FORM OF
SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”), dated as of December ___, 2009, is
made by and among the grantors listed on the signature pages hereof
(collectively, jointly and severally, the “Grantors” and each, individually, a
“Grantor”), and the secured parties listed on the signature pages hereof
(collectively, the “Secured Parties” and each, individually, a “Secured Party”).
 
RECITALS
 
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
December 21, 2009 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the “Purchase
Agreement”), by and among MAGNUM D’OR RESOURCES, INC., a Nevada corporation
(“Parent”), and the Secured Parties, Parent has agreed to sell, and Secured
Parties have agreed to purchase, severally and not jointly, certain Notes and
Warrants; and
 
WHEREAS, each Grantor other than Parent is a direct or indirect wholly-owned
subsidiary of Parent and will receive direct and substantial benefits from the
purchase by Secured Parties of the Notes and Warrants; and
 
WHEREAS, in order to induce the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Purchase Agreement,
Grantors have agreed to grant a continuing security interest in and to the
Collateral in order to secure the prompt and complete payment, observance and
performance of the Secured Obligations.
 
AGREEMENTS
 
NOW, THEREFORE, for and in consideration of the recitals made above and other
good and valuable consideration, the receipt, sufficiency and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
 
1.           Defined Terms. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Notes. Any terms used in this Agreement that are defined
in the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein or in the Notes; provided, however, if the Code is used
to define any term used herein and if such term is defined differently in
different Articles of the Code, the definition of such term contained in Article
9 of the Code shall govern. In addition to those terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
following meanings:
 
(a)           “Account” means an account (as that term is defined in the Code).
 
(b)           “Account Debtor” means an account debtor (as that term is defined
in the Code).
 
(c)           “Bankruptcy Code” means title 11 of the United States Code, as in
effect from time to time.

 
 

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(d)           “Books” means books and records (including, without limitation,
each Grantor’s Records) indicating, summarizing, or evidencing each Grantor’s
assets (including the Collateral) or liabilities, each Grantor’s Records
relating to its business operations (including, without limitation, stock
ledgers) or financial condition, and each Grantor’s goods or General Intangibles
related to such information.
 
(e)           “Chattel Paper” means chattel paper (as that term is defined in
the Code) and includes tangible chattel paper and electronic chattel paper.
 
(f)           “Code” means the New York Uniform Commercial Code, as in effect
from time to time; provided, however, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to any Secured Party’s Lien on any Collateral is governed
by the Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority, or
remedies.
 
(g)           “Collateral” has the meaning specified therefor in Section 2.
 
(h)           “Colorado Collateral” means, collectively, (i) all Collateral of
Parent that is located at Parent’s facility in Hudson, Colorado as of the date
hereof and (ii) all Collateral acquired after the date hereof by Parent,
directly or indirectly, from any Person (other than any of the Subsidiaries or
any affiliate of Parent or any of the Subsidiaries) that is solely used and
located at Parent’s facility in Hudson, Colorado.
 
(i)           “Commencement Notice” means a written notice, given by any Secured
Party to the other Secured Parties in accordance with the notice provisions set
forth in the Purchase Agreement, pursuant to which such Secured Party notifies
the other Secured Parties of the existence of one or more Events of Default and
of such Secured Party’s intent to commence the exercise of one or more of the
remedies provided for under this Agreement with respect to all or any portion of
the Collateral as a consequence thereof, which notice shall incorporate a
reasonably detailed description of each Event of Default then existing and of
the remedial action proposed to be taken.
 
(j)           “Commercial Tort Claims” means commercial tort claims (as that
term is defined in the Code), and includes those commercial tort claims listed
on Schedule 1 attached hereto.
 
(k)           “Control Agreement” means a control agreement, in form and
substance satisfactory to Secured Parties, executed and delivered by a Grantor,
one or more Secured Parties, and the applicable securities intermediary (with
respect to a Securities Account) or bank (with respect to a Deposit Account), as
may be amended from time to time.

 
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(l)           “Copyrights” means all copyrights and copyright registrations, and
also includes (i) the copyright registrations and recordings thereof and all
applications in connection therewith listed on Schedule 2 attached hereto and
made a part hereof, (ii) all reissues, continuations, extensions or renewals
thereof, (iii) all income, royalties, damages and payments now and hereafter due
or payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and
future infringements and dilutions thereof, (v) the goodwill of each Grantor’s
business symbolized by the foregoing or connected therewith, and (vi) all of
each Grantor’s rights corresponding thereto throughout the world.
 
(m)           “Copyright Security Agreement” means each Copyright Security
Agreement among Grantors, or any of them, and Secured Parties, in substantially
the form of Exhibit A attached hereto, pursuant to which Grantors have granted
to each Secured Party a security interest in all their respective Copyrights, as
may be amended from time to time.
 
(n)           “Deposit Account” means a deposit account (as that term is defined
in the Code).
 
(o)           “Equipment” means equipment (as that term is defined in the Code).
 
(p)           “Event of Default” has the meaning specified therefor in the
Notes.
 
(q)           “General Intangibles” means general intangibles (as that term is
defined in the Code) and, in any event, includes payment intangibles, contract
rights, rights to payment, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill (including the goodwill
associated with any Trademark, Patent, or Copyright), Patents, Trademarks,
Copyrights, URLs and domain names, industrial designs, other industrial or
Intellectual Property or rights therein or applications therefor, whether under
license or otherwise, programs, programming materials, blueprints, drawings,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, including Intellectual Property Licenses, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, pension plan refunds, pension plan refund claims,
insurance premium rebates, tax refunds, and tax refund claims, interests in a
partnership or limited liability company which do not constitute a security
under Article 8 of the Code, and any other personal property other than
Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods,
Investment Related Property, Negotiable Collateral, and oil, gas, or other
minerals before extraction.
 
(r)           “Governmental Authority” means any domestic or foreign federal,
state, local, or other governmental or administrative body, instrumentality,
board, department, or agency or any court, tribunal, administrative hearing
body, arbitration panel, commission, or other similar dispute-resolving panel or
body.

 
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(s)           “Guaranties” means each Guaranty dated of even date herewith
executed by Guarantors in favor of any or all of the Secured Parties, together
with any other guaranty or similar agreement now or hereafter executed by a
Guarantor in favor of any or all of the Secured Parties in connection with the
Notes or any of the other Transaction Documents (other than the Warrants), as
may be amended from time to time.
 
(t)           “Guarantor” means each Grantor, other than Parent, and each other
Person that now or hereafter executes a Guaranty.
 
(u)           “Insolvency Proceeding” means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law or any equivalent laws in any
other jurisdiction, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.
 
(v)           “Intellectual Property” means Patents, Copyrights, Trademarks, the
goodwill associated with such Trademarks, trade secrets and customer lists, and
Intellectual Property Licenses.
 
(w)           “Intellectual Property Licenses” means rights under or interests
in any patent, trademark, copyright or other intellectual property, including
software license agreements with any other party, whether the applicable Grantor
is a licensee or licensor under any such license agreement, including the
license agreements listed on Schedule 3 attached hereto and made a part hereof,
as may be amended from time to time.
 
(x)           “Inventory” means inventory (as that term is defined in the Code).
 
(y)           “Investment Related Property” means (i) investment property (as
that term is defined in the Code), and (ii) all of the following (regardless of
whether classified as investment property under the Code): all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.
 
(z)           “Lien” has the meaning specified therefor in the Notes.
 
(aa)         “Negotiable Collateral” means letters of credit, letter-of-credit
rights, instruments, promissory notes, drafts, and documents.
 
(bb)         “Notes” has the meaning specified therefor in the Purchase
Agreement.
 
(cc)         “Patents” means all patents and patent applications, and also
includes (i) the patents and patent applications listed on Schedule 4 attached
hereto and made a part hereof, (ii) all renewals thereof, (iii) all income,
royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in
connection therewith and damages and payments for past or future infringements
or dilutions thereof, (iv) the right to sue for past, present and future
infringements and dilutions thereof, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.

 
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(dd)         “Patent Security Agreement” means each Patent Security Agreement
among Grantors and Secured Parties in substantially the form of Exhibit B
attached hereto, pursuant to which Grantors have granted to each Secured Party a
security interest in all their respective Patents, as may be amended from time
to time.
 
(ee)          “Permitted Liens” has the meaning specified therefor in the Notes.
 
(ff)           “Permitted Secured Party” means, with respect to the exercise of
any remedy provided for under this Agreement, any Secured Party that has
delivered a Commencement Notice with respect to the exercise of such remedy to
the other Secured Parties and has not received a Veto Notice with respect
thereto within the Veto Period; provided, however, there shall only be a single
Permitted Secured Party that may exercise any specific remedy at any one time
(it being agreed that if a Commencement Notice is delivered by more than one
Secured Party with respect to any remedy provided for under this Agreement, then
the first Secured Party to deliver a Commencement Notice and not receive a Veto
Notice within the Veto Period shall be the only Secured Party that may exercise
such remedy).
 
(gg)         “Person” has the meaning specified therefor in the Purchase
Agreement.
 
(hh)         “Pledged Companies” means, each Person listed on Schedule 5 hereto
as a “Pledged Company,” together with each other Person all or a portion of
whose Stock is acquired or otherwise owned by a Grantor after the date hereof.
 
(ii)           “Pledged Interests” means all of each Grantor’s right, title and
interest in and to all of the Stock now or hereafter owned by such Grantor,
regardless of class or designation, including all substitutions therefor and
replacements thereof, all proceeds thereof and all rights relating thereto, also
including any certificates representing the Stock, the right to receive any
certificates representing any of the Stock, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof, and the right to receive dividends, distributions of income, profits,
surplus, or other compensation by way of income or liquidating distributions, in
cash or in kind, and cash, instruments, and other property from time to time
received, receivable, or otherwise distributed in respect of or in addition to,
in substitution of, on account of, or in exchange for any or all of the
foregoing.
 
(jj)           “Pledged Operating Agreements” means all of each Grantor’s
rights, powers, and remedies under the limited liability company operating
agreements of each of the Pledged Companies that are limited liability
companies, as may be amended from time to time.
 
(kk)          “Pledged Partnership Agreements” means all of each Grantor’s
rights, powers, and remedies under the partnership agreements of each of the
Pledged Companies that are partnerships, as may be amended from time to time.
 
(ll)           “Proceeds” has the meaning specified therefor in Section 2.
 
(mm)        “Real Property” means any estates or interests in real property now
owned or hereafter acquired by any Grantor and the improvements thereto.

 
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(nn)         “Records” means information that is inscribed on a tangible medium
or which is stored in an electronic or other medium and is retrievable in
perceivable form.
 
(oo)         “Secured Obligations” mean all of the present and future payment
and performance obligations of Grantors arising under this Agreement, the Notes,
the Guaranties, and the other Transaction Documents (other than the Warrants),
including, without duplication, reasonable attorneys’ fees and expenses and any
interest, fees, or expenses that accrue after the filing of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any Insolvency Proceeding.
 
(pp)         “Securities Account” means a securities account (as that term is
defined in the Code).
 
(qq)         “Security Documents” means, collectively, this Agreement, each
Copyright Security Agreement, each Patent Security Agreement, each Trademark
Security Agreement, each Control Agreement, and each other security agreement,
pledge agreement, assignment, mortgage, security deed, deed of trust, and other
agreement or document executed and delivered by a Grantor as security for any of
the Secured Obligations, as may be amended from time to time.
 
(rr)           “Security Interest” and “Security Interests” have the meanings
specified therefor in Section 2.
 
(ss)         “Senior Lender” means Cache Bank & Trust.
 
(tt)           “Significant Secured Party” means, on any date of determination,
any Secured Party holding twenty percent (20%) or more of the aggregate
principal amount of Notes outstanding on such date.
 
(uu)         “Stock” means all shares, options, warrants, interests (including
membership and partnership interests), participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the United States Securities and Exchange Commission and any successor
thereto under the Securities Exchange Act of 1934, as in effect from time to
time).
 
(vv)         “Subordination Agreement” means, collectively, those certain
subordination agreements dated as of the date hereof and entered into by each of
the Secured Parties with each of the Senior Lender and Parent, as may be amended
from time to time.
 
(ww)       “Subsidiaries” and “Subsidiary” each have the meanings specified
therefor in the Notes.
 
(xx)           “Supporting Obligations” means supporting obligations (as such
term is defined in the Code).

 
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(yy)         “Trademarks” means all trademarks, trade names, trademark
applications, service marks, service mark applications, and also includes (i)
the trade names, trademarks, trademark applications, service marks, and service
mark applications listed on Schedule 6 attached hereto and made a part hereof,
and (ii) all renewals thereof, (iii) all income, royalties, damages and payments
now and hereafter due or payable under and with respect thereto, including
payments under all licenses entered into in connection therewith and damages and
payments for past or future infringements or dilutions thereof, (iv) the right
to sue for past, present and future infringements and dilutions thereof, (v) the
goodwill of each Grantor’s business symbolized by the foregoing or connected
therewith, and (vi) all of each Grantor’s rights corresponding thereto
throughout the world.
 
(zz)          “Trademark Security Agreement” means each Trademark Security
Agreement among Grantors and Secured Parties in substantially the form of
Exhibit C attached hereto, pursuant to which Grantors have granted to each
Secured Party a security interest in all their respective Trademarks.
 
(aaa)       “Transaction Documents” has the meaning specified therefor in the
Purchase Agreement.
 
(bbb)      “URL” means “uniform resource locator,” an internet web address.
 
(ccc)       “Veto Notice” means, with respect to any Commencement Notice, a
written notice given by any Significant Secured Party to the other Secured
Parties in accordance with the notice provisions set forth in the Purchase
Agreement pursuant to which such Significant Secured Party notifies the other
Secured Parties of its objection to the commencement of the remedial action
specified in such Commencement Notice and certifies that, to the best of its
knowledge, it is a Significant Secured Party.
 
(ddd)      “Veto Period” means, with respect to any Commencement Notice, the
period of ten (10) consecutive calendar days following the delivery of such
Commencement Notice to the Secured Parties.
 
(eee)       “Warrants” has the meaning specified therefor in the Purchase
Agreement.
 
2.           Grant of Security. Each Grantor hereby unconditionally grants,
assigns, and pledges to each Secured Party a separate, continuing security
interest (each, a “Security Interest” and, collectively, the “Security
Interests”) in all assets of such Grantor (other than Real Property) whether now
owned or hereafter acquired or arising and wherever located (collectively, the
“Collateral”), including, without limitation, such Grantor’s right, title, and
interest in and to the following, whether now owned or hereafter acquired or
arising and wherever located:
 
(a)           all of such Grantor’s Accounts;
 
(b)           all of such Grantor’s Books;

 
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(c)           all of such Grantor’s Chattel Paper;
 
(d)           all of such Grantor’s Deposit Accounts;
 
(e)           all of such Grantor’s Equipment and fixtures;
 
(f)           all of such Grantor’s General Intangibles;
 
(g)           all of such Grantor’s Inventory;
 
(h)           all of such Grantor’s Investment Related Property;
 
(i)           all of such Grantor’s Negotiable Collateral;
 
(j)           all of such Grantor’s rights in respect of Supporting Obligations;
 
(k)           all of such Grantor’s Commercial Tort Claims;
 
(l)           all of such Grantor’s money, cash, cash equivalents, or other
assets of each such Grantor that now or hereafter come into the possession,
custody, or control of any Secured Party;
 
(m)          all of the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance or Commercial Tort
Claims covering or relating to any or all of the foregoing, and any and all
Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral,
Supporting Obligations, money, or other tangible or intangible property
resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, or guaranty payable
by reason of loss or damage to, or otherwise with respect to any of the
foregoing (the “Proceeds”). Without limiting the generality of the foregoing,
the term “Proceeds” includes whatever is receivable or received when Investment
Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any indemnity or guaranty payable to any Grantor or any Secured
Party from time to time with respect to any of the Investment Related Property.
 
3.           Security for Obligations. This Agreement and the Security Interests
created hereby secure the payment and performance of the Secured Obligations,
whether now existing or arising hereafter.  Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Secured Obligations and would be owed by Grantors, or any
of them, to Secured Parties, or any of them, but for the fact that they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.

 
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4.           Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (a) each of the Grantors shall remain liable under the
contracts and agreements included in the Collateral, including the Pledged
Operating Agreements and the Pledged Partnership Agreements, to perform all of
the duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Secured Parties, or any of them, of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations under such contracts and agreements included in the Collateral,
and (c) no Secured Party shall have any obligation or liability under such
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall any Secured Party be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder. Until an Event of Default shall occur and
be continuing, except as otherwise provided in this Agreement or any other
Transaction Document, Grantors shall have the right to possession and enjoyment
of the Collateral for the purpose of conducting the ordinary course of their
respective businesses, subject to and upon the terms hereof and the other
Transaction Documents. Without limiting the generality of the foregoing, it is
the intention of the parties hereto that record and beneficial ownership of the
Pledged Interests, including all voting, consensual, and dividend rights, shall
remain in the applicable Grantor until the occurrence, and during the
continuance, of an Event of Default and until any Secured Party shall notify the
applicable Grantor of such Secured Party’s exercise of voting, consensual, or
dividend rights with respect to the Pledged Interests pursuant to Section 15
hereof.
 
5.           Representations and Warranties.  Each Grantor hereby represents and
warrants as follows:
 
(a)           The exact legal name of each of the Grantors is set forth on the
signature pages of this Agreement.
 
(b)           As of the date hereof, Schedule 7 attached hereto sets forth (i)
all Real Property owned or leased by Grantors, together with all other locations
of Collateral, as of the date hereof, and (ii) the chief executive office of
each Grantor as of the date hereof.
 
(c)           As of the date hereof, no Grantor has any interest in, or title
to, any Copyrights, Intellectual Property Licenses, Patents or Trademarks,
except as set forth on Schedules 2, 3, 4 and 6, respectively, attached hereto.
This Agreement is effective to create a valid and continuing Lien on such
Copyrights, Intellectual Property Licenses, Patents and Trademarks and, upon
filing of the Copyright Security Agreement with the United States Copyright
Office and filing of the Patent Security Agreement and the Trademark Security
Agreement with the United States Patent and Trademark Office, and the filing of
appropriate financing statements in the jurisdictions listed on Schedule 8
hereto, all action necessary or desirable to protect and perfect the Security
Interests in and to each Grantor’s Patents, Trademarks, or Copyrights has been,
or will within the time period required by applicable law be, taken and such
perfected Security Interests are enforceable as such as against any and all
creditors of and purchasers from any Grantor.  No Grantor has any interest in
any Copyright that is necessary in connection with the operation of such
Grantor’s business, except for those Copyrights identified on Schedule 2
attached hereto which have been registered with the United States Copyright
Office.

 
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(d)           This Agreement creates a valid security interest in all of the
Collateral of each Grantor, to the extent a security interest therein can be
created under the Code securing the payment of the Secured Obligations. Except
to the extent a security interest in the Collateral cannot be perfected by the
filing of a financing statement under the Code, all filings and other actions
necessary to perfect and protect such security interest have been duly taken or
will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Secured Parties, as secured parties, in the
jurisdictions listed next to such Grantor’s name on Schedule 8 attached hereto.
Upon the making of such filings, Secured Parties shall each have a first
priority perfected security interest in all of the Collateral of each Grantor
(other than the Colorado Collateral with respect to Parent) to the extent such
security interest can be perfected by the filing of a financing statement under
the Code. Upon the making of such filings, Secured Parties shall each have a
third priority perfected security interest in all of the Colorado Collateral to
the extent such security interest can be perfected by the filing of a financing
statement under the Code. All action by any Grantor necessary to protect and
perfect such security interest on each item of Collateral has been, or will
within the time period required by applicable law be, duly taken.
 
(e)           (i) Except for the Security Interests created hereby, such Grantor
is the sole holder of record and the legal and beneficial owner, free and clear
of all Liens other than Permitted Liens, of the Pledged Interests indicated on
Schedule 5 as being owned by such Grantor and, when acquired by such Grantor,
any Pledged Interests acquired after the date hereof; (ii) all of the Pledged
Interests are duly authorized, validly issued, fully paid and nonassessable and
the Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Stock of the Pledged Companies of such Grantor identified on
Schedule 5 hereto; (iii) such Grantor has the right and requisite authority to
pledge all Investment Related Property pledged by such Grantor to each Secured
Party as provided herein; (iv) all actions necessary to perfect, establish the
first priority of, or otherwise protect, Secured Parties’ respective Liens in
the Investment Related Property pledged hereunder, and the proceeds thereof,
have been duly taken, (A) upon the execution and delivery of this Agreement; (B)
upon the taking of possession by any Secured Party of any certificates
constituting the Pledged Interests, to the extent such Pledged Interests are
represented by certificates, together with undated powers endorsed in blank by
the applicable Grantor; (C) upon the filing of financing statements in the
applicable jurisdiction set forth on Schedule 8 attached hereto for such Grantor
with respect to the Pledged Interests of such Grantor that are not represented
by certificates, and (D) with respect to any Securities Accounts, upon the
delivery of Control Agreements with respect thereto; and (v) each Grantor has
delivered to and deposited with any Secured Party (or, with respect to any
Pledged Interests created or obtained after the date hereof, will deliver and
deposit in accordance with Sections 6(a) and 8 hereof) all certificates
representing the Pledged Interests now or hereafter owned by such Grantor to the
extent such Pledged Interests are represented by certificates, and undated
powers endorsed in blank with respect to such certificates. None of the Pledged
Interests owned or held by such Grantor has been issued or transferred in
violation of any securities registration, securities disclosure, or similar laws
of any jurisdiction to which such issuance or transfer may be subject.

 
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(f)           No consent, approval, authorization, or other order or other
action by, and no notice to or filing with, any Governmental Authority or any
other Person is required (i) for the grant of a Security Interest by such
Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by such Grantor, other
than such consents as have already been obtained, or (ii) for the exercise by
any Secured Party of the voting or other rights provided in this Agreement with
respect to Investment Related Property pledged hereunder or the remedies in
respect of the Collateral pursuant to this Agreement, except (A) as may be
required in connection with such disposition of Investment Related Property by
laws affecting the offering and sale of securities generally and (B) for any
consent that may be required for the assignment of any Intellectual Property
License that expressly provides that such Intellectual Property License is not
assignable (or is not assignable without the consent of the other party to such
Intellectual Property License).
 
6.           Covenants.  Each Grantor, jointly and severally, covenants and
agrees with each Secured Party that from and after the date of this Agreement
and until the date of termination of this Agreement in accordance with Section
24 hereof (but only to the extent the particular assets described in this
Section 6 constitute Collateral hereunder):
 
(a)           Possession of Collateral.  In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper, and if and to the extent that
perfection or priority of Secured Parties’ respective Security Interests is
dependent on or enhanced by possession, the applicable Grantor, immediately upon
the request of any Secured Party, shall execute such other documents and
instruments as shall be reasonably requested by such Secured Party or, if
applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to such Secured Party,
together with such undated powers endorsed in blank as shall be requested by
such Secured Party.
 
(b)           Chattel Paper.
 
(i)         Each Grantor shall take all steps reasonably necessary to grant each
Secured Party control of all Chattel Paper in accordance with the Code and all
“transferable records” as that term is defined in Section 16 of the Uniform
Electronic Purchase Act and Section 201 of the federal Electronic Signatures in
Global and National Commerce Act as in effect in any relevant jurisdiction; and
 
(ii)         If any Grantor retains possession of any Chattel Paper or
instruments (which retention of possession shall be subject to the extent
permitted hereby and by the Purchase Agreement), promptly upon the request of
any Secured Party, such Chattel Paper and instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby
are subject to the Security Interests of [names of Secured Parties].”

 
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(c)           Control Agreements.
 
(i)         Upon request of any Secured Party, each Grantor shall obtain an
authenticated Control Agreement from each bank maintaining a Deposit Account for
such Grantor; and
 
(ii)        Upon request of any Secured Party, each Grantor shall obtain
authenticated Control Agreements from each issuer of uncertificated securities,
securities intermediary, or commodities intermediary issuing or holding any
financial assets or commodities to or for such Grantor.
 
(d)           Letter-of-Credit Rights.  Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 2
Business Days after becoming a beneficiary) notify Secured Parties thereof and,
upon the request by any Secured Party, enter into a multi-party agreement with
Secured Parties and the issuing or confirming bank with respect to
letter-of-credit rights assigning such letter-of-credit rights to Secured
Parties and directing all payments thereunder to Secured Parties, all in form
and substance satisfactory to Secured Parties.
 
(e)           Commercial Tort Claims.  Each Grantor shall promptly (and in any
event within 2 Business Days of receipt thereof) notify Secured Parties in
writing upon incurring or otherwise obtaining a Commercial Tort Claim after the
date hereof and, upon request of any Secured Party, promptly amend Schedule 1 to
this Agreement to describe such after-acquired Commercial Tort Claim in a manner
that reasonably identifies such Commercial Tort Claim, and hereby authorizes the
filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claims, and agrees to do such other
acts or things deemed necessary or desirable by any Secured Party to give
Secured Parties a first priority, perfected security interest in any such
Commercial Tort Claim.
 
(f)           Government Contracts.  If any Account or Chattel Paper arises out
of a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, Grantors shall promptly (and in any event
within 5 Business Days of the creation thereof) notify Secured Parties thereof
in writing and execute any instruments or take any steps reasonably required by
any Secured Party in order that all moneys due or to become due under such
contract or contracts shall be assigned to Secured Parties, and shall provide
written notice thereof and take all other appropriate actions under the
Assignment of Claims Act or other applicable law to provide each Secured Party a
first-priority perfected security interest in such contract.
 
(g)           Intellectual Property.
 
(i)         Upon request of any Secured Party, in order to facilitate filings
with the United States Patent and Trademark Office and the United States
Copyright Office or any other applicable Governmental Authority, each Grantor
shall execute and deliver to Secured Parties one or more Copyright Security
Agreements, Trademark Security Agreements, or Patent Security Agreements to
further evidence Secured Parties’ respective Liens on such Grantor’s Copyrights,
Trademarks or Patents.

 
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(ii)         Each Grantor shall have the duty (A) to promptly sue for
infringement, misappropriation, or dilution with respect to its rights in
Intellectual Property and to recover any and all damages for such infringement,
misappropriation, or dilution, (B) to prosecute diligently any trademark
application or service mark application that is part of the Trademarks pending
as of the date hereof or hereafter until the termination of this Agreement, (C)
to prosecute diligently any patent application that is part of the Patents
pending as of the date hereof or hereafter until the termination of this
Agreement, and (D) to take all reasonable and necessary action to preserve and
maintain all of each Grantor’s Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings.  Each Grantor shall promptly file
an application with the United States Copyright Office for any material
Copyright that has not been registered with the United States Copyright Office.
Each Grantor shall promptly file an application with the United States Patent
and Trademark Office for any material Patent or material Trademark that has not
been registered with the United States Patent and Trademark Office. Any expenses
incurred in connection with the foregoing shall be borne by Grantors. Each
Grantor further agrees not to abandon any material Trademark, Patent, Copyright,
or Intellectual Property License.
 
(iii)         Grantors acknowledge and agree that Secured Parties shall have no
duties with respect to the Trademarks, Patents, Copyrights, or Intellectual
Property Licenses.  Without limiting the generality of this Section 6(g),
Grantors acknowledge and agree that no Secured Party shall be under any
obligation to take any steps necessary to preserve rights in the Trademarks,
Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any Secured Party may do so at its option from and after the occurrence and
during the continuance of an Event of Default, and all expenses incurred in
connection therewith (including fees and expenses of attorneys and other
professionals) shall be for the sole account of the Grantors and shall be deemed
to be Secured Obligations.
 
(h)           Investment Related Property.
 
(i)         If any Grantor shall receive or become entitled to receive any
Pledged Interests after the date hereof, it shall promptly (and in any event
within 2 Business Days of receipt thereof) identify such Pledged Interests in a
written notice to Secured Parties;
 
(ii)         All sums of money and property paid or distributed in respect of
the Investment Related Property pledged hereunder which are received by any
Grantor shall be held by the Grantors in trust for the benefit of Secured
Parties segregated from such Grantor’s other property, and such Grantor shall
deliver it forthwith to the Secured Parties in the exact form received;
 
(iii)         Each Grantor shall promptly deliver to Secured Parties a copy of
each notice or other communication received by it in respect of any Pledged
Interests;

 
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(iv)         No Grantor shall make or consent to any material amendment or other
material modification or waiver with respect to any Pledged Interests, Pledged
Operating Agreement, or Pledged Partnership Agreement, or enter into any
agreement or permit to exist any restriction with respect to any Pledged
Interests;
 
(v)         Each Grantor agrees that it will cooperate with Secured Parties in
obtaining all necessary approvals and making all necessary filings under
federal, state, local, or foreign law in connection with the Security Interests
on the Investment Related Property pledged hereunder or any sale or transfer
thereof; and
 
(vi)         As to all limited liability company or partnership interests issued
under any Pledged Operating Agreement or Pledged Partnership Agreement, each
Grantor hereby represents, warrants and covenants that the Pledged Interests
issued pursuant to such agreement (A) are not and shall not be dealt in or
traded on securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held
by such Grantor in a securities account. In addition, none of the Pledged
Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction.
 
(i)           Transfers and Other Liens.  Grantors shall not (i) sell, lease,
license, assign (by operation of law or otherwise), transfer or otherwise
dispose of, or grant any option with respect to, any of the Collateral, except
as expressly permitted by this Agreement and the other Transaction Documents, or
(ii) create or permit to exist any Lien upon or with respect to any of the
Collateral of any of Grantors, except for Permitted Liens.  The inclusion of
Proceeds in the Collateral shall not be deemed to constitute consent by any
Secured Party to any sale or other disposition of any of the Collateral except
as expressly permitted in this Agreement or the other Transaction Documents.
Notwithstanding anything contained in this Agreement to the contrary, Permitted
Liens (other than Permitted Liens securing Permitted Senior Indebtedness) shall
not be permitted with respect to any Pledged Interests.
 
(j)           Preservation of Existence.  Each Grantor shall maintain and
preserve its existence, rights and privileges, and become or remain duly
qualified and in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
 
(k)           Maintenance of Properties. Each Grantor shall maintain and
preserve all of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply at all times in all material respects with the
provisions of all leases to which it is a party as lessee or under which it
occupies property, so as to prevent any loss or forfeiture thereof or
thereunder.

 
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(l)           Maintenance of Insurance. Each Grantor shall maintain insurance
with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.
 
(m)           Other Actions as to Any and All Collateral.  Each Grantor shall
promptly (and in any event within 5 Business Days of acquiring or obtaining such
Collateral) notify Secured Parties in writing upon (i) acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Trademarks,
Patents, registered Copyrights, Intellectual Property Licenses, Investment
Related Property, Chattel Paper (electronic, tangible or otherwise), documents
(as defined in Article 9 of the Code), promissory notes (as defined in the Code,
or instruments (as defined in the Code) or (ii) any amount payable under or in
connection with any of the Collateral being or becoming evidenced after the date
hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of any Secured Party, promptly execute such
other documents, or if applicable, deliver such Chattel Paper, other documents
or certificates evidencing any Investment Related Property and do such other
acts or things deemed necessary or desirable by any Secured Party to protect
Secured Parties’ respective Security Interests therein.
 
7.           Relation to Other Transaction Documents.  The provisions of this
Agreement shall be read and construed with the Transaction Documents referred to
below in the manner so indicated.
 
(a)           Purchase Agreement and Notes. In the event of any conflict between
any provision in this Agreement and any provision in the Purchase Agreement or
Notes, such provision of the Purchase Agreement or Notes shall control, except
to the extent the applicable provision in this Agreement is more restrictive
with respect to the rights of Grantors or imposes more burdensome or additional
obligations on Grantors, in which event the applicable provision in this
Agreement shall control.
 
(b)           Patent, Trademark, Copyright Security Agreements.  The provisions
of the Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Copyright Security Agreements, Trademark Security
Agreements or the Patent Security Agreements shall limit any of the rights or
remedies of any Secured Party hereunder.

 
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8.           Further Assurances.
 
(a)           Each Grantor agrees that from time to time, at its own expense,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that any
Secured Party may reasonably request, in order to perfect and protect the
Security Interests granted or purported to be granted hereby or to enable any
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any of the Collateral.
 
(b)           Each Grantor authorizes the filing by any Secured Party of
financing or continuation statements, or amendments thereto, and such Grantor
will execute and deliver to such Secured Party such other instruments or
notices, as may be necessary or as such Secured Party may reasonably request, in
order to perfect and preserve the Security Interests granted or purported to be
granted hereby.
 
(c)           Each Grantor authorizes any Secured Party at any time and from
time to time to file, transmit, or communicate, as applicable, financing
statements and amendments (i) describing the Collateral as “all personal
property of debtor” or “all assets of debtor” or words of similar effect, (ii)
describing the Collateral as being of equal or lesser scope or with greater
detail, or (iii) that contain any information required by part 5 of Article 9 of
the Code for the sufficiency or filing office acceptance.
 
(d)           Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior
written consent of each Secured Party affected thereby, subject to such
Grantor’s rights under Section 9-509(d)(2) of the Code.
 
(e)           Each Grantor shall permit each Secured Party or its employees,
accountants, attorneys or agents, to examine and inspect any Collateral or any
other property of such Grantor at any time during ordinary business hours upon
reasonable advance notice.
 
9.           Secured Parties’ Right to Perform Contracts, Exercise Rights,
etc.  Upon the occurrence and during the continuance of an Event of Default, any
Secured Party (a) may proceed to perform any and all of the obligations of any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor’s rights under Intellectual
Property Licenses in connection with the enforcement of the Secured Party’s
rights hereunder, including the right to prepare for sale and sell any and all
Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request that
any Stock that is pledged hereunder be registered in the name of such Secured
Party or any of its nominees.

 
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10.           Secured Parties Appointed Attorney-in-Fact.  Each Grantor, on
behalf of itself and each Subsidiary of such Grantor, hereby irrevocably
appoints each Secured Party as the attorney-in-fact of such Grantor and each
Subsidiary. In the event any Grantor or any Subsidiary fails to execute or
deliver in a timely manner any Transaction Document or other agreement,
document, certificate or instrument which such Grantor or Subsidiary now or at
any time hereafter is required to execute or deliver pursuant to the terms of
the Purchase Agreement or any other Transaction Document, each Secured Party
shall have full authority in the place and stead of such Grantor or Subsidiary,
and in the name of such Grantor, such Subsidiary or otherwise, to execute and
deliver each of the foregoing. Without limitation of the foregoing, each Secured
Party shall have full authority in the place and stead of each Grantor and each
Subsidiary, and in the name of any such Grantor, any such Subsidiary or
otherwise, at such time as an Event of Default has occurred and is continuing,
to take any action and to execute any instrument which such Secured Party may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
 
(a)           to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with any Collateral of such Grantor or Subsidiary;
 
(b)           to receive and open all mail addressed to such Grantor or
Subsidiary and to notify postal authorities to change the address for the
delivery of mail to such Grantor or Subsidiary to that of such Secured Party;
 
(c)           to receive, indorse, and collect any drafts or other instruments,
documents, Negotiable Collateral or Chattel Paper;
 
(d)           to file any claims or take any action or institute any proceedings
which such Secured Party may deem necessary or desirable for the collection of
any of the Collateral of such Grantor or Subsidiary or otherwise to enforce the
rights of any Secured Party with respect to any of the Collateral;
 
(e)           to repair, alter, or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any Person obligated to such Grantor or
Subsidiary in respect of any Account of such Grantor or Subsidiary;
 
(f)           to use any labels, Patents, Trademarks, trade names, URLs, domain
names, industrial designs, Copyrights, customer lists, advertising matter or
other industrial or intellectual property rights, in advertising for sale and
selling Inventory and other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Grantor or Subsidiary; and
 
(g)           such Secured Party shall have the right, but shall not be
obligated, to bring suit in its own name to enforce the Trademarks, Patents,
Copyrights and Intellectual Property Licenses and, if such Secured Party shall
commence any such suit, the appropriate Grantor or Subsidiary shall, at the
request of such Secured Party, do any and all lawful acts and execute any and
all proper documents reasonably required by such Secured Party in aid of such
enforcement.
 
To the extent permitted by law, each Grantor hereby ratifies, for itself and
each of its Subsidiaries, all that such attorney-in-fact shall lawfully do or
cause to be done by virtue hereof.  This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.

 
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11.           Secured Parties May Perform.  If any Grantor fails to perform any
agreement contained herein, any Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of such Secured
Party incurred in connection therewith shall be payable, jointly and severally,
by Grantors.
 
12.           Secured Parties’ Duties; Bailee for Perfection.  The powers
conferred on Secured Parties hereunder are solely to protect the Secured
Parties’ respective interests in the Collateral and shall not impose any duty
upon any Secured Party in favor of any Grantor or any other Secured Party to
exercise any such powers.  Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, no Secured Party shall have any duty to any Grantor or any other
Secured Party as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.  A Secured Party shall be deemed to have exercised reasonable care
in the custody and preservation of any Collateral in its actual possession if
such Collateral is accorded treatment substantially equal to that which such
Secured Party accords its own property.  Each Secured Party agrees that, with
respect to any Collateral at any time or times in its possession and in which
any other Secured Party has a Lien, the Secured Party in possession of any such
Collateral shall be the bailee of each other Secured Party solely for purposes
of perfecting (to the extent not otherwise perfected) each other Secured Party’s
Lien in such Collateral, provided that no Secured Party shall be obligated to
obtain or retain possession of any such Collateral.  Without limiting the
generality of the foregoing, Secured Parties and Grantors hereby agree that any
Secured Party that is in possession of any Collateral at such time as the
Secured Obligations owing to such Secured Party have been paid in full may
re-deliver such Collateral to the applicable Grantor or, if requested by any
Secured Party prior to such re-delivery, may deliver such Collateral (unless
otherwise restricted by applicable law or court order and subject in all events
to the receipt of an indemnification of all liabilities arising from such
delivery) to the requesting Secured Party, without recourse to or representation
or warranty by the Secured Party in such possession.
 
13.           Collection of Accounts, General Intangibles and Negotiable
Collateral. At any time upon the occurrence and during the continuation of an
Event of Default, any Secured Party may (a) notify Account Debtors of any
Grantor that the Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to such Secured Party or that such Secured Party
has a security interest therein, and (b) collect the Accounts, General
Intangibles and Negotiable Collateral directly, and any collection costs and
expenses shall constitute part of the Secured Obligations.
 
14.           Disposition of Pledged Interests by Secured Party.  None of the
Pledged Interests existing as of the date of this Agreement are, and none of the
Pledged Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal, state or other securities
laws of the United States or any other jurisdiction, and disposition thereof
after an Event of Default may be restricted to one or more private (instead of
public) sales in view of the lack of such registration.  Each Grantor
understands that in connection with such disposition, any Secured Party may
approach only a restricted number of potential purchasers and further
understands that a sale under such circumstances may yield a lower price for the
Pledged Interests than if the Pledged Interests were registered and qualified
pursuant to federal, state and other securities laws and sold on the open
market.  Each Grantor, therefore, agrees that:  (a) if a Secured Party  shall,
pursuant to the terms of this Agreement, sell or cause the Pledged Interests or
any portion thereof to be sold at a private sale, such Secured Party shall have
the right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice and
the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the
Pledged Interest or any portion thereof for sale and as to the best price
reasonably obtainable at the private sale thereof; and (b) such reliance shall
be conclusive evidence that such Secured Party has handled the disposition in a
commercially reasonable manner.

 
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15.           Voting Rights.
 
(a)           Upon the occurrence and during the continuation of an Event of
Default, (i) any Secured Party may, at its option, and with 2 Business Days
prior notice to any Grantor, and in addition to all rights and remedies
available to Secured Parties under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual
rights in respect of the Pledged Interests owned by such Grantor, but under no
circumstances is any Secured Party obligated by the terms of this Agreement to
exercise such rights, and (ii) if such Secured Party duly exercises its right to
vote any of such Pledged Interests, each Grantor hereby appoints such Secured
Party as such Grantor’s true and lawful attorney-in-fact and IRREVOCABLE PROXY
to vote such Pledged Interests in any manner that such Secured Party deems
advisable for or against all matters submitted or which may be submitted to a
vote of shareholders, partners or members, as the case may be.  The
power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.
 
(b)           For so long as any Grantor shall have the right to vote the
Pledged Interests owned by it, such Grantor covenants and agrees that it will
not, without the prior written consent of Secured Parties, vote or take any
consensual action with respect to such Pledged Interests which would materially
or adversely affect the rights of Secured Parties exercising the voting rights
owned by such Grantor or the value of the Pledged Interests.
 
16.           Remedies.  Upon the occurrence and during the continuance of an
Event of Default:

 
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(a)           Any Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein, in the other
Transaction Documents, or otherwise available to it, all the rights and remedies
of a secured party on default under the Code or any other applicable law.
Without limiting the generality of the foregoing, each Grantor expressly agrees
that, in any such event, any Secured Party without any demand, advertisement, or
notice of any kind (except a notice specified below of time and place of public
or private sale) to or upon any Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the Code or by any other applicable law), may take
immediate possession of all or any portion of the Collateral and (i) require
Grantors to, and each Grantor hereby agrees that it will at its own expense and
upon request of such Secured Party forthwith, assemble all or part of the
Collateral as directed by such Secured Party and make it available to such
Secured Party at one or more locations where such Grantor regularly maintains
Inventory, and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of such Secured Party’s offices or elsewhere, for cash, on credit, and
upon such other terms as such Secured Party may deem commercially
reasonable.  Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least 10 days notice to any Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code.  No Secured Party shall be obligated to make any sale
of Collateral regardless of notice of sale having been given.  Any Secured Party
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
 
(b)           Each Secured Party is hereby granted a license or other right to
use, without liability for royalties or any other charge, each Grantor’s labels,
Patents, Copyrights, rights of use of any name, trade secrets, trade names,
Trademarks, service marks and advertising matter, URLs, domain names, industrial
designs, other industrial or intellectual property or any property of a similar
nature, whether owned by any Grantor or with respect to which any Grantor has
rights under license, sublicense, or other agreements (but only to the extent
(i) such license, sublicense or agreement does not prohibit such use by such
Secured Party and (ii) such Grantor will not be in default under such license,
sublicense, or other agreement as a result of such use by such Secured Party),
as it pertains to the Collateral, in preparing for sale, advertising for sale
and selling any Collateral, and each Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of such Secured Party.
 
(c)           Any cash held by any Secured Party as Collateral and all proceeds
received by any Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied
against the Secured Obligations in the order set forth in Section 17 hereof. In
the event the proceeds of Collateral are insufficient to indefeasibly satisfy
and discharge all of the Secured Obligations in full, each Grantor shall remain
jointly and severally liable for any such deficiency.
 
(d)           Each Grantor hereby acknowledges that the Secured Obligations
arose out of a commercial transaction, and agrees that if an Event of Default
shall occur and be continuing any Secured Party shall have the right to an
immediate writ of possession without notice of a hearing. Each Secured Party
shall have the right to the appointment of a receiver for the properties and
assets of each Grantor, and each Grantor hereby consents to such rights and such
appointment and hereby waives any objection such Grantor may have thereto or the
right to have a bond or other security posted by any Secured Party.

 
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(e)           Notwithstanding anything in this Agreement to the contrary, each
Secured Party agrees that it will not exercise any remedy provided for under
this Agreement with respect to all or any portion of the Collateral unless such
Secured Party is a Permitted Secured Party (provided that the foregoing shall
not prevent any Secured Party from commencing or participating in any Insolvency
Proceeding or taking any action (other than with respect to the Collateral) to
enforce the payment or performance of any Grantors’ obligations under any of the
Notes, Guaranties or other Transaction Documents).  This Section 16(e) is not
intended to confer any rights or benefits upon Grantors, or any of them, or any
other Person except Secured Parties, and no Person (including any or all
Grantors) other than Secured Parties shall have any right to enforce any of the
provisions of this Section 16(e). As between Grantors, or any of them, and any
Secured Party, any action that such Secured Party may take under this Agreement
shall be conclusively presumed to have been authorized and approved by the other
Secured Parties.
 
17.           Priority of Liens; Application of Proceeds of Collateral.  Each
Secured Party hereby acknowledges and agrees that, notwithstanding the time or
order of the filing of any financing statement or other registration or document
with respect to the Collateral and the Security Interests, or any provision of
this Agreement, any other Security Document, the Code or other applicable law,
solely as amongst the Secured Parties, the separate Security Interests of the
Secured Parties shall have the same rank and priority; provided, that, the
foregoing shall not apply to any Security Interest of a Secured Party that is
void or voidable as  a matter of law.  In furtherance thereof, all proceeds of
Collateral received by any Secured Party shall be applied as follows:
 
(a)           first, ratably to pay any expenses due to any of the Secured
Parties (including, without limitation, the reasonable costs and expenses paid
or incurred by any Secured Party to correct any default under or enforce any
provision of the Transaction Documents, or after the occurrence of any Event of
Default in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral, or
any portion thereof, irrespective of whether a sale is consummated) or
indemnities then due to any of the Secured Parties under the Transaction
Documents, until paid in full;
 
(b)           second, ratably to pay any fees or premiums then due to any of the
Secured Parties under the Transaction Documents, until paid in full;
 
(c)           third, ratably to pay interest due in respect of the Secured
Obligations then due to any of the Secured Parties, until paid in full;
 
(d)           fourth, ratably to pay the principal amount of all Secured
Obligations then due to any of the Secured Parties, until paid in full;
 
(e)           fifth, ratably to pay any other Secured Obligations then due to
any of the Secured Parties; and
 
(f)           sixth, to Grantors or such other Person entitled thereto under
applicable law.

 
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18.           Remedies Cumulative.  Each right, power, and remedy of any Secured
Party as provided for in this Agreement or in any other Transaction Document or
now or hereafter existing at law or in equity or by statute or otherwise shall
be cumulative and concurrent and shall be in addition to every other right,
power, or remedy provided for in this Agreement or in the other Transaction
Documents or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by any Secured Party,
of any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by such Secured Party of any or all such other
rights, powers, or remedies.
 
19.           Marshaling. No Secured Party shall be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising.  To the extent that it lawfully may, each Grantor hereby agrees that
it will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of any Secured Party’s rights and
remedies under this Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, each Grantor hereby irrevocably waives the benefits of all such laws.
 
20.           Acknowledgment.
 
(a)           Each Secured Party hereby agrees and acknowledges that no other
Secured Party has agreed to act for it as an administrative or collateral agent,
and each Secured Party is and shall remain solely responsible for the
attachment, perfection and priority of all Liens created by this Agreement or
any other Security Document in favor of such Secured Party.  No Secured Party
shall have by reason of this Agreement or any other Transaction Document an
agency or fiduciary relationship with any other Secured Party.  No Secured Party
(which term, as used in this sentence, shall include reference to each Secured
Party’s officers, directors, employees, attorneys, agents and affiliates and to
the officers, directors, employees, attorneys and agents of such Secured Party’s
affiliates) shall: (i) have any duties or responsibilities except those
expressly set forth in this Agreement and the other Security Documents or
(ii) be required to take, initiate or conduct any enforcement action (including
any litigation, foreclosure or collection proceedings hereunder or under any of
the other Security Documents).  Without limiting the foregoing, no Secured Party
shall have any right of action whatsoever against any other Secured Party as a
result of such Secured Party acting or refraining from acting hereunder or under
any of the Security Documents except as a result and to the extent of losses
caused by such Secured Party’s actual gross negligence or willful misconduct (it
being understood and agreed by each Secured Party that the delivery by any
Significant Secured Party of one or more Veto Notices shall not be deemed to be
or construed as gross negligence or willful misconduct on the part of the
Secured Party delivering any such Veto Notice).  No Secured Party assumes any
responsibility for any failure or delay in performance or breach by any Grantor
or any Secured Party of its obligations under this Agreement or any other
Transaction Document.  No Secured Party makes to any other Secured Party any
express or implied warranty, representation or guarantee with respect to any
Secured Obligations, Collateral, Transaction Document or Grantor.  No Secured
Party nor any of its officers, directors, employees, attorneys or agents shall
be responsible to any other Secured Party or any of its officers, directors,
employees, attorneys or agents for:  (i) any recitals, statements, information,
representations or warranties contained in any of the Transaction Documents or
in any certificate or other document furnished pursuant to the terms hereof;
(ii) the execution, validity, genuineness, effectiveness or enforceability of
any of the Transaction Documents; (iii) the validity, genuineness,
enforceability, collectability, value, sufficiency or existence of any
Collateral, or the attachment, perfection or priority of any Lien therein; or
(iv) the assets, liabilities, financial condition, results of operations,
business, creditworthiness or legal status of any Grantor or any Account
Debtor.  No Secured Party nor any of its officers, directors, employees,
attorneys or agents shall have any obligation to any other Secured Party to
ascertain or inquire into the existence of any default or Event of Default, the
observance or performance by any Grantor of any of the duties or agreements of
such Grantor under any of the Transaction Documents or the satisfaction of any
conditions precedent contained in any of the Transaction Documents.

 
22

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(b)           Each Secured Party hereby acknowledges and represents that it has,
independently and without reliance upon any other Secured Party, and based upon
such documents, information and analyses as it has deemed appropriate, made its
own credit analysis of each Grantor and its own decision to enter into the
Transaction Documents and to purchase the Notes and Warrants, and each Secured
Party has made such inquiries concerning the Transaction Documents, the
Collateral and each Grantor as such Secured Party feels necessary and
appropriate, and has taken such care on its own behalf as would have been the
case had it entered into the Transaction Documents without any other Secured
Party.  Each Secured Party hereby further acknowledges and represents that the
other Secured Parties have not made any representations or warranties to it
concerning any Grantor, any of the Collateral or the legality, validity,
sufficiency or enforceability of any of the Transaction Documents.  Each Secured
Party also hereby acknowledges that it will, independently and without reliance
upon the other Secured Parties, and based upon such financial statements,
documents and information as it deems appropriate at the time, continue to make
and rely upon its own credit decisions in taking or refraining to take any other
action under this Agreement or the Transaction Documents.  No Secured Party
shall have any duty or responsibility to provide any other Secured Party with
any notices, reports or certificates furnished to such Secured Party by any
Grantor or any credit or other information concerning the affairs, financial
condition, business or assets of any Grantor (or any of its affiliates) which
may come into possession of such Secured Party.

 
23

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21.           Indemnity and Expenses.
 
(a)           Without limiting any obligations of the Company under the Purchase
Agreement, each Grantor agrees to indemnify all Secured Parties from and against
all claims, lawsuits and liabilities (including attorneys’ fees) arising out of
or resulting from this Agreement (including enforcement of this Agreement) or
any other Transaction Document, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking
indemnification as determined by a final non-appealable order of a court of
competent jurisdiction. This provision shall survive the termination of this
Agreement and the Transaction Documents and the indefeasible satisfaction and
discharge of all the Secured Obligations in full. Notwithstanding the foregoing,
no Grantor shall indemnify (unless otherwise required by the terms of any of the
other Transaction Documents) any of the Secured Parties from claims, lawsuits or
liabilities that are (i) solely between one or more Secured Parties, on the one
hand, and one or more Secured Parties, on the other hand, and (ii) solely
involve the relative rights and obligations of the Secured Parties against each
other (and not any of the Grantors) under this Agreement.
 
(b)           Grantors, jointly and severally, shall, upon demand, pay to each
Secured Party all of the costs and expenses which such Secured Party actually
incurs in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or, upon the occurrence and during
the continuance of an Event of Default, the sale of, collection from, or other
realization upon, any of the Collateral in accordance with this Agreement and
the other Transaction Documents, (iii) the exercise or enforcement of any of the
rights of such Secured Party hereunder or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
 
22.           Merger, Amendments; Etc.  THIS AGREEMENT, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES SOLELY
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.  No
waiver of any provision of this Agreement, and no consent to any departure by
any of Grantors herefrom, shall in any event be effective unless the same shall
be in writing and signed by each Secured Party, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No amendment of any provision of this Agreement shall be
effective unless the same shall be in writing and signed by each Secured Party
and each Grantor to which such amendment applies.
 
23.           Addresses for Notices. All notices and other communications
provided for hereunder (a) shall be given in the form and manner set forth in
the Purchase Agreement and (b) shall be delivered, (i) in the case of notice to
any Grantor, by delivery of such notice to Parent at Parent’s address specified
in the Purchase Agreement or at such other address as shall be designated by
Parent in a written notice to each of the Secured Parties in accordance with the
provisions thereof, and (ii) in the case of notice to any Secured Party, by
delivery of such notice to such Secured Party at its address specified in the
Purchase Agreement or at such other address as shall be designated by such
Secured Party in a written notice to Parent and each other Secured Party in
accordance with the provisions thereof.

 
24

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24.           Separate, Continuing Security Interests; Assignments under
Transaction Documents.  This Agreement shall create a separate, continuing
security interest in the Collateral in favor of each Secured Party and shall (a)
remain in full force and effect until the Secured Obligations have been
indefeasibly satisfied and discharged in full in accordance with the provisions
of the Transaction Documents, (b) be binding upon each of Grantors, and their
respective permitted successors and permitted assigns, and (c) inure to the
benefit of, and be enforceable by, the Secured Parties and their respective
successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any Secured Party may, in accordance with the provisions
of the Transaction Documents, assign or otherwise transfer all or any portion of
its rights and obligations under the Transaction Documents to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such Secured Party herein or otherwise. Upon the
indefeasible satisfaction and discharge in full of the Secured Obligations in
accordance with the provisions of the Transaction Documents, the Security
Interests granted hereby shall terminate and all rights to the Collateral shall
revert to Grantors or any other Person entitled thereto. At such time, each
Secured Party will authorize the filing of appropriate termination statements to
terminate such Security Interests.  No transfer or renewal, extension,
assignment, or termination of this Agreement or any other Transaction Document,
or any other instrument or document executed and delivered by any Grantor to any
Secured Party nor any additional loans made by any Secured Party to any Grantor,
nor the taking of further security, nor the retaking or re-delivery of the
Collateral to Grantors, or any of them, by any Secured Party, nor any other act
of Secured Parties, or any of them, shall release any of Grantors from any
obligation, except a release or discharge executed in writing by all Secured
Parties.  No Secured Party shall by any act, delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder, unless such
waiver is in writing and signed by such Secured Party and then only to the
extent therein set forth.  A waiver by any Secured Party of any right or remedy
on any occasion shall not be construed as a bar to the exercise of any such
right or remedy which such Secured Party would otherwise have had on any other
occasion.
 
25.           Governing Law; Jurisdiction; Service of Process; Jury Trial.  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 jurisdictions) (other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law) that would
cause the application of the laws of any jurisdictions other than the State of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York, New York 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper; provided, however, any
suit seeking enforcement against any Collateral or other property may be
brought, at any Secured Party’s option, in the courts of any jurisdiction where
such Secured Party elects to bring such action or where such Collateral or other
property may be found.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Without limitation of
the foregoing, each Grantor other than Parent hereby irrevocably appoints Parent
as such Grantor’s agent for purposes of receiving and accepting any service of
process hereunder or under any of the other Security Documents.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
 
 
25

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26.           Intercreditor Matters. Notwithstanding anything to the contrary
contained herein, the rights and remedies of the Secured Parties, and the
obligations of Parent, as set forth herein are subject to the terms and
conditions of the Subordination Agreement so long as it is in effect. Without
limiting the foregoing, to the extent that Parent is required to deliver,
endorse, pay over or otherwise provide possession or control over any of the
Colorado Collateral set forth herein to the Secured Parties hereunder, such
obligations shall be subject to the rights (if any) of the Senior Lender to such
Colorado Collateral, and subject to the terms and conditions of the
Subordination Agreement so long as it is in effect. The limitations and
qualifications set forth in this paragraph are solely to recognize the rights
and remedies of the Senior Lender with respect to the Colorado Collateral and
shall not otherwise impair the pledge and security interests granted by the
Grantors to the Secured Parties pursuant to this Agreement. The parties
acknowledge that to the extent that the Subordination Agreement is no longer in
effect, the limitations and qualifications set forth in this paragraph shall be
of no further force or effect.
 
27.           Miscellaneous.
 
(a)           This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof. Any party delivering an executed counterpart of this
Agreement by facsimile or other electronic method of transmission also shall
deliver an original executed counterpart of this Agreement but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. The foregoing shall apply
to each other Security Document mutatis mutandis.
 
(b)           Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
 
(c)           Headings used in this Agreement are for convenience only and shall
not be used in connection with the interpretation of any provision hereof.
 
(d)           The pronouns used herein shall include, when appropriate, either
gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
 
(e)           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.  For clarification
purposes, the Recitals are part of this Agreement.

 
26

--------------------------------------------------------------------------------

 
 
(f)           Unless the context of this Agreement or any other Transaction
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and  “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Transaction Document refer to this Agreement or such other
Transaction Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Transaction Document, as the case may
be.  Section, subsection, clause, schedule, and exhibit references herein are to
this Agreement unless otherwise specified. Any reference in this Agreement or in
any other Transaction Document to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
or in any other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible (i) payment in full in cash and
discharge or (ii) other satisfaction in accordance with the terms of the
Transaction Documents and discharge, in each case, of all Secured Obligations in
full. Any reference herein to any Person shall be construed to include such
Person’s permitted successors and permitted assigns. Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
 
(g)           All dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“US Dollars”), and all
amounts owing under this Agreement and all other Transaction Documents shall be
paid in US Dollars. All amounts denominated in other currencies shall be
converted in the US Dollar equivalent amount in accordance with the Exchange
Rate on the date of calculation. “Exchange Rate” means, in relation to any
amount of currency to be converted into US Dollars pursuant to this Agreement,
the US Dollar exchange rate as published in the Wall Street Journal on the
relevant date of calculation.
 
[signature pages follow]

 
27

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement
by and through their duly authorized officers, as of the day and year first
above written.
 
GRANTORS:
MAGNUM D’OR RESOURCES, INC., a Nevada corporation
     
By:
   
Name:
   
Title:
       
MAGNUM RECYCLING USA, INC., a Nevada
corporation
     
By:
   
Name:
   
Title:
       
MAGNUM ENGINEERING INTERNATIONAL,
INC., a Delaware corporation
     
By:
   
Name:
   
Title:
 

 
 

--------------------------------------------------------------------------------

 
 
SECURED PARTIES:
CRANSHIRE CAPITAL, L.P.
     
By: Downsview Capital, Inc.
 
Its: General Partner
         
By: Mitchell P. Kopin
 
Its: President
     
[OTHER SECURED PARTIES]

 
 

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SCHEDULE 1
 
COMMERCIAL TORT CLAIMS
 
None.

 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE 2
 
COPYRIGHTS
 
None.

 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE 3
 
INTELLECTUAL PROPERTY LICENSES
 
None.

 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE 4
 
PATENTS
 
None.

 
 

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SCHEDULE 5
 
PLEDGED COMPANIES
 
Name of Pledgor
 
Name of Pledged Company
 
Certificate
No.
   
Class of
Shares
   
Percentage
of Class
 
Magnum D’Or Resources, Inc.
 
Magnum Recycling USA, Inc.
 
C-1
      100       100 %
Magnum D’Or Resources, Inc.
 
Magnum Engineering International, Inc.
 
C-1
      100       100 %
Magnum D’Or Resources, Inc.
 
Magnum Recycling Canada, Inc.
 
AO-1
      100       100 %

 
 

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SCHEDULE 6
 
TRADEMARKS
 
None.

 
 

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SCHEDULE 7
 
REAL PROPERTY
 
Owned Real Property
 
Magnum D’Or Resources, Inc.
12311 WCR 41
Hudson, CO  80642
 
Leased Real Property
 
Magnum D’Or Resources, Inc.
110 E. Broward Blvd., Ste 1700
Ft Lauderdale, FL, 33301

Chief Executive Office/Principal Place of Business:

Magnum D’Or Resources, Inc.
110 E. Broward Blvd., Ste 1700
Ft Lauderdale, FL, 33301

Magnum Recycling USA, Inc.
12311 Weld County Road 41
Hudson, Colorado 80642

Magnum Engineering International, Inc.
110 E. Broward Blvd., Ste 1700
Ft Lauderdale, FL, 33301

Other Locations of Collateral:

None

 
 

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SCHEDULE 8
 
LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS
 
Grantor
 
Jurisdictions
     
Magnum D’Or Resources, Inc.
 
Nevada Secretary of State
     
Magnum Recycling USA, Inc.
 
Nevada Secretary of State
     
Magnum Engineering International, Inc.
 
Delaware Secretary of State

 
 

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EXHIBIT A
 
COPYRIGHT SECURITY AGREEMENT
 
This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made
this [__] day of December 2009, by the Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), in favor of the Secured Parties under and as defined in the
below-described Security Agreement.
 
RECITALS
 
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
December 21, 2009 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the “Purchase
Agreement”), by and among MAGNUM D’OR RESOURCES, INC., a Nevada corporation
(“Parent”), and the Secured Parties, Parent has agreed to sell, and Secured
Parties have agreed to purchase, severally and not jointly, certain Notes and
Warrants; and
 
WHEREAS, in order to induce the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Purchase Agreement,
Grantors have executed and delivered to Secured Parties that certain Security
Agreement of even date herewith (including all annexes, exhibits or schedules
thereto, as from time to time amended, restated, supplemented or otherwise
modified, the “Security Agreement”); and
 
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Parties this Copyright Security Agreement.
 
AGREEMENTS
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:
 
1.           DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement.
 
2.           GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor
hereby grants to each Secured Party a continuing first priority security
interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Copyright Collateral”):
 
(a)           all of each Grantor’s Copyrights and Copyright Intellectual
Property Licenses to which it is a party including those referred to on Schedule
I hereto;
 
(b)           all reissues, continuations or extensions of the foregoing; and
 
(c)           all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement or
dilution of any Copyright or any Copyright licensed under any Intellectual
Property License.

 
 

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Notwithstanding the foregoing, Parent hereby grants to each Secured Party a
continuing third priority security interest in all of Parent’s right, title and
interest in, to and under all Copyright Collateral that constitutes Colorado
Collateral.
 
3.           SECURITY FOR OBLIGATIONS.  This Copyright Security Agreement and
the Security Interests created hereby secures the payment and performance of all
the Secured Obligations, whether now existing or arising hereafter. Without
limiting the generality of the foregoing, this Copyright Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Secured Parties,
or any of them, whether or not they are unenforceable or not allowable due to
the existence of an Insolvency Proceeding involving any Grantor.
 
4.           SECURITY AGREEMENT. The security interests granted pursuant to this
Copyright Security Agreement are granted in conjunction with the security
interests granted to Secured Parties pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Parties with respect to their respective security interests in the Copyright
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
 
5.           AUTHORIZATION TO SUPPLEMENT. To the extent required under the
Security Agreement, Grantors shall give Secured Parties prompt notice in writing
of any additional copyright registrations or applications therefor after the
date hereof. Grantors hereby authorize Secured Parties unilaterally to modify
this Agreement by amending Schedule I to include any future registered
copyrights or applications therefor of Grantors.  Notwithstanding the foregoing,
no failure to so modify this Copyright Security Agreement or amend Schedule I
shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on
Schedule I.
 
6.           COUNTERPARTS.  This Copyright Security Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof.  In proving this Copyright Security
Agreement or any other Transaction Document in any judicial proceedings, it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom such enforcement is sought.
 
 
2

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7.           CONSTRUCTION.  Unless the context of this Copyright Security
Agreement or any other Transaction Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are not limiting, and
the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Copyright Security Agreement or any other
Transaction Document refer to this Copyright Security Agreement or such other
Transaction Document, as the case may be, as a whole and not to any particular
provision of this Copyright Security Agreement or such other Transaction
Document, as the case may be.  Section, subsection, clause, schedule, and
exhibit references herein are to this Copyright Security Agreement unless
otherwise specified. Any reference in this Copyright Security Agreement or in
any other Transaction Document to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
or in any other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible (i) payment in full in cash and
discharge or (ii) other satisfaction in accordance with the terms of the
Transaction Documents and discharge, in each case, of all Secured Obligations in
full. Any reference herein to any Person shall be construed to include such
Person’s permitted successors and permitted assigns. Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The language used in this Copyright Security
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. For clarification purposes, the Recitals are part of this Copyright
Security Agreement.
 
8.           TERMINATION. This Copyright Security Agreement shall automatically
terminate upon the indefeasible satisfaction and discharge of all of the Secured
Obligations in full.
 
[signature page follows]
 
 
2

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IN WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.
 
GRANTORS:
MAGNUM D’OR RESOURCES, INC., a Nevada corporation
       
By:
   
Name:
   
Title:
         
MAGNUM RECYCLING USA, INC., a Nevada corporation
       
By:
   
Name:
     
Title:
          
MAGNUM ENGINEERING INTERNATIONAL, INC., a Delaware corporation
       
By:
   
Name:
   
Title:
 

 
COPYRIGHT SECURITY AGREEMENT
 
 
 

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SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
 
Copyright Registrations
 
Grantor
 
Country
 
Copyright
 
Registration No.
 
Registration
Date
                                                                               
                                             

 
Copyright Licenses
 
COPYRIGHT SECURITY AGREEMENT
 
 
 

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EXHIBIT B
 
PATENT SECURITY AGREEMENT
 
This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
[___] day of December 2009, by the Grantors listed on the signature pages hereof
(collectively, jointly and severally, “Grantors” and each individually
“Grantor”), in favor of the Secured Parties under and as defined in the
below-described Security Agreement.
 
RECITALS
 
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
December 21, 2009 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the “Purchase
Agreement”), by and among MAGNUM D’OR RESOURCES, INC., a Nevada corporation
(“Parent”), and the Secured Parties, Parent has agreed to sell, and Secured
Parties have agreed to purchase, severally and not jointly, certain Notes and
Warrants; and
 
WHEREAS, in order to induce the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Purchase Agreement,
Grantors have executed and delivered to Secured Parties that certain Security
Agreement of even date herewith (including all annexes, exhibits or schedules
thereto, as from time to time amended, restated, supplemented or otherwise
modified, the “Security Agreement”); and
 
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Parties this Patent Security Agreement.
 
AGREEMENTS
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:
 
1.           DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement.
 
2.           GRANT OF SECURITY INTEREST IN PATENT COLLATERAL.  Each Grantor
hereby grants to each Secured Party a continuing first priority security
interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Patent Collateral”):
 
(a)           all of its Patents and Patent Intellectual Property Licenses to
which it is a party including those referred to on Schedule I hereto;
 
(b)           all reissues, continuations or extensions of the foregoing; and
 
(c)           all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement or
dilution of any Patent or any Patent licensed under any Intellectual Property
License.
 
 
 

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Notwithstanding the foregoing, Parent hereby grants to each Secured Party a
continuing third priority security interest in all of Parent’s right, title and
interest in, to and under all Patent Collateral that constitutes Colorado
Collateral.
 
3.           SECURITY FOR OBLIGATIONS.  This Patent Security Agreement and the
Security Interests created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Patent Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Parties, or any of them,
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.
 
4.           SECURITY AGREEMENT.  The security interests granted pursuant to
this Patent Security Agreement are granted in conjunction with the security
interests granted to Secured Parties pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Parties with respect to their respective security interests in the Patent
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
 
5.           AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to
any new patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. To the extent required under the Security Agreement, Grantors shall
give prompt notice in writing to Secured Parties with respect to any such new
patent rights. Without limiting each Grantor’s obligations under this Section 5,
Grantors hereby authorize Secured Parties unilaterally to modify this Agreement
by amending Schedule I to include any such new patent rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this Patent
Security Agreement or amend Schedule I shall in any way affect, invalidate or
detract from any Secured Party’s continuing security interest in all Collateral,
whether or not listed on Schedule I.
 
6.           COUNTERPARTS.  This Patent Security Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof. In proving this Patent Security
Agreement or any other Transaction Document in any judicial proceedings, it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom such enforcement is sought.
 
 
2

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7.           CONSTRUCTION.  Unless the context of this Patent Security Agreement
or any other Transaction Document clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural, the
terms “includes” and  “including” are not limiting, and the term “or” has,
except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Patent Security Agreement or any other Transaction
Document refer to this Patent Security Agreement or such other Transaction
Document, as the case may be, as a whole and not to any particular provision of
this Patent Security Agreement or such other Transaction Document, as the case
may be. Section, subsection, clause, schedule, and exhibit references herein are
to this Patent Security Agreement unless otherwise specified.  Any reference in
this Patent Security Agreement or in any other Transaction Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein).  Any reference herein or in any other Transaction Document to
the satisfaction in full of the Secured Obligations shall mean the indefeasible
(i) payment in full in cash and discharge or (ii) other satisfaction in
accordance with the terms of the Transaction Documents and discharge, in each
case, of all Secured Obligations in full. Any reference herein to any Person
shall be construed to include such Person’s permitted successors and permitted
assigns. Any requirement of a writing contained herein or in any other
Transaction Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein. The language
used in this Patent Security 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. For clarification purposes, the
Recitals are part of this Patent Security Agreement.
 
8.           TERMINATION. This Patent Security Agreement shall automatically
terminate upon the indefeasible satisfaction and discharge of all of the Secured
Obligations in full.
 
[signature pages follow]
 
 
3

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IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
 
GRANTORS:
MAGNUM D’OR RESOURCES, INC., a Nevada corporation
       
By:
   
Name:
   
Title:
         
MAGNUM RECYCLING USA, INC., a Nevada corporation
       
By:
   
Name:
   
Title:
         
MAGNUM ENGINEERING INTERNATIONAL, INC., a Delaware corporation
       
By:
   
Name:
   
Title:
 

 
 
4

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EXHIBIT C

TRADEMARK SECURITY AGREEMENT
 
This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made
this [___] day of December 2009, by the Grantors listed on the signature pages
hereof (collectively, jointly and severally, “Grantors” and each individually
“Grantor”), in favor of the Secured Parties under and as defined in the
below-described Security Agreement.
 
RECITALS
 
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
December 21, 2009 (as amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the “Purchase
Agreement”), by and among MAGNUM D’OR RESOURCES, INC., a Nevada corporation
(“Parent”), and the Secured Parties, Parent has agreed to sell, and Secured
Parties have agreed to purchase, severally and not jointly, certain Notes and
Warrants; and
 
WHEREAS, in order to induce the Secured Parties to purchase, severally and not
jointly, the Notes and Warrants as provided for in the Purchase Agreement,
Grantors have executed and delivered to Secured Parties that certain Security
Agreement of even date herewith (including all annexes, exhibits or schedules
thereto, as from time to time amended, restated, supplemented or otherwise
modified, the “Security Agreement”); and
 
WHEREAS, pursuant to the Security Agreement, Grantors are required to execute
and deliver to Secured Parties this Trademark Security Agreement.
 
AGREEMENTS
 
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as follows:
 
1.           DEFINED TERMS.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Security Agreement.
 
2.           GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL.  Each Grantor
hereby grants to each Secured Party a continuing first priority security
interest in all of such Grantor’s right, title and interest in, to and under the
following, whether presently existing or hereafter created or acquired
(collectively, the “Trademark Collateral”):
 
(a)           all of its Trademarks and Trademark Intellectual Property Licenses
to which it is a party including those referred to on Schedule I hereto;
 
(b)           all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and other
General Intangibles with respect to the foregoing;
 
 
 

--------------------------------------------------------------------------------

 
 
(c)           all reissues, continuations or extensions of the foregoing;
 
(d)           all goodwill of the business connected with the use of, and
symbolized by, each Trademark and each Trademark Intellectual Property License;
and
 
(e)           all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future (i) infringement
or dilution of any Trademark or any Trademark licensed under any Intellectual
Property License or (ii) injury to the goodwill associated with any Trademark or
any Trademark licensed under any Intellectual Property License.
 
Notwithstanding the foregoing, Parent hereby grants to each Secured Party a
continuing third priority security interest in all of Parent’s right, title and
interest in, to and under all Trademark Collateral that constitutes Colorado
Collateral.
 
3.           SECURITY FOR OBLIGATIONS.  This Trademark Security Agreement and
the Security Interests created hereby secures the payment and performance of all
the Secured Obligations, whether now existing or arising hereafter. Without
limiting the generality of the foregoing, this Trademark Security Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Secured Parties,
or any of them, whether or not they are unenforceable or not allowable due to
the existence of an Insolvency Proceeding involving any Grantor.
 
4.           SECURITY AGREEMENT.  The security interests granted pursuant to
this Trademark Security Agreement are granted in conjunction with the security
interests granted to Secured Parties pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Parties with respect to their respective security interests in the Trademark
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
 
5.           AUTHORIZATION TO SUPPLEMENT.  If any Grantor shall obtain rights to
any new trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. To the extent required under the Security
Agreement, Grantors shall give prompt notice in writing to Secured Parties with
respect to any such new trademarks or renewal or extension of any trademark
registration.   Without limiting each Grantor’s obligations under this Section
5, Grantors hereby authorize Secured Parties unilaterally to modify this
Agreement by amending Schedule I to include any such new trademark rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this Trademark
Security Agreement or amend Schedule I shall in any way affect, invalidate or
detract from any Secured Party’s continuing security interest in all Collateral,
whether or not listed on Schedule I.
 
6.           COUNTERPARTS.  This Trademark Security Agreement may be executed in
two or more identical counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
signature page were an original thereof. In proving this Trademark Security
Agreement or any other Transaction Document in any judicial proceedings, it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom such enforcement is sought.
 
 
2

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7.           CONSTRUCTION.  Unless the context of this Trademark Security
Agreement or any other Transaction Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are not limiting, and
the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Trademark Security Agreement or any other
Transaction Document refer to this Trademark Security Agreement or such other
Transaction Document, as the case may be, as a whole and not to any particular
provision of this Trademark Security Agreement or such other Transaction
Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Trademark Security Agreement or in any other Transaction
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible (i) payment in full in cash and
discharge or (ii) other satisfaction in accordance with the terms of the
Transaction Documents and discharge, in each case, of all Secured Obligations in
full. Any reference herein to any Person shall be construed to include such
Person’s permitted successors and permitted assigns. Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The language used in this Trademark Security
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. For clarification purposes, the Recitals are part of this Trademark
Security Agreement.
 
8.           TERMINATION. This Trademark Security Agreement shall automatically
terminate upon the indefeasible satisfaction and discharge of all of the Secured
Obligations in full.
 
[signature pages follow]
 
 
3

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.
 
GRANTORS:
MAGNUM D’OR RESOURCES, INC., a Nevada corporation
       
By:
   
Name:
   
Title:
         
MAGNUM RECYCLING USA, INC., a Nevada corporation
       
By:
   
Name:
   
Title:
         
MAGNUM ENGINEERING INTERNATIONAL, INC., a Delaware corporation
       
By:
   
Name:
   
Title:
 

 
 

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SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
 
Trademark Registrations/Applications
 
Grantor
 
Country
 
Mark
 
Application/
Registration No.
 
App/Reg Date
                                                                               
                                             

 
Trade Names
 
Common Law Trademarks
 
Trademarks Not Currently In Use
 
Trademark Licenses
 
 
 

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