in
     connection with any environmental activity whether or not there is damage
     to the environment and/or other natural resources.

     Additional Assurances. Make, execute and deliver to Lender such promissory
     notes, mortgages, deeds of trust, security agreements, assignments,
     financing statements, instruments, documents and other agreements as Lender
     or its attorneys may reasonably request to evidence and secure the Loans
     and to perfect all Security Interests.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or

<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 4
================================================================================

paying all taxes, liens, security interests, encumbrances and other claims, at
any time levied or placed on any Collateral and paying all costs for insuring,
maintaining and preserving any Collateral. All such expenditures incurred or
paid by Lender for such purposes will then bear interest at the rate charged
under the Note from the date incurred or paid by Lender to the date of repayment
by Borrower. All such expenses will become a part of the Indebtedness and, at
Lenders option, will (A) be payable on demand; (B) be added to the balance of
the Note and be apportioned among and be payable with any installment payments
to become due during either (1) the term of any applicable insurance policy; or
(2) the remaining term of the Note; or (C) be treated as a balloon payment which
will be due and payable at the Note's maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     Indebtedness and Liens. (1) Except for trade debt incurred in the normal
     course of business and indebtedness to Lender contemplated by this
     Agreement, create, incur or assume indebtedness for borrowed money,
     including capital leases, (2) sell, transfer, mortgage, assign, pledge,
     lease, grant a security interest in, or encumber any of Borrower's assets
     (except as allowed as Permitted Liens), or (3) sell with recourse any of
     Borrower's accounts, except to Lender.

     Continuity of Operations. (1) Engage in any business activities
     substantially different than those in which Borrower is presently engaged,
     (2) cease operations, liquidate, merge, transfer, acquire or consolidate
     with any other entity, change its name, dissolve or transfer or sell
     Collateral out of the ordinary course of business, or (3) pay any dividends
     on Borrower's stock (other than dividends payable in its stock), provided,
     however that notwithstanding the foregoing, but only so long as no Event of
     Default has occurred and is continuing or would result from the payment of
     dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
     Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
     on its stock to its shareholders from time to time in amounts necessary to
     enable the shareholders to pay income taxes and make estimated income tax
     payments to satisfy their liabilities under federal and state law which
     arise solely from their status as Shareholders of a Subchapter S
     Corporation because of their ownership of shares of Borrower's stock, or
     purchase or retire any of Borrower's outstanding shares or alter or amend
     Borrower's capital structure.

     Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or
     assets to any other person, enterprise or entity, (2) purchase, create or
     acquire any interest in any other enterprise or entity, or (3) incur any
     obligation as surety or guarantor other than in the ordinary course of
     business.

     Agreements. Borrower will not enter into any agreement containing any
     provisions which would be violated or breached by the performance of
     Borrower's obligations under this Agreement or in connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor; or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in
good faith deems itself insecure, even though no Event of Default shall have
occurred.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's Option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement;

     Payment Default. Borrower fails to make any payment when due under the
     Loan.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     Default in Favor of Third Parties. Borrower or any Grantor defaults under
     any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's or any Grantor's property or
     Borrower's or any Grantor's ability to repay the Loans or perform their
     respective obligations under this Agreement or any of the Related
     Documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this
     Agreement or the Related Documents is false or misleading in any materiel
     respect, either now or at the time made or furnished or becomes false or
     misleading at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the Loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or any Guarantor dies or
     becomes incompetent, or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness.

     Change in Ownership. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

     Adverse Change. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of the
     Loan is impaired.

     Insecurity. Lender in good faith believes itself insecure.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.

NO PURCHASE OF SECURITIES. Borrower agrees the proceeds of the credit facility
may not be used to purchase or carry securities.

ACQUISITION. In the event the borrower or any of the subsidiaries are acquired
or purchased by a third party, the facility will be due and payable.

LOANS TO AFFILIATED PERSONS AND ENTITIES. Borrower agrees, without prior written
consent of First Community bank, no loans or advances directly or indirectly
made by Customer to affiliated person or entities.

MATERIAL CHANGE IN CLIENT BASE. Borrower agrees, no adverse, material change in
the current client base as it related to the Borrowers largest clients, i.e.
EchoStar Communications and Time Warner Broadcasting.

CONTINUITY. Customer will continue to maintain its business, existence,
ownership and good standing.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties


<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 5
================================================================================

     as to the matters set forth in this Agreement. No alteration of or
     amendment to this Agreement shall be effective unless given in writing and
     signed by the party or parties sought to be charged or bound by the
     alteration or amendment.

     Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of
     Lender's reasonable costs and expenses, including Lender's attorneys' fees
     and Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Borrower shall pay the reasonable costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services, Borrower also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Consent to Loan Participation. Borrower agrees and consents to Lender's
     sale or transfer, whether now or later, of one or more participation
     interests in the Loan to one or more purchasers, whether related or
     unrelated to Lender. Lender may provide, without any limitation whatsoever,
     to any one or more purchasers, or potential purchasers, any information or
     knowledge Lender may have about Borrower or about any other matter relating
     to the Loan, and Borrower hereby waives any rights to privacy Borrower may
     have with respect to such matters. Borrower additionally waives any and all
     notices of sale of participation interests, as well as all notices of any
     repurchase of such participation interests. Borrower also agrees that the
     purchasers of any such participation interests will be considered as the
     absolute owners of such interests in the Loan and will have all the rights
     granted under the participation agreement or agreements governing the sale
     of such participation interests. Borrower further waives all rights of
     offset or counterclaim that it may have now or later against Lender or
     against any purchaser of such a participation interest and unconditionally
     agrees that either Lender or such purchaser may enforce Borrower's
     obligation under the Loan irrespective of the failure or insolvency of any
     holder of the interest in the Loan. Borrower further agrees that the
     purchaser of any such participation interests may enforce its interests
     irrespective of any personal claims or defenses that Borrower may have
     against Lender.

     Governing Law. This Agreement will be governed by federal law applicable to
     Lender and, to the extent not preempted by federal law, the laws of the
     State of Colorado without regard to its conflicts of law provisions. This
     Agreement has been accepted by Lender in the State of Colorado.

     Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's
     request to submit to the jurisdiction of the courts of Denver County, State
     of Colorado.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver it given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Borrower, or between
     Lender and any Grantor, shall constitute a waiver of any of Lender's rights
     or of any of Borrower's or any Grantor's obligations as to any future
     transaction. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

     Notices. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Borrower agrees to keep Lender informed at all times
     of Borrower's current address. Unless otherwise provided or required by
     law, if there is more than one Borrower, any notice given by Lender to any
     Borrower is deemed to be notice given to all Borrowers.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall hot make the offending provision illegal,
     invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable, If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     Subsidiaries and Affiliates of Borrower. To the extent the context of any
     provisions of this Agreement makes it appropriate, including without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used in this Agreement shall include all of Borrower's subsidiaries and
     affiliates. Notwithstanding the foregoing however, under no circumstances
     shall this Agreement be construed to require Lender to make any Loan or
     other financial accommodation to any of Borrower's subsidiaries or
     affiliates.

     Successors and Assigns. All covenants and agreements by or on behalf of
     Borrower contained in this Agreement or any Related Documents shall bind
     Borrower's successors and assigns and shall inure to the benefit of Lender
     and its successors and assigns. Borrower shall not, however, have the right
     to assign Borrower's rights under this Agreement or any interest therein,
     without the prior written consent of Lender.

     Survival of Representations and Warranties. Borrower understands and agrees
     that in extending Loan Advances, Lender is relying on all representations,
     warranties, and covenants made by Borrower in this Agreement or in any
     certificate or other instrument delivered by Borrower to Lender under this
     Agreement or the Related Documents. Borrower further agrees that regardless
     of any investigation made by Lender, all such representations, warranties
     and covenants will survive the extension of Loan Advances and delivery to
     Lender of the Related Documents, shall be continuing in nature, shall be
     deemed made and redated by Borrower at the time each Loan Advance is made,
     and shall remain in full force and effect until such time as Borrower's
     Indebtedness shall be paid in full, or until this Agreement shall be
     terminated in the manner provided above, whichever is the last to occur.

     Time is of the Essence, Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code, Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

     Account. The word "Account" means a trade account, account receivable,
     other receivable, or other right to payment for goods sold or services
     rendered owing to Borrower (or to a third party grantor acceptable to
     Lender).

     Account Debtor. The words "Account Debtor" means the person or entity
     obligated upon an Account.

     Advance. The word "Advance" means a disbursement of Loan funds made, or to
     be made, to Borrower or on Borrower's behalf under the terms and conditions
     of this Agreement.

     Agreement. The word "Agreement" means this Business Loan Agreement (Asset
     Based), as this Business Loan Agreement (Asset Based) may be amended or
     modified from time to time, together with all exhibits and schedules
     attached to this Business Loan Agreement (Asset Based) from time to time.

     Borrower. The word "Borrower" means NEW FRONTIER MEDIA, INC. and includes
     all co-signers and co-makers signing the Note and all their successors and
     assigns.

     Borrowing Base. The words "Borrowing Base" mean Borrowing Base and
     Compliance Certificate- submission of the company's borrowing base and
     compliance certificate, to be submitted with 30 days of each fiscal quarter
     and while the line of credit is not in use, and monthly when the line of
     credit is being utilized.

     Business Day. The words "Business Day" mean a day on which commercial banks
     are open in the State of Colorado.

     Collateral. The word "Collateral" means all property and assets granted as
     collateral security for a Loan, whether real or personal property, whether
     granted directly or indirectly, whether granted now or in the future, and
     whether granted in the form of a security interest, mortgage, collateral
     mortgage, deed of trust, assignment pledge, crop pledge, chattel mortgage,
     collateral chattel mortgage, chattel trust factor's lien, equipment trust,
     conditional sale, trust receipt, lien, charge, lien or title retention
     contract, lease or consignment intended as a security device, or any other
     security or lien interest whatsoever, whether created by law, contract, or
     otherwise. The word Collateral also includes without limitation all
     collateral described in the Collateral section of this Agreement.

     Eligible Accounts. The words "Eligible Accounts" mean at any time, all of
     Borrower's Accounts which contain selling terms and conditions acceptable
     to Lender. The net amount of any Eligible Account against which Borrower
     may borrow shall exclude all returns, discounts,

<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 6
================================================================================

     credits, and offsets of any nature, Unless otherwise agreed to by Lender in
     writing, Eligible Accounts do not include:

          (1) Accounts with respect to which the Account Debtor is employee or
          agent of Borrower.

          (2) Accounts with respect to which the Account Debtor is a subsidiary
          of, or affiliated with Borrower or its shareholders, officers, or
          directors.

          (3) Accounts with respect to which goods are placed on consignment,
          guaranteed sale, or other terms by reason of which the payment by the
          Account Debtor may be conditional.

          (4) Accounts with respect to which Borrower is or may become liable to
          the Account Debtor for goods sold or services rendered by the Account
          Debtor to Borrower.

          (5) Accounts which are subject to dispute, counterclaim, or setoff.

          (6) Accounts with respect to which the goods have not been shipped or
          delivered, or the services have not been rendered, to the Account
          Debtor.

          (7) Accounts with respect to which Lender, in its sole discretion,
          deems the creditworthiness or financial condition of the Account
          Debtor to be unsatisfactory.

          (8) Accounts of any Account Debtor who has flied or has had filed
          against it a petition in bankruptcy or an application for relief under
          any provision of any state or federal bankruptcy, insolvency, or
          debtor-in-relief acts: or who has had appointed a trustee, custodian,
          or receiver for the assets of such Account Debtor; or who has made an
          assignment for the benefit of creditors or has become insolvent or
          fails generally to pay its debts (including its payrolls) as such
          debts become due.

     Environmental Laws. The words "Environmental Laws" mean any and all state,
     federal and local statutes, regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
     Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
     1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
     Section 6901, et seq., or other applicable state or federal laws, rules, or
     regulations adopted pursuant thereto.

     Event of Default. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     Expiration Date. The words "Expiration Date" mean the date of termination
     of Lender's commitment to lend under this Agreement

     GAAP. The word "GAAP" means generally accepted accounting principles.

     Grantor. The word "Grantor" means each and all of the persons or entities
     granting a Security Interest in any Collateral for the Loan, including
     without limitation all Borrowers granting such a Security Interest.

     Guarantor. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Loan.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Hazardous Substances. The words "Hazardous Substances" mean materials that,
     because of their quantity, concentration or physical, chemical or
     infectious characteristics, may cause or pose a present or potential hazard
     to human health or the environment when improperly used, treated, stored,
     disposed of, generated, manufactured, transported or otherwise handled. The
     words "Hazardous Substances" are used in their very broadest sense and
     include without limitation any and all hazardous or toxic substances,
     materials or waste as defined by or listed under the Environmental Laws.
     The term "Hazardous Substances" also includes, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     Lender. The word "Lender" means First Community Bank, its successors and
     assigns;

     Loan. The word "Loan" means any and all loans and financial accommodations
     from Lender to Borrower whether now or hereafter existing, and however
     evidenced, including without limitation those loans and financial
     accommodations described herein or described on any exhibit or schedule
     attached to this Agreement from time to time.

     Note. The word "Note" means the Promissory Note or Agreement dated July 1,
     2007 in the original principal amount of $7,500,000.00 from
     Borrower/Grantor to Lender together with all renewals of, extensions of,
     modifications of, refinancings of, consolidations of, additions of and
     substitutions for the Promissory Note or Agreement.

     Permitted Liens. The words "Permitted Liens" mean (1) liens and security
     interests securing Indebtedness owed by Borrower to Lender: (2) liens for
     taxes, assessments, or similar charges either not yet due or being
     contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
     or carriers, or other like liens arising in the ordinary course of business
     and securing obligations which are not yet delinquent; (4) purchase money
     liens or purchase money security interests upon or in any property acquired
     or held by Borrower in the ordinary course of business to secure
     indebtedness outstanding on the data of this Agreement or permitted to be
     incurred under the paragraph of this Agreement titled "Indebtedness and
     Liens"; (5) liens and security interests which, as of the date of this
     Agreement, have been disclosed to and approved by the Lender in writing;
     and (6) those liens and security interests which in the aggregate
     constitute an immaterial and insignificant monetary amount with respect to
     the net value of Borrower's assets.

     Primary Credit Facility. The words "Primary Credit Facility" mean the
     credit facility described in the Line of Credit section of this Agreement.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Loan.

     Security Agreement. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     Security Interest. The words "Security Interest" mean, without limitation,
     any and all types of collateral security, present and future, whether in
     the form of a lien, charge, encumbrance, mortgage, deed of trust, security
     deed, assignment, pledge, crop pledge, chattel mortgage, collateral
     chattel mortgage, chattel trust, factor's lien, equipment trust,
     conditional sale, trust receipt, lien or title retention contract, lease or
     consignment intended as a security device, or any other security or lien
     interest whatsoever whether created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED JULY 1, 2007,

BORROWER:

NEW FRONTIER MEDIA, INC.

By: /s/ Michael Weiner
   -----------------------------
MICHAEL WEINER, CEO of NEW FRONTIER MEDIA, INC.


<PAGE>

                      BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 281001273                 (Continued)                          Page 7
================================================================================


LENDER:

FIRST COMMUNITY BANK

By: /s/ Gregory P. Boushelle
   -----------------------------
    Authorized Signer


<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
--------------------------------------------------------------------------------
Principal        Loan      Maturity     Loan     Call   Account Officer Initials
                 Date                    No.     /Coll
$7,500,000.00  07-01-2007  07-01-2008  281001273                 GPB
--------------------------------------------------------------------------------

  References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.
             Any item above containing "***" has been omitted due to
                            text length limitations.
--------------------------------------------------------------------------------
 Borrower: NEW FRONTIER MEDIA, INC.         Lender: First Community Bank
           7007 WINCHESTER CIR, STE 200              Denver Tech Consumer
           BOULDER, CO 80301                          Servicing Center
                                                    4582 South Ulster Street,
                                                      Suite 650
                                                    Denver, CO 80237
                                                    (303) 729-3502

================================================================================


THIS COMMERCIAL SECURITY AGREEMENT dated, July 1, 2007, is made and executed
between NEW FRONTIER MEDIA, INC. ("Grantor") and First Community Bank
("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral as used in this Agreement means the
following described property, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever located, in which Grantor is
giving to Lender a security interest for the payment of the Indebtedness and
performance of all other obligations under the Note and this Agreement:

     Accounts

In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

     (A) All accessions, attachments, accessories, replacements of and additions
     to any of the collateral described herein, whether added now or later.

     (B) All products and produce of any of the property described in this
     Collateral section.

     (C) All accounts, general intangibles, instruments, rents, monies,
     payments, and all other rights, arising out of a sale, lease, consignment
     or other disposition of any of the property described in this Collateral
     section,

     (D) All proceeds (including insurance proceeds from the sale, destruction,
     loss, or other disposition of any of the property described in this
     Collateral section, and sums due from a third party who has damaged or
     destroyed the Collateral or from that party's insurer, whether due to
     judgment, settlement or other process.

     (E) All records and data relating to any of the property described in this
     Collateral section, whether in the form of a writing, photograph,
     microfilm, microfiche, or electronic media, together with all of Grantor's
     right, title, and interest in and to all computer software required to
     utilize, create, maintain, and process any such records or data on
     electronic media.


RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any IRA or Keogh account, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

     Perfection of Security Interest. Grantor agrees to take whatever actions
     are requested by Lender to perfect and continue Lender's security interest
     in the Collateral Upon request of Lender, Grantor will deliver to Lender
     any and all of the documents evidencing or constituting the Collateral, and
     Grantor will note Lender's interest upon any and all chattel paper and
     instruments if not delivered to Lender for possession by Lender. This is a
     continuing Security Agreement and will continue in effect even though all
     or any part of the Indebtedness is paid in full and even though for a
     period of time Grantor may not be indebted to Lender.

     Notices to Lender. Grantor will promptly notify Lender in writing at
     Lender's address shown above (or such other addresses as Lender may
     designate from time to time) prior to any (1) change in Grantor's name; (2)
     change in Grantor's assumed business name(s); (3) change in the management
     of the Corporation Grantor; (4) change in the authorized signer(s); (5)
     change in Grantor's principal office address; (6) change in Grantor's state
     of organization; (7) conversion of Grantor to a new or different type of
     business entity or (8) change in any other aspect of Grantor that directly
     or indirectly relates to any agreements between Grantor and Lender. No
     change in Grantor's name or state of organization will take effect until
     after Lender has received notice.

     No Violation. The execution and delivery of this Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its certificate or articles of incorporation and bylaws do not prohibit any
     term or condition of this Agreement.

     Enforceability of Collateral. To the extent the Collateral consists of
     accounts, chattel paper, or general intangibles, as defined by the Uniform
     Commercial Code, the Collateral is enforceable in accordance with its
     terms, is genuine, and fully complies with all applicable laws and
     regulations concerning form, content and manner of preparation and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. At the time any account becomes subject to a
     security interest in favor of Lender, the account shall be a good and valid
     account representing an undisputed, bone fide indebtedness incurred by the
     account debtor, for merchandise held subject to delivery instructions or
     previously shipped or delivered pursuant to a contract of sale, or for
     services previously performed by Grantor with or for the account debtor. So
     long as this Agreement remains in effect, Grantor shall not, without
     Lender's prior written consent, compromise, settle, adjust, or extend
     payment under or with regard to any such Accounts. There shall be no
     setoffs or counterclaims against any of the Collateral, and no agreement
     shall have been made under which any deductions or discounts may be claimed
     concerning the Collateral except those disclosed to Lender in writing.

     Location of the Collateral. Except in the ordinary course of Grantor's
     business, Grantor agrees to keep the Collateral (or to the extent the
     Collateral consists of intangible property such as accounts or general
     intangibles, the records concerning the Collateral) at Grantor's address
     shown above or at such other locations as are acceptable to Lender. Upon
     Lender's request, Granter will deliver to Lender in form satisfactory to
     Lender a schedule of reel properties and Collateral locations relating to
     Grantor's operations, including without limitation the following: (1) all
     reel property Grantor owns or is purchasing; (2) all real property Grantor
     is renting or leasing; (3) all storage facilities Grantor owns, rents,
     leases, or uses; and 141 all other properties which Collateral is or may be
     located.

     Removal of the Collateral. Except in the ordinary course of Grantor's
     business, Grantor shall not remove the Collateral from its existing
     location without Lender's prior written consent, Grantor shall, whenever
     requested, advise Lender of the exact location of the Collateral.

     Transactions Involving Collateral. Except for inventory sold or accounts
     collected in the ordinary course of Grantor's business, or as otherwise
     provided for in this Agreement, Grantor shall not sell, offer to sell, or
     otherwise transfer or dispose of the Collateral. Grantor shall not pledge,
     mortgage, encumber or otherwise permit the Collateral to be subject to any
     lien, security interest, encumbrance, or charge, other than the security
     interest provided for in this Agreement without the prior written consent
     of Lender. This includes security interests even if junior in right to the
     security interests granted under this Agreement. Unless waived by Lender,
     all proceeds from any disposition of the Collateral (for whatever reason)
     shall be held in trust for Lender and shall not be commingled with any
     other funds; provided however, this requirement shall not constitute
     consent by Lender to any sale or other disposition. Upon receipt, Grantor
     shall Immediately deliver any such proceeds to Lender.

     Title. Grantor represents and warrants to Lender that Grantor holds good
     and marketable title to the Collateral, free and clear of all liens and
     encumbrances except for the lien of this Agreement. No financing statement
     covering any of the Collateral is on file in any public office other than
     those which reflect the security interest created by this Agreement or to
     which Lender has specifically consented. Grantor shall defend Lender's
     rights in the Collateral against the claims and demands of all other
     persons.

     Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
     others to keep and maintain, the Collateral in good order, repair and
     condition at all times while this Agreement remains in effect. Grantor
     further agrees to pay when due all claims for work done on, or services
     rendered or materiel furnished in connection with the Collateral so that no
     lien or encumbrance may ever attach to or be filed against the Collateral.

     Inspection of Collateral. Lender and Lender's designated representatives
     and agents shall have the right at all reasonable times to examine

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 281001273                 (Continued)                          Page 2
================================================================================


     and inspect the Collateral wherever located.

     Taxes. Assessments and Liens. Grantor will pay when due all taxes,
     assessments and liens upon the Collateral, its use or operation, upon this
     Agreement, upon any promissory note or notes evidencing the Indebtedness,
     or upon any of the other Related Documents. Grantor may withhold any such
     payment or may elect to contest any lien if Grantor is in good faith
     conducting an appropriate proceeding to contest the obligation to pay and
     so long as Lender's interest in the Collateral is not jeopardized in
     Lender's sole opinion. If the Collateral is subjected to a lien which is
     not discharged within fifteen (15) days, Grantor shall deposit with Lender
     cash, a sufficient corporate surety bond or other security satisfactory to
     Lender in an amount adequate to provide for the discharge of the lien plus
     any interest costs, attorneys' fees or other charges that could accrue as a
     result of foreclosure or sale of the Collateral. In any contest Grantor
     shall defend itself and Lender and shall satisfy any final adverse judgment
     before enforcement against the Collateral. Grantor shall name Lender so an
     additional obligee under any surety bond furnished in the contest
     proceedings. Grantor further agrees to furnish Lender with evidence that
     such taxes, assessments, and governmental and other charges have been paid
     in full and in a timely manner. Grantor may withhold any such payment or
     may elect to contest any lien if Grantor is in good faith conducting an
     appropriate proceeding to contest the obligation to pay and so long as
     Lender's interest in the Collateral is not jeopardized.

     Compliance with Governmental Requirements. Grantor shall comply promptly
     with all laws, ordinances, rules and regulations of all governmental
     authorities, now or hereafter in effect, applicable to the ownership,
     production, disposition, or use of the Collateral, including all laws or
     regulations relating to the undue erosion of highly-erodible land or
     relating to the conversion of wetlands for the production of an
     agricultural product or commodity. Grantor may contest in good faith any
     such law, ordinance or regulation and withhold compliance during any
     proceeding, including appropriate appeals, so long as Lender's interest in
     the Collateral, in Lender's opinion, is not jeopardized.

     Hazardous Substances. Grantor represents and warrants that the Collateral
     never has been, and never will be so long as this Agreement remains a lien
     on the Collateral, used in violation of any Environmental Laws or for the
     generation, manufacture, storage, transportation, treatment, disposal,
     release or threatened release of any Hazardous Substance, The
     representations and warranties contained herein are based on Grantor's due
     diligence in investigating the Collateral for Hazardous Substances. Grantor
     hereby (1) releases and waives any future claims against Lender for
     indemnity or contribution in the event Grantor becomes liable for cleanup
     or other costs under any Environmental Laws, and (2) agrees to indemnify,
     defend, and hold harmless Lender against any and all claims and losses
     resulting from a breach of this provision of this Agreement. This
     obligation to indemnify and defend shall survive the payment of the
     Indebtedness and the satisfaction of this Agreement.

     Maintenance of Casualty Insurance. Grantor shall procure and maintain all
     risks insurance, including without limitation fire, theft and liability
     coverage together with such other insurance as Lender may require with
     respect to the Collateral, in form, amounts, coverages and basis reasonably
     acceptable to Lender and issued by a company or companies reasonably
     acceptable to Lender. Grantor, upon request of Lender, will deliver to
     Lender from time to time the policies or certificates of insurance in form
     satisfactory to Lender, including stipulations that coverages will not be
     cancelled or diminished without at least fifteen (15) days' prior written
     notice to Lender and not including any disclaimer of the insurer's
     liability for failure to give such a notice, Each insurance policy also
     shall include an endorsement providing that coverage in favor of Lender
     will not be impaired in any way by any act, omission or default of Grantor
     or any other person. In connection with all policies covering assets in
     which Lender holds or is offered a security interest, Grantor will provide
     Lender with such loss payable or other endorsements as Lender may require.
     If Grantor at any time fails to obtain or maintain any insurance as
     required under this Agreement Lender may (but shall not be obligated to)
     obtain such insurance as Lender deems appropriate, including if Lender so
     chooses "single interest Insurance," which will cover only Lender's
     interest in the Collateral.

     Application of Insurance Proceeds. Grantor shall promptly notify Lender of
     any loss or damage to the Collateral if the estimated cost of repair or
     replacement exceeds $5,000.00, whether or not such casualty or loss is
     covered by insurance. Lender may make proof of loss if Grantor fails to do
     so within fifteen (15) days of the casualty. All proceeds of any insurance
     on the Collateral, including accrued proceeds thereon, shall be held by
     Lender as part of the Collateral. If Lender consents to repair or
     replacement of the damaged or destroyed Collateral, Lender shall, upon
     satisfactory proof of expenditure, pay or reimburse Grantor from the
     proceeds for the reasonable cost of repair or restoration. If Lender does
     not consent to repair or replacement of the Collateral, Lender shall retain
     a sufficient amount of the proceeds to pay all of the Indebtedness, and
     shall pay the balance to Grantor. Any proceeds which have not bean
     disbursed within six (6) months after their receipt and which Grantor has
     not committed to the repair or restoration of the Collateral shall be used
     to prepay the Indebtedness.

     Insurance Reserves. Lender may require Grantor to maintain with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by monthly payments from Grantor of a sum estimated by Lender to be
     sufficient to produce, at least fifteen (15) days before the premium due
     date, amount at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Leader is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the payment
     of premiums shall remain Grantor's sole responsibility.

     Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing policy of insurance showing such information as
     Lender may reasonably request including the following: (1) the name of the
     insurer; (2) the risks insured; (3) the amount of the policy; (4) the
     property insured; (5) the then current value on the basis of which
     insurance has been obtained and the manner of determining that value; and
     (6) the expiration date of the policy. In addition, Granter shall upon
     request by Lender (however not more often than annually) have an
     independent appraiser satisfactory to Lender determine, as applicable, the
     cash value or replacement cost of the Collateral.

     Financing Statements. Grantor authorizes Lender to file a UCC financing
     statement, or alternatively. a copy of this Agreement to perfect Lender's
     security interest. At Lender's request, Grantor additionally agrees to sign
     all other documents that are necessary to perfect, protect, and continue
     Lender's security interest in the Property. Grantor will pay all filing
     fees, title transfer fees, and other fees and costs involved unless
     prohibited by law or unless Lender is required by law to pay such fees and
     costs. Grantor irrevocably appoints Lender to execute documents necessary
     to transfer title if there is a default. Lender may file a copy of this
     Agreement as a financing statement. If Grantor changes Grantor's name or
     address, or the name or address of any person granting a security interest
     under this Agreement changes, Grantor will promptly notify the Lender of
     such change.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.

LENDER'S EXPENDITURES, If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will than bear
interest at the rate charged under the Note from the data incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable "at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

     Payment Default. Grantor fails to make any payment when due under the
     Indebtedness.

     Other Defaults. Grantor fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Grantor.


<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 281001273                 (Continued)                          Page 3
================================================================================


     Default in Favor of Third Parties. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Grantor's property or Grantor's or any
     Grantor's ability to repay the Indebtedness or perform their respective
     obligations under this Agreement or any of the Related Documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Grantor or on Grantor's behalf under this Agreement
     or the Related Documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Insolvency. The dissolution or termination of Grantor's existence as a
     going business, the insolvency of Grantor, The appointment of a receiver
     for any part of Grantor's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Grantor.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or by any
     governmental agency against any collateral securing the Indebtedness. This
     includes a garnishment of any of Grantor's accounts, including deposit
     accounts, with Lender. However, this Event of Default shall not apply if
     there is a good faith dispute by Grantor as to the validity or
     reasonableness of the claim which is the basis of the creditor or
     forfeiture proceeding and if Grantor gives Lender written notice of the
     creditor or forfeiture proceeding and deposits with Lender monies or a
     surety bond for the creditor or forfeiture proceeding, in an amount
     determined by Lender, in its sole discretion, as being an adequate reserve
     or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any guarantor, endorser, surety, or accommodation party of any of the
     Indebtedness or guarantor, endorser, surety, or accommodation party dies or
     becomes incompetent or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness.

     Adverse Change. A materiel adverse change occurs in Grantor's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     Insecurity. Lender in good faith believes itself insecure.


RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement at any time thereafter, Lender shall have all the rights of a secured
party under the Colorado Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

     Accelerate Indebtedness. Lender may declare the entire Indebtedness,
     including any prepayment penalty which Grantor would be required to pay,
     immediately due and payable, without notice of any kind to Grantor.

     Assemble Collateral. Lender may require Granter to deliver to Lender all or
     any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter upon the
     property of Grantor to take possession of and remove the Collateral, If the
     Collateral contains other goods not covered by this Agreement at the time
     of repossession, Grantor agrees Lender may take such other goods, provided
     that Lender makes reasonable efforts to return them to Grantor after
     repossession.

     Sell the Collateral. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof in Lender's own
     name or that of Grantor. Lender may sell the Collateral at public auction
     or private sale. Unless the Collateral threatens to decline speedily in
     value or is of a type customarily sold on a recognized market, Lender will
     give Grantor, and other persons as required by law, reasonable notice of
     the time and place of any public sale, or the time after which any private
     sale or any other disposition of the Collateral is to be made. However, no
     notice need be provided to any person who, after Event of Default occurs,
     enters into and authenticates an agreement waiving that person's right to
     notification of sale. The requirements of reasonable notice shall be met if
     such notice is given at least ten (10) days before the time of the sale or
     disposition. All expenses relating to the disposition of the Collateral,
     including without limitation the expenses of retaking, holding, insuring,
     preparing for sale and selling the Collateral, shall become a part of the
     Indebtedness secured by this Agreement and shall be payable on demand, with
     interest at the Note rate from date of expenditure until repaid.

     Appoint Receiver. Lender shall have the right to have a receiver appointed
     to take possession of all or any part of the Collateral, with the power to
     protect and preserve the Collateral, to operate the Collateral preceding
     foreclosure or sale, and to collect the Rents front the Collateral and
     apply the proceeds, over and above the cost of the receivership, against
     the Indebtedness. The receiver may serve without bond if permitted by law.
     Lender's right to the appointment of a receiver shall exist whether or not
     the apparent value of the Collateral exceeds the Indebtedness by a
     substantial amount. Employment by Lender shall not disqualify a person from
     serving as a receiver. Receiver may be appointed by a court of competent
     jurisdiction upon ex parte application and without notice, notice being
     expressly waived.

     Collect Revenues, Apply Accounts. Lender, either itself or through a
     receiver, may collect the payments, rents, income, and revenues from the
     Collateral. Lender may at any time in Lender's discretion transfer any
     Collateral into Lender's own name or that of Lender's nominee and receive
     the payments, rents, income, and revenues therefrom and hold the same as
     security for the Indebtedness or apply it to payment of the Indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general intangibles, insurance policies, instruments,
     chattel paper, choses in action, or similar property, Lender may demand,
     collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
     realize on the Collateral as Lender may determine, whether or not
     Indebtedness or Collateral is then due. For these purposes, Lender may, on
     behalf of and in the name of Grantor, receive, open and dispose of mail
     addressed to Grantor; change any address to which mail and payments are to
     be sent; and endorse notes, checks, drafts, money orders, documents of
     title, instruments and items pertaining to payment, shipment or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligation on any Collateral to make payments directly to Lender.

     Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a judgment against Grantor for any deficiency remaining
     on the Indebtedness due to Lender after application of all amounts received
     from the exercise of the rights provided in this Agreement. Grantor shall
     be liable for a deficiency even if the transaction described in this
     subsection is a sale of accounts or chattel paper.

     Other Rights and Remedies. Lender shall have all the rights and remedies of
     a secured creditor under the provisions of the Uniform Commercial Code, as
     may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     Election of Remedies. Except as may be prohibited by applicable law, all of
     Lender's rights and remedies, whether evidenced by this Agreement, the
     Related Documents, or by any other writing, shall be cumulative and may be
     exercised singularly or concurrently. Election by Lender to pursue any
     remedy shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform on obligation of Grantor
     under this Agreement, after Grantor's failure to perform, shall not affect
     Lender's right to declare a default and exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment,

     Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
     Lender's reasonable costs and expenses, including Lender's attorneys' fees
     and Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Grantor shall pay the reasonable costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Grantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Governing Law. This Agreement will be governed by federal law applicable to
     Lender and, to the extent not preempted by federal law, the laws of the
     State of Colorado without regard to its conflicts of law provisions. This
     Agreement has been accepted by Lender in the State of Colorado.

     Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's
     request to submit to the jurisdiction of the courts of Denver County, State
     of Colorado.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 281001273                 (Continued)                          Page 4
================================================================================

     and signed by Lender. No delay or omission on the part of Lender in
     exercising any right shall operate as a waiver of such right or any other
     right. A waiver by Lender of a provision of this Agreement shall not
     prejudice or constitute a waiver of Lender's right otherwise to demand
     strict compliance with that provision or any other provision of this
     Agreement. No prior waiver by Lender, nor any course of dealing between
     Lender and Grantor, shall constitute a waiver of any of Lender's rights or
     of any of Grantor's obligations as to any future transactions, Whenever the
     consent of Lender is required under this Agreement, the granting of such
     consent by Lender in any instance shall not constitute continuing consent
     to subsequent instances where such consent is required and in all cases
     such consent may be granted or withheld in the sole discretion of Lender.

     Notices. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Grantor agrees to keep Lender informed at all times of
     Grantor's current address. Unless otherwise provided or required by law, if
     there is more than one Grantor, any notice given by Lender to any Grantor
     is deemed to be notice given to all Grantors.

     Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect, amend, or to continue the security interest granted in this
     Agreement or to demand termination of filings of other secured parties.
     Lender may at any time, and without further authorization from Grantor,
     file a carbon, photographic or other reproduction of any financing
     statement or of this Agreement for use as a financing statement. Grantor
     will reimburse Lender for all expenses for the perfection and the
     continuation of the perfection of Lender's security interest in the
     Collateral.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable, If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     Successors and Assigns. Subject to any limitations stated in this Agreement
     on transfer of Grantor's interest, this Agreement shall be binding upon and
     inure to the benefit of the parties, their successors and assigns. If
     ownership of the Collateral becomes vested in a person other then Grantor,
     Lender, without notice to Grantor, may deal with Grantor's successors with
     reference to this Agreement and the Indebtedness by way of forbearance or
     extension without releasing Grantor from the obligations of this Agreement
     or liability under the Indebtedness,

     Survival of Representations and Warranties. All representations,
     warranties, and agreements made by Grantor in this Agreement shall survive
     the execution and delivery of this Agreement, shall be continuing in
     nature, and shall remain in full force and effect until such time as
     Grantor's Indebtedness shall be paid in full.

     Time is of the Essence. Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code;

     Agreement. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     Borrower. The word "Borrower" means NEW FRONTIER MEDIA, INC. and includes
     all co-signers and co-makers signing the Note and all their successors and
     assigns.

     Collateral. The word "Collateral" means all of Grantor's right, title and
     Interest in and to all the Collateral as described in the Collateral
     Description section of this Agreement.

     Default. The word "Default" means the Default set forth in this Agreement
     in the section titled "Default".

     Environmental Laws. The Words "Environmental Laws" mean any and all state,
     federal and local statutes, regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
     Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
     1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
     Section 6901, et seq., or other applicable state or federal laws, rules, or
     regulations adopted pursuant thereto.

     Event of Default. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     Grantor. The word "Grantor" means NEW FRONTIER MEDIA, INC..

     Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser,
     surety, or accommodation party to Lender, including without limitation a
     guaranty of all or part of the Note.

     Hazardous Substances. The words "Hazardous Substances" mean materials that,
     because of their quantity, concentration or physical, chemical or
     infectious characteristics, may cause or pose a present or potential hazard
     to human health or the environment when improperly used, treated, stored,
     disposed of, generated, manufactured, transported or otherwise handled. The
     words "Hazardous Substances" are used in their very broadest sense and
     include without limitation any and all hazardous or toxic substances,
     materials or waste as defined by or listed under the Environmental Laws.
     The term "Hazardous Substances" also includes, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Grantor is responsible under this Agreement or under any of the Related
     Documents,

     Lender. The word "Lender" means First Community Bank, its successors and
     assigns.

     Note. The word "Note" means the Promissory Note or Agreement dated July 1.
     2007 in the original principal amount of $7,500,000.OO from
     Borrower/Grantor to Lender together with all renewals of, extensions of,
     modifications of, refinancings of, consolidations of, additions of and
     substitutions for the Promissory Note or Agreement.

     Property. The word "Property" means all of Grantor's right title and
     interest in and to all the Property as described in the "Collateral
     Description" section of this Agreement.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY 1, 2007.

GRANTOR:

NEW FRONTIER MEDIA, INC.


By: /s/ Michael Weiner
   -----------------------------
   MICHAEL WEINER, CEO of NEW FRONTIER MEDIA, INC.

<PAGE>

                             Supplemental Agreement
                                  July 1, 2007


           RE: $7,500,000.00 loan to New Frontier Media, Inc. (Loan).


This Supplemental Agreement is effective this 1 day of July, 2007, to amend,
supplement and revise certain of the "Related Loan Documents", as defined in the
Business Loan Agreement between New Frontier Media, Inc. and First Community
Bank.

Detailed herein are revisions to certain of the related documents ("Documents")
that evidence, govern and secure a Loan from First Community Bank. (Lender) to
New Frontier Media, Inc. (Borrower). The Documents revised are following:

                *  Promissory Note
*               *  Business Loan Agreement (Asset Based)

The revisions contained herein supplement, amend and supersede the terms of
their counterpart articles and paragraphs in the Documents referred to below:


                             REVISIONS TO DOCUMENTS

1.0 Promissory Note

     1.1 Page 1, Paragraph "DEFAULT.", sub paragraph -- " Change in Ownership."
     is deemed deleted in its entirety.

2.0 Business Loan Agreement (Asset Based)

     2.0 Page 4, Paragraph -- "NEGATIVE COVENANTS.", sub paragraph --
     "Indebtedness and Liens". The entire paragraph is deemed deleted.

     2.1 Page 4, Paragraph -- "NEGATIVE COVENANTS.", sub paragraph --
     "Continuity of Operations.", item "2" of this paragraph is deemed deleted
     in its entirety and replaced with the following:

     (2) cease operations, liquidate, merge, transfer, or consolidate with any
     other entity, change its name, dissolve or transfer or sell collateral out
     of the ordinary course of business, or

     2.2 Page 4, Paragraph -- "NEGATIVE COVENANTS.", sub paragraph --
     "Continuity of Operations.", the entirety of item "3" of this paragraph is
     deemed deleted.

     2.3 Page 4, -- "DEFAULT.", sub paragraph -- "Change in Ownership. " is
     deemed deleted in its entirety.

FIRST COMMUNITY BANK.

BY: /S/ GREGORY P. BOUSHELLE
    -----------------------------
   Gregory P. Boushelle
   Senior Vice President
<PAGE>

                                   ACCEPTANCE

The above outlined terms and conditions are hereby accepted this 29th day
June, in the year 2007.


Borrower:
New Frontier Media, Inc.
BY: /s/ Michael Weiner
   ------------------------
Michael Weiner, C.E.O. of
New Frontier Media

Source: OneCLE Business Contracts.