Exhibit 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”), dated as of March 26, 2010, 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
March 26, 2010 (as may be amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the
“Securities Purchase Agreement”), by and among EcoBlu Products, Inc., a Colorado
corporation (“Parent”), and each of the Secured Parties, Parent has agreed to
sell, and each of the Secured Parties have each 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 (as defined below) of Parent and will receive direct and substantial
benefits from the purchase by each of the 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 Securities 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).
 
 
 
1

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

 
 
(c) “Bankruptcy Code” means title 11 of the United States Code, as in effect
from time to time.
 
(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 Illinois 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 Illinois, 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) “Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in any Grantor’s books and records, Equipment, or Inventory, in each case, in
form and substance satisfactory to Secured Parties.
 
(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 Securities 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, restated, supplemented, or otherwise modified from time to time.
 
 
 
2

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

 
 
 
(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, restated, supplemented, or otherwise modified 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.
 
 
 
 
3

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

 
 
(s) “Guaranties” means each Guaranty, in the form attached hereto as Exhibit D,
executed by a Guarantor 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, as may be amended, restated,
supplemented, or otherwise modified 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, restated, supplemented, or otherwise modified 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) “New Subsidiary” has the meaning specified therefor in the Notes.
 
(cc) “Notes” has the meaning specified therefor in the Securities Purchase
Agreement.
 
(dd) “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.
 
 
 
4

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

 
 
 
(ee) “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, restated,
supplemented, or otherwise modified from time to time.
 
(ff) “Permitted Liens” has the meaning specified therefor in the Notes.
 
(gg) “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).
 
(hh) “Person” has the meaning specified therefor in the Securities Purchase
Agreement.
 
(ii) “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.
 
(jj) “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.
 
(kk) “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,
restated, supplemented, or otherwise modified from time to time.
 
 
 
5

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

 
 
 
(ll) “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, restated, supplemented, or
otherwise modified from time to time.
 
(mm) “Proceeds” has the meaning specified therefor in Section 2.
 
(nn) “Real Property” means any estates or interests in real property now owned
or hereafter acquired by any Grantor and the improvements thereto.
 
(oo) “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.
 
(pp) “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, 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.
 
(qq) “Securities Account” means a securities account (as that term is defined in
the Code).
 
(rr) “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, restated, supplemented, or otherwise
modified from time to time.
 
(ss) “Security Interest” and “Security Interests” have the meanings specified
therefor in Section 2.
 
(tt) “Significant Secured Party” means, on any date of determination, any
Secured Party holding 17.5% or more of the aggregate principal amount of Notes
outstanding on such date.
 
(uu) “Stock” means all shares, options, warrants, interests (including, without
limitation, 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).
 
 
 
6

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

 
 
 
(vv) “Subsidiaries” and “Subsidiary” each have the meanings specified therefor
in the Notes.
 
(ww) “Supporting Obligations” means supporting obligations (as such term is
defined in the Code).
 
(xx) “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.
 
(yy) “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.
 
(zz) “Transaction Documents” has the meaning specified therefor in the
Securities Purchase Agreement.
 
(aaa) “URL” means “uniform resource locator,” an internet web address.
 
(bbb) “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 Securities 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.
 
(ccc) “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.
 
(ddd) “Warrants” has the meaning specified therefor in the Securities 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:
 
 
 
7

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

 
 
(a) all of such Grantor’s Accounts;
 
(b) all of such Grantor’s Books;
 
(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.
 
 
 
8

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

 
 
 
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.
 
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 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) 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.  As of the date hereof, the Inventory and Equipment (other than
Equipment out for repair) of the Grantors are not stored with a bailee,
warehouseman, or similar party (unless, in any such case, such bailee,
warehouseman or other party has entered into a Collateral Access Agreement with
respect to such Inventory and Equipment).
 
 
 
9

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

 
 
 
(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 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.
 
(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 or
desirable 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 to
the extent such security interest can be perfected by the filing of a financing
statement.  All action by any Grantor necessary to protect and perfect such
security interest on each item of Collateral has been duly taken.
 
(e) (i) Except for the Security Interests created hereby, such Grantor is and
will at all times be 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 or desirable 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
 
 
 
 
10

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

 
 
 
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.
 
(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, 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).
 
(g) Schedule 9 contains a complete and accurate list of all of each Grantor’s
Deposit Accounts and Securities Accounts, including, without limitation, with
respect to each bank or securities intermediary (a) the name and address of such
Person and (b) the account numbers of such accounts maintained with such Person.
 
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 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.
 
 
 
11

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

 
 
 
(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 Securities 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].”
 
(c) Control Agreements.  Except as set forth on Schedule 9, no Grantor shall
establish or maintain any Deposit Account or Securities Account (or any other
similar account) unless (i) Grantors shall have provided each Secured Party with
10 days’ advance written notice of each such account and (ii) the Secured
Parties shall have received a Control Agreement in respect of such account
concurrently with the opening thereof.  Each Grantor shall ensure that all of
its Account Debtors forward payment of the amounts owed by them directly to a
Deposit Account that is subject to a Control Agreement and deposit or cause to
be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all of their collections (including those
sent directly by their Account Debtors to a Grantor) into a Deposit Account
subject to a Control Agreement.
 
(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.
 
 
 
12

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

 
 
 
(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 2 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.
 
(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 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 Patent or 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 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.
 
 
 
13

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

 
 
 
(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;
 
(iv) No Grantor shall make or consent to any material amendment or other
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.
 
 
 
14

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

 
 
 
(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 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 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.
 
(l) Maintenance of Insurance. Each Grantor shall maintain insurance with
responsible and reputable insurance companies or associations acceptable to
Secured Parties (including, without limitation, comprehensive general liability,
property, hazard, rent and business interruption insurance) with respect to its
assets and properties (including ,without limitation, all real properties leased
or owned by it and any and all Inventory and Equipment) 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 and, in each case, acceptable to Secured Parties.
 
(m) Locations of Inventory and Equipment.  Each Grantor shall keep its Inventory
and Equipment (other than Equipment out for repair) only at the locations
identified in part (c) on Schedule 7 and shall maintain its chief executive
office only at the location identified in part (b) on Schedule 7.  Promptly upon
the request of any Secured Party (but in no event later than five (5) days
following the date of such request), each Grantor shall obtain a Collateral
Access Agreement from each Person holding or otherwise in possession of or
having a Lien on (as bailee or otherwise) any books and records, Inventory,
Equipment or other Collateral of such Grantor.
 
(n) Other Actions as to Any and All Collateral.  Each Grantor shall promptly
(and in any event within 2 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.
 
 
 
15

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

 
 
 
(o) Insurance.  Not later than ten (10) Business Days after the Closing Date (as
defined in the Securities Purchase Agreement), each Grantor shall deliver or
cause to be delivered evidence of its liability and property insurance together
with loss payee and additional insured endorsements with respect to such
insurance, as applicable, in favor of each Secured Party, in each case, in form
and substance acceptable to such Secured Parties.
 
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) Securities Purchase Agreement and Notes. In the event of any conflict
between any provision in this Agreement and any provision in the Securities
Purchase Agreement or Notes, such provision of the Securities 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.
 
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.
 
 
 
16

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

 
 
 
(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.  Each Grantor also hereby ratifies any
and all financing statements or amendments previously filed by any Secured Party
in any jurisdiction.
 
(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.
 
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.
 
10. Secured Parties Appointed Attorney-in-Fact. Each Grantor, on behalf of
itself and each New Subsidiary of such Grantor, hereby irrevocably appoints each
Secured Party as the attorney-in-fact of such Grantor and each such New
Subsidiary. In the event any Grantor or any New Subsidiary fails to execute or
deliver in a timely manner any Transaction Document or other agreement,
document, certificate or instrument which such Grantor or New Subsidiary now or
at any time hereafter is required to execute or deliver pursuant to the terms of
the Securities Purchase Agreement or any other Transaction Document, each
Secured Party shall have full authority in the place and stead of such Grantor
or New Subsidiary, and in the name of such Grantor, such New 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 New Subsidiary, and in the name of any such
Grantor, any such New 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:
 
 
 
17

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

 
 
 
(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 New Subsidiary;
 
(b) to receive and open all mail addressed to such Grantor or New Subsidiary and
to notify postal authorities to change the address for the delivery of mail to
such Grantor or New 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 New 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 New
Subsidiary in respect of any Account of such Grantor or New 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 New 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 New 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 New Subsidiaries, all that such attorney-in-fact shall lawfully do
or cause to be done by virtue hereof.  This power-of-attorney granted pursuant
to this Section 10 is coupled with an interest and shall be irrevocable until
this Agreement is terminated.
 
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.
 
 
18

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

 
 
 
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.
 
 
 
19

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

 
 
 
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.  This power-of-attorney
granted pursuant to this Section 15 is coupled with an interest and shall be
irrevocable until this Agreement is terminated.
 
(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:
 
(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)  Each Secured Party may, in addition to other rights and remedies provided
for herein, in the other Transaction Documents, or otherwise available to it
under applicable law and without the requirement of notice to or upon any
Grantor or any other Person (which notice is hereby expressly waived to the
maximum extent permitted by the Code or any other applicable law), (i) with
respect to any Grantor’s Deposit Accounts in which any such Secured Party’s
Liens are perfected by control under Section 9-104 of the Code, instruct the
bank maintaining such Deposit Account for the applicable Grantor to pay the
balance of such Deposit Account to or for the benefit of such Secured Party, and
(ii) with respect to any Grantor’s Securities Accounts in which Agent’s Liens
are perfected by control under Section 9-106 of the Code, instruct the
securities intermediary maintaining such Securities Account for the applicable
Grantor to (A) transfer any cash in such Securities Account to or for the
benefit of such Secured Party, or (B) liquidate any financial assets in such
Securities Account that are customarily sold on a recognized market and transfer
the cash proceeds thereof to or for the benefit of such Secured Party.
 
(d) 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 for the Satisfaction in Full of the
Secured Obligations (as defined below), each Grantor shall remain jointly and
severally liable for any such deficiency.
 
 
 
20

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

 
 
 
(e) 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.
 
(f) 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 (including,
without limitation, pursuant to a Collateral Access Agreement) 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(f) 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(f). 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;
 
 
 
21

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

 
 
 
(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.
 
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.
 
 
 
 
22

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

 
 
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.
 
(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

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

 
 
 
 
21. Indemnity and Expenses.
 
(a) Without limiting any obligations of Parent under the Securities 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 Satisfaction in Full of the
Secured Obligations.
 
(b) Grantors, jointly and severally, shall, upon demand, pay to each Secured
Party all of the costs and expenses which such Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon 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
provision of this Agreement may be amended other than by an instrument in
writing signed by each Grantor and each Significant Secured Party, and any
amendment to any provision of this Agreement made in conformity with the
provisions of this Section 22 shall be binding on all Secured Parties, provided
that no such amendment shall be effective to the extent that it (1) applies to
less than all of the Secured Parties, (2) imposes any obligation or liability on
any Secured Party without such Secured Party’s prior written consent (which may
be granted or withheld in such Secured Party’s sole discretion) or (3) applies
retroactively. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party, provided that all of the
Significant Secured Parties (in a writing signed by all of the Significant
Secured Parties) may waive any provision of this Agreement, and any waiver of
any provision of this Agreement made in conformity with the provisions of this
Section 22 shall be binding on all Secured Parties, provided that no such waiver
shall be effective to the extent that it (1) applies to less than all the
Secured Parties (unless a party gives a waiver as to itself only), (2) imposes
any obligation or liability on any Secured Party without such Secured Party’s
prior written consent (which may be granted or withheld in such Secured Party’s
sole discretion) or (3) applies retroactively.
 
 
 
24

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

 
 
 
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 Securities
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 Securities 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 Securities 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. 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 Satisfaction in Full of the Secured Obligations, (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 Satisfaction in Full of
the Secured Obligations, 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

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

 
 
 
25. Governing Law; Jurisdiction; Service of Process; Jury Trial. The parties
hereby agree that pursuant to 735 Illinois Compiled Statutes 105/5-5 they have
chosen that all questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Chicago, Illinois, 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.
 
26. 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.
 
 
 
26

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

 
 
 
(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.
 
(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). “Satisfaction in
Full of the Secured Obligations” shall mean the indefeasible payment in full in
cash and discharge, or other satisfaction in accordance with the terms of the
Transaction Documents and discharge, 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 (“U.S. Dollars”), and all amounts owing
under this Agreement and all other Transaction Documents shall be paid in U.S.
Dollars. All amounts denominated in other currencies shall be converted in the
U.S. 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 U.S. Dollars pursuant to this Agreement, the U.S. Dollar
exchange rate as published in the Wall Street Journal on the relevant date of
calculation.
 
[signature pages follow]
 
 
27

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

 
 
 
 
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:
ECOBLU PRODUCTS, INC., a Colorado corporation        
 
By:
      Name       Title             

 
 
 
 
28

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

 
 
 
 
 
 
SECURED PARTIES:
IROQUOIS MASTER FUND LTD.        
 
 
        By: Joshua Silverman, Authorized Signatory                  

 
 
 
 
 
 
 
 
 
 
29

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

 
 
 
SCHEDULE 1
 
COMMERCIAL TORT CLAIMS
 

 
NONE
 
 
 
 
 
 
 
 

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

 
 
SCHEDULE 2
 
COPYRIGHTS
 

 
NONE
 
 
 
 
 
 

 
 
 

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

 
 
SCHEDULE 3
 
INTELLECTUAL PROPERTY LICENSES
 
1)   License of Purchase, Distribution and Services Agreement by Bluwood USA in
favor of EcoBlu Products, Inc., dated as of August 24th 2009.
 
2)   License of Hartindo AF21 Product, Purchase, Sales, Distribution, Marketing
and Service Agreement by Megola in favor of EcoBlu Products, Inc., dated as of
November 11th 2009.
 
 
 
 
 
 
 

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

 
 
 
SCHEDULE 4
 
PATENTS
 

 

 
NONE
 
 
 
 
 

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

 
 
SCHEDULE 5
 
PLEDGED COMPANIES
 

 
Name of Pledgor
Name of Pledged Company
Percentage of Class Owned
NONE
         

 

 
 
 
 

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

 
 
 
 
SCHEDULE 6
 
TRADEMARKS
 

 
Grantor
Country
Mark
Application/ Registration No.
App/Reg Date
EcoBlu Products, Inc.
US
ECOBLU
77769468
June 26, 2009
EcoBlu Products, Inc.
US
ECOBLU
77768573
June 25, 2009

 
 
 
 
 
 
 
 

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

 
 
SCHEDULE 7
 

 
Part (a)
 
Owned Real Property
 
NONE
 
Leased Real Property
 
909 West Vista Way, Vista, California 92083 (Corporate office)
 
o  
Landlord is “James A Meredith Trust”

 
1280 Jefferson Lane, Colton, California 92324 (Manufacturing Plant)
 
o  
Landlord is “Cascade Warehouse/Scott Cantonwine”

 
300 South McKinley Street, Prosper, Texas 75078
 
o  
Landlord is “Guthrie Properties, Ltd.”

 
Other Locations of
Collateral                                                      
 
NONE
 
Part (b)
 
Chief Executive Office of each Grantor:
 
909 West Vista Way, Vista CA 92083
 
Part (c)
 
Locations of Inventory and Equipment:
 
1280 Jefferson Lane, Colton CA 92324
 
 
 
 

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

 
 
SCHEDULE 8
 
LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS
 
Grantor
Jurisdictions
EcoBlu Products, Inc.
Colorado
                           

 

 
 
 

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

 
 
SCHEDULE 9
 
DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS
 
Deposit Accounts

Regents Bank
501 West Broadway Suite 550
San Diego, CA 92101
Account Number: 002107852
ABA Routing Number: 122243321

Regents Bank
501 West Broadway Suite 550
San Diego, CA 92101
Account Number: 002108330
ABA Routing Number: 122243321

Securities Accounts
 
None.
 
 
 

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

 
EXHIBIT A
 
COPYRIGHT SECURITY AGREEMENT
 
This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”) is made
this 26th day of March 2010, 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
March 26, 2010 (as may be amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the
“Securities Purchase Agreement”), by and among EcoBlu Products, Inc., a Colorado
corporation (“Parent”), and each of the Secured Parties, Parent has agreed to
sell, and each of the Secured Parties have each agreed to purchase, severally
and not jointly, certain Notes and Warrants; and
 
WHEREAS, in order to induce each of the Secured Parties to purchase, severally
and not jointly, the Notes and Warrants as provided for in the Securities
Purchase Agreement, Grantors have executed and delivered to each of the 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 each of the 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.
 
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.
 
 
 
 

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

 
 
 
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 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.
 
[signature pages follow]
 
 
 
 
 

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

 
 
 
 
 
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:
ECOBLU PRODUCTS, INC., a Colorado corporation        
 
By:
      Name       Title             

 
 
 
 
 
 
 
 
 
 

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

 

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

 
Copyright Licenses
 
 
 
 
 
 

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

 
 
 
 
EXHIBIT B
 
PATENT SECURITY AGREEMENT
 
This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made this
26th day of March 2010, 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
March 26, 2010 (as may be amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the
“Securities Purchase Agreement”), by and among EcoBlu Products, Inc., a Colorado
corporation (“Parent”), and each of the Secured Parties, Parent has agreed to
sell, and each of the Secured Parties have each agreed to purchase, severally
and not jointly, certain Notes and Warrants; and
 
WHEREAS, in order to induce each of the Secured Parties to purchase, severally
and not jointly, the Notes and Warrants as provided for in the Securities
Purchase Agreement, Grantors have executed and delivered to each of the 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 each of the 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.
 
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.
 
 
 
 
 

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

 
 
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 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.
 
[signature pages follow]
 
 
 
 

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

 
 
 
 
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:
ECOBLU PRODUCTS, INC., a Colorado corporation        
 
By:
      Name       Title             

 
 
 
 
 
 
 

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

 
 
 
 
EXHIBIT C

TRADEMARK SECURITY AGREEMENT
 
This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is made
this 26th day of March 2010, 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
March 26, 2010 (as may be amended, restated, supplemented, or otherwise modified
from time to time, including all schedules thereto, collectively, the
“Securities Purchase Agreement”), by and among EcoBlu Products, Inc., a Colorado
corporation (“Parent”), and each of the Secured Parties, Parent has agreed to
sell, and each of the Secured Parties have each agreed to purchase, severally
and not jointly, certain Notes and Warrants; and
 
WHEREAS, in order to induce each of the Secured Parties to purchase, severally
and not jointly, the Notes and Warrants as provided for in the Securities
Purchase Agreement, Grantors have executed and delivered to each of the 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 each of the 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.
 
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.
 
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 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.
 
[signature pages follow]
 
 
 
 

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

 
 
 
 
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:
ECOBLU PRODUCTS, INC., a Colorado corporation        
 
By:
      Name       Title             

 
 
 
 
 
 
 
 

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

 
 

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT

Trademark Registrations/Applications
 
Grantor
Country
Mark
Application/ Registration No.
App/Reg Date
EcoBlu Products, Inc.
US
ECOBLU
77769468
June 26, 2009
EcoBlu Products, Inc.
US
ECOBLU
77768573
June 25, 2009
                                                           

 
Trade Names

 
Common Law Trademarks
 
 
Trademarks Not Currently In Use
 
 
Trademark Licenses
 
 
 
 

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

 
 
 
 
 
EXHIBIT D
 
Form of Guaranty
 
See attached
 
 
 
 
 
 
 
 

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