SECURITY AGREEMENT, dated as of May 4, 2017 (this “Agreement”), is among Chanticleer Holdings, Inc., a Delaware
corporation (the “Company”), all of the Subsidiaries of the Company (such subsidiaries,
and together with the Company, the “Debtors”)
and the holders of the Company’s 8.0% Secured Debentures due December 31, 2018 years following their issuance, in the original
aggregate principal amount of $6,000,000 (collectively, the “Debentures”) signatory hereto, their endorsees,
transferees and assigns (collectively, the “Secured Parties”).
I T N E S S E T H:
pursuant to the Purchase Agreement (as defined in the Debentures), the Secured Parties have severally agreed to extend the loans
to the Company evidenced by the Debentures;
pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the “Guarantee”), the Guarantors
have jointly and severally agreed to guarantee and act as surety for payment of such Debentures; and
in order to induce the Secured Parties to extend the loans evidenced by the Debentures, each Debtor has agreed to execute and
deliver to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party
and through the Agent (as defined in Section 18 hereof), a security interest in certain property of such Debtor to secure the
prompt payment, performance and discharge in full of all of the Company’s obligations under the Debentures and the Guarantors’
obligations under the Guarantee.
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.
“Collateral” means the collateral in which the Secured Parties are granted a security interest by this Agreement
and which shall include the following personal property of the Debtors, whether presently owned or existing or hereafter acquired
or coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in connection therewith,
and all dividends,
interest, cash, notes, securities, equity interest or other property at any time and from time to time acquired, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the Pledged Securities (as defined below):
All goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships,
appliances, furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind
and nature and wherever situated, together with all documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items
used and useful in connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;
All contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational
Documents, agreements related to the Pledged Securities, licenses, distribution and other agreements, computer software (whether
“off-the-shelf”, licensed from any third party or developed by any Debtor), computer software development rights,
leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property and income
All accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;
All documents, letter-of-credit rights, instruments and chattel paper;
All commercial tort claims;
All deposit accounts and all cash (whether or not deposited in such deposit accounts);
All investment property;
All supporting obligations; and
All files, records, books of account, business papers, and computer programs; and
the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.
limiting the generality of the foregoing, the “Collateral”
shall include all investment property and general intangibles respecting ownership and/or other equity interests in each Guarantor,
including, without limitation, the shares of capital stock and the other equity interests listed on Schedule H hereto
(as the same may be modified from time to time pursuant to the terms hereof), and any other shares of capital stock and/or other
equity interests of any other direct or indirect subsidiary of any Debtor obtained in the future, and, in each case, all certificates
representing such shares and/or equity interests and, in each case, all rights, options, warrants, stock, other securities and/or
equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the foregoing
and all rights arising under or in connection with the Pledged Securities, including, but not limited to, all dividends, interest
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the
extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in
the proceeds of such asset.
“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to
intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation,
(i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright
Office, (ii) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and
extensions thereof, and all applications for letters patent of the United States or any other country and all divisions, continuations
and continuations-in-part thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, logos, domain names and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto,
(iv) all trade secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v)
all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii)
all causes of action for infringement of the foregoing.
“Majority in Interest” means, at any time of determination, the majority in interest (based on then-outstanding
principal amounts of Debentures at the time of such determination) of the Secured Parties.
“Necessary Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment
duly executed and such other instruments or documents as the Agent (as that term is defined below) may reasonably request.
“Obligations” means all of
the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that
are now or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured Parties, including, without limitation,
all obligations under this Agreement, the Debentures, the Guarantee and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from
any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations”
shall include, without limitation: (i) principal of, and interest on the Debentures and the loans extended pursuant thereto; (ii)
any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from time to time under or in connection
with this Agreement, the Debentures, the Guarantee and any other instruments, agreements or other documents executed and/or delivered
in connection herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of
the foregoing that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding involving any Debtor.
means with respect to any Debtor, the documents by which such Debtor was organized (such as a certificate of incorporation, certificate
of limited partnership or articles of organization, and including, without limitation, any certificates of designation for preferred
stock or other forms of preferred equity) and which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).
“Pledged Interests” shall
have the meaning ascribed to such term in Section 4(j).
“Pledged Securities” shall
have the meaning ascribed to such term in Section 4(i).
“UCC” means the Uniform Commercial Code of the State of New York and or any other applicable law of any state
or states which has jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to time.
It is the intent of the parties that defined terms in the UCC should be construed in their broadest sense so that the term “Collateral”
will be construed in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that
broaden the definitions, they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Debentures
and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations,
each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest
in and to, a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral, subject only to the first priority security interest of the Senior Lender (as defined in the
Debenture) (a “Security Interest” and, collectively, the “Security Interests”).
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to
be delivered to the Agent (a) any and all certificates and other instruments representing or evidencing the Pledged Securities,
and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or have previously
delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities.
Warranties, Covenants and Agreements of the Debtors. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the Secured Parties
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by each Debtor of this Agreement
and the filings contemplated therein have been duly authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor. This Agreement has been duly executed by each Debtor. This Agreement constitutes the legal,
valid and binding obligation of each Debtor, enforceable against each Debtor in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of equity.
Debtors have no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, each Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the Debentures). Except as disclosed on Schedule A, none of such Collateral is in the possession of any
consignee, bailee, warehouseman, agent or processor.
for Permitted Liens (as defined in the Debentures) and except as set forth on Schedule B attached hereto, the Debtors are
the sole owner of the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of business),
free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security
Interests. Except as set forth on Schedule C attached hereto, there is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the
foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. Except as set forth on Schedule C attached hereto and except pursuant to this Agreement, as long
as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly permit to be on file in any such office
or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the
Secured Parties pursuant to the terms of this Agreement).
written claim has been received that any Collateral or any Debtor’s use of any Collateral violates the rights of any third
party. There has been no adverse decision to any Debtor’s claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and effect, and there is
no proceeding involving said rights pending or, to the best knowledge of any Debtor, threatened before any court, judicial body,
administrative or regulatory agency, arbitrator or other governmental authority.
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account
and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interests to create in favor of the Secured Parties a valid, perfected and continuing perfected lien in
Agreement creates in favor of the Secured Parties a valid security interest in the Collateral, subject only to Permitted Liens
(as defined in the Debentures) securing the payment and performance of the Obligations. Upon making the filings described in the
immediately following paragraph, all security interests created hereunder in any Collateral which may be perfected by filing Uniform
Commercial Code financing statements shall have been duly perfected. Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the recordation of the Intellectual Property Security Agreement
(as defined in Section 4(p) hereof) with respect to copyrights and copyright applications in the United States Copyright Office
referred to in paragraph (m), the execution and delivery of deposit account control agreements satisfying the requirements of
Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtors, and the
delivery of the certificates and other instruments provided in Section 3,
no action is necessary to create, perfect or protect the security interests created hereunder. Without limiting the generality
of the foregoing, except for the filing of said financing statements, the recordation of said Intellectual Property Security Agreement,
and the execution and delivery of said deposit account control agreements, no consent of any third parties and no authorization,
approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for (i)
the execution, delivery and performance of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder
in the Collateral or (iii) the enforcement of the rights of the Agent and the Secured Parties hereunder.
Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests,
with the proper filing and recording agencies in any jurisdiction deemed proper by it.
execution, delivery and performance of this Agreement by the Debtors does not (i) violate any of the provisions of any Organizational
Documents of any Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to any Debtor or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
any Debtor’s debt or otherwise) or other understanding to which any Debtor is a party or by which any property or asset
of any Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors
of any Debtor) necessary for any Debtor to enter into and perform its obligations hereunder have been obtained.
capital stock and other equity interests listed on Schedule H hereto (the “Pledged
Securities”) represent all of the capital stock and other equity interests
of the Guarantors, and represent all capital stock and other equity interests owned, directly or indirectly, by the Company. All
of the Pledged Securities are validly issued, fully paid and nonassessable, and the Company is the legal and beneficial owner
of the Pledged Securities, free and clear of any lien, security interest or other encumbrance except for the security interests
created by this Agreement and other Permitted Liens (as defined in the Debentures).
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the
by their express terms do not provide that they are securities governed by Article 8 of the UCC and are not held in a securities
account or by any financial intermediary.
for Permitted Liens (as defined in the Debentures), each Debtor shall at all times maintain the liens and Security Interests provided
for hereunder as valid and perfected second priority liens and security interests in the Collateral in favor of the Secured Parties
until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor hereby
agrees to defend the same against the claims of any and all persons and entities. Each Debtor shall safeguard and protect all
Collateral for the account of the Secured Parties. At the request of the Agent, each Debtor will sign and deliver to the Agent
on behalf of the Secured Parties at any time or from time to time one or more financing statements pursuant to the UCC in form
reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices wherever filing is, or is
deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the
generality of the foregoing, each Debtor shall pay all fees, taxes and other amounts necessary to maintain the Collateral and
the Security Interests hereunder, and each Debtor shall obtain and furnish to the Agent from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the priority of the Security Interests hereunder.
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for non-exclusive
licenses granted by a Debtor in its ordinary course of business and sales of inventory by a Debtor in its ordinary course of business)
without the prior written consent of a Majority in Interest.
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including Collateral
hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities of established
reputation having similar properties similarly situated and in such amounts as are customarily carried under similar circumstances
by other such entities and otherwise as is prudent for entities engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof. Each Debtor shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or materially changed for any reason
whatsoever, such insurer will promptly notify the Agent and such cancellation or change shall not be effective as to the Agent
for at least thirty (30) days after receipt by the Agent of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Agent will have the right (but no obligation) at its election to remedy any default in
the payment of premiums within thirty (30) days of notice from the insurer of such default. If no Event of Default (as defined
in the Debentures) exists and if the proceeds arising out of any claim or series of related claims do not exceed $100,000, loss
payments in each instance will be applied by the applicable Debtor to the repair and/or replacement of property with respect to
which the loss was incurred to the extent reasonably feasible, and any loss payments or the balance thereof remaining, to the
extent not so applied, shall be payable to the applicable Debtor; provided, however, that payments received by any
Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any occurrence or series of related occurrences
shall be paid to the Agent on behalf of the Secured Parties and, if received by such Debtor, shall be held in trust for the Secured
Parties and immediately paid over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the
related certificates, in each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent
at least annually and at the time any new policy of insurance is issued.
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail,
of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect
on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.
Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time
to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Secured Parties’ security
interest in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement
with respect to each Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which
the Secured Parties have been granted a security interest hereunder, substantially in a form reasonably acceptable to the Agent,
which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms and conditions
Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon
reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent
from time to time.
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other information received by such Debtor that may materially
affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured Parties hereunder.
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of any Debtor with respect to the
Collateral is accurate and complete in all material respects as of the date furnished.
Debtors shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.
Debtor will change its name, type of organization, jurisdiction of organization, organizational identification number (if it has
one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior written
notice to the Secured Parties of such change and, at the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced
by this Agreement.
in the ordinary course of business, no Debtor may consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably
Debtor may relocate its chief executive office to a new location without providing 30 days prior written notification thereof
to the Secured Parties and so long as, at the time of such written notification, such Debtor provides any financing statements
or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced by this Agreement.
Debtor was organized and remains organized solely under the laws of the state set forth next to such Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth each Debtor’s organizational identification number or, if any
Debtor does not have one, states that one does not exist.
The actual name of each Debtor is the name set forth in Schedule D attached hereto; (ii) no Debtor has any trade names
except as set forth on Schedule E attached hereto; (iii) no Debtor has used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into any Debtor or been
acquired by any Debtor within the past five years except as set forth on Schedule E.
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the applicable Debtor shall deliver
such Collateral to the Agent.
Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the Pledged
Interests consistent with the terms of this Agreement without the further consent of any Debtor as contemplated by Section 8-106
(or any successor section) of the UCC. Further, each Debtor agrees that it shall not enter into a similar agreement (or one that
would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.
Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is not
possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest created
by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the applicable Debtor shall cause the
underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, the applicable Debtor shall cause such an account control agreement, in form and substance in each
case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties.
the extent that any Collateral consists of letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.
the extent that any Collateral is in the possession of any third party, the applicable Debtor shall join with the Agent in notifying
such third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory
to the Agent.
any Debtor shall at any time hold or acquire a commercial tort claim, such Debtor shall promptly notify the Secured Parties in
a writing signed by such Debtor of the particulars thereof and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory
to the Agent.
Debtor shall immediately provide written notice to the Secured Parties of any and all accounts which arise out of contracts with
any governmental authority and, to the extent necessary to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such accounts and cooperate
with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests in such accounts
and proceeds thereof.
Debtor shall cause each subsidiary of such Debtor to immediately become a party hereto
(an “Additional Debtor”), by executing and delivering an Additional Debtor Joinder in substantially the form of Annex
A attached hereto and comply with the provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor
shall deliver replacement schedules for, or supplements to all other Schedules to (or referred to in) this Agreement, as applicable,
which replacement schedules shall supersede, or supplements shall modify, the Schedules then in effect. The Additional Debtor
shall also deliver such opinions of counsel, authorizing resolutions, good standing certificates, incumbency certificates, organizational
documents, financing statements and other information and documentation as the Agent may reasonably request. Upon delivery of
the foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement with the same rights and obligations
as the Debtors, for all purposes hereof as fully and to the same extent as if it were an original signatory hereto and shall be
deemed to have made the representations, warranties and covenants set forth herein as of the date of execution and delivery of
such Additional Debtor Joinder, and all references herein to the “Debtors” shall be deemed to include each Additional
Debtor shall vote the Pledged Securities to comply with the covenants and agreements set forth herein and in the Debentures.
Debtor shall register the pledge of the applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each
issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in the name of the Secured Parties on
the books of such issuer. Further, except with respect to certificated securities delivered to the Agent, the applicable Debtor
shall deliver to Agent an acknowledgement of pledge (which, where appropriate, shall comply with the requirements of the relevant
UCC with respect to perfection by registration) signed by the issuer of the applicable Pledged Securities, which acknowledgement
shall confirm that: (a) it has registered the pledge on its books and records; and (b) at any time directed by Agent during the
continuation of an Event of Default, such issuer will transfer the record ownership of such Pledged Securities into the name of
any designee of Agent, will take such steps as may be necessary to effect the transfer, and will comply with all other instructions
of Agent regarding such Pledged Securities without the further consent of the applicable Debtor.
the event that, upon an occurrence of an Event of Default, Agent shall sell all or any of the Pledged Securities to another party
or parties (herein called the “Transferee”)
or shall purchase or retain all or any of the Pledged Securities, each Debtor shall, to the extent applicable: (i) deliver to
Agent or the Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock certificate books, corporate
seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of account, financial records and all other Organizational
Documents and records of the Debtors and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations
of the persons then serving as officers and directors of the Debtors and their direct and indirect subsidiaries, if so requested;
and (iii) use its best efforts to obtain any approvals that are required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged Securities by Agent and allow
the Transferee or Agent to continue the business of the Debtors and their direct and indirect subsidiaries.
limiting the generality of the other obligations of the Debtors hereunder, each Debtor shall promptly (i) cause to be registered
at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office
to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.
Debtor will from time to time, at the joint and several expense of the Debtors, promptly execute and deliver all such further
instruments and documents, and take all such further action as may be necessary or desirable, or as the Agent may reasonably request,
in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Secured Parties
to exercise and enforce their rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes
of this Agreement.
F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered copyrights,
and domain names owned by any of the Debtors as of the date hereof. Schedule F lists all material licenses in favor of
any Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents and
trademarks of the Debtors have been duly recorded at the United States Patent and Trademark Office and all material copyrights
of the Debtors have been duly recorded at the United States Copyright Office.
as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.
the Obligations shall have been paid and performed in full, the Company covenants that it shall promptly direct any direct or
indirect subsidiary of the Company formed or acquired after the date hereof to enter into a Subsidiary Guarantee in favor of the
Secured Party, in the form of Exhibit F to the Purchase Agreement.
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor
The following events shall be “Events of Default”:
occurrence of an Event of Default (as defined in the Debentures) under the Debentures;
representation or warranty of any Debtor in this Agreement shall prove to have been incorrect in any material respect when made;
failure by any Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to such Debtor of
notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such
time frame and such Debtor is using best efforts to cure same in a timely fashion; or
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority having
jurisdiction over any Debtor, seeking to establish the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this Agreement.
To Hold In Trust.
the occurrence of any Event of Default and at any time thereafter, each Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Debentures or otherwise,
or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same
in trust for the Secured Parties and shall forthwith endorse and transfer any such sums or instruments, or both, to the Secured
Parties, pro-rata in proportion to their respective then-currently outstanding principal amount of Debentures for application
to the satisfaction of the Obligations (and if any Debenture is not outstanding, pro-rata in proportion to the initial purchases
of the remaining Debentures).
any Debtor shall become entitled to receive or shall receive any securities or other property (including, without limitation,
shares of Pledged Securities or instruments representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any reorganization of such Debtor or any of
its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an addition to, in substitution of, or in
exchange for, such Pledged Securities or otherwise), such Debtor agrees to (i) accept the same as the agent of the Secured Parties;
(ii) hold the same in trust on behalf of and for the benefit of the Secured Parties; and (iii) to deliver any and all certificates
or instruments evidencing the same to Agent on or before the close of business on the fifth business day following the receipt
thereof by such Debtor, in the exact form received together with the Necessary Endorsements, to be held by Agent subject to the
terms of this Agreement as Collateral.
and Remedies Upon Default.
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the
right to exercise all of the remedies conferred hereunder and under the Debentures, and the Secured Parties shall have all the
rights and remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall
have the following rights and powers:
Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall
assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at such
Debtor’s premises or elsewhere, and make available to the Agent, without rent, all of such Debtor’s respective premises
and facilities for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable
notice to the Debtors by Agent, all rights of each Debtor to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise be authorized
to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of the Secured Parties,
any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise in such Agent’s
discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Agent shall have the right
(but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral in connection
with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the Collateral or
any Debtor or any of its direct or indirect subsidiaries.
Agent shall have the right to operate the business of each Debtor using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
any Debtor or right of redemption of a Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or other
transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which cannot
be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right of redemption
and equities of any Debtor, which are hereby waived and released.
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights against such
account debtors and obligors.
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of any Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtors
will only be credited with payments actually made by the purchaser. In addition, each Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including,
without limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, each Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to such Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter acquired by such Debtor, and wherever the same
may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of
Debentures at the time of any such determination), and to the payment of any other amounts required by applicable law, after which
the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Parties are legally entitled, the
Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted
by applicable law (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Parties
to collect such deficiency. To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against
the Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross
negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction.
Law Provision. Each Debtor recognizes that Agent may be limited in its ability to effect a sale to the public of all or part
of the Pledged Securities by reason of certain prohibitions in the Securities Act of 1933, as amended, or other federal or state
securities laws (collectively, the “Securities
Laws”), and may be compelled to resort to one or more sales to a restricted
group of purchasers who may be required to agree to acquire the Pledged Securities for their own account, for investment and not
with a view to the distribution or resale thereof. Each Debtor agrees that sales so made may be at prices and on terms less favorable
than if the Pledged Securities were sold to the public, and that Agent has no obligation to delay the sale of any Pledged Securities
for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor
shall cooperate with Agent in its attempt to satisfy any requirements under the Securities Laws (including, without limitation,
registration thereunder if requested by Agent) applicable to the sale of the Pledged Securities by Agent.
and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with
any filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements,
partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent.
The Debtors shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security Interests therein. The Debtors will also, upon demand, pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance,
amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the
Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Parties under the Debentures. Until so paid, any fees payable hereunder shall be added to the principal
amount of the Debentures and shall bear interest at the Default Rate.
for Collateral. The Debtors assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i)
has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b)
each Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed
by such Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating
to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations
of any Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party
under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled
at any time or times.
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Debentures or any other agreement entered into in connection with the foregoing; (c) any exchange,
release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties
to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with
the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to a Debtor,
or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed
in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy. Each Debtor expressly waives presentment, protest, notice
of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral
or any payment received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall
be deemed to be otherwise due to any party other than the Secured Parties, then, in any such event, each Debtor’s obligations
hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. Each Debtor waives all right to require the Secured Parties to proceed against any other person or entity
or to apply any Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other
remedy. Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Debentures
have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtors contained in this Agreement (including, without limitation, Annex B hereto) shall survive and remain operative
and in full force and effect regardless of the termination of this Agreement.
of Attorney; Further Assurances.
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns
with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent
or such Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect
of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the
UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Debentures all as fully and effectually as the Debtors
might or could do; and each Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long
as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed
to amend and supersede any inconsistent provision in the Organizational Documents or other documents or agreements to which any
Debtor is subject or to which any Debtor is a party. Without limiting the generality of the foregoing, after the occurrence and
during the continuance of an Event of Default, each Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual Property with the United
States Patent and Trademark Office and the United States Copyright Office.
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest
in all the Collateral under the UCC.
Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact, with full authority in the place and instead
of such Debtor and in the name of such Debtor, from time to time in the Agent’s discretion, to take any action and to execute
any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing,
in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of such Debtor where permitted by law, which financing statements may (but need not) describe the Collateral
as “all assets” or “all personal property” or words of like import, and ratifies all such actions taken
by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Purchase Agreement
(as such term is defined in the Debentures).
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any
way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.
of Agent. The Secured Parties hereby appoint T.R. Winston & Company, LLC to act as their agent (“TR Winston”
or “Agent”) for purposes of exercising any and all rights and remedies of the Secured Parties hereunder. The
Agent shall have the rights, responsibilities and immunities set forth in Annex B hereto.
course of dealing between the Debtors and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or under the Debentures shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
of the rights and remedies of the Secured Parties with respect to the Collateral, whether established hereby or by the Debentures
or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors
and the Secured Parties holding 67% or more of the principal amount of Debentures then outstanding, or, in the case of a waiver,
by the party against whom enforcement of any such waived provision is sought.
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company
and the Guarantors may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each
Secured Party (other than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person
(as defined in the Purchase Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee
agrees in writing to be bound, with respect to the transferred Obligations, by the provisions of this Agreement that apply to
the “Secured Parties.”
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent
mandatorily governed by the jurisdiction or situs where the Collateral is located, each Debtor agrees that all proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Debentures (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to
the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, each Debtor hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.
Debtors shall jointly and severally be liable for the obligations of each Debtor to the Secured Parties hereunder.
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Debentures, the Purchase Agreement (as such term is defined in the Debentures) or any other agreement, instrument
or other document executed or delivered in connection herewith or therewith.
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in any Debtor or any if its
direct or indirect subsidiaries that is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of any such Debtor or any of its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party exercises its right to be substituted for such Debtor as a
partner or member, as applicable, pursuant hereto.
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtors hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.
The obligations of the Debtors pursuant to this Agreement are subject to the Senior Lender’s (as defined in the Debenture)
first priority security interest. If any conflict or inconsistency exists between this Agreement and the Notwithstanding anything
to the contrary contained herein, the Liens and security interests granted to the Secured Party pursuant to this Agreement and
the exercise of any right or remedy by the Secured Party hereunder are subject in all respects to the Senior Lender’s first
priority security interest.
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.
its subsidiaries party thereto from time to time, as Debtors
and in favor of
Secured Parties identified therein (the “Security Agreement”)
is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have
the meanings given to such terms in, or by reference in, the Security Agreement.
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned
shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights and obligations of the Debtors under the
Security Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to
have made the representations and warranties set forth therein as of the date of execution and delivery of this Additional Debtor
Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY
INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY
TRIAL PROVISIONS SET FORTH THEREIN.
hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable.
executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth
herein on or after the date hereof. This Joinder shall not be modified, amended or terminated without the prior written consent
of the Secured Parties.
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned.
of Additional Debtor
Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective
meanings provided in the Security Agreement to which this Annex B is attached (the “Agreement”)), by their
acceptance of the benefits of the Agreement, hereby designate T.R. Winston & Company, LLC (“TR Winston”
or “Agent”) as the Agent to act as specified herein and in the Agreement. Each Secured Party shall be deemed
irrevocably to authorize the Agent to take such action on its behalf under the provisions of the Agreement and any other Transaction
Document (as such term is defined in the Purchase Agreement) and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its agents or employees.
Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement.
Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for
any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible
for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross
negligence or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement
or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party; and nothing in the Agreement
or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.
Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs
of the Company and its subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation and
continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any
action in connection therewith, and (ii) its own appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Party with any credit, market or other information with respect thereto, whether coming into its
possession before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtors
or any Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate
or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition
of the Debtors or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial
condition of the Debtors, or the value of any of the Collateral, or the existence or possible existence of any default or Event
of Default under the Agreement, the Debentures or any of the other Transaction Documents.
Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf
of all of the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect
to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and
the Debtors shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to
the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected
to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.
Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the
other Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining
to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it.
Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the
Collateral exists or is owned by the Debtors or is cared for, protected or insured or that the liens granted pursuant to the Agreement
have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.
Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Debtors, the Secured Parties
will jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal
amounts of Debentures, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against
the Agent in performing its duties hereunder or under the Agreement or any other Transaction Document, or in any way relating
to or arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject
to further appeal) of a court of competent jurisdiction to have resulted solely from the Agent’s own gross negligence or
willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it
sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with taking
Resignation by the Agent.
The Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving 30 days’ prior written notice (as provided in the Agreement) to the Debtors and the Secured Parties.
Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.
Upon any such notice of resignation, the Secured Parties, acting by a Majority
in Interest, shall appoint a successor
If a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent
who shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtors and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtors on demand.
Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that
it shall not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant
to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent
or any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as
set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After
any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex B shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.