Exhibit 10.5

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of September 29, 2017 by
and among Health-Right Discoveries, Inc., a Florida corporation (the “Company”,
and together with each other Person who becomes a party to this Agreement by
execution of a joinder in the form of Exhibit A attached hereto being
hereinafter sometimes referred to individually as a “Debtor” and, collectively,
as the “Debtors”), and GPB Debt Holdings II LLC, a limited liability company, in
its capacity as Collateral Agent and Purchaser (together with its successors and
assigns, the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Purchase Agreement (as hereafter defined), the Secured
Party will purchase from the Company certain senior secured notes each issued by
the Company (such notes, together with any promissory notes or other securities
issued in exchange or substitution therefor or replacement thereof, and as any
of the same may be amended, supplemented, restated or modified and in effect
from time to time, the “Notes”);

 

AND WHEREAS, the Notes are being acquired by the Secured Party, and the Secured
Party has made certain financial accommodations to the Company pursuant to a
Securities Purchase Agreement dated as of the date hereof by and between the
Company and the Secured Party (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the “Purchase Agreement”);

 

AND WHEREAS, each Debtor will derive substantial benefit and advantage from the
financial accommodations to the Company set forth in the Purchase Agreement and
the Notes, and it will be to each such Debtor’s direct interest and economic
benefit to assist the Company in procuring said financial accommodations from
the Secured Party;

 

AND WHEREAS, to induce the Secured Party to enter into the Purchase Agreement
and purchase the Notes, each Debtor will pledge and grant a security interest in
all of its right, title and interest in and to the Collateral (as hereinafter
defined) as security for its Obligations for the benefit of the Secured Party
and its successors and assigns;

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

Section 1.          Definitions. Capitalized terms used herein without
definition and defined in the Purchase Agreement are used herein as defined
therein. In addition, as used herein:

 

“Accounts” means any “account,” as such term is defined in the UCC, and, in any
event, shall include, without limitation, “supporting obligations” as defined in
the UCC.

 

“Chattel Paper” means any “chattel paper,” as such term is defined in the UCC.

 

“Collateral” shall have the meaning ascribed thereto in Section 3 hereof.

 

“Commercial Tort Claims” means “commercial tort claims”, as such term is defined
in the UCC.

 

 

 

 

“Contracts” means all contracts, undertakings, or other agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or under which a
Debtor may now or hereafter have any right, title or interest, including,
without limitation, with respect to an Account, any agreement relating to the
terms of payment or the terms of performance thereof.

 

“Copyrights” means any copyrights, rights and interests in copyrights, works
protectable by copyrights, copyright registrations and copyright applications,
including, without limitation, the copyright registrations and applications
listed on Schedule III attached hereto (if any), and all renewals of any of the
foregoing, all income, royalties, damages and payments now and hereafter due
and/or payable under or with respect to any of the foregoing, including, without
limitation, damages and payments for past, present and future infringements of
any of the foregoing and the right to sue for past, present and future
infringements of any of the foregoing.

 

“Deposit Accounts” means all “deposit accounts” as such term is defined in the
UCC, now or hereafter held in the name of a Debtor.

 

“Documents” means any “documents,” as such term is defined in the UCC, and shall
include, without limitation, all documents of title (as defined in the UCC),
bills of lading or other receipts evidencing or representing Inventory or
Equipment.

 

“Equipment” means any “equipment,” as such term is defined in the UCC and, in
any event, shall include, Motor Vehicles.

 

“Event of Default” shall have the meaning set forth in the Notes.

 

“Excluded Assets” means any lease, license or other agreement or any property
subject to a capital lease, purchase money security interest or similar
arrangement, to the extent that a grant of a Lien thereon in favor of Secured
Party would violate or invalidate such lease, license, agreement or capital
lease, purchase money security interest or similar arrangement or create a right
of termination in favor of any other party thereto (other than the Debtors), so
long as such provision exists and so long as such lease, license or agreement
was not entered into in contemplation of circumventing the obligation to provide
Collateral hereunder or in violation of the Purchase Agreement, other than to
the extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law including
the bankruptcy code, or principles of equity.

 

“General Intangibles” means any “general intangibles,” as such term is defined
in the UCC, and, in any event, shall include, without limitation, all right,
title and interest in or under any Contract, models, drawings, materials and
records, claims, literary rights, goodwill, rights of performance, Copyrights,
Trademarks, Patents, warranties, rights under insurance policies and rights of
indemnification.

 

“Goods” means any “goods”, as such term is defined in the UCC, including,
without limitation, fixtures and embedded Software to the extent included in
“goods” as defined in the UCC.

 

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“Governmental Authority” means the government of the United States of America or
any other nation, or any political subdivision thereof, whether state or local,
or any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administration powers or functions of or pertaining to government over any
Debtor or any of its subsidiaries, or any of their respective properties, assets
or undertakings.

 

“Instruments” means any “instrument,” as such term is defined in the UCC, and
shall include, without limitation, promissory notes, drafts, bills of exchange,
trade acceptances, letters of credit, letter of credit rights (as defined in the
UCC), and Chattel Paper.

 

“Inventory” means any “inventory,” as such term is defined in the UCC.

 

“Investment Property” means any “investment property”, as such term is defined
in the UCC.

 

“Obligations” means all obligations, liabilities and indebtedness of every
nature of Debtors from time to time owed or owing under or in respect of this
Agreement, the Purchase Agreement, the Notes, any of the other Security
Documents and any of the other Transaction Documents, as the case may be,
including, without limitation, the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable whether before or
after the filing of a bankruptcy, insolvency or similar proceeding under
applicable federal, state, foreign or other law and whether or not an allowed
claim in any such proceeding.

 

“Lien” has the meaning set forth in the Purchase Agreement.

 

“Motor Vehicles” shall mean motor vehicles, tractors, trailers and other like
property, whether or not the title thereto is governed by a certificate of title
or ownership.

 

“Mortgage” has the meaning set forth in Section 2(h).

 

“Patents” means any patents and patent applications, including, without
limitation, the inventions and improvements described and claimed therein, all
inventions subject to the patents and patent applications listed on Schedule IV
attached hereto (if any), and the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing, and all income,
royalties, damages and payments now or hereafter due and/or payable under or
with respect to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the foregoing and
the right to sue for past, present and future infringements of any of the
foregoing.

 

“Permitted Indebtedness” has the meaning set forth in the Notes.

 

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any
event, includes, without limitation, (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable with respect to any of the Collateral,
(b) any and all payments (in any form whatsoever) made or due and payable from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority), and (c)
any and all other amounts from time to time paid or payable under, in respect of
or in connection with any of the Collateral.

 

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“Representative” means any Person acting as agent, representative or trustee on
behalf of the Secured Party from time to time.

 

“Security Documents” means this Agreement and any other documents securing the
Liens of the Secured Party hereunder.

 

“Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by a Debtor, other than software embedded in any category of
Goods, including, without limitation, all computer programs and all supporting
information provided in connection with a transaction related to any program.

 

“Trademarks” means any trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos,
other business identifiers, prints and labels on which any of the foregoing have
appeared or appear, all registrations and recordings thereof, and all
applications in connection therewith, including, without limitation, the
trademarks and applications listed in Schedule V attached hereto (if any) and
renewals thereof, and all income, royalties, damages and payments now or
hereafter due and/or payable under or with respect to any of the foregoing,
including, without limitation, damages and payments for past, present and future
infringements of any of the foregoing and the right to sue for past, present and
future infringements of any of the foregoing.

 

“Transaction Documents” means the Purchase Agreement, the Notes, the Security
Documents, the Warrants and any other related agreements.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, that to the extent that the Uniform Commercial
Code is used to define any term herein and such term is defined differently in
different Articles or Divisions of the Uniform Commercial Code, the definition
of such term contained in Article or Division 9 shall govern.

 

Section 2.          Representations, Warranties and Covenants of Debtors. Each
Debtor represents and warrants to, and covenants with, the Secured Party as
follows:

 

(a)          Such Debtor has or will have rights in and the power to transfer
the Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof (subject, with respect to after acquired Collateral, to such
Debtor acquiring the same) and no Lien other than Permitted Indebtedness exists
or will exist upon such Collateral at any time.

 

(b)         This Agreement is effective to create in favor of Secured Party a
valid security interest in and Lien upon all of such Debtor’s right, title and
interest in and to the Collateral upon (i) the filing of appropriate UCC
financing statements in the jurisdictions listed on Schedule I attached hereto,
(ii) the execution of a deposit account control agreement (iii) filings in the
United States Patent and Trademark Office, or United States Copyright Office
with respect to Collateral that is Patents and Trademarks, or Copyrights, as the
case may be, (iv) the filing of the Mortgages in the jurisdictions listed on
Schedule I hereto, (v) the security interest created hereby being noted on each
certificate of title evidencing the ownership of any Motor Vehicle in accordance
with Section 4.1(d) hereof and (vi) delivery to the Secured Party or its
Representative of Instruments duly endorsed by such Debtor or accompanied by
appropriate instruments of transfer duly executed by such Debtor with respect to
Instruments not constituting Chattel Paper, such security interest will be a
duly perfected first priority perfected security interest (subject to Permitted
Indebtedness) in all of the Collateral.

 

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(c)          All of the Equipment, Inventory and Goods owned by such Debtor is
located at the places as specified on Schedule I attached hereto. Except as
disclosed on Schedule I, none of the Collateral is in the possession of any
bailee, warehousemen, processor or consignee. Schedule I discloses such Debtor’s
name as of the date hereof as it appears in official filings in the state or
province, as applicable, of its incorporation, formation or organization, the
type of entity of such Debtor (including corporation, partnership, limited
partnership or limited liability company), organizational identification number
issued by such Debtor’s state of incorporation, formation or organization (or a
statement that no such number has been issued), such Debtor’s state or province,
as applicable, of incorporation, formation or organization and the chief place
of business, chief executive office and the office where such Debtor keeps its
books and records and the states in which such Debtor conducts its business.
Such Debtor has only one state or province, as applicable, of incorporation,
formation or organization. Such Debtor does not do business and has not done
business during the past five (5) years under any trade name or fictitious
business name except as disclosed on Schedule II attached hereto.

 

(d)         Schedules III, IV and V contain complete and accurate lists as of
the date hereof of all (i) registered copyrights and applications therefor; (ii)
patents and pending applications therefor; (iii) registered trademarks and
service marks and applications therefor; and (iv) all unregistered trademarks
and service marks that are material to the operations of the business of such
Debtor; in each case owned by such Debtor. No Copyrights, Patents or Trademarks
listed on Schedules III, IV and V, respectively, if any, have been adjudged
invalid or unenforceable or have been canceled, in whole or in part, or are not
presently subsisting. Each of such Copyrights, Patents and Trademarks (if any)
is valid and enforceable. Such Debtor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of such
Copyrights, Patents and Trademarks, identified on Schedules III, IV and V, as
applicable, as being owned by such Debtor, free and clear of any liens, charges
and encumbrances, including without limitation licenses, shop rights and
covenants by such Debtor not to sue third persons. Such Debtor has adopted, used
and is currently using, or has a current bona fide intention to use, all of such
Trademarks. Such Debtor has no notice of any suits or actions commenced or
threatened with reference to the Copyrights, Patents or Trademarks owned by it.

 

(e)         Each Debtor agrees to deliver to the Secured Party an updated
Schedule I, II, III, IV and/or V within five (5) Business Days of any change
thereto.

 

(f)          All depositary and other accounts including, without limitation,
Deposit Accounts, securities accounts, brokerage accounts and other similar
accounts, maintained by each Debtor are described on Schedule VI hereto, which
description includes for each such account the name of the Debtor maintaining
such account, the name, address and telephone and telecopy numbers of the
financial institution at which such account is maintained, the account number
and the account officer, if any, of such account. No Debtor shall open any new
Deposit Accounts, securities accounts, brokerage accounts or other accounts
unless such Debtor shall have given Secured Party ten (10) Business Days’ prior
written notice of its intention to open any such new accounts. Each Debtor shall
deliver to Secured Party a revised version of Schedule VI showing any changes
thereto within five (5) Business Days of any such change. Each Debtor hereby
authorizes the financial institutions at which such Debtor maintains an account
to provide Secured Party with such information with respect to such account as
Secured Party from time to time reasonably may request, and each Debtor hereby
consents to such information being provided to Secured Party. In addition, all
of such Debtor’s depositary, security, brokerage and other accounts including,
without limitation, Deposit Accounts shall be subject to the provisions of
Section 4.5 hereof.

 

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(g)         Such Debtor does not own any Commercial Tort Claim except for those
disclosed on Schedule VII hereto (if any).

 

(h)         Such Debtor does not have any interest in real property with respect
to real property except as disclosed on Schedule VIII (if any). Each Debtor
shall deliver to Secured Party a revised version of Schedule VIII showing any
changes thereto within ten (10) Business Days of any such change. Except as
otherwise agreed to by Secured Party, all such interests in real property with
respect to such real property are subject to a mortgage and deed of trust (in
form and substance satisfactory to Secured Party) in favor of Secured Party
(hereinafter, a “Mortgage”).

 

(i)          Each Debtor shall duly and properly record each interest in real
property held by such Debtor except with respect to easements, rights of way,
access agreements, surface damage agreements, surface use agreements or similar
agreements that such Debtor, using prudent customs and practices in the industry
in which it operates, does not believe are of material value or material to the
operation of such Debtor’s business or, with respect to state and federal rights
of way, are not capable of being recorded as a matter of state and federal law.

 

(j)          All Equipment (including, without limitation, Motor Vehicles) owned
by a Debtor and subject to a certificate of title or ownership statute is
described on Schedule IX hereto.

 

Section 3.          Collateral. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations, each Debtor hereby pledges and grants to the Secured Party a Lien
on and security interest in and to all of such Debtor’s right, title and
interest in the following properties and assets of such Debtor, whether now
owned by such Debtor or hereafter acquired and whether now existing or hereafter
coming into existence and wherever located (all being collectively referred to
herein as “Collateral”):

 

(a)          all Instruments, together with all payments thereon or thereunder:

 

(b)         all Accounts;

 

(c)         all Inventory;

 

(d)         all General Intangibles (including payment intangibles (as defined
in the UCC) and Software);

 

(e)         all Equipment;

 

(f)          all Documents;

 

(g)         all Contracts;

 

(h)         all Goods;

 

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(i)          all Investment Property, including without limitation all equity
interests now owned or hereafter acquired by such Debtor;

 

(j)          all Deposit Accounts, including, without limitation, the balance
from time to time in all bank accounts maintained by such Debtor;

 

(k)         all Commercial Tort Claims specified on Schedule VII;

 

(l)          all Trademarks, Patents and Copyrights;

 

(m)        all books and records pertaining to the other Collateral; and

 

(n)         all other tangible and intangible property of such Debtor,
including, without limitation, all interests in real property, Proceeds, tort
claims, products, accessions, rents, profits, income, benefits, substitutions,
additions and replacements of and to any of the property of such Debtor
described in the preceding clauses of this Section 3 (including, without
limitation, any proceeds of insurance thereon, insurance claims and all rights,
claims and benefits against any Person relating thereto), other rights to
payments not otherwise included in the foregoing, and all books, correspondence,
files, records, invoices and other papers, including without limitation all
tapes, cards, computer runs, computer programs, computer files and other papers,
documents and records in the possession or under the control of such Debtor, any
computer bureau or service company from time to time acting for such Debtor.

 

Notwithstanding anything to the contrary contained herein or in any Transaction
Document, in no event shall the security interest granted herein or therein
attach to any Excluded Assets.

 

Section 4.         Covenants; Remedies. In furtherance of the grant of the
pledge and security interest pursuant to Section 3 hereof, each Debtor hereby
agrees with the Secured Party as follows:

 

4.1      Delivery and Other Perfection; Maintenance, etc.

 

(a)       Delivery of Instruments, Documents, Etc. Each Debtor shall deliver and
pledge to the Secured Party or its Representative any and all Instruments,
negotiable Documents, Chattel Paper and certificated securities (accompanied by
stock powers executed in blank, which stock powers may be filled in and
completed at any time upon the occurrence of any Event of Default) duly endorsed
and/or accompanied by such instruments of assignment and transfer executed by
such Debtor in such form and substance as the Secured Party or its
Representative may request; provided, that so long as no Event of Default shall
have occurred and be continuing, each Debtor may retain for collection in the
ordinary course of business any Instruments, negotiable Documents and Chattel
Paper received by such Debtor in the ordinary course of business, and the
Secured Party or its Representative shall, promptly upon request of a Debtor,
make appropriate arrangements for making any other Instruments, negotiable
Documents and Chattel Paper pledged by such Debtor available to such Debtor for
purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Secured Party or its
Representative, against a trust receipt or like document). If a Debtor retains
possession of any Chattel Paper, negotiable Documents or Instruments pursuant to
the terms hereof, such Chattel Paper, negotiable Documents and Instruments shall
be marked with the following legend: “This writing and the obligations evidenced
or secured hereby are subject to the security interest of GPB Debt Holdings II
LLC, in its capacity as Collateral Agent for the benefit of the Purchaser, as
secured party.”

 

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(b)       Other Documents and Actions. Subject to the rights of holders of
permitted Liens, each Debtor shall give, execute, deliver, file and/or record
any financing statement, registration, notice, instrument, document, agreement,
Mortgage or other papers that may be necessary or desirable (in the reasonable
judgment of the Secured Party or its Representative) to create, preserve,
perfect or validate the security interest granted pursuant hereto (or any
security interest or mortgage contemplated or required hereunder, including with
respect to Section 2(h) of this Agreement) or to enable the Secured Party or its
Representative to exercise and enforce the rights of the Secured Party hereunder
with respect to such pledge and security interest, provided that notices to
account debtors in respect of any Accounts or Instruments shall be subject to
the provisions of clause (e) below. Notwithstanding the foregoing each Debtor
hereby irrevocably authorizes the Secured Party at any time and from time to
time to file in any filing office in any jurisdiction any initial financing
statements (and other similar filings or registrations under other applicable
laws and regulations pertaining to the creation, attachment, or perfection of
security interests) and amendments thereto that (a) indicate the Collateral (i)
as all assets of such Debtor or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of
Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with
greater detail, and (b) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Debtor is an
organization, the type of organization and any organization identification
number issued to such Debtor, and (ii) in the case of a financing statement
filed as a fixture filing, a sufficient description of real property to which
the Collateral relates. Each Debtor agrees to furnish any such information to
the Secured Party promptly upon request. Each Debtor also ratifies its
authorization for the Secured Party to have filed in any jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date
hereof.

 

(c)       Books and Records. Each Debtor (or a Company on behalf of a Debtor)
shall maintain at its own cost and expense complete and accurate books and
records of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the Collateral and all
other dealings with the Collateral. Upon the occurrence and during the
continuation of any Event of Default, each Debtor shall deliver and turn over
any such books and records (or true and correct copies thereof) to the Secured
Party or its Representative at any time on demand. Each Debtor shall permit any
Representative of the Secured Party to inspect such books and records at any
time during reasonable business hours and will provide photocopies thereof at
such Debtor’s expense to the Secured Party upon request of the Secured Party.

 

(d)       Motor Vehicles. Each Debtor shall, promptly upon acquiring same, cause
the Secured Party to be listed as the lienholder on each certificate of title or
ownership covering any items of Equipment, including Motor Vehicles, having a
value in excess of $50,000 individually or in the aggregate for all such items
of Equipment of the Debtor, or otherwise comply with the certificate of title or
ownership laws of the relevant jurisdiction issuing such certificate of title or
ownership in order to properly evidence and perfect Secured Party’s security
interest in the assets represented by such certificate of title or ownership.

 

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(e)       Notice to Account Debtors; Verification. (i) Subject to the rights of
holders of Permitted Liens, upon the occurrence and during the continuance of
any Event of Default or if any rights of set-off (other than set-offs against an
Account arising under the Contract giving rise to the same Account) or contra
accounts may be asserted, upon request of the Secured Party or its
Representative, each Debtor shall promptly notify (and each Debtor hereby
authorizes the Secured Party and its Representative so to notify) each account
debtor in respect of any Accounts or Instruments or other Persons obligated on
the Collateral that such Collateral has been assigned to the Secured Party
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Secured Party, and (ii) the Secured
Party and its Representative shall have the right at any time or times to make
direct verification with the account debtors or other Persons obligated on the
Collateral of any and all of the Accounts or other such Collateral.

 

(f)       Intellectual Property. If such Debtor shall (i) obtain rights to any
new patentable inventions, any registered Copyrights or any Patents or
Trademarks, or (ii) become entitled to the benefit of any registered Copyrights
or any Patents or any registered Trademarks or unregistered Trademarks material
to the operations of the business of such Debtor or any improvement on any
Patent, the provisions of this Agreement above shall automatically apply thereto
and such Debtor shall give to Secured Party prompt written notice thereof. Each
Debtor hereby authorizes Secured Party to modify this Agreement by amending
Schedules III, IV and V, as applicable, to include any such registered
Copyrights or any such Patents and Trademarks. Each Debtor shall have the duty
(i) to prosecute diligently any patent, trademark, or service mark applications
pending as of the date hereof or hereafter, (ii) to preserve and maintain all
rights in the Copyrights, Patents and Trademarks, to the extent material to the
operations of the business of such Debtor and (iii) to ensure that the
Copyrights, Patents and Trademarks are and remain enforceable, to the extent
material to the operations of the business of such Debtor. Any expenses incurred
in connection with such Debtor’s obligations under this Section 4.1(f) shall be
borne by such Debtor. Except for any such items that a Debtor reasonably
believes (using prudent industry customs and practices) are no longer necessary
for the on-going operations of its business, no Debtor shall abandon any
material right to file a patent, trademark or service mark application, or
abandon any pending patent, trademark or service mark application or any other
Copyright, Patent or Trademark without the prior written consent of Secured
Party, which consent shall not be unreasonably withheld.

 

(g)       Further Identification of Collateral. Each Debtor will, when and as
often as requested by the Secured Party or its Representative, furnish to the
Secured Party or such Representative, statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party or its Representative may reasonably
request, all in reasonable detail.

 

(h)       Investment Property. Each Debtor will take any and all actions
required or reasonably requested by the Secured Party, from time to time, to (i)
cause the Secured Party to obtain exclusive control of any Investment Property
owned by such Debtor in a manner acceptable to the Secured Party and (ii) obtain
from any issuers of Investment Property and such other Persons, for the benefit
of the Secured Party, written confirmation of the Secured Party’s control over
such Investment Property. For purposes of this Section 4.1(h), the Secured Party
shall have exclusive control of Investment Property if (i) such Investment
Property consists of certificated securities and a Debtor delivers such
certificated securities to the Secured Party (with appropriate endorsements if
such certificated securities are in registered form); (ii) such Investment
Property consists of uncertificated securities and either (x) a Debtor delivers
such uncertificated securities to the Secured Party or (y) the issuer thereof
agrees, pursuant to documentation in form and substance satisfactory to the
Secured Party, that it will comply with instructions originated by the Secured
Party without further consent by such Debtor, and (iii) such Investment Property
consists of security entitlements and either (x) the Secured Party becomes the
entitlement holder thereof or (y) the appropriate securities intermediary
agrees, pursuant to the documentation in form and substance satisfactory to the
Secured Party, that it will comply with entitlement orders originated by the
Secured Party without further consent by any Debtor.

 

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(i)         Commercial Tort Claims. Each Debtor shall promptly notify Secured
Party of any Commercial Tort Claim acquired by it that concerns a claim in
excess of $50,000 and unless otherwise consented to by Secured Party, such
Debtor shall enter into a supplement to this Agreement granting to Secured Party
a Lien on and security interest in such Commercial Tort Claim.

 

4.2      Other Liens. Debtors will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is necessary to
remove, any Lien on the Collateral except Permitted Liens, and will defend the
right, title and interest of the Secured Party in and to the Collateral and in
and to all Proceeds thereof against the claims and demands of all Persons
whatsoever, except holders of Permitted Liens.

 

4.3      Preservation of Rights. Whether or not any Event of Default has
occurred or is continuing, the Secured Party and its Representative may, but
shall not be required to, take any steps the Secured Party or its Representative
deems necessary or appropriate to preserve any Collateral or any rights against
third parties to any of the Collateral, including obtaining insurance for the
Collateral at any time when such Debtor has failed to do so, and Debtors shall
promptly pay, or reimburse the Secured Party for, all expenses incurred in
connection therewith.

 

4.4      Formation of Subsidiaries; Name Change; Location; Bailees.

 

(a)       No Debtor shall form or acquire any subsidiary unless (i) such Debtor
pledges all of the stock or equity interests of such subsidiary to the Secured
Party pursuant to an agreement in a form agreed to by the Secured Party, (ii)
such subsidiary becomes a party to this Agreement and all other applicable
Security Documents and (iii) the formation or acquisition of such Subsidiary is
not prohibited by the terms of the Transaction Documents.

 

(b)       No Debtor shall (i) reincorporate or reorganize itself under the laws
of any jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof, or (ii) otherwise change its name, identity or
corporate structure, in each case, without the prior written consent of Secured
Party, which consent shall not be unreasonably withheld. Each Debtor will notify
Secured Party promptly in writing prior to any such change in the proposed use
by such Debtor of any tradename or fictitious business name other than any such
name set forth on Schedule II attached hereto.

 

(c)       Except for the sale of Inventory in the ordinary course of business
and other sales of assets expressly permitted by the terms of the Purchase
Agreement, each Debtor will keep the Collateral at the locations specified in
Schedule I. Each Debtor will give Secured Party thirty (30) day’s prior written
notice of any change in such Debtor’s chief place of business or of any new
location for any of the Collateral.

 

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(d)       If any Collateral is at any time in the possession or control of any
warehousemen, bailee, consignee or processor, such Debtor shall, upon the
request of Secured Party or its Representative, notify such warehousemen,
bailee, consignee or processor of the Lien and security interest created hereby
and shall instruct such Person to hold all such Collateral for Secured Party’s
account subject to Secured Party’s instructions.

 

(e)       Each Debtor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement relating to Secured Party’s security interests hereunder
without the prior written consent of Secured Party and agrees that it will not
do so without the prior written consent of Secured Party, subject to such
Debtor’s rights under Section 9-509(d)(2) to the UCC.

 

(f)        Subject to the rights of holders of Permitted Liens, no Debtor shall
enter into any Contract that restricts or prohibits the grant to Secured Party
of a security interest in Accounts, Chattel Paper, Instruments or payment
intangibles or the proceeds of the foregoing.

 

4.5      Events of Default, Etc. During the period during which an Event of
Default shall have occurred and be continuing, subject to the rights of holders
of Permitted Liens:

 

(a)       each Debtor shall, at the request of the Secured Party or its
Representative, assemble the Collateral and make it available to Secured Party
or its Representative at a place or places designated by the Secured Party or
its Representative which are reasonably convenient to Secured Party or its
Representative, as applicable, and such Debtor;

 

(b)       the Secured Party or its Representative may make any reasonable
compromise or settlement deemed desirable with respect to any of the Collateral
and may extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;

 

(c)       the Secured Party shall have all of the rights and remedies with
respect to the Collateral of a secured party under the UCC (whether or not said
UCC is in effect in the jurisdiction where the rights and remedies are asserted)
and such additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to the
maximum extent permitted by law, to: (i) exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Secured Party
were the sole and absolute owner thereof (and each Debtor agrees to take all
such action as may be appropriate to give effect to such right) and (ii) to the
appointment of a receiver or receivers for all or any part of the Collateral or
business of a Debtor, whether such receivership be incident to a proposed sale
or sales of such Collateral or otherwise and without regard to the value of the
Collateral or the solvency of any person or persons liable for the payment of
the Obligations secured by such Collateral. Each Debtor hereby consents to the
appointment of such receiver or receivers, waives any and all defenses to such
appointment and agrees that such appointment shall in no manner impair,
prejudice or otherwise affect the rights of Secured Party under this Agreement.
Each Debtor hereby expressly waives notice of a hearing for appointment of a
receiver and the necessity for bond or an accounting by the receiver;

 

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(d)       the Secured Party or its Representative in its discretion may, in the
name of the Secured Party or in the name of a Debtor or otherwise, demand, sue
for, collect or receive any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral, but shall be under no
obligation to do so;

 

(e)       the Secured Party or its Representative may take immediate possession
and occupancy of any premises owned, used or leased by a Debtor and exercise all
other rights and remedies which may be available to the Secured Party;

 

(f)        the Secured Party may, upon reasonable notice (such reasonable notice
to be determined by Secured Party in its sole and absolute discretion, which
shall not be less than ten (10) days), with respect to the Collateral or any
part thereof which shall then be or shall thereafter come into the possession,
custody or control of the Secured Party or its Representative, sell, lease,
license, assign or otherwise dispose of all or any part of such Collateral, at
such place or places as the Secured Party deems best, and for cash or for credit
or for future delivery (without thereby assuming any credit risk), at public or
private sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the Secured
Party or anyone else may be the purchaser, lessee, licensee, assignee or
recipient of any or all of the Collateral so disposed of at any public sale (or,
to the extent permitted by law, at any private sale) and thereafter hold the
same absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of Debtors, any such
demand, notice and right or equity being hereby expressly waived and released.
The Secured Party may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for the sale, and such sale may be made at any time
or place to which the sale may be so adjourned;

 

(g)       the rights, remedies and powers conferred by this Section 4.5 are in
addition to, and not in substitution for, any other rights, remedies or powers
that the Secured Party may have under any Transaction Document, at law, in
equity or by or under the UCC or any other statute or agreement. The Secured
Party may proceed by way of any action, suit or other proceeding at law or in
equity and no right, remedy or power of the Secured Party will be exclusive of
or dependent on any other. The Secured Party may exercise any of its rights,
remedies or powers separately or in combination and at any time; and

 

(h)       each Debtor, Secured Party and each Debtor’s bank shall enter into a
deposit account control agreement in form and substance satisfactory to Secured
Party that is sufficient to give Secured Party “control” (for purposes of
Articles 8 and 9 of the Uniform Commercial Code) over such account and which
directs such bank to transfer such funds so deposited on a daily basis, or at
other times acceptable to Secured Party, to Secured Party, either to any account
maintained by Secured Party at said bank or by wire transfer to appropriate
account(s) at Secured Party. All funds deposited in such Deposit Accounts shall
immediately become subject to the security interest of Secured Party for its own
benefit, and Secured Party shall obtain the agreement by such bank to waive any
offset rights against the funds so deposited. Secured Party shall apply all
funds received by it from the Deposit Accounts to the satisfaction of the
Obligations.

 

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The proceeds of each collection, sale or other disposition under this Section
4.5 shall be applied in accordance with Section 4.8 hereof.

 

4.6      Deficiency. If the proceeds of sale, collection or other realization of
or upon the Collateral are insufficient to cover the costs and expenses of such
realization and the payment in full of the Obligations, Debtors shall remain
jointly and severally liable for any deficiency.

 

4.7      Private Sale. Each Debtor recognizes that the Secured Party may be
unable to effect a public sale of any or all of the Collateral consisting of
securities by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the “Act”), and applicable state securities laws, but may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and each Debtor agrees that it is
not commercially unreasonable for Secured Party to engage in any such private
sales or dispositions under such circumstances. The Secured Party shall be under
no obligation to delay a sale of any of the Collateral to permit a Debtor to
register such Collateral for public sale under the Act, or under applicable
state securities laws, even if Debtors would agree to do so. The Secured Party
shall not incur any liability as a result of the sale of any such Collateral, or
any part thereof, at any private sale provided for in this Agreement conducted
in a commercially reasonable manner, and so long as Secured Party conducts such
sale in a commercially reasonable manner each Debtor hereby waives any claims
against the Secured Party arising by reason of the fact that the price at which
the Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Obligations, even if the Secured Party accepts the first offer
received and does not offer the Collateral to more than one offeree.

 

Each Debtor further agrees to do or cause to be done all such other acts and
things as may be necessary to make such sale or sales of any portion or all of
any such Collateral valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at such Debtor’s
expense. Each Debtor further agrees that a breach of any of the covenants
contained in this Section 4.7 will cause irreparable injury to the Secured
Party, that the Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 4.7 shall be specifically enforceable against Debtors, and each
Debtor hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred and is continuing.

 

4.8      Application of Proceeds. The proceeds of any collection, sale or other
realization of all or any part of the Collateral, and any other cash at the time
held by the Secured Party under this Agreement, shall be applied to the
Obligations in such order as Secured Party shall elect.

 

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4.9      Attorney-in-Fact. Each Debtor hereby irrevocably constitutes and
appoints the Secured Party, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Debtor and in the name of such Debtor or in its own name, from
time to time in the discretion of the Secured Party, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to perfect or protect any security interest granted hereunder, to
maintain the perfection or priority of any security interest granted hereunder,
or to otherwise accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, hereby gives the Secured Party the power and
right, on behalf of such Debtor, without notice to or assent by such Debtor (to
the extent permitted by applicable law), subject to the rights of holders of
Permitted Liens, to do the following:

 

(a)       to take any and all appropriate action and to execute and deliver any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement;

 

(b)       upon the occurrence and during the continuation of an Event of
Default, to ask, demand, collect, receive and give acquittance and receipts for
any and all moneys due and to become due under any Collateral and, in the name
of such Debtor or its own name or otherwise, to take possession of and endorse
and collect any checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any and all such
moneys due under any Collateral whenever payable and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Collateral whenever payable;

 

(c)       to pay or discharge charges or liens levied or placed on or threatened
against the Collateral, to effect any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums therefor;

 

(d)       to direct any party liable for any payment under any of the Collateral
to make payment of any and all moneys due, and to become due thereunder,
directly to the Secured Party or as the Secured Party shall direct, and to
receive payment of and receipt for any and all moneys, claims and other amounts
due, and to become due at any time, in respect of or arising out of any
Collateral;

 

(e)       upon the occurrence and during the continuation of an Event of
Default, to sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other Documents
constituting or relating to the Collateral;

 

(f)        upon the occurrence and during the continuation of an Event of
Default, to commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any Collateral;

 

(g)       upon the occurrence and during the continuation of an Event of
Default, to defend any suit, action or proceeding brought against a Debtor with
respect to any Collateral;

 

14 

 

 

(h)       upon the occurrence and during the continuation of an Event of
Default, to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges or
releases as the Secured Party may deem appropriate;

 

(i)        to the extent that a Debtor’s authorization given in Section 4.1(b)
of this Agreement is not sufficient to file such financing statements with
respect to this Agreement, with or without such Debtor’s signature, or to file a
photocopy of this Agreement in substitution for a financing statement, as the
Secured Party may deem appropriate and to execute in such Debtor’s name such
financing statements and amendments thereto and continuation statements which
may require such Debtor’s signature;

 

(j)        upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Secured Party were the absolute owners thereof for all purposes; and

 

(k)       to do, at the Secured Party’s option and at such Debtor’s expense, at
any time, or from time to time, all acts and things which the Secured Party
reasonably deems necessary to protect or preserve or, upon the occurrence and
during the continuation of an Event of Default, realize upon the Collateral and
the Secured Party’s lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as such Debtor might do.

 

Each Debtor hereby ratifies, to the extent permitted by law, all that such
attorneys lawfully do or cause to be done by virtue hereof provided the same is
performed in a commercially reasonable manner. The power of attorney granted
hereunder is a power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full in cash and this Agreement is
terminated in accordance with Section 4.11 hereof.

 

Each Debtor also authorizes the Secured Party, at any time from and after the
occurrence and during the continuation of any Event of Default, (x) to
communicate in its own name with any party to any Contract with regard to the
assignment of the right, title and interest of such Debtor in and under the
Contracts hereunder and other matters relating thereto and (y) to execute, in
connection with any sale of Collateral provided for in Section 4.5 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

 

4.10    Perfection. Prior to or concurrently with the execution and delivery of
this Agreement, each Debtor shall:

 

(a)       file such financing statements, assignments for security and other
documents in such offices as may be necessary or as the Secured Party or the
Representative may request to perfect the security interests granted by Section
3 of this Agreement;

 

(b)       at Secured Party’s request, deliver to the Secured Party or its
Representative the originals of all Instruments together with, in the case of
Instruments constituting promissory notes, allonges attached thereto showing
such promissory notes to be payable to the order of a blank payee;

 

15 

 

 

(c)       deliver to the Secured Party or its Representative the originals of
all Motor Vehicle Titles, duly endorsed indicating the Secured Party’s interest
therein as a lienholder, together with such other documents as may be required
consistent with Section 4.1(d) hereof to perfect the security interest granted
by Section 3 in all such Motor Vehicles (if any).

 

4.11    Termination; Partial Release of Collateral. This Agreement and the Liens
and security interests granted hereunder shall not terminate until the
termination of the Purchase Agreement and the Notes and the full and complete
performance and indefeasible satisfaction of all the Obligations (i) in respect
of the Transaction Documents (including, without limitation, the indefeasible
payment in full in cash of all such Obligations) and (ii) with respect to which
claims have been asserted by the Collateral Agent/ and or Purchaser, whereupon
the Secured Party shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral to or on the order of Debtors. The Secured
Party shall also execute and deliver to Debtors upon such termination and at
Debtors’ expense such UCC termination statements, certificates for terminating
the liens on the Motor Vehicles (if any) and such other documentation as shall
be reasonably requested by Debtors to effect the termination and release of the
Liens and security interests in favor of the Secured Party affecting the
Collateral.

 

4.12    Further Assurances. At any time and from time to time, upon the written
request of the Secured Party or its Representative, and at the sole expense of
Debtors, subject to the rights of holders of Permitted Liens, Debtors will
promptly and duly execute and deliver any and all such further instruments,
documents and agreements and take such further actions as the Secured Party or
its Representative may reasonably require in order for the Secured Party to
obtain the full benefits of this Agreement and of the rights and powers herein
granted in favor of the Secured Party, including, without limitation, using
Debtors’ best efforts to secure all consents and approvals necessary or
appropriate for the assignment to the Secured Party of any Collateral held by
Debtors or in which a Debtor has any rights not heretofore assigned, the filing
of any financing or continuation statements under the UCC with respect to the
liens and security interests granted hereby, transferring Collateral to the
Secured Party’s possession (if a security interest in such Collateral can be
perfected by possession), placing the interest of the Secured Party as
lienholder on the certificate of title of any Motor Vehicle, and obtaining
waivers of liens from landlords and mortgagees. Each Debtor also hereby
authorizes the Secured Party and its Representative to file any such financing
or continuation statement without the signature of such Debtor to the extent
permitted by applicable law.

 

4.13    Limitation on Duty of Secured Party. The powers conferred on the Secured
Party under this Agreement are solely to protect the Secured Party’s interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. The Secured Party shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither the Secured
Party nor its Representative nor any of their respective officers, directors,
employees or agents shall be responsible to Debtors for any act or failure to
act, except for gross negligence or willful misconduct. Without limiting the
foregoing, the Secured Party and any Representative shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
their possession if such Collateral is accorded treatment substantially
equivalent to that which the relevant Secured Party or any Representative, in
its individual capacity, accords its own property consisting of the type of
Collateral involved, it being understood and agreed that neither the Secured
Party nor any Representative shall have any responsibility for taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above) to preserve rights against any Person with respect to any
Collateral.

 

16 

 

 

Also without limiting the generality of the foregoing, neither the Secured Party
nor any Representative shall have any obligation or liability under any Contract
or license by reason of or arising out of this Agreement or the granting to the
Secured Party of a security interest therein or assignment thereof or the
receipt by the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured Party or any
Representative be required or obligated in any manner to perform or fulfill any
of the obligations of Debtors under or pursuant to any Contract or license, or
to make any payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance by any party
under any Contract or license, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

 

Section 5.          Miscellaneous.

 

5.1      No Waiver. No failure on the part of the Secured Party or any of its
Representatives to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Secured Party or
any of its Representatives of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.

 

5.2      Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.

 

5.3      Notices. All notices, approvals, requests, demands and other
communications hereunder shall be delivered or made in the manner set forth in,
and shall be effective in accordance with the terms of, the Purchase Agreement;
provided, that, to the extent any such communication is being made or sent to a
Debtor that is not the Company, such communication shall be effective as to such
Debtor if made or sent to any Company in accordance with the foregoing. Debtors
and Secured Party may change their respective notice addresses by written notice
given to each other party five (5) days prior to the effectiveness of such
change.

 

5.4      Amendments, Etc. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by the Debtor sought to
be charged or benefited thereby and the Secured Party. Any such amendment or
waiver shall be binding upon the Secured Party and the Debtor sought to be
charged or benefited thereby and their respective successors and assigns.

 

5.5      Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of each of the parties
hereto, provided, that no Debtor shall assign or transfer its rights hereunder
without the prior written consent of the Secured Party. Secured Party may assign
its rights hereunder without the consent of Debtors, in which event such
assignee shall be deemed to be Secured Party hereunder with respect to such
assigned rights; provided, so long as no Event of Default has occurred and is
continuing, the Secured Party shall not assign any of its rights hereunder to a
competitor of any Company.

 

17 

 

 

5.6      Counterparts; Headings. This Agreement may be authenticated in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may authenticate this Agreement by
signing any such counterpart. This Agreement may be authenticated by manual
signature or facsimile, .pdf or similar electronic signature, all of which shall
be equally valid. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof.

 

5.7      Severability. If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Secured Party and its
Representative in order to carry out the intentions of the parties hereto as
nearly as may be possible and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

 

5.8      SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS. EACH
DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK, BOROUGH
OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND EACH DEBTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF SECURED PARTY
TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION.
ANY JUDICIAL PROCEEDING BY A DEBTOR AGAINST SECURED PARTY OR ANY AFFILIATE
THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT
IN NEW YORK, NEW YORK (AND SECURED PARTY HEREBY SUBMITS TO THE JURISDICTION OF
SUCH COURT). NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY
RIGHT OF SECURED PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

 

5.9      WAIVER OF RIGHT TO TRIAL BY JURY. EACH DEBTOR AND SECURED PARTY WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH DEBTOR AND SECURED
PARTY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION 5.9 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

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5.10    Joint and Several. The obligations, covenants and agreements of Debtors
hereunder shall be the joint and several obligations, covenants and agreements
of each Debtor, whether or not specifically stated herein without preferences or
distinction among them.

 

5.11    Concerning Collateral Agent. Collateral Agent shall act in accordance
with the terms of the Purchase Agreement. The Collateral Agent may exercise or
refrain from exercising any rights (including making demands and giving notices)
and take or refrain from taking any action, in accordance with this Agreement
and the Purchase Agreement. The Collateral Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be liable for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Collateral Agent may resign and a successor Collateral Agent
may be appointed by the Purchaser. On the acceptance of appointment as the
successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent’s resignation, the
provisions hereof shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was the Collateral Agent.

 

5.12    No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

5.13    ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN SECURED PARTY, THE DEBTORS, THEIR AFFILIATES AND PERSONS ACTING ON THEIR
BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT,
TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS AND THE OTHER INSTRUMENTS
REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED PARTY NOR ANY
DEBTOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT
TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO UNWRITTEN
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO
PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN
BY AN INSTRUMENT IN WRITING SIGNED BY THE DEBTORS AND THE SECURED PARTY.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

19 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.

 

DEBTORS:

 

  HEALTH-RIGHT DISCOVERIES, INC., a Florida corporation       By:

/s/ David Hopkins

    Name: David Hopkins
Title: President

 

 

 

 

  SECURED PARTY:       GPB Debt HOLDINGS II LLC          By:  /s/ David Gentile

   Name:  David Gentile

   Title:

Manager

 

  Notice Address:     GPB Debt Holdings II, LLC     535 W 24th Street, 4th Floor
    New York, NY, 10011

 

 

 

 

EXHIBIT A

Form of Joinder

Joinder to Security Agreement

 

The undersigned, ______________________________, hereby joins in the execution
of that certain Security Agreement dated as of September 29, 2017 (as amended,
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”) by Health-Right Discoveries, Inc., a Florida corporation, GPB Debt
Holdings II LLC, a limited liability company, and each other Person that becomes
a Debtor or a Secured Party (as defined therein) thereunder after the date
thereof and hereof and pursuant to the terms thereof, to and in favor of the
Secured Party. By executing this Joinder, the undersigned hereby agrees that it
is a Debtor thereunder and agrees to be bound by all of the terms and provisions
of the Security Agreement. The undersigned represents and warrants that the
representations and warranties set forth in the Security Agreement are, with
respect to the undersigned, true and correct as of the date hereof.

 

The undersigned represents and warrants to Secured Party that:

 

(a)      all of the Equipment, Inventory and Goods owned by such Debtor is
located at the places as specified on Schedule I and such Debtor conducts
business in the jurisdiction set forth on Schedule I;

 

(b)      except as disclosed on Schedule I, none of such Collateral is in the
possession of any bailee, warehousemen, processor or consignee;

 

(c)      the chief place of business, chief executive office and the office
where such Debtor keeps its books and records are located at the place specified
on Schedule I;

 

(d)      such Debtor (including any Person acquired by such Debtor) does not do
business or has not done business during the past five years under any tradename
or fictitious business name, except as disclosed on Schedule II;

 

(e)      all Copyrights, Patents and Trademarks owned or licensed by the
undersigned are listed in Schedules III, IV and V, respectively;

 

(f)       all Deposit Accounts, securities accounts, brokerage accounts and
other similar accounts maintained by such Debtor, and the financial institutions
at which such accounts are maintained, are listed on Schedule VI;

 

(g)      all Commercial Tort Claims of such Debtor are listed on Schedule VII;

 

(h)      all interests in real property and mining rights held by such Debtor
are listed on Schedule VIII;

 

(i)       all Equipment (including Motor Vehicles) owned by such debtor are
listed on Schedule IX.

 

    , a       By:

Title:

FEIN: