Exhibit
10.2

    CNS
RESPONSE, INC.

    


    SECURITY
AGREEMENT

     

    SECURITY
AGREEMENT (this “Agreement”),
dated as of October 1, 2010, by and between CNS Response, Inc., a Delaware
corporation (the “Company”),
and John Pappajohn, as administrative agent (in such capacity, the “Administrative
Agent”) for the Secured Parties (as defined below).

     

    WHEREAS, in connection
with the execution and delivery of this Agreement, the Company is
entering into a Note and Warrant Purchase Agreement (the “Purchase
Agreement”) with each of the entities set forth on Schedule A thereto,
as such schedule may be updated from time to time in accordance with the terms
of such agreement (the “Investors”);

     

    WHEREAS, each
Investor has agreed to purchase from the Company a secured convertible
promissory note pursuant to, and upon the terms and subject to the conditions
set forth in, the Purchase Agreement;

     

    WHEREAS, each
Investor who is a holder of Existing Notes has agreed to subordinate
right of payment under the Existing Notes in full to the Company’s repayment of
the Obligations (as defined below); and

     

    WHEREAS, the
obligations of each Investor to the Company under the Purchase Agreement are
conditioned upon, among other things, the execution and delivery by the Company
of an agreement in the form hereof to secure (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Notes, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations, including fees (including fees and disbursements of
counsel), costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Company to the Investors under the Purchase Agreement and the other Loan
Agreements and (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Company under or pursuant to the
Purchase Agreement and the other Loan Agreements (all of the obligations
described in the preceding clauses (a) and (b) being referred to herein
collectively as the “Obligations”).

     

    NOW
THEREFORE, in consideration of these premises and in order to induce the
Investors to enter into the Purchase Agreement, the Company and the
Administrative Agent, for its benefit and for the ratable benefit of the Secured
Parties, hereby agree as follows:


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    ARTICLE
I

     

    Definitions

     

    SECTION
1.01.           Definition of Terms Used
Herein.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement. All terms defined in the UCC (as defined herein) and not defined in
this Agreement shall have the meanings specified therein; the term “instrument”
shall have the meaning specified in Article 9 of the UCC.

     

    SECTION
1.02.            Definition of Certain Terms
Used Herein.  As used herein, the following terms shall have
the following meanings:

     

    “Account
Debtor” shall mean any Person who is or who may become obligated to the
Company under, with respect to, or on account of, an Account.

     

    “Collateral”
shall mean all right, title or interest now owned or at anytime hereafter
acquired by the Company or in which the Company now has or at any time in the
future may acquire any right, title or interest in all (a) Accounts,
(b)  Chattel Paper, (c) Commercial Tort Claims, (d) Deposit
Accounts, (e) Documents, (f) Electronic Chattel Paper,
(g) Equipment, (h) General Intangibles, (i) Instruments,
(j) Inventory, (k) Investment Property, (l) Letter-of-Credit
Rights, (m) Supporting Obligations, (n) all books and records
pertaining to the foregoing and (o) to the extent not otherwise included,
all Proceeds and products of any of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.

     

    “Copyright
License” shall mean any written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter owned
by the Company or which the Company otherwise has the right to license, or
granting any right to the Company under any Copyright now or hereafter owned by
any third party, and all rights of the Company under any such
agreement.

     

    “Copyrights”
shall mean all of the following now owned or hereafter acquired by the Company:
(a) all copyright rights in any work subject to the copyright laws of the United
States or any other country, whether as author, assignee, transferee or
otherwise and (b) all registrations and applications for registration of any
such copyright in the United States or any other country, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office.

     

    “Documents”
shall mean all instruments, files, records, ledger sheets and documents covering
or relating to any of the Collateral.

     

    “Event of
Default” shall have the meaning ascribed to such term in the
Notes.

     

    “Existing Note
Documents” shall mean (i) the Bridge Note and Warrant Purchase Agreement,
dated as of June 3, 2010, by and between the Company and John Pappajohn, (ii)
the Existing Notes and related warrants, (iii) the Guaranty, dated July 5, 2010,
by SAIL Venture Partners, LP executed in favor of Deerwood Holdings, LLC, (iv)
the Guaranty, dated July 5, 2010, by SAIL Venture Partners, LP executed in favor
of Deerwood Partners, LLC, (v) the Guaranty, dated August 20, 2010, by SAIL
Venture Partners, LP executed in favor of Deerwood Holdings, LLC, and (vi) the
Guaranty, dated August 20, 2010, by SAIL Venture Partners, LP executed in favor
of Deerwood Partners, LLC.


    
      
         


      

      
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    “General
Intangibles” shall mean all choses in action and causes of action and all
other assignable intangible personal property of the Company of every kind and
nature (other than Accounts) now owned or hereafter acquired by the Company,
including interests in any trust, corporate or other business records, contract
rights, indemnification claims, Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to the Company to secure
payment by an Account Debtor of any of the Accounts.

     

    “Intellectual
Property” shall mean all intellectual and similar property of the Company
of every kind and nature now owned or hereafter acquired by the Company,
including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade
secrets, confidential or proprietary technical and business information,
know-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the
foregoing.

     

    “License”
shall mean any Patent License, Trademark License, Copyright License or other
license or sublicense to which the Company is a party.

     

    “Lien”
shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

     

    “Notes”
shall mean those certain Secured Convertible Promissory Notes issued pursuant to
the Purchase Agreement.

     

    “Patent
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by the Company or which the Company
otherwise has the right to license, is in existence, or granting to the Company
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of the Company under
any such agreement.

     

    “Patents”
shall mean all of the following now owned or hereafter acquired by the Company:
(a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office or any
similar offices in any other country, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use and/or
sell the inventions disclosed or claimed therein.


    
      
         


      

      
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    “Perfection
Certificate” shall mean a certificate substantially in the form of Annex
1 hereto, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by an officer of the
Company.

     

    “Secured
Parties” shall mean (a) the Investors, (b) the Administrative Agent and
(c) the successors and assigns of each of the foregoing.

     

    “Trademark
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by the Company or which the Company otherwise has the right to license, or
granting to the Company any right to use any Trademark now or hereafter owned by
any third party, and all rights of the Company under any such
agreement.

     

    “Trademarks”
shall mean all of the following now owned or hereafter acquired by the Company:
(a) all trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all registration and recording applications filed in
connection therewith, including registrations and registration applications in
the United States Patent and Trademark Office, any State of the United States or
any similar offices in any other country or any political subdivision thereof,
and all extensions or renewals thereof, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.

     

    “UCC” shall
mean the Uniform Commercial Code as amended from time to time.

     

    ARTICLE
II

     

    Security
Interest

     

    SECTION
2.01.           Security
Interest.  As security for the payment and performance in full
of the Obligations, the Company hereby grants, mortgages, pledges, hypothecates
and transfers to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a continuing security interest in all of the Company’s right, title and
interest now owned or at any time hereafter acquired by the Company or in which
the Company now has or any time in the future may acquire any right, title or
interest, in, to or under the Collateral (the “Security
Interest”). The Company hereby irrevocably authorizes the Administrative
Agent at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings), and amendments thereto
that contain the information required by the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment
(without the signature of the Company), including (a) whether the Company is an
organization, the type of organization and any organizational identification
number issued to the Company and (b) in the case of a financing statement filed
as a fixture filing or covering Collateral constituting minerals or the like to
be extracted or timber to be cut, a sufficient description of the real property
to which such Collateral relates. The Company agrees to provide such information
to the Administrative Agent promptly upon request.  The Company
ratifies and authorizes the filing by the Administrative Agent of any financing
statement filed prior to the date hereof.  Any Person (other than the
Administrative Agent) at any time and from time to time holding all or any
portion of the Collateral shall be deemed to, and shall, hold the Collateral as
the agent of, and as pledge holder for, the Administrative Agent.  At
any time and from time to time, the Administrative Agent may give notice to any
such Person holding all or any portion of the Collateral that such Person is
holding the Collateral as the agent and bailee of, and as pledge holder for, the
Administrative Agent, and obtain such Person’s written acknowledgment
thereof.  Without limiting the generality of the foregoing, the
Company will join with the Administrative Agent in notifying any Person who has
possession of any Collateral of the Administrative Agent’s security interest
therein and obtaining an acknowledgment from such Person that it is holding the
Collateral for the benefit of the Administrative Agent.


    
      
         


      

      
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    The
Administrative Agent is further authorized to file filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by the Company, without the signature of the
Company, and naming the Company as debtor and the Administrative Agent as
secured party.

     

    SECTION
2.02.           No Assumption of
Liability.  The Security Interest is granted as security only
and shall not subject the Administrative Agent or any other Secured Party to, or
in any way alter or modify, any obligation or liability of the Company with
respect to or arising out of the Collateral.  In no event shall the
Administrative Agent or any other Secured Party be deemed a trustee or become
liable as a trustee as a result of the grant of the Security Interest in any
interest in any trust.

     

    ARTICLE
III

     

    Representations and
Warranties

     

    The
Company represents and warrants to the Administrative Agent and the other
Secured Parties that:

     

    SECTION
3.01.           Title and
Authority.  The Company has good and valid rights in, and title
to, the Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the
Administrative Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other Person other
than any consent or approval which has been obtained.


    
      
         


      

      
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    SECTION
3.02.           Filings.  (a)
A Perfection Certificate has been duly prepared, completed and executed by the
Company and the information set forth therein, including the exact legal name of
the Company, is correct and complete. Fully executed Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been delivered to the Administrative Agent for filing in each
governmental, municipal or other office specified in the Perfection Certificate,
which are all the filings, recordings and registrations that are necessary to
publish notice of and protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Administrative Agent (for the
ratable benefit of the Secured Parties) in respect of all Collateral in which
the Security Interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements or amendments.

     

    (b)           The
Company represents and warrants that fully executed security agreements in the
form hereof and containing a description of all Collateral consisting of
Intellectual Property with respect to United States Patents and United States
registered Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights have been
delivered to the Administrative Agent for recording by the United States Patent
and Trademark Office and the United States Copyright Office pursuant to 35
U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Administrative Agent (for the benefit of the Secured Parties) in respect of all
Collateral consisting of Patents, Trademarks and United States registered
Copyrights in which a security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, or in any other necessary jurisdiction, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than the financing statements referred to
above in Section 3.02(a) and such actions as are necessary to perfect the
Security Interest with respect to any Collateral consisting of Patents,
Trademarks and Copyrights (or registration or application for registration
thereof) acquired or developed after the date hereof).

     

    SECTION
3.03.           Validity of Security
Interest.  The Security Interest constitutes (a) a legal and
valid security interest in all the Collateral securing the payment and
performance of the Obligations, (b) a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261, 15 U.S.C.
Section 1060 or 17 U.S.C. Section 205 and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction. The Security Interest is and
shall be prior to any other Lien on any of the Collateral (now held or hereafter
acquired).


    
      
         


      

      
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    SECTION
3.04.           Absence of Other
Liens.  The Collateral is owned by the Company free and clear
of any Lien other than those arising under the Existing Note
Documents.  Other than as contemplated by the Existing Note Documents,
the Company has not filed or consented to the filing of (a) any financing
statement or analogous document under the Uniform Commercial Code or any other
applicable laws covering any Collateral, (b) any assignment in which the Company
assigns any Collateral or any security agreement or similar instrument covering
any Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which the Company assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect.  The Company does not hold any
Commercial Tort Claim or Letter-of-Credit Right.  Except with respect
to any rights arising under the Existing Note Documents, no Person has control
(as defined in the UCC) over the Company’s Deposit Accounts, Electronic Chattel
Paper, Investment Property or Letter-of-Credit Rights.

     

    ARTICLE
IV

     

    Covenants

     

    SECTION
4.01.           Change of Name; Location of
Collateral; Records; Place of Business.  (a) The Company agrees
promptly to notify the Administrative Agent in writing of any change (i) in its
corporate name, (ii) in the location of its chief executive office, its
principal place of business, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility) other than with respect to Collateral (A) consisting of goods in
transit between facilities, whether in vehicles owned by the Company or on
common carriers and (B) located in temporary warehousing which will remain in
such warehousing for no longer than one month, (iii) in its identity or type of
organization or legal structure, (iv) in its Federal Taxpayer Identification
Number or organizational identification number, as applicable or (v) in its
jurisdiction of organization. The Company agrees promptly to provide the
Administrative Agent with certified organizational documents reflecting any of
the changes described in the preceding sentence. The Company agrees not to
effect or permit any change referred to in the preceding sentences unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected first priority
security interest in all the Collateral.  The Company agrees promptly
to notify the Administrative Agent if any material portion of the Collateral
owned or held by the Company is damaged or destroyed.

     

    (b)           The
Company agrees to maintain, at its own cost and expense, such complete and
accurate records with respect to the Collateral owned by it as is consistent
with its current practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to those in which
the Company is engaged, but in any event to include complete accounting records
indicating all payments and proceeds received with respect to any part of the
Collateral, and, at such time or times as the Administrative Agent may
reasonably request, promptly to prepare and deliver to the Administrative Agent
a duly certified schedule or schedules in form and detail satisfactory to the
Administrative Agent showing the identity, amount and location of any and all
Collateral.


    
      
         


      

      
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    SECTION
4.02.           Changes to Perfection
Certificate.  The Company shall notify the Administrative Agent
promptly after any change to any of the information set forth in the Perfection
Certificate.

     

    SECTION
4.03.           Protection of
Security.  The Company shall, at its own cost and expense, take
any and all actions necessary to defend title to the Collateral against all
Persons and to defend the Security Interest of the Administrative Agent in the
Collateral and the priority thereof against any Lien.

     

    SECTION
4.04.           Further
Assurances.  The Company agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Administrative Agent
may from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be promptly
pledged and delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent.  Without limiting the
generality of the foregoing, the Company hereby authorizes the Administrative
Agent, with prompt notice thereof to the Company, to supplement this Agreement
by adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Patents or Trademarks; provided, however, that
the Company shall have the right, exercisable within 10 days after it has been
notified by the Administrative Agent of the specific identification of such
Collateral, to advise the Administrative Agent in writing of any inaccuracy of
the representations and warranties made by the Company hereunder with respect to
such Collateral. The Company agrees that it will use its reasonable best efforts
to take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Administrative Agent
of the specific identification of such Collateral.  Upon the request
of the Administrative Agent, the Company will cooperate with the Administrative
Agent in obtaining control (as defined in the UCC) of Collateral consisting of
any Deposit Accounts, Electronic Chattel Paper, Investment Property or
Letter-of-Credit Rights.  Upon the request of the Administrative
Agent, the Company will (a) immediately deliver to the Administrative Agent
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, all Instruments, Documents, Chattel Paper and certificated
securities with respect to any Investment Property, all letters of credit, and
all other Accounts at any time evidenced by promissory notes, trade acceptances
or other instruments, (b) cause any securities intermediaries to show on their
books that the Administrative Agent is the entitlement holder with respect to
any Investment Property, and/or obtain agreements to establish control (as
defined in the UCC) in favor of the Administrative Agent from such securities
intermediaries, in form and substance satisfactory to the Administrative Agent
with respect to any Investment Property, as requested by the Administrative
Agent and (c) provide such notice, obtain such acknowledgements and take all
such other action, with respect to any Chattel Paper, Documents and
Letter-of-Credit Rights, as the Administrative Agent shall reasonably
specify.


    
      
         


      

      
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    SECTION
4.05.           Inspection and
Verification.  The Administrative Agent and such Persons as the
Administrative Agent may reasonably designate shall have the right to inspect
the Collateral, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any of the Collateral is located,
to discuss the Company’s affairs with the officers of the Company and their
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Accounts or Collateral in
the possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a verification.
The Administrative Agent shall have the absolute right to share any information
it gains from such inspection or verification with any Secured
Party.

     

    SECTION
4.06.           Taxes;
Encumbrances.  At its option and after notice to the Company,
the Administrative Agent may discharge past due taxes, assessments, charges,
fees, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the
Collateral to the extent the Company fails to do so as required by this
Agreement, and the Company agrees to reimburse the Administrative Agent on
demand for any payment made or any expense incurred by the Administrative Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.06 shall be interpreted as excusing
the Company from the performance of, or imposing any obligation on the
Administrative Agent or any Secured Party to cure or perform, any covenants or
other promises of the Company with respect to taxes, assessments, charges, fees,
liens, security interests or other encumbrances and maintenance as set forth
herein or in the other Loan Agreements.

     

    SECTION
4.07.           Assignment of Security
Interest.  If at any time the Company shall take a security
interest in any property of an Account Debtor or any other Person to secure
payment and performance of an Account, the Company shall promptly assign such
security interest to the Administrative Agent. Such assignment need not be filed
of public record unless necessary to continue the perfected status of the
security interest against creditors of and transferees from the Account Debtor
or other Person granting the security interest.

     

    SECTION
4.08.           Continuing Obligations of
the Company.  The Company shall remain liable to observe and
perform all the conditions and obligations to be observed and performed by it
under each contract, agreement or instrument relating to the Collateral, all in
accordance with the terms and conditions thereof, and the Company agrees to
indemnify and hold harmless the Administrative Agent and the Secured Parties
from and against any and all liability for such performance.

     

    SECTION
4.09.           Use and Disposition of
Collateral.  The Company shall not make or permit to be made an
assignment, pledge or hypothecation of the Collateral or shall grant any other
Lien in respect of the Collateral. The Company shall not make or permit to be
made any transfer of the Collateral and the Company shall remain at all times in
possession of the Collateral owned by it. Without limiting the generality of the
foregoing, the Company agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Administrative Agent and to waive and release any Lien held by it with respect
to such Inventory, whether arising by operation of law or
otherwise.


    
      
         


      

      
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    SECTION
4.10.           Limitation on Modification
of Accounts.  The Company shall not, without the Administrative
Agent’s prior written consent, grant any extension of the time of payment of any
of the Accounts included in the Collateral, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business and consistent with its
current practices and in accordance with such prudent and standard practices
used in industries that are the same as or similar to those in which the Company
is engaged.

     

    SECTION
4.11.           Insurance.  The
Company, at its own expense, shall maintain or cause to be maintained insurance
covering physical loss or damage to the Collateral. The Company irrevocably
makes, constitutes and appoints the Administrative Agent (and all officers,
employees or agents designated by the Administrative Agent) as the Company’s
true and lawful agent (and attorney-in-fact) for the purpose, during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of the
Company on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that the Company at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the
Administrative Agent may, without waiving or releasing any obligation or
liability of the Company hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Administrative Agent
deems advisable. All sums disbursed by the Administrative Agent in connection
with this Section 4.11, including reasonable attorneys’ fees, court costs,
expenses and other charges relating thereto, shall be payable, upon demand, by
the Company to the Administrative Agent and shall be additional Obligations
secured hereby.

     

    SECTION
4.12.           Legend.  The
Company shall legend, in form and manner satisfactory to the Administrative
Agent, its Chattel Paper and its books, records and documents evidencing or
pertaining thereto with an appropriate reference to the fact that such Chattel
Paper have been assigned to the Administrative Agent for the benefit of the
Secured Parties and that the Administrative Agent has a security interest
therein.

     

    SECTION
4.13.            Covenants Regarding Patent,
Trademark and Copyright Collateral.

     

    (a)           The
Company agrees that it will not, nor will it permit any of its licensees to, do
any act, or omit to do any act, whereby any Patent may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable
laws.


    
      
         


      

      
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    (b)           The
Company (either itself or through its licensees or its sublicensees) will, for
each Trademark, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use, or knowingly permit the use of, such Trademark in violation of
any third party rights.

     

    (c)           The
Company (either itself or through licensees) will, for each work covered by a
Copyright, continue to publish, reproduce, display, adopt and distribute the
work with appropriate copyright notice as necessary and sufficient to establish
and preserve its maximum rights under applicable laws.

     

    (d)           The
Company shall notify the Administrative Agent immediately if it knows, or has
reason to know, that any Patent, Trademark or Copyright may become abandoned,
lost or dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding the
Company’s ownership of any Patent, Trademark or Copyright, its right to register
the same, or to keep and maintain the same.

     

    (e)           In
no event shall the Company, either itself or through any agent, employee,
licensee or designee, file an application for any Patent, Trademark or Copyright
(or for the registration of any Trademark or Copyright) with the United States
Patent and Trademark Office, United States Copyright Office or any office or
agency in any political subdivision of the United States or in any other country
or any political subdivision thereof, unless it promptly informs the
Administrative Agent, and, upon request of the Administrative Agent, executes
and delivers any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s security
interest in such Patent, Trademark or Copyright, and the Company hereby appoints
the Administrative Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.

     

    (f)          
The Company will take all necessary steps that are consistent with the practice
in any proceeding before the United States Patent and Trademark Office, United
States Copyright Office or any office or agency in any political subdivision of
the United States or in any other country or any political subdivision thereof,
to maintain and pursue each application relating to the Patents, Trademarks
and/or Copyrights (and to obtain the relevant grant or registration) and to
maintain each issued Patent and each registration of the Trademarks and
Copyrights, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.

     

    (g)           In
the event that the Company has reason to believe that any Collateral consisting
of a Patent, Trademark or Copyright has been or is about to be infringed,
misappropriated or diluted by a third party, the Company promptly shall notify
the Administrative Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.


    
      
         


      

      
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    (h)           Upon
and during the continuance of an Event of Default, the Company shall use its
reasonable best efforts to obtain all requisite consents or approvals by the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all of the Company’s right, title and interest
thereunder to the Administrative Agent or its designee.

     

    (i)           
The Company shall ensure that fully executed security agreements in the form
hereof and containing a description of all Collateral consisting of Intellectual
Property shall have been received and recorded within three months after the
execution of this Agreement with respect to United States Patents, United States
registered Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights have been
delivered to the Administrative Agent for recording by the United States Patent
and Trademark Office and the United States Copyright Office pursuant to 35
U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section 205 and the
regulations thereunder, as applicable, and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction, to protect the validity of and
to establish a legal, valid and perfected security interest in favor of the
Administrative Agent (for the ratable benefit of the Secured Parties) in respect
of all Collateral consisting of Patents, Trademarks and registered Copyrights in
which a security interest may be perfected by filing, recording or registration
in the United States (or any political subdivision thereof) and its territories
and possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of Patents,
Trademarks and Copyrights (or registration or application for registration
thereof) acquired or developed after the date of this amendment and
restatement).

     

    SECTION
4.14.           Other
Actions.  In order to further insure the attachment, perfection and priority
of, and the ability of the Administrative Agent to enforce, the Administrative
Agent’s security interest in the Collateral, the Company agrees, in each case at
the Company’s own expense, to take the following actions with respect to the
following Collateral:

     

    (a)           Instruments and Tangible
Chattel Paper.  If the Company shall at any time hold or acquire any
Instruments or Tangible Chattel Paper, the Company shall forthwith endorse,
assign and deliver the same to the Administrative Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the
Administrative Agent may from time to time specify.


    
      
         


      

      
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    (b)           Investment
Property.  If the Company shall at any time hold or
acquire any
certificated securities, the Company shall forthwith endorse, assign and deliver
the same to the Administrative Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Administrative Agent may
from time to time specify. If any securities now or hereafter acquired by the
Company are uncertificated and are issued to the Company or its nominee directly
by the issuer thereof, the Company shall promptly notify the Administrative
Agent thereof and, at the Administrative Agent’s request and option, pursuant to
an agreement in form and substance satisfactory to the Administrative Agent,
either (i) cause the issuer to agree to comply with instructions from the
Administrative Agent as to such securities, without further consent of the
Company or such nominee or (ii) arrange for the Administrative Agent to become
the registered owner of the securities. If any securities, whether certificated
or uncertificated, or other investment property now or hereafter acquired by the
Company are held by the Company or its nominee through a securities intermediary
or commodity intermediary, the Company shall promptly notify the Administrative
Agent thereof and, at the Administrative Agent’s request and option, pursuant to
an agreement in form and substance reasonably satisfactory to the Administrative
Agent, either (A) cause such securities intermediary or commodity intermediary
(as the case may be) to agree to comply with entitlement orders or other
instructions from the Administrative Agent to such securities intermediary as to
such securities or other investment property or to apply any value distributed
on account of any commodity contract as directed by the Administrative Agent to
such commodity intermediary, in each case without further consent of the Company
or such nominee or (B) in the case of Financial Assets or other Investment
Property held through a securities intermediary, arrange for the Administrative
Agent to become the entitlement holder with respect to such Investment Property,
with the Company being permitted, only with the consent of the Administrative
Agent, to exercise rights to withdraw or otherwise deal with such Investment
Property. The Administrative Agent agrees with the Company that the
Administrative Agent shall not give any such entitlement orders or instructions
or directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by the Company, unless an Event of Default has
occurred and is continuing, or, after giving effect to any such investment and
withdrawal rights would occur.

     

    (c)           Electronic Chattel Paper and
Transferable Records.  If the Company at any time holds or
acquires an interest in any Electronic Chattel Paper or any “transferable
record,” as that term is defined in Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the
Company shall promptly notify the Administrative Agent thereof and, at the
request of the Administrative Agent, shall take such action as the
Administrative Agent may reasonably request to vest in the Administrative Agent
control under the UCC of such Electronic Chattel Paper or control under Section
201 of the Federal Electronic Signatures in Global and National Commerce Act or,
as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so
in effect in such jurisdiction, of such transferable record. The Administrative
Agent agrees with the Company that the Administrative Agent will arrange,
pursuant to procedures satisfactory to the Administrative Agent and so long as
such procedures will not result in the Administrative Agent’s loss of control,
for the Company to make alterations to the electronic chattel paper or
transferable record permitted under the UCC or, as the case may be, Section 201
of the Federal Electronic Signatures in Global and National Commerce Act or
Section 16 of the Uniform Electronic Transactions Act for a party in control to
allow without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Company
with respect to such Electronic Chattel Paper or transferable
record.

     

    (d)           Letter-of-Credit
Rights.  If the Company is at any time a beneficiary under a
letter of credit now or hereafter issued in favor of the Company, the Company
shall promptly notify the Administrative Agent thereof and, at the request and
option of the Administrative Agent, the Company shall, pursuant to an agreement
in form and substance reasonably satisfactory to the Administrative Agent,
either (i) arrange for the issuer and any confirmed of such letter of credit to
consent to an assignment to the Administrative Agent of the proceeds of any
drawing under the letter of credit or (ii) arrange for the Administrative Agent
to become the transferee beneficiary of the letter of credit.


    
      
         


      

      
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    (e)           Commercial Tort
Claims.  If the Company shall at any time hold or acquire a Commercial
Tort Claim, the Company shall promptly notify the Administrative Agent in a
writing signed by the Company of the brief details thereof and grant to the
Administrative Agent in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Administrative Agent.

     

    ARTICLE
V

     

    Collections

     

    SECTION
5.01.           Collections.  Upon
the occurrence of and during the continuance of an Event of Default, the
Administrative Agent shall have the right, at any time and from time to time,
(a) to notify the Account Debtors and other third parties holding or otherwise
concerned with the Collateral that the Accounts have been assigned to the
Administrative Agent and that the Administrative Agent has a security interest
therein; (b) to direct all such Persons to make payments to the Administrative
Agent of all or any part of the sums owing to the Company by such Persons; (c)
to enforce collection of any of the Accounts by suit or otherwise; (d) to
surrender, release or exchange all or any part of such Accounts; or (e) to
compromise, settle, extend or renew for any period (whether or not longer than
the original period) any indebtedness thereunder or evidenced
thereby.

     

    SECTION
5.02.           Power of
Attorney.  The Company irrevocably makes, constitutes and
appoints the Administrative Agent (and all officers, employees or agents
designated by the Administrative Agent) as the Company’s true and lawful agent
and attorney-in-fact, and in such capacity the Administrative Agent shall have
the right, with full power of substitution for the Company and in the Company’s
name or otherwise, for the use and benefit of the Administrative Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of the Company on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
included in the Collateral to any Account Debtor; (e) to commence and prosecute
any and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the
Collateral or to enforce any rights in respect of any Collateral; (f) to settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require the
Company to notify, Account Debtors to make payment directly to the
Administrative Agent; and (h) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Administrative Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Administrative Agent or any Secured Party to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the
Administrative Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Administrative Agent
or any Secured Party with respect to the Collateral or any part thereof shall
give rise to any defense, counterclaim or offset in favor of the Company or to
any claim or action against the Administrative Agent or any Secured Party. It is
understood and agreed that the appointment of the Administrative Agent as the
agent and attorney-in-fact of the Company for the purposes set forth above is
coupled with an interest and is irrevocable. The provisions of this Section
shall in no event relieve the Company of any of its obligations hereunder or
under any other Loan Agreement with respect to the Collateral or any part
thereof or impose any obligation on the Administrative Agent or any Secured
Party to proceed in any particular manner with respect to the Collateral or any
part thereof, or in any way limit the exercise by the Administrative Agent or
any Secured Party of any other or further right which it may have on the date of
this Agreement or hereafter, whether hereunder, under any other Loan Agreement,
by law or otherwise.


    
      
         


      

      
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    ARTICLE
VI

     

    Remedies

     

    SECTION
6.01.           Remedies upon
Default.  Upon the occurrence and during the continuance of an
Event of Default, the Company agrees to deliver each item of Collateral to the
Administrative Agent on demand, and it is agreed that the Administrative Agent
shall have the right to take any of, or all, the following actions at the same
or different times: (a) with respect to any Collateral consisting of
Intellectual Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Collateral by the
Company to the Administrative Agent, or to license or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any such Collateral throughout the world on such terms and conditions and
in such manner as the Administrative Agent shall determine (other than in
violation of any then-existing licensing arrangements to the extent that waivers
cannot be obtained) and (b) with or without legal process and with or without
prior notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
UCC or other applicable law. Without limiting the generality of the foregoing,
the Company agrees that the Administrative Agent may sell or otherwise dispose
of all or any part of the Collateral, at public or private sale or at any
broker’s board or on any securities exchange, for cash, upon credit or for
future delivery as the Administrative Agent shall deem appropriate. The
Administrative Agent shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to Persons
who will represent and agree that they are purchasing the Collateral for their
own account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Administrative Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of the
Company, and the Company hereby waives all rights of redemption, stay, valuation
and appraisal which the Company now has or may at any time in the future have
under any rule of law or statute now existing or hereafter
enacted.


    
      
         


      

      
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    The
Administrative Agent shall give the Company 10 days’ written notice (which the
Company agrees is reasonable notice within the meaning of the UCC or its
equivalent in other jurisdictions) of the Administrative Agent’s intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker’s
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Administrative Agent may fix and state in the notice of
such sale. At any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the Administrative
Agent may (in its sole and absolute discretion) determine. The Administrative
Agent shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Administrative Agent may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Administrative Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Administrative Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free from any right of redemption, stay, valuation or appraisal
on the part of the Company (all said rights being also hereby waived and
released), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Secured Party from the Company as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to the Company therefor.
For purposes hereof, a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof; the Administrative Agent
shall be free to carry out such sale pursuant to such agreement; and the Company
shall not be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Administrative Agent
shall have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Administrative Agent may proceed by
a suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
6.01 shall be deemed to conform to the commercially reasonable standards as
provided in the UCC or its equivalent in other jurisdictions.

     

    SECTION
6.02.            Application of
Proceeds.  The Administrative Agent shall apply the proceeds of
any collection or sale of Collateral, as well as any Collateral consisting of
cash, as follows:


    
      
         


      

      
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    FIRST, to
the payment of all costs and expenses incurred by the Administrative Agent (in
its capacity as such hereunder or under any other Loan Agreement) in connection
with such collection or sale or otherwise in connection with this Agreement, any
other Loan Agreement or any of the Obligations, including all court costs and
the fees and expenses of its agents and legal counsel, the repayment of all
advances made by the Administrative Agent hereunder or under any other Loan
Agreement on behalf of the Company and any other costs or expenses incurred by
the Administrative Agent in connection with the exercise of any right or remedy
hereunder or under any other Loan Agreement;

     

    SECOND,
to the payment in full of the Obligations (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the amounts of
the Obligations owed to them on the date of any such distribution);

     

    THIRD, to
the payment in full of the obligations arising under the Existing Note Documents
(the amounts so applied to be distributed among the secured parties thereunder
pro rata in accordance with the amounts of the obligations owed to them on the
date of any such distribution); and

     

    FOURTH,
to the Company, its successors or assigns, or as a court of competent
jurisdiction may otherwise direct.

     

    The
Administrative Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Administrative Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the purchase money by the Administrative Agent or of
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Administrative Agent or such officer or be answerable in any way for
the misapplication thereof.

     

    SECTION
6.03.           Grant of License to Use
Intellectual Property.  For the purpose of enabling the
Administrative Agent to exercise rights and remedies under this Article at such
time as the Administrative Agent shall be lawfully entitled to exercise such
rights and remedies, the Company hereby grants to the Administrative Agent an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Company) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by the Company, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Administrative
Agent shall be exercised, at the option of the Administrative Agent, upon the
occurrence and during the continuation of an Event of Default; provided that any
license, sub-license or other transaction entered into by the Administrative
Agent in accordance herewith shall be binding upon the Company notwithstanding
any subsequent cure of an Event of Default.


    
      
         


      

      
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    ARTICLE
VII

     

    Miscellaneous

     

    SECTION
7.01.            Notices.  All
communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in the Purchase
Agreement.

     

    SECTION
7.02.            Security Interest
Absolute.  All rights of the Administrative Agent hereunder,
the Security Interest and all obligations of the Company hereunder shall be
absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Purchase Agreement, any other Loan Agreement, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Purchase Agreement, any other Loan Agreement or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Obligations or in respect of this Agreement.

     

    SECTION
7.03.            Survival of
Agreement.  All covenants, agreements, representations and
warranties made by the Company herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Agreement shall be considered to have been relied
upon by the Secured Parties and shall survive the Closing, regardless of any
investigation made by the Investors or on their behalf.

     

    SECTION
7.04.           Binding Effect; Several
Agreement.  This Agreement shall become effective as to the
Company when a counterpart hereof executed on behalf of the Company shall have
been delivered to the Administrative Agent and a counterpart hereof shall have
been executed on behalf of the Administrative Agent, and thereafter shall be
binding upon the Company and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Administrative Agent and the other Secured Parties and their respective
successors and assigns, except that the Company shall not have the right to
assign or transfer its rights or obligations hereunder or any interest herein or
in the Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement and the other Loan
Agreements.

     

    SECTION
7.05.            Successors and
Assigns.  Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party; and all covenants, promises and agreements by
or on behalf of the Company that are contained in this Agreement shall bind and
inure to the benefit of its successors and permitted assigns.


    
      
         


      

      
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    SECTION
7.06.           Administrative Agent’s Fees
and Expenses; Indemnification.  (a) The Company agrees to pay
upon demand to the Administrative Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, which the Administrative Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Administrative Agent hereunder or (iv) the failure of the Company
to perform or observe any of the provisions hereof.

     

    (b)           Without
limitation of its indemnification obligations under the other Loan Agreements,
the Company agrees to indemnify the Administrative Agent and the other Secured
Parties against, and hold each Secured Party harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted against any
Secured Party arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any other Loan Agreement
or any agreement or instrument contemplated hereby or thereby, the performance
by the parties hereto of their respective obligations thereunder or the
consummation of the transactions contemplated hereby and thereby and the other
transactions contemplated thereby or any claim, litigation, investigation or
proceeding relating to any of the foregoing or to the Collateral, whether or not
any Secured Party is a party thereto.

     

    (c)           Any
amounts payable as provided hereunder shall be additional Obligations secured
hereby and by the other Loan Agreements. The provisions of this Section 7.06
shall remain operative and in full force and effect regardless of the
termination of this Agreement or any other Loan Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Obligations,
the invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Agreement, or any investigation made by or on behalf of the
Administrative Agent or any other Secured Party. All amounts due under this
Section 7.06 shall be payable on written demand therefor.

     

    SECTION
7.07.          GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.

     

    SECTION
7.08.            Waivers;
Amendment.  (a) No failure or delay of the Administrative Agent
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies of the Administrative Agent
hereunder and of the other Secured Parties under the other Loan Agreements are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other Loan
Agreement or consent to any departure by the Company therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on the Company in
any case shall entitle the Company to any other or further notice or demand in
similar or other circumstances.


    
      
         


      

      
        19

        
          

        

      

      
         


      

    

     

    (b)           Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Administrative
Agent and the Company.

     

    SECTION
7.09.           WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN AGREEMENTS.

     

    SECTION
7.10.           Severability.  In
the event any one or more of the provisions contained in this Agreement should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby (it being understood that the invalidity of
a particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction).

     

    SECTION
7.11.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
a single contract and shall become effective as provided in Section 7.04.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile or PDF transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.

     

    SECTION
7.12.           Headings.  Article
and Section headings used herein are for the purpose of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.

     

    SECTION
7.13.          Termination or
Release.  This Agreement and the Security Interest shall
terminate at the earliest of (i) the date when all of the Obligations have been
indefeasibly paid in full and (ii) the date that holders of a majority of the
aggregate principal amount of Notes issued have converted their Notes in
accordance with the terms of such Notes, at which time the Administrative Agent
shall execute and deliver to the Company, at the Company’s expense, all Uniform
Commercial Code termination statements and similar documents which the Company
shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section 7.13
shall be without recourse to or warranty by the Administrative
Agent.

     

    [Signatures
on following page]


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date first written above.

     

    
      
        
          	 
      	
                  CNS
      RESPONSE, INC.

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Paul Buck

                	 
      
	 
      	 
      	
                  Name:
      Paul Buck

                
	 
      	 
      	
                  Title:
      CFO

                


        

      

    

     

    
      
        	 
      	
                ADMINISTRATIVE
      AGENT

              
	 
      	 
      
	 
      	
                /s/ John Pappajohn