FORM
OF

    SECURITY
AGREEMENT

    


    This
SECURITY AGREEMENT (this
“Agreement”), dated as
of December ___, 2009, is made by and among the grantors listed on the signature
pages hereof (collectively, jointly and severally, the “Grantors” and each,
individually, a “Grantor”), and the secured
parties listed on the signature pages hereof (collectively, the “Secured Parties” and each,
individually, a “Secured
Party”).

     

    RECITALS

     

    WHEREAS, pursuant to that
certain Securities Purchase Agreement, dated as of December 21, 2009 (as
amended, restated, supplemented, or otherwise modified from time to time,
including all schedules thereto, collectively, the “Purchase Agreement”), by and
among MAGNUM D’OR RESOURCES, INC., a Nevada corporation (“Parent”), and the Secured
Parties, Parent has agreed to sell, and Secured Parties have agreed to purchase,
severally and not jointly, certain Notes and Warrants; and

     

    WHEREAS, each Grantor other
than Parent is a direct or indirect wholly-owned subsidiary of Parent and will
receive direct and substantial benefits from the purchase by Secured Parties of
the Notes and Warrants; and

     

    WHEREAS, in order to induce
the Secured Parties to purchase, severally and not jointly, the Notes and
Warrants as provided for in the Purchase Agreement, Grantors have agreed to
grant a continuing security interest in and to the Collateral in order to secure
the prompt and complete payment, observance and performance of the Secured
Obligations.

     

    AGREEMENTS

     

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

     

    1.           Defined Terms. All
capitalized terms used herein (including in the preamble and recitals hereof)
without definition shall have the meanings ascribed thereto in the Notes. Any
terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the
Notes; provided, however, if the Code
is used to define any term used herein and if such term is defined differently
in different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern. In addition to those terms defined elsewhere
in this Agreement, as used in this Agreement, the following terms shall have the
following meanings:

     

    (a)           “Account” means an account (as
that term is defined in the Code).

     

    (b)           “Account Debtor” means an
account debtor (as that term is defined in the Code).

     

    (c)           “Bankruptcy Code” means title
11 of the United States Code, as in effect from time to time.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (d)           “Books” means books and records
(including, without limitation, each Grantor’s Records) indicating, summarizing,
or evidencing each Grantor’s assets (including the Collateral) or liabilities,
each Grantor’s Records relating to its business operations (including, without
limitation, stock ledgers) or financial condition, and each Grantor’s goods or
General Intangibles related to such information.

     

    (e)           “Chattel Paper” means chattel
paper (as that term is defined in the Code) and includes tangible chattel paper
and electronic chattel paper.

     

    (f)           “Code” means the New York
Uniform Commercial Code, as in effect from time to time; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection, priority, or remedies with respect to any Secured Party’s Lien on
any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of New York, the term “Code” shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies.

     

    (g)           “Collateral” has the meaning
specified therefor in Section 2.

     

    (h)           “Colorado Collateral” means,
collectively, (i) all Collateral of Parent that is located at Parent’s facility
in Hudson, Colorado as of the date hereof and (ii) all Collateral acquired after
the date hereof by Parent, directly or indirectly, from any Person (other than
any of the Subsidiaries or any affiliate of Parent or any of the Subsidiaries)
that is solely used and located at Parent’s facility in Hudson,
Colorado.

     

    (i)           “Commencement Notice” means a
written notice, given by any Secured Party to the other Secured Parties in
accordance with the notice provisions set forth in the Purchase Agreement,
pursuant to which such Secured Party notifies the other Secured Parties of the
existence of one or more Events of Default and of such Secured Party’s intent to
commence the exercise of one or more of the remedies provided for under this
Agreement with respect to all or any portion of the Collateral as a consequence
thereof, which notice shall incorporate a reasonably detailed description of
each Event of Default then existing and of the remedial action proposed to be
taken.

     

    (j)           “Commercial Tort Claims” means
commercial tort claims (as that term is defined in the Code), and includes those
commercial tort claims listed on Schedule
1 attached hereto.

     

    (k)           “Control Agreement” means a
control agreement, in form and substance satisfactory to Secured Parties,
executed and delivered by a Grantor, one or more Secured Parties, and the
applicable securities intermediary (with respect to a Securities Account) or
bank (with respect to a Deposit Account), as may be amended from time to
time.


    
      
         


      

      
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    (l)           “Copyrights” means all
copyrights and copyright registrations, and also includes (i) the copyright
registrations and recordings thereof and all applications in connection
therewith listed on Schedule
2 attached hereto and made a part hereof, (ii) all reissues,
continuations, extensions or renewals thereof, (iii) all income, royalties,
damages and payments now and hereafter due or payable under and with respect
thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions
thereof, (iv) the right to sue for past, present and future infringements and
dilutions thereof, (v) the goodwill of each Grantor’s business symbolized by the
foregoing or connected therewith, and (vi) all of each Grantor’s rights
corresponding thereto throughout the world.

     

    (m)           “Copyright Security Agreement”
means each Copyright Security Agreement among Grantors, or any of them, and
Secured Parties, in substantially the form of Exhibit
A attached hereto, pursuant to which Grantors have granted to each
Secured Party a security interest in all their respective Copyrights, as may be
amended from time to time.

     

    (n)           “Deposit Account” means a
deposit account (as that term is defined in the Code).

     

    (o)           “Equipment” means equipment (as
that term is defined in the Code).

     

    (p)           “Event of Default” has the
meaning specified therefor in the Notes.

     

    (q)           “General Intangibles” means
general intangibles (as that term is defined in the Code) and, in any event,
includes payment intangibles, contract rights, rights to payment, rights arising
under common law, statutes, or regulations, choses or things in action, goodwill
(including the goodwill associated with any Trademark, Patent, or Copyright),
Patents, Trademarks, Copyrights, URLs and domain names, industrial designs,
other industrial or Intellectual Property or rights therein or applications
therefor, whether under license or otherwise, programs, programming materials,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, including Intellectual Property Licenses,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, pension plan refunds, pension
plan refund claims, insurance premium rebates, tax refunds, and tax refund
claims, interests in a partnership or limited liability company which do not
constitute a security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts, Chattel Paper,
Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and
oil, gas, or other minerals before extraction.

     

    (r)           “Governmental Authority” means
any domestic or foreign federal, state, local, or other governmental or
administrative body, instrumentality, board, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.


    
      
         


      

      
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    (s)           “Guaranties” means each
Guaranty dated of even date herewith executed by Guarantors in favor of any or
all of the Secured Parties, together with any other guaranty or similar
agreement now or hereafter executed by a Guarantor in favor of any or all of the
Secured Parties in connection with the Notes or any of the other Transaction
Documents (other than the Warrants), as may be amended from time to
time.

     

    (t)           “Guarantor” means each Grantor,
other than Parent, and each other Person that now or hereafter executes a
Guaranty.

     

    (u)           “Insolvency Proceeding” means
any proceeding commenced by or against any Person under any provision of the
Bankruptcy Code or under any other state or federal bankruptcy or insolvency law
or any equivalent laws in any other jurisdiction, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.

     

    (v)           “Intellectual Property” means
Patents, Copyrights, Trademarks, the goodwill associated with such Trademarks,
trade secrets and customer lists, and Intellectual Property
Licenses.

     

    (w)           “Intellectual Property
Licenses” means rights under or interests in any patent, trademark,
copyright or other intellectual property, including software license agreements
with any other party, whether the applicable Grantor is a licensee or licensor
under any such license agreement, including the license agreements listed on
Schedule
3 attached hereto and made a part hereof, as may be amended from time to
time.

     

    (x)           “Inventory” means inventory (as
that term is defined in the Code).

     

    (y)           “Investment Related Property”
means (i) investment property (as that term is defined in the Code), and (ii)
all of the following (regardless of whether classified as investment property
under the Code): all Pledged Interests, Pledged Operating Agreements, and
Pledged Partnership Agreements.

     

    (z)           “Lien” has the meaning
specified therefor in the Notes.

     

    (aa)         “Negotiable Collateral” means
letters of credit, letter-of-credit rights, instruments, promissory notes,
drafts, and documents.

     

    (bb)         “Notes” has the meaning
specified therefor in the Purchase Agreement.

     

    (cc)         “Patents” means all patents and
patent applications, and also includes (i) the patents and patent applications
listed on Schedule
4 attached hereto and made a part hereof, (ii) all renewals thereof,
(iii) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and
future infringements and dilutions thereof, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.


    
      
         


      

      
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    (dd)         “Patent Security Agreement”
means each Patent Security Agreement among Grantors and Secured Parties in
substantially the form of Exhibit
B attached hereto, pursuant to which Grantors have granted to each
Secured Party a security interest in all their respective Patents, as may be
amended from time to time.

     

    (ee)          “Permitted Liens” has the
meaning specified therefor in the Notes.

     

    (ff)           “Permitted Secured Party”
means, with respect to the exercise of any remedy provided for under this
Agreement, any Secured Party that has delivered a Commencement Notice with
respect to the exercise of such remedy to the other Secured Parties and has not
received a Veto Notice with respect thereto within the Veto Period; provided, however, there shall
only be a single Permitted Secured Party that may exercise any specific remedy
at any one time (it being agreed that if a Commencement Notice is delivered by
more than one Secured Party with respect to any remedy provided for under this
Agreement, then the first Secured Party to deliver a Commencement Notice and not
receive a Veto Notice within the Veto Period shall be the only Secured Party
that may exercise such remedy).

     

    (gg)         “Person” has the meaning
specified therefor in the Purchase Agreement.

     

    (hh)         “Pledged Companies” means, each
Person listed on Schedule
5 hereto as a “Pledged Company,” together with each other Person all or a
portion of whose Stock is acquired or otherwise owned by a Grantor after the
date hereof.

     

    (ii)           “Pledged Interests” means all
of each Grantor’s right, title and interest in and to all of the Stock now or
hereafter owned by such Grantor, regardless of class or designation, including
all substitutions therefor and replacements thereof, all proceeds thereof and
all rights relating thereto, also including any certificates representing the
Stock, the right to receive any certificates representing any of the Stock, all
warrants, options, share appreciation rights and other rights, contractual or
otherwise, in respect thereof, and the right to receive dividends, distributions
of income, profits, surplus, or other compensation by way of income or
liquidating distributions, in cash or in kind, and cash, instruments, and other
property from time to time received, receivable, or otherwise distributed in
respect of or in addition to, in substitution of, on account of, or in exchange
for any or all of the foregoing.

     

    (jj)           “Pledged Operating Agreements”
means all of each Grantor’s rights, powers, and remedies under the limited
liability company operating agreements of each of the Pledged Companies that are
limited liability companies, as may be amended from time to time.

     

    (kk)          “Pledged Partnership
Agreements” means all of each Grantor’s rights, powers, and remedies
under the partnership agreements of each of the Pledged Companies that are
partnerships, as may be amended from time to time.

     

    (ll)           “Proceeds” has the meaning
specified therefor in Section 2.

     

    (mm)        “Real Property” means any
estates or interests in real property now owned or hereafter acquired by any
Grantor and the improvements thereto.


    
      
         


      

      
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    (nn)         “Records” means information
that is inscribed on a tangible medium or which is stored in an electronic or
other medium and is retrievable in perceivable form.

     

    (oo)         “Secured Obligations” mean all
of the present and future payment and performance obligations of Grantors
arising under this Agreement, the Notes, the Guaranties, and the other
Transaction Documents (other than the Warrants), including, without duplication,
reasonable attorneys’ fees and expenses and any interest, fees, or expenses that
accrue after the filing of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any Insolvency
Proceeding.

     

    (pp)         “Securities Account” means a
securities account (as that term is defined in the Code).

     

    (qq)         “Security Documents” means,
collectively, this Agreement, each Copyright Security Agreement, each Patent
Security Agreement, each Trademark Security Agreement, each Control Agreement,
and each other security agreement, pledge agreement, assignment, mortgage,
security deed, deed of trust, and other agreement or document executed and
delivered by a Grantor as security for any of the Secured Obligations, as may be
amended from time to time.

     

    (rr)           “Security Interest” and “Security Interests” have the
meanings specified therefor in Section 2.

     

    (ss)         “Senior Lender” means Cache
Bank & Trust.

     

    (tt)           “Significant Secured Party”
means, on any date of determination, any Secured Party holding twenty percent
(20%) or more of the aggregate principal amount of Notes outstanding on such
date.

     

    (uu)         “Stock” means all shares,
options, warrants, interests (including membership and partnership interests),
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the United States Securities and
Exchange Commission and any successor thereto under the Securities Exchange Act
of 1934, as in effect from time to time).

     

    (vv)         “Subordination Agreement”
means, collectively, those certain subordination agreements dated as of the date
hereof and entered into by each of the Secured Parties with each of the Senior
Lender and Parent, as may be amended from time to time.

     

    (ww)       “Subsidiaries” and “Subsidiary” each have the
meanings specified therefor in the Notes.

     

    (xx)           “Supporting Obligations” means
supporting obligations (as such term is defined in the Code).


    
      
         


      

      
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    (yy)         “Trademarks” means all
trademarks, trade names, trademark applications, service marks, service mark
applications, and also includes (i) the trade names, trademarks, trademark
applications, service marks, and service mark applications listed on Schedule
6 attached hereto and made a part hereof, and (ii) all renewals thereof,
(iii) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and
future infringements and dilutions thereof, (v) the goodwill of each Grantor’s
business symbolized by the foregoing or connected therewith, and (vi) all of
each Grantor’s rights corresponding thereto throughout the world.

     

    (zz)          “Trademark Security Agreement”
means each Trademark Security Agreement among Grantors and Secured Parties in
substantially the form of Exhibit
C attached hereto, pursuant to which Grantors have granted to each
Secured Party a security interest in all their respective
Trademarks.

     

    (aaa)       “Transaction Documents” has the
meaning specified therefor in the Purchase Agreement.

     

    (bbb)      “URL” means “uniform resource
locator,” an internet web address.

     

    (ccc)       “Veto Notice” means, with
respect to any Commencement Notice, a written notice given by any Significant
Secured Party to the other Secured Parties in accordance with the notice
provisions set forth in the Purchase Agreement pursuant to which such
Significant Secured Party notifies the other Secured Parties of its objection to
the commencement of the remedial action specified in such Commencement Notice
and certifies that, to the best of its knowledge, it is a Significant Secured
Party.

     

    (ddd)      “Veto Period” means, with
respect to any Commencement Notice, the period of ten (10) consecutive calendar
days following the delivery of such Commencement Notice to the Secured
Parties.

     

    (eee)       “Warrants” has the meaning
specified therefor in the Purchase Agreement.

     

    2.           Grant of Security.
Each Grantor hereby unconditionally grants, assigns, and pledges to each Secured
Party a separate, continuing security interest (each, a “Security Interest” and,
collectively, the “Security
Interests”) in all assets of such Grantor (other than Real Property)
whether now owned or hereafter acquired or arising and wherever located
(collectively, the “Collateral”), including,
without limitation, such Grantor’s right, title, and interest in and to the
following, whether now owned or hereafter acquired or arising and wherever
located:

     

    (a)           all
of such Grantor’s Accounts;

     

    (b)           all
of such Grantor’s Books;


    
      
         


      

      
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    (c)           all
of such Grantor’s Chattel Paper;

     

    (d)           all
of such Grantor’s Deposit Accounts;

     

    (e)           all
of such Grantor’s Equipment and fixtures;

     

    (f)           all
of such Grantor’s General Intangibles;

     

    (g)           all
of such Grantor’s Inventory;

     

    (h)           all
of such Grantor’s Investment Related Property;

     

    (i)           all
of such Grantor’s Negotiable Collateral;

     

    (j)           all
of such Grantor’s rights in respect of Supporting Obligations;

     

    (k)           all
of such Grantor’s Commercial Tort Claims;

     

    (l)           all
of such Grantor’s money, cash, cash equivalents, or other assets of each such
Grantor that now or hereafter come into the possession, custody, or control of
any Secured Party;

     

    (m)          all
of the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or Commercial Tort Claims covering or
relating to any or all of the foregoing, and any and all Accounts, Books,
Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory,
Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the foregoing, the
proceeds of any award in condemnation with respect to any of the foregoing, any
rebates or refunds, whether for taxes or otherwise, and all proceeds of any such
proceeds, or any portion thereof or interest therein, and the proceeds thereof,
and all proceeds of any loss of, damage to, or destruction of the above, whether
insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing (the “Proceeds”). Without limiting
the generality of the foregoing, the term “Proceeds” includes whatever is
receivable or received when Investment Related Property or proceeds are sold,
exchanged, collected, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes proceeds of any indemnity or guaranty
payable to any Grantor or any Secured Party from time to time with respect to
any of the Investment Related Property.

     

    3.           Security for
Obligations. This Agreement and the Security Interests created hereby
secure the payment and performance of the Secured Obligations, whether now
existing or arising hereafter.  Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Secured Obligations and would be owed by Grantors, or any of them,
to Secured Parties, or any of them, but for the fact that they are unenforceable
or not allowable due to the existence of an Insolvency Proceeding involving any
Grantor.


    
      
         


      

      
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    4.           Grantors Remain
Liable.  Anything herein to the contrary notwithstanding, (a)
each of the Grantors shall remain liable under the contracts and agreements
included in the Collateral, including the Pledged Operating Agreements and the
Pledged Partnership Agreements, to perform all of the duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Secured Parties, or any of them, of any of the rights hereunder
shall not release any Grantor from any of its duties or obligations under such
contracts and agreements included in the Collateral, and (c) no Secured Party
shall have any obligation or liability under such contracts and agreements
included in the Collateral by reason of this Agreement, nor shall any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder. Until an Event of Default shall occur and be continuing,
except as otherwise provided in this Agreement or any other Transaction
Document, Grantors shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of their respective
businesses, subject to and upon the terms hereof and the other Transaction
Documents. Without limiting the generality of the foregoing, it is the intention
of the parties hereto that record and beneficial ownership of the Pledged
Interests, including all voting, consensual, and dividend rights, shall remain
in the applicable Grantor until the occurrence, and during the continuance, of
an Event of Default and until any Secured Party shall notify the applicable
Grantor of such Secured Party’s exercise of voting, consensual, or dividend
rights with respect to the Pledged Interests pursuant to Section 15
hereof.

     

    5.           Representations and
Warranties.  Each Grantor hereby represents and warrants as
follows:

     

    (a)           The
exact legal name of each of the Grantors is set forth on the signature pages of
this Agreement.

     

    (b)           As
of the date hereof, Schedule
7 attached hereto sets forth (i) all Real Property owned or leased by
Grantors, together with all other locations of Collateral, as of the date
hereof, and (ii) the chief executive office of each Grantor as of the date
hereof.

     

    (c)           As
of the date hereof, no Grantor has any interest in, or title to, any Copyrights,
Intellectual Property Licenses, Patents or Trademarks, except as set forth on
Schedules
2, 3, 4 and 6,
respectively, attached hereto. This Agreement is effective to create a valid and
continuing Lien on such Copyrights, Intellectual Property Licenses, Patents and
Trademarks and, upon filing of the Copyright Security Agreement with the United
States Copyright Office and filing of the Patent Security Agreement and the
Trademark Security Agreement with the United States Patent and Trademark Office,
and the filing of appropriate financing statements in the jurisdictions listed
on Schedule
8 hereto, all action necessary or desirable to protect and perfect the
Security Interests in and to each Grantor’s Patents, Trademarks, or Copyrights
has been, or will within the time period required by applicable law be, taken
and such perfected Security Interests are enforceable as such as against any and
all creditors of and purchasers from any Grantor.  No Grantor has any
interest in any Copyright that is necessary in connection with the operation of
such Grantor’s business, except for those Copyrights identified on Schedule
2 attached hereto which have been registered with the United States
Copyright Office.


    
      
         


      

      
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    (d)           This
Agreement creates a valid security interest in all of the Collateral of each
Grantor, to the extent a security interest therein can be created under the Code
securing the payment of the Secured Obligations. Except to the extent a security
interest in the Collateral cannot be perfected by the filing of a financing
statement under the Code, all filings and other actions necessary to perfect and
protect such security interest have been duly taken or will have been taken upon
the filing of financing statements listing each applicable Grantor, as a debtor,
and Secured Parties, as secured parties, in the jurisdictions listed next to
such Grantor’s name on Schedule
8 attached hereto. Upon the making of such filings, Secured Parties shall
each have a first priority perfected security interest in all of the Collateral
of each Grantor (other than the Colorado Collateral with respect to Parent) to
the extent such security interest can be perfected by the filing of a financing
statement under the Code. Upon the making of such filings, Secured Parties shall
each have a third priority perfected security interest in all of the Colorado
Collateral to the extent such security interest can be perfected by the filing
of a financing statement under the Code. All action by any Grantor necessary to
protect and perfect such security interest on each item of Collateral has been,
or will within the time period required by applicable law be, duly
taken.

     

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


    
      
         


      

      
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    (f)           No
consent, approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, other than such consents as have
already been obtained, or (ii) for the exercise by any Secured Party of the
voting or other rights provided in this Agreement with respect to Investment
Related Property pledged hereunder or the remedies in respect of the Collateral
pursuant to this Agreement, except (A) as may be required in connection with
such disposition of Investment Related Property by laws affecting the offering
and sale of securities generally and (B) for any consent that may be required
for the assignment of any Intellectual Property License that expressly provides
that such Intellectual Property License is not assignable (or is not assignable
without the consent of the other party to such Intellectual Property
License).

     

    6.           Covenants.  Each
Grantor, jointly and severally, covenants and agrees with each Secured Party
that from and after the date of this Agreement and until the date of termination
of this Agreement in accordance with Section 24 hereof (but only to the extent
the particular assets described in this Section 6 constitute Collateral
hereunder):

     

    (a)           Possession of
Collateral.  In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Investment
Related Property, or Chattel Paper, and if and to the extent that perfection or
priority of Secured Parties’ respective Security Interests is dependent on or
enhanced by possession, the applicable Grantor, immediately upon the request of
any Secured Party, shall execute such other documents and instruments as shall
be reasonably requested by such Secured Party or, if applicable, endorse and
deliver physical possession of such Negotiable Collateral, Investment Related
Property, or Chattel Paper to such Secured Party, together with such undated
powers endorsed in blank as shall be requested by such Secured
Party.

     

    (b)           Chattel
Paper.

     

    (i)         Each
Grantor shall take all steps reasonably necessary to grant each Secured Party
control of all Chattel Paper in accordance with the Code and all “transferable
records” as that term is defined in Section 16 of the Uniform Electronic
Purchase Act and Section 201 of the federal Electronic Signatures in Global and
National Commerce Act as in effect in any relevant jurisdiction;
and

     

    (ii)         If
any Grantor retains possession of any Chattel Paper or instruments (which
retention of possession shall be subject to the extent permitted hereby and by
the Purchase Agreement), promptly upon the request of any Secured Party, such
Chattel Paper and instruments shall be marked with the following legend: “This
writing and the obligations evidenced or secured hereby are subject to the
Security Interests of [names of Secured Parties].”


    
      
         


      

      
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    (c)           Control
Agreements.

     

    (i)         Upon
request of any Secured Party, each Grantor shall obtain an authenticated Control
Agreement from each bank maintaining a Deposit Account for such Grantor;
and

     

    (ii)        Upon
request of any Secured Party, each Grantor shall obtain authenticated Control
Agreements from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for such Grantor.

     

    (d)           Letter-of-Credit
Rights.  Each Grantor that is or becomes the beneficiary of a
letter of credit shall promptly (and in any event within 2 Business Days after
becoming a beneficiary) notify Secured Parties thereof and, upon the request by
any Secured Party, enter into a multi-party agreement with Secured Parties and
the issuing or confirming bank with respect to letter-of-credit rights assigning
such letter-of-credit rights to Secured Parties and directing all payments
thereunder to Secured Parties, all in form and substance satisfactory to Secured
Parties.

     

    (e)           Commercial Tort
Claims.  Each Grantor shall promptly (and in any event within 2
Business Days of receipt thereof) notify Secured Parties in writing upon
incurring or otherwise obtaining a Commercial Tort Claim after the date hereof
and, upon request of any Secured Party, promptly amend Schedule
1 to this Agreement to describe such after-acquired Commercial Tort Claim
in a manner that reasonably identifies such Commercial Tort Claim, and hereby
authorizes the filing of additional financing statements or amendments to
existing financing statements describing such Commercial Tort Claims, and agrees
to do such other acts or things deemed necessary or desirable by any Secured
Party to give Secured Parties a first priority, perfected security interest in
any such Commercial Tort Claim.

     

    (f)           Government
Contracts.  If any Account or Chattel Paper arises out of a
contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, Grantors shall promptly (and in any event
within 5 Business Days of the creation thereof) notify Secured Parties thereof
in writing and execute any instruments or take any steps reasonably required by
any Secured Party in order that all moneys due or to become due under such
contract or contracts shall be assigned to Secured Parties, and shall provide
written notice thereof and take all other appropriate actions under the
Assignment of Claims Act or other applicable law to provide each Secured Party a
first-priority perfected security interest in such contract.

     

    (g)           Intellectual
Property.

     

    (i)         Upon
request of any Secured Party, in order to facilitate filings with the United
States Patent and Trademark Office and the United States Copyright Office or any
other applicable Governmental Authority, each Grantor shall execute and deliver
to Secured Parties one or more Copyright Security Agreements, Trademark Security
Agreements, or Patent Security Agreements to further evidence Secured Parties’
respective Liens on such Grantor’s Copyrights, Trademarks or
Patents.


    
      
         


      

      
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    (ii)         Each
Grantor shall have the duty (A) to promptly sue for infringement,
misappropriation, or dilution with respect to its rights in Intellectual
Property and to recover any and all damages for such infringement,
misappropriation, or dilution, (B) to prosecute diligently any trademark
application or service mark application that is part of the Trademarks pending
as of the date hereof or hereafter until the termination of this Agreement, (C)
to prosecute diligently any patent application that is part of the Patents
pending as of the date hereof or hereafter until the termination of this
Agreement, and (D) to take all reasonable and necessary action to preserve and
maintain all of each Grantor’s Trademarks, Patents, Copyrights, Intellectual
Property Licenses, and its rights therein, including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings.  Each Grantor shall
promptly file an application with the United States Copyright Office for any
material Copyright that has not been registered with the United States Copyright
Office. Each Grantor shall promptly file an application with the United States
Patent and Trademark Office for any material Patent or material Trademark that
has not been registered with the United States Patent and Trademark Office. Any
expenses incurred in connection with the foregoing shall be borne by Grantors.
Each Grantor further agrees not to abandon any material Trademark, Patent,
Copyright, or Intellectual Property License.

     

    (iii)         Grantors
acknowledge and agree that Secured Parties shall have no duties with respect to
the Trademarks, Patents, Copyrights, or Intellectual Property
Licenses.  Without limiting the generality of this Section 6(g),
Grantors acknowledge and agree that no Secured Party shall be under any
obligation to take any steps necessary to preserve rights in the Trademarks,
Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any Secured Party may do so at its option from and after the occurrence and
during the continuance of an Event of Default, and all expenses incurred in
connection therewith (including fees and expenses of attorneys and other
professionals) shall be for the sole account of the Grantors and shall be deemed
to be Secured Obligations.

     

    (h)           Investment Related
Property.

     

    (i)         If
any Grantor shall receive or become entitled to receive any Pledged Interests
after the date hereof, it shall promptly (and in any event within 2 Business
Days of receipt thereof) identify such Pledged Interests in a written notice to
Secured Parties;

     

    (ii)         All
sums of money and property paid or distributed in respect of the Investment
Related Property pledged hereunder which are received by any Grantor shall be
held by the Grantors in trust for the benefit of Secured Parties segregated from
such Grantor’s other property, and such Grantor shall deliver it forthwith to
the Secured Parties in the exact form received;

     

    (iii)         Each
Grantor shall promptly deliver to Secured Parties a copy of each notice or other
communication received by it in respect of any Pledged
Interests;


    
      
         


      

      
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    (iv)         No
Grantor shall make or consent to any material amendment or other material
modification or waiver with respect to any Pledged Interests, Pledged Operating
Agreement, or Pledged Partnership Agreement, or enter into any agreement or
permit to exist any restriction with respect to any Pledged
Interests;

     

    (v)         Each
Grantor agrees that it will cooperate with Secured Parties in obtaining all
necessary approvals and making all necessary filings under federal, state,
local, or foreign law in connection with the Security Interests on the
Investment Related Property pledged hereunder or any sale or transfer thereof;
and

     

    (vi)         As
to all limited liability company or partnership interests issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor
hereby represents, warrants and covenants that the Pledged Interests issued
pursuant to such agreement (A) are not and shall not be dealt in or traded on
securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be
held by such Grantor in a securities account. In addition, none of the Pledged
Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction.

     

    (i)           Transfers and Other
Liens.  Grantors shall not (i) sell, lease, license, assign (by
operation of law or otherwise), transfer or otherwise dispose of, or grant any
option with respect to, any of the Collateral, except as expressly permitted by
this Agreement and the other Transaction Documents, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral of any of Grantors,
except for Permitted Liens.  The inclusion of Proceeds in the
Collateral shall not be deemed to constitute consent by any Secured Party to any
sale or other disposition of any of the Collateral except as expressly permitted
in this Agreement or the other Transaction Documents. Notwithstanding anything
contained in this Agreement to the contrary, Permitted Liens (other than
Permitted Liens securing Permitted Senior Indebtedness) shall not be permitted
with respect to any Pledged Interests.

     

    (j)           Preservation of
Existence.  Each Grantor shall maintain and preserve its
existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary.

     

    (k)           Maintenance of
Properties. Each Grantor shall maintain and preserve all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times in all material respects with the provisions of all leases to which
it is a party as lessee or under which it occupies property, so as to prevent
any loss or forfeiture thereof or thereunder.


    
      
         


      

      
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    (l)           Maintenance of
Insurance. Each Grantor shall maintain insurance with responsible
and reputable insurance companies or associations (including, without
limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.

     

    (m)           Other Actions as to Any and
All Collateral.  Each Grantor shall promptly (and in any event
within 5 Business Days of acquiring or obtaining such Collateral) notify Secured
Parties in writing upon (i) acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Trademarks, Patents, registered Copyrights,
Intellectual Property Licenses, Investment Related Property, Chattel Paper
(electronic, tangible or otherwise), documents (as defined in Article 9 of the
Code), promissory notes (as defined in the Code, or instruments (as defined in
the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes, or instruments and, in each such case upon
the request of any Secured Party, promptly execute such other documents, or if
applicable, deliver such Chattel Paper, other documents or certificates
evidencing any Investment Related Property and do such other acts or things
deemed necessary or desirable by any Secured Party to protect Secured Parties’
respective Security Interests therein.

     

    7.           Relation to Other
Transaction Documents.  The provisions of this Agreement shall
be read and construed with the Transaction Documents referred to below in the
manner so indicated.

     

    (a)           Purchase Agreement and
Notes. In the event of any conflict between any provision in this
Agreement and any provision in the Purchase Agreement or Notes, such provision
of the Purchase Agreement or Notes shall control, except to the extent the
applicable provision in this Agreement is more restrictive with respect to the
rights of Grantors or imposes more burdensome or additional obligations on
Grantors, in which event the applicable provision in this Agreement shall
control.

     

    (b)           Patent, Trademark, Copyright
Security Agreements.  The provisions of the Copyright Security
Agreements, Trademark Security Agreements, and Patent Security Agreements are
supplemental to the provisions of this Agreement, and nothing contained in the
Copyright Security Agreements, Trademark Security Agreements or the Patent
Security Agreements shall limit any of the rights or remedies of any Secured
Party hereunder.


    
      
         


      

      
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    8.           Further
Assurances.

     

    (a)           Each
Grantor agrees that from time to time, at its own expense, such Grantor will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that any Secured Party may reasonably
request, in order to perfect and protect the Security Interests granted or
purported to be granted hereby or to enable any Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any of the
Collateral.

     

    (b)           Each
Grantor authorizes the filing by any Secured Party of financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver to
such Secured Party such other instruments or notices, as may be necessary or as
such Secured Party may reasonably request, in order to perfect and preserve the
Security Interests granted or purported to be granted hereby.

     

    (c)           Each
Grantor authorizes any Secured Party at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments (i)
describing the Collateral as “all personal property of debtor” or “all assets of
debtor” or words of similar effect, (ii) describing the Collateral as being of
equal or lesser scope or with greater detail, or (iii) that contain any
information required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance.

     

    (d)           Each
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
filed in connection with this Agreement without the prior written consent of
each Secured Party affected thereby, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.

     

    (e)           Each
Grantor shall permit each Secured Party or its employees, accountants, attorneys
or agents, to examine and inspect any Collateral or any other property of such
Grantor at any time during ordinary business hours upon reasonable advance
notice.

     

    9.           Secured Parties’ Right to
Perform Contracts, Exercise Rights, etc.  Upon the occurrence
and during the continuance of an Event of Default, any Secured Party (a) may
proceed to perform any and all of the obligations of any Grantor contained in
any contract, lease, or other agreement and exercise any and all rights of any
Grantor therein contained as fully as such Grantor itself could, (b) shall have
the right to use any Grantor’s rights under Intellectual Property Licenses in
connection with the enforcement of the Secured Party’s rights hereunder,
including the right to prepare for sale and sell any and all Inventory and
Equipment now or hereafter owned by any Grantor and now or hereafter covered by
such licenses, and (c) shall have the right to request that any Stock that is
pledged hereunder be registered in the name of such Secured Party or any of its
nominees.


    
      
         


      

      
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    10.           Secured Parties Appointed
Attorney-in-Fact.  Each Grantor, on behalf of itself and each
Subsidiary of such Grantor, hereby irrevocably appoints each Secured Party as
the attorney-in-fact of such Grantor and each Subsidiary. In the event any
Grantor or any Subsidiary fails to execute or deliver in a timely manner any
Transaction Document or other agreement, document, certificate or instrument
which such Grantor or Subsidiary now or at any time hereafter is required to
execute or deliver pursuant to the terms of the Purchase Agreement or any other
Transaction Document, each Secured Party shall have full authority in the place
and stead of such Grantor or Subsidiary, and in the name of such Grantor, such
Subsidiary or otherwise, to execute and deliver each of the foregoing. Without
limitation of the foregoing, each Secured Party shall have full authority in the
place and stead of each Grantor and each Subsidiary, and in the name of any such
Grantor, any such Subsidiary or otherwise, at such time as an Event of Default
has occurred and is continuing, to take any action and to execute any instrument
which such Secured Party may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation:

     

    (a)           to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance
and receipts for moneys due and to become due under or in connection with any
Collateral of such Grantor or Subsidiary;

     

    (b)           to
receive and open all mail addressed to such Grantor or Subsidiary and to notify
postal authorities to change the address for the delivery of mail to such
Grantor or Subsidiary to that of such Secured Party;

     

    (c)           to
receive, indorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;

     

    (d)           to
file any claims or take any action or institute any proceedings which such
Secured Party may deem necessary or desirable for the collection of any of the
Collateral of such Grantor or Subsidiary or otherwise to enforce the rights of
any Secured Party with respect to any of the Collateral;

     

    (e)           to
repair, alter, or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any Person obligated to such Grantor or Subsidiary in
respect of any Account of such Grantor or Subsidiary;

     

    (f)           to
use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, customer lists, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Inventory and
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor or Subsidiary; and

     

    (g)           such
Secured Party shall have the right, but shall not be obligated, to bring suit in
its own name to enforce the Trademarks, Patents, Copyrights and Intellectual
Property Licenses and, if such Secured Party shall commence any such suit, the
appropriate Grantor or Subsidiary shall, at the request of such Secured Party,
do any and all lawful acts and execute any and all proper documents reasonably
required by such Secured Party in aid of such enforcement.

     

    To the
extent permitted by law, each Grantor hereby ratifies, for itself and each of
its Subsidiaries, all that such attorney-in-fact shall lawfully do or cause to
be done by virtue hereof.  This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is
terminated.


    
      
         


      

      
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    11.           Secured Parties May
Perform.  If any Grantor fails to perform any agreement
contained herein, any Secured Party may itself perform, or cause performance of,
such agreement, and the reasonable expenses of such Secured Party incurred in
connection therewith shall be payable, jointly and severally, by
Grantors.

     

    12.           Secured Parties’ Duties;
Bailee for Perfection.  The powers conferred on Secured Parties
hereunder are solely to protect the Secured Parties’ respective interests in the
Collateral and shall not impose any duty upon any Secured Party in favor of any
Grantor or any other Secured Party to exercise any such
powers.  Except for the safe custody of any Collateral in its actual
possession and the accounting for moneys actually received by it hereunder, no
Secured Party shall have any duty to any Grantor or any other Secured Party as
to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any
Collateral.  A Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its actual
possession if such Collateral is accorded treatment substantially equal to that
which such Secured Party accords its own property.  Each Secured Party
agrees that, with respect to any Collateral at any time or times in its
possession and in which any other Secured Party has a Lien, the Secured Party in
possession of any such Collateral shall be the bailee of each other Secured
Party solely for purposes of perfecting (to the extent not otherwise perfected)
each other Secured Party’s Lien in such Collateral, provided that no Secured
Party shall be obligated to obtain or retain possession of any such
Collateral.  Without limiting the generality of the foregoing, Secured
Parties and Grantors hereby agree that any Secured Party that is in possession
of any Collateral at such time as the Secured Obligations owing to such Secured
Party have been paid in full may re-deliver such Collateral to the applicable
Grantor or, if requested by any Secured Party prior to such re-delivery, may
deliver such Collateral (unless otherwise restricted by applicable law or court
order and subject in all events to the receipt of an indemnification of all
liabilities arising from such delivery) to the requesting Secured Party, without
recourse to or representation or warranty by the Secured Party in such
possession.

     

    13.           Collection of Accounts,
General Intangibles and Negotiable Collateral. At any time upon the
occurrence and during the continuation of an Event of Default, any Secured Party
may (a) notify Account Debtors of any Grantor that the Accounts, General
Intangibles, Chattel Paper or Negotiable Collateral have been assigned to such
Secured Party or that such Secured Party has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of the
Secured Obligations.

     

    14.           Disposition of Pledged
Interests by Secured Party.  None of the Pledged Interests
existing as of the date of this Agreement are, and none of the Pledged Interests
hereafter acquired on the date of acquisition thereof will be, registered or
qualified under the various federal, state or other securities laws of the
United States or any other jurisdiction, and disposition thereof after an Event
of Default may be restricted to one or more private (instead of public) sales in
view of the lack of such registration.  Each Grantor understands that
in connection with such disposition, any Secured Party may approach only a
restricted number of potential purchasers and further understands that a sale
under such circumstances may yield a lower price for the Pledged Interests than
if the Pledged Interests were registered and qualified pursuant to federal,
state and other securities laws and sold on the open market.  Each
Grantor, therefore, agrees that:  (a) if a Secured
Party  shall, pursuant to the terms of this Agreement, sell or cause
the Pledged Interests or any portion thereof to be sold at a private sale, such
Secured Party shall have the right to rely upon the advice and opinion of any
nationally recognized brokerage or investment firm (but shall not be obligated
to seek such advice and the failure to do so shall not be considered in
determining the commercial reasonableness of such action) as to the best manner
in which to offer the Pledged Interest or any portion thereof for sale and as to
the best price reasonably obtainable at the private sale thereof; and (b) such
reliance shall be conclusive evidence that such Secured Party has handled the
disposition in a commercially reasonable manner.


    
      
         


      

      
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    15.           Voting
Rights.

     

    (a)           Upon
the occurrence and during the continuation of an Event of Default, (i) any
Secured Party may, at its option, and with 2 Business Days prior notice to any
Grantor, and in addition to all rights and remedies available to Secured Parties
under any other agreement, at law, in equity, or otherwise, exercise all voting
rights, and all other ownership or consensual rights in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is any Secured Party
obligated by the terms of this Agreement to exercise such rights, and (ii) if
such Secured Party duly exercises its right to vote any of such Pledged
Interests, each Grantor hereby appoints such Secured Party as such Grantor’s
true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged
Interests in any manner that such Secured Party deems advisable for or against
all matters submitted or which may be submitted to a vote of shareholders,
partners or members, as the case may be.  The power-of-attorney
granted hereby is coupled with an interest and shall be
irrevocable.

     

    (b)           For
so long as any Grantor shall have the right to vote the Pledged Interests owned
by it, such Grantor covenants and agrees that it will not, without the prior
written consent of Secured Parties, vote or take any consensual action with
respect to such Pledged Interests which would materially or adversely affect the
rights of Secured Parties exercising the voting rights owned by such Grantor or
the value of the Pledged Interests.

     

    16.           Remedies.  Upon
the occurrence and during the continuance of an Event of
Default:


    
      
         


      

      
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    (a)           Any
Secured Party may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, in the other Transaction Documents, or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code or any other applicable law. Without limiting the
generality of the foregoing, each Grantor expressly agrees that, in any such
event, any Secured Party without any demand, advertisement, or notice of any
kind (except a notice specified below of time and place of public or private
sale) to or upon any Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or by any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of such Secured Party forthwith, assemble all or part of the Collateral as
directed by such Secured Party and make it available to such Secured Party at
one or more locations where such Grantor regularly maintains Inventory, and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of such Secured
Party’s offices or elsewhere, for cash, on credit, and upon such other terms as
such Secured Party may deem commercially reasonable.  Each Grantor
agrees that, to the extent notice of sale shall be required by law, at least 10
days notice to any Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification and specifically such notice shall constitute a reasonable
“authenticated notification of disposition” within the meaning of Section 9-611
of the Code.  No Secured Party shall be obligated to make any sale of
Collateral regardless of notice of sale having been given.  Any
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.

     

    (b)           Each
Secured Party is hereby granted a license or other right to use, without
liability for royalties or any other charge, each Grantor’s labels, Patents,
Copyrights, rights of use of any name, trade secrets, trade names, Trademarks,
service marks and advertising matter, URLs, domain names, industrial designs,
other industrial or intellectual property or any property of a similar nature,
whether owned by any Grantor or with respect to which any Grantor has rights
under license, sublicense, or other agreements (but only to the extent (i) such
license, sublicense or agreement does not prohibit such use by such Secured
Party and (ii) such Grantor will not be in default under such license,
sublicense, or other agreement as a result of such use by such Secured Party),
as it pertains to the Collateral, in preparing for sale, advertising for sale
and selling any Collateral, and each Grantor’s rights under all licenses and all
franchise agreements shall inure to the benefit of such Secured
Party.

     

    (c)           Any
cash held by any Secured Party as Collateral and all proceeds received by any
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral shall be applied against the Secured
Obligations in the order set forth in Section 17 hereof. In the event the
proceeds of Collateral are insufficient to indefeasibly satisfy and discharge
all of the Secured Obligations in full, each Grantor shall remain jointly and
severally liable for any such deficiency.

     

    (d)           Each
Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur and
be continuing any Secured Party shall have the right to an immediate writ of
possession without notice of a hearing. Each Secured Party shall have the right
to the appointment of a receiver for the properties and assets of each Grantor,
and each Grantor hereby consents to such rights and such appointment and hereby
waives any objection such Grantor may have thereto or the right to have a bond
or other security posted by any Secured Party.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    (e)           Notwithstanding
anything in this Agreement to the contrary, each Secured Party agrees that it
will not exercise any remedy provided for under this Agreement with respect to
all or any portion of the Collateral unless such Secured Party is a Permitted
Secured Party (provided that the foregoing shall not prevent any Secured Party
from commencing or participating in any Insolvency Proceeding or taking any
action (other than with respect to the Collateral) to enforce the payment or
performance of any Grantors’ obligations under any of the Notes, Guaranties or
other Transaction Documents).  This Section 16(e) is not intended to
confer any rights or benefits upon Grantors, or any of them, or any other Person
except Secured Parties, and no Person (including any or all Grantors) other than
Secured Parties shall have any right to enforce any of the provisions of
this Section 16(e). As between Grantors, or any of them, and any Secured
Party, any action that such Secured Party may take under this Agreement shall be
conclusively presumed to have been authorized and approved by the other Secured
Parties.

     

    17.           Priority of Liens;
Application of Proceeds of Collateral.  Each Secured Party
hereby acknowledges and agrees that, notwithstanding the time or order of the
filing of any financing statement or other registration or document with respect
to the Collateral and the Security Interests, or any provision of this
Agreement, any other Security Document, the Code or other applicable law, solely
as amongst the Secured Parties, the separate Security Interests of the Secured
Parties shall have the same rank and priority; provided, that, the foregoing
shall not apply to any Security Interest of a Secured Party that is void or
voidable as  a matter of law.  In furtherance thereof, all
proceeds of Collateral received by any Secured Party shall be applied as
follows:

     

    (a)           first, ratably to pay
any expenses due to any of the Secured Parties (including, without limitation,
the reasonable costs and expenses paid or incurred by any Secured Party to
correct any default under or enforce any provision of the Transaction Documents,
or after the occurrence of any Event of Default in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated) or indemnities then due to any of
the Secured Parties under the Transaction Documents, until paid in
full;

     

    (b)           second, ratably to
pay any fees or premiums then due to any of the Secured Parties under the
Transaction Documents, until paid in full;

     

    (c)           third, ratably to pay
interest due in respect of the Secured Obligations then due to any of the
Secured Parties, until paid in full;

     

    (d)           fourth, ratably to
pay the principal amount of all Secured Obligations then due to any of the
Secured Parties, until paid in full;

     

    (e)           fifth, ratably to pay
any other Secured Obligations then due to any of the Secured Parties;
and

     

    (f)           sixth, to Grantors or
such other Person entitled thereto under applicable law.


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


    18.           Remedies
Cumulative.  Each right, power, and remedy of any Secured Party
as provided for in this Agreement or in any other Transaction Document or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Transaction Documents
or now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise or beginning of the exercise by any Secured Party, of any one or
more of such rights, powers, or remedies shall not preclude the simultaneous or
later exercise by such Secured Party of any or all such other rights, powers, or
remedies.

     

    19.           Marshaling. No
Secured Party shall be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising.  To the
extent that it lawfully may, each Grantor hereby agrees that it will not invoke
any law relating to the marshaling of collateral which might cause delay in or
impede the enforcement of any Secured Party’s rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Secured Obligations or under which any of the Secured Obligations is outstanding
or by which any of the Secured Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.

     

    20.           Acknowledgment.

     

    (a)           Each
Secured Party hereby agrees and acknowledges that no other Secured Party has
agreed to act for it as an administrative or collateral agent, and each Secured
Party is and shall remain solely responsible for the attachment, perfection and
priority of all Liens created by this Agreement or any other Security Document
in favor of such Secured Party.  No Secured Party shall have by reason
of this Agreement or any other Transaction Document an agency or fiduciary
relationship with any other Secured Party.  No Secured Party (which
term, as used in this sentence, shall include reference to each Secured Party’s
officers, directors, employees, attorneys, agents and affiliates and to the
officers, directors, employees, attorneys and agents of such Secured Party’s
affiliates) shall: (i) have any duties or responsibilities except those
expressly set forth in this Agreement and the other Security Documents or
(ii) be required to take, initiate or conduct any enforcement action
(including any litigation, foreclosure or collection proceedings hereunder or
under any of the other Security Documents).  Without limiting the
foregoing, no Secured Party shall have any right of action whatsoever against
any other Secured Party as a result of such Secured Party acting or refraining
from acting hereunder or under any of the Security Documents except as a result
and to the extent of losses caused by such Secured Party’s actual gross
negligence or willful misconduct (it being understood and agreed by each
Secured Party that the delivery by any Significant Secured Party of one or more
Veto Notices shall not be deemed to be or construed as gross negligence or
willful misconduct on the part of the Secured Party delivering any such Veto
Notice).  No Secured Party assumes any responsibility for any failure
or delay in performance or breach by any Grantor or any Secured Party of
its obligations under this Agreement or any other Transaction
Document.  No Secured Party makes to any other Secured Party any
express or implied warranty, representation or guarantee with respect to any
Secured Obligations, Collateral, Transaction Document or Grantor.  No
Secured Party nor any of its officers, directors, employees, attorneys or agents
shall be responsible to any other Secured Party or any of its officers,
directors, employees, attorneys or agents for:  (i) any recitals,
statements, information, representations or warranties contained in any of the
Transaction Documents or in any certificate or other document furnished pursuant
to the terms hereof; (ii) the execution, validity, genuineness,
effectiveness or enforceability of any of the Transaction Documents;
(iii) the validity, genuineness, enforceability, collectability, value,
sufficiency or existence of any Collateral, or the attachment, perfection or
priority of any Lien therein; or (iv) the assets, liabilities, financial
condition, results of operations, business, creditworthiness or legal status of
any Grantor or any Account Debtor.  No Secured Party nor any of its
officers, directors, employees, attorneys or agents shall have any obligation to
any other Secured Party to ascertain or inquire into the existence of any
default or Event of Default, the observance or performance by any Grantor
of any of the duties or agreements of such Grantor under any of the Transaction
Documents or the satisfaction of any conditions precedent contained in any of
the Transaction Documents.


    
      
         


      

      
        22

        
          

        

      

      
         


      

    

     

    (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 the Company under the Purchase Agreement, each
Grantor agrees to indemnify all Secured Parties from and against all claims,
lawsuits and liabilities (including attorneys’ fees) arising out of or resulting
from this Agreement (including enforcement of this Agreement) or any other
Transaction Document, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification as
determined by a final non-appealable order of a court of competent jurisdiction.
This provision shall survive the termination of this Agreement and the
Transaction Documents and the indefeasible satisfaction and discharge of all the
Secured Obligations in full. Notwithstanding the foregoing, no Grantor shall
indemnify (unless otherwise required by the terms of any of the other
Transaction Documents) any of the Secured Parties from claims, lawsuits or
liabilities that are (i) solely between one or more Secured Parties, on the one
hand, and one or more Secured Parties, on the other hand, and (ii) solely
involve the relative rights and obligations of the Secured Parties against each
other (and not any of the Grantors) under this Agreement.

     

    (b)           Grantors,
jointly and severally, shall, upon demand, pay to each Secured Party all of the
costs and expenses which such Secured Party actually incurs in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or
operation of, or, upon the occurrence and during the continuance of an Event of
Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Transaction
Documents, (iii) the exercise or enforcement of any of the rights of such
Secured Party hereunder or (iv) the failure by any Grantor to perform or observe
any of the provisions hereof.

     

    22.           Merger, Amendments;
Etc.  THIS AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES SOLELY WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.  No waiver of any provision of this Agreement, and no consent
to any departure by any of Grantors herefrom, shall in any event be effective
unless the same shall be in writing and signed by each Secured Party, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No amendment of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
each Secured Party and each Grantor to which such amendment
applies.

     

    23.           Addresses for
Notices. All notices and other communications provided for hereunder (a)
shall be given in the form and manner set forth in the Purchase Agreement and
(b) shall be delivered, (i) in the case of notice to any Grantor, by delivery of
such notice to Parent at Parent’s address specified in the Purchase Agreement or
at such other address as shall be designated by Parent in a written notice to
each of the Secured Parties in accordance with the provisions thereof, and (ii)
in the case of notice to any Secured Party, by delivery of such notice to such
Secured Party at its address specified in the Purchase Agreement or at such
other address as shall be designated by such Secured Party in a written notice
to Parent and each other Secured Party in accordance with the provisions
thereof.


    
      
         


      

      
        24

        
          

        

      

      
         


      

    


    24.           Separate, Continuing
Security Interests; Assignments under Transaction
Documents.  This Agreement shall create a separate, continuing
security interest in the Collateral in favor of each Secured Party and shall (a)
remain in full force and effect until the Secured Obligations have been
indefeasibly satisfied and discharged in full in accordance with the provisions
of the Transaction Documents, (b) be binding upon each of Grantors, and their
respective permitted successors and permitted assigns, and (c) inure to the
benefit of, and be enforceable by, the Secured Parties and their respective
successors, transferees and assigns.  Without limiting the generality
of the foregoing clause (c), any Secured Party may, in accordance with the
provisions of the Transaction Documents, assign or otherwise transfer all or any
portion of its rights and obligations under the Transaction Documents to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise.
Upon the indefeasible satisfaction and discharge in full of the Secured
Obligations in accordance with the provisions of the Transaction Documents, the
Security Interests granted hereby shall terminate and all rights to the
Collateral shall revert to Grantors or any other Person entitled thereto. At
such time, each Secured Party will authorize the filing of appropriate
termination statements to terminate such Security Interests.  No
transfer or renewal, extension, assignment, or termination of this Agreement or
any other Transaction Document, or any other instrument or document executed and
delivered by any Grantor to any Secured Party nor any additional loans made by
any Secured Party to any Grantor, nor the taking of further security, nor the
retaking or re-delivery of the Collateral to Grantors, or any of them, by any
Secured Party, nor any other act of Secured Parties, or any of them, shall
release any of Grantors from any obligation, except a release or discharge
executed in writing by all Secured Parties.  No Secured Party shall by
any act, delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder, unless such waiver is in writing and signed by
such Secured Party and then only to the extent therein set forth.  A
waiver by any Secured Party of any right or remedy on any occasion shall not be
construed as a bar to the exercise of any such right or remedy which such
Secured Party would otherwise have had on any other occasion.

     

    25.           Governing Law; Jurisdiction;
Service of Process; Jury Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) (other than Sections 5-1401 and 5-1402
of the New York General Obligations Law) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, New York for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper; provided, however, any suit
seeking enforcement against any Collateral or other property may be brought, at
any Secured Party’s option, in the courts of any jurisdiction where such Secured
Party elects to bring such action or where such Collateral or other property may
be found.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Without limitation of
the foregoing, each Grantor other than Parent hereby irrevocably appoints Parent
as such Grantor’s agent for purposes of receiving and accepting any service of
process hereunder or under any of the other Security
Documents.  Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     

    
      
         


      

      
        25

        
          

        

      

      
         


      

    

     

    26.           Intercreditor
Matters. Notwithstanding anything to the contrary contained herein, the
rights and remedies of the Secured Parties, and the obligations of Parent, as
set forth herein are subject to the terms and conditions of the Subordination
Agreement so long as it is in effect. Without limiting the foregoing, to the
extent that Parent is required to deliver, endorse, pay over or otherwise
provide possession or control over any of the Colorado Collateral set forth
herein to the Secured Parties hereunder, such obligations shall be subject to
the rights (if any) of the Senior Lender to such Colorado Collateral, and
subject to the terms and conditions of the Subordination Agreement so long as it
is in effect. The limitations and qualifications set forth in this paragraph are
solely to recognize the rights and remedies of the Senior Lender with respect to
the Colorado Collateral and shall not otherwise impair the pledge and security
interests granted by the Grantors to the Secured Parties pursuant to this
Agreement. The parties acknowledge that to the extent that the Subordination
Agreement is no longer in effect, the limitations and qualifications set forth
in this paragraph shall be of no further force or effect.

     

    27.           Miscellaneous.

     

    (a)           This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original thereof. Any
party delivering an executed counterpart of this Agreement by facsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Security Document mutatis
mutandis.

     

    (b)           Any
provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.

     

    (c)           Headings
used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.

     

    (d)           The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.

     

    (e)           The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party.  For clarification purposes, the
Recitals are part of this Agreement.


    
      
         


      

      
        26

        
          

        

      

      
         


      

    

     

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

     

    (g)           All
dollar amounts referred to in this Agreement and the other Transaction Documents
are in United States Dollars (“US Dollars”), and all amounts
owing under this Agreement and all other Transaction Documents shall be paid in
US Dollars. All amounts denominated in other currencies shall be converted in
the US Dollar equivalent amount in accordance with the Exchange Rate on the date
of calculation. “Exchange
Rate” means,
in relation to any amount of currency to be converted into US Dollars pursuant
to this Agreement, the US Dollar exchange rate as published in the Wall Street
Journal on the relevant date of calculation.

     

    [signature pages
follow]


    
      
         


      

      
        27

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by
and through their duly authorized officers, as of the day and year first above
written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      GRANTORS:

                                    	
                                      MAGNUM
      D’OR RESOURCES, INC., a Nevada corporation

                                    
	 
      	 
      
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Title:

                                    	 
      
	 
      	 
      
	 
      	
                                      MAGNUM
      RECYCLING USA, INC., a Nevada

                                      corporation

                                    
	 
      	 
      
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Title:

                                    	 
      
	 
      	 
      
	 
      	
                                      MAGNUM
      ENGINEERING INTERNATIONAL,

                                      INC.,
      a Delaware corporation

                                    
	 
      	 
      
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Title:

                                    	 
      


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      
        
          	
                  SECURED
      PARTIES:

                	
                  CRANSHIRE
      CAPITAL, L.P.

                
	 
      	 
      
	 
      	
                  By:
      Downsview Capital, Inc.

                
	 
      	
                  Its:
      General Partner

                
	 
      	 
      
	 
      	 
      
	 
      	
                  By:
      Mitchell P. Kopin

                
	 
      	
                  Its:
      President

                
	 
      	 
      
	 
      	
                  [OTHER
      SECURED PARTIES]

                


        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
1

     

    COMMERCIAL
TORT CLAIMS

     

    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
2

     

    COPYRIGHTS

     

    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
3

     

    INTELLECTUAL
PROPERTY LICENSES

     

    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
4

     

    PATENTS

     

    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
5

     

    PLEDGED
COMPANIES

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Name
      of Pledgor

                                    	 	
                                      Name
      of Pledged Company

                                    	 	
                                      Certificate

                                      No.

                                    	 	 	
                                      Class
      of

                                      Shares

                                    	 	 	
                                      Percentage

                                      of
      Class

                                    	 
	
                                      Magnum
      D’Or Resources, Inc.

                                    	 	
                                      Magnum
      Recycling USA, Inc.

                                    	 	
                                      C-1

                                    	 	 	 	100	 	 	 	100	%
	
                                      Magnum
      D’Or Resources, Inc.

                                    	 	
                                      Magnum
      Engineering International, Inc.

                                    	 	
                                      C-1

                                    	 	 	 	100	 	 	 	100	%
	
                                      Magnum
      D’Or Resources, Inc.

                                    	 	
                                      Magnum
      Recycling Canada, Inc.

                                    	 	
                                      AO-1

                                    	 	 	 	100	 	 	 	100	%


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
6

     

    TRADEMARKS

     

    None.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
7

     

    REAL
PROPERTY

     

    Owned Real
Property

     

    Magnum
D’Or Resources, Inc.

    12311 WCR
41

    Hudson,
CO  80642

     

    Leased Real
Property

     

    Magnum
D’Or Resources, Inc.

    110 E.
Broward Blvd., Ste 1700

    Ft
Lauderdale, FL, 33301

    


    Chief Executive
Office/Principal Place of Business:

    


    Magnum
D’Or Resources, Inc.

    110 E.
Broward Blvd., Ste 1700

    Ft
Lauderdale, FL, 33301

    


    Magnum
Recycling USA, Inc.

    12311
Weld County Road 41

    Hudson,
Colorado 80642

    


    Magnum
Engineering International, Inc.

    110 E.
Broward Blvd., Ste 1700

    Ft
Lauderdale, FL, 33301

    


    Other Locations of
Collateral:

    


    None


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
8

     

    LIST OF
UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Grantor

                              	 	
                                Jurisdictions

                              
	 	 	 
	
                                Magnum
      D’Or Resources, Inc.

                              	 	
                                Nevada
      Secretary of State

                              
	 	 	 
	
                                Magnum
      Recycling USA, Inc.

                              	 	
                                Nevada
      Secretary of State

                              
	 	 	 
	
                                Magnum
      Engineering International, Inc.

                              	 	
                                Delaware
      Secretary of
State

                              


                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    EXHIBIT
A

     

    COPYRIGHT SECURITY
AGREEMENT

     

    This
COPYRIGHT SECURITY AGREEMENT (this “Copyright Security Agreement”)
is made this [__] day of December 2009, by the Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”),
in favor of the Secured Parties under and as defined in the below-described
Security Agreement.

     

    RECITALS

     

    WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of December 21,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Purchase Agreement”), by and
among MAGNUM D’OR RESOURCES, INC., a Nevada corporation (“Parent”), and the Secured
Parties, Parent has agreed to sell, and Secured Parties have agreed to purchase,
severally and not jointly, certain Notes and Warrants; and

     

    WHEREAS,
in order to induce the Secured Parties to purchase, severally and not jointly,
the Notes and Warrants as provided for in the Purchase Agreement, Grantors have
executed and delivered to Secured Parties that certain Security Agreement of
even date herewith (including all annexes, exhibits or schedules thereto, as
from time to time amended, restated, supplemented or otherwise modified, the
“Security Agreement”);
and

     

    WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Secured Parties this Copyright Security Agreement.

     

    AGREEMENTS

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:

     

    1.           DEFINED
TERMS.  All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement.

     

    2.           GRANT OF SECURITY INTEREST
IN COPYRIGHT COLLATERAL. Each Grantor hereby grants to each Secured Party
a continuing first priority security interest in all of such Grantor’s right,
title and interest in, to and under the following, whether presently existing or
hereafter created or acquired (collectively, the “Copyright
Collateral”):

     

    (a)           all
of each Grantor’s Copyrights and Copyright Intellectual Property Licenses to
which it is a party including those referred to on Schedule
I hereto;

     

    (b)           all
reissues, continuations or extensions of the foregoing; and

     

    (c)           all
products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future infringement or dilution of
any Copyright or any Copyright licensed under any Intellectual Property
License.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Notwithstanding
the foregoing, Parent hereby grants to each Secured Party a continuing third
priority security interest in all of Parent’s right, title and interest in, to
and under all Copyright Collateral that constitutes Colorado
Collateral.

     

    3.           SECURITY FOR
OBLIGATIONS.  This Copyright Security Agreement and the
Security Interests created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Parties, or any of them,
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

     

    4.           SECURITY AGREEMENT.
The security interests granted pursuant to this Copyright Security Agreement are
granted in conjunction with the security interests granted to Secured Parties
pursuant to the Security Agreement.  Each Grantor hereby acknowledges
and affirms that the rights and remedies of Secured Parties with respect to
their respective security interests in the Copyright Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.

     

    5.           AUTHORIZATION TO
SUPPLEMENT. To the extent required under the Security Agreement, Grantors
shall give Secured Parties prompt notice in writing of any additional copyright
registrations or applications therefor after the date hereof. Grantors hereby
authorize Secured Parties unilaterally to modify this Agreement by amending
Schedule
I to include any future registered copyrights or applications therefor of
Grantors.  Notwithstanding the foregoing, no failure to so modify this
Copyright Security Agreement or amend Schedule
I shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on Schedule
I.

     

    6.           COUNTERPARTS.  This
Copyright Security Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.  In proving this Copyright Security
Agreement or any other Transaction Document in any judicial proceedings, it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom such enforcement is sought.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    7.           CONSTRUCTION.  Unless
the context of this Copyright Security Agreement or any other Transaction
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and  “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Copyright Security Agreement or any other Transaction Document refer to this
Copyright Security Agreement or such other Transaction Document, as the case may
be, as a whole and not to any particular provision of this Copyright Security
Agreement or such other Transaction Document, as the case may
be.  Section, subsection, clause, schedule, and exhibit references
herein are to this Copyright Security Agreement unless otherwise specified. Any
reference in this Copyright Security Agreement or in any other Transaction
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Transaction Document to the satisfaction in full of the Secured
Obligations shall mean the indefeasible (i) payment in full in cash and
discharge or (ii) other satisfaction in accordance with the terms of the
Transaction Documents and discharge, in each case, of all Secured Obligations in
full. Any reference herein to any Person shall be construed to include such
Person’s permitted successors and permitted assigns. Any requirement of a
writing contained herein or in any other Transaction Document shall be satisfied
by the transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein. The language used in this Copyright Security
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party. For clarification purposes, the Recitals are part of this Copyright
Security Agreement.

     

    8.           TERMINATION. This
Copyright Security Agreement shall automatically terminate upon the indefeasible
satisfaction and discharge of all of the Secured Obligations in
full.

     

    [signature page
follows]

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, each Grantor has caused this Copyright Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      GRANTORS:

                                    	
                                      MAGNUM
      D’OR RESOURCES, INC., a Nevada corporation

                                    
	 	 	 
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Title:

                                    	 
      
	 
      	 
      	 
      
	 
      	
                                      MAGNUM
      RECYCLING USA, INC., a Nevada corporation

                                    
	 
      	 
      	 
      
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
       
	 
      	
                                      Title:

                                    	  
      
	 
      	 
      	 
      
	 
      	
                                      MAGNUM
      ENGINEERING INTERNATIONAL, INC., a Delaware corporation

                                    
	 	 	 
	 
      	
                                      By:

                                    	 
      
	 
      	
                                      Name:

                                    	 
      
	 
      	
                                      Title:

                                    	 
      


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    COPYRIGHT
SECURITY AGREEMENT

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    SCHEDULE
I

    to

    COPYRIGHT SECURITY
AGREEMENT

     

    Copyright
Registrations

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Grantor

                                    	 	
                                      Country

                                    	 	
                                      Copyright

                                    	 	
                                      Registration
      No.

                                    	 	
                                      Registration
      

                                      Date

                                    
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Copyright
Licenses

     

    COPYRIGHT
SECURITY AGREEMENT

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
B

     

    PATENT SECURITY
AGREEMENT

     

    This
PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is
made this [___] day of December 2009, by the Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”),
in favor of the Secured Parties under and as defined in the below-described
Security Agreement.

     

    RECITALS

     

    WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of December 21,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Purchase Agreement”), by and
among MAGNUM D’OR RESOURCES, INC., a Nevada corporation (“Parent”), and the Secured
Parties, Parent has agreed to sell, and Secured Parties have agreed to purchase,
severally and not jointly, certain Notes and Warrants; and

     

    WHEREAS,
in order to induce the Secured Parties to purchase, severally and not jointly,
the Notes and Warrants as provided for in the Purchase Agreement, Grantors have
executed and delivered to Secured Parties that certain Security Agreement of
even date herewith (including all annexes, exhibits or schedules thereto, as
from time to time amended, restated, supplemented or otherwise modified, the
“Security Agreement”);
and

     

    WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Secured Parties this Patent Security Agreement.

     

    AGREEMENTS

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:

     

    1.           DEFINED
TERMS.  All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement.

     

    2.           GRANT OF SECURITY INTEREST
IN PATENT COLLATERAL.  Each Grantor hereby grants to each
Secured Party a continuing first priority security interest in all of such
Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the “Patent
Collateral”):

     

    (a)           all
of its Patents and Patent Intellectual Property Licenses to which it is a party
including those referred to on Schedule
I hereto;

     

    (b)           all
reissues, continuations or extensions of the foregoing; and

     

    (c)           all
products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future infringement or dilution of
any Patent or any Patent licensed under any Intellectual Property
License.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Notwithstanding
the foregoing, Parent hereby grants to each Secured Party a continuing third
priority security interest in all of Parent’s right, title and interest in, to
and under all Patent Collateral that constitutes Colorado
Collateral.

     

    3.           SECURITY FOR
OBLIGATIONS.  This Patent Security Agreement and the Security
Interests created hereby secures the payment and performance of all the Secured
Obligations, whether now existing or arising hereafter. Without limiting the
generality of the foregoing, this Patent Security Agreement secures the payment
of all amounts which constitute part of the Secured Obligations and would be
owed by Grantors, or any of them, to Secured Parties, or any of them, whether or
not they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.

     

    4.           SECURITY
AGREEMENT.  The security interests granted pursuant to this
Patent Security Agreement are granted in conjunction with the security interests
granted to Secured Parties pursuant to the Security Agreement.  Each
Grantor hereby acknowledges and affirms that the rights and remedies of Secured
Parties with respect to their respective security interests in the Patent
Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.

     

    5.           AUTHORIZATION TO
SUPPLEMENT.  If any Grantor shall obtain rights to any new
patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. To the extent required under the Security Agreement, Grantors shall
give prompt notice in writing to Secured Parties with respect to any such new
patent rights. Without limiting each Grantor’s obligations under this Section 5,
Grantors hereby authorize Secured Parties unilaterally to modify this Agreement
by amending Schedule
I to include any such new patent rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this
Patent Security Agreement or amend Schedule
I shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on Schedule
I.

     

    6.           COUNTERPARTS.  This
Patent Security Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile
transmission or by an e-mail which contains a portable document format (.pdf)
file of an executed signature page, such signature page shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such signature page were an
original thereof. In proving this Patent Security Agreement or any other
Transaction Document in any judicial proceedings, it shall not be necessary to
produce or account for more than one such counterpart signed by the party
against whom such enforcement is sought.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    7.           CONSTRUCTION.  Unless
the context of this Patent Security Agreement or any other Transaction Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the terms “includes”
and  “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Patent Security Agreement or any other Transaction
Document refer to this Patent Security Agreement or such other Transaction
Document, as the case may be, as a whole and not to any particular provision of
this Patent Security Agreement or such other Transaction Document, as the case
may be. Section, subsection, clause, schedule, and exhibit references herein are
to this Patent Security Agreement unless otherwise specified.  Any
reference in this Patent Security Agreement or in any other Transaction Document
to any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein).  Any reference herein or in any other
Transaction Document to the satisfaction in full of the Secured Obligations
shall mean the indefeasible (i) payment in full in cash and discharge or (ii)
other satisfaction in accordance with the terms of the Transaction Documents and
discharge, in each case, of all Secured Obligations in full. Any reference
herein to any Person shall be construed to include such Person’s permitted
successors and permitted assigns. Any requirement of a writing contained herein
or in any other Transaction Document shall be satisfied by the transmission of a
Record and any Record so transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein. The language used in this Patent Security Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. For
clarification purposes, the Recitals are part of this Patent Security
Agreement.

     

    8.           TERMINATION. This
Patent Security Agreement shall automatically terminate upon the indefeasible
satisfaction and discharge of all of the Secured Obligations in
full.

     

    [signature pages
follow]

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  GRANTORS:

                                	
                                  MAGNUM
      D’OR RESOURCES, INC., a Nevada corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      
	 
      	 
      	 
      
	 
      	
                                  MAGNUM
      RECYCLING USA, INC., a Nevada corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      
	 
      	 
      	 
      
	 
      	
                                  MAGNUM
      ENGINEERING INTERNATIONAL, INC., a Delaware corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      


                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    EXHIBIT
C

    


    TRADEMARK SECURITY
AGREEMENT

     

    This
TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”)
is made this [___] day of December 2009, by the Grantors listed on the signature
pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”),
in favor of the Secured Parties under and as defined in the below-described
Security Agreement.

     

    RECITALS

     

    WHEREAS,
pursuant to that certain Securities Purchase Agreement, dated as of December 21,
2009 (as amended, restated, supplemented, or otherwise modified from time to
time, including all schedules thereto, collectively, the “Purchase Agreement”), by and
among MAGNUM D’OR RESOURCES, INC., a Nevada corporation (“Parent”), and the Secured
Parties, Parent has agreed to sell, and Secured Parties have agreed to purchase,
severally and not jointly, certain Notes and Warrants; and

     

    WHEREAS,
in order to induce the Secured Parties to purchase, severally and not jointly,
the Notes and Warrants as provided for in the Purchase Agreement, Grantors have
executed and delivered to Secured Parties that certain Security Agreement of
even date herewith (including all annexes, exhibits or schedules thereto, as
from time to time amended, restated, supplemented or otherwise modified, the
“Security Agreement”);
and

     

    WHEREAS,
pursuant to the Security Agreement, Grantors are required to execute and deliver
to Secured Parties this Trademark Security Agreement.

     

    AGREEMENTS

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:

     

    1.           DEFINED
TERMS.  All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement.

     

    2.           GRANT OF SECURITY INTEREST
IN TRADEMARK COLLATERAL.  Each Grantor hereby grants to each
Secured Party a continuing first priority security interest in all of such
Grantor’s right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the “Trademark
Collateral”):

     

    (a)           all
of its Trademarks and Trademark Intellectual Property Licenses to which it is a
party including those referred to on Schedule
I hereto;

     

    (b)           all
goodwill, trade secrets, proprietary or confidential information, technical
information, procedures, formulae, quality control standards, designs, operating
and training manuals, customer lists, and other General Intangibles with respect
to the foregoing;

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (c)           all
reissues, continuations or extensions of the foregoing;

     

    (d)           all
goodwill of the business connected with the use of, and symbolized by, each
Trademark and each Trademark Intellectual Property License; and

     

    (e)           all
products and proceeds of the foregoing, including any claim by such Grantor
against third parties for past, present or future (i) infringement or dilution
of any Trademark or any Trademark licensed under any Intellectual Property
License or (ii) injury to the goodwill associated with any Trademark or any
Trademark licensed under any Intellectual Property License.

     

    Notwithstanding
the foregoing, Parent hereby grants to each Secured Party a continuing third
priority security interest in all of Parent’s right, title and interest in, to
and under all Trademark Collateral that constitutes Colorado
Collateral.

     

    3.           SECURITY FOR
OBLIGATIONS.  This Trademark Security Agreement and the
Security Interests created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Secured Obligations and
would be owed by Grantors, or any of them, to Secured Parties, or any of them,
whether or not they are unenforceable or not allowable due to the existence of
an Insolvency Proceeding involving any Grantor.

     

    4.           SECURITY
AGREEMENT.  The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Secured Parties pursuant to the Security
Agreement.  Each Grantor hereby acknowledges and affirms that the
rights and remedies of Secured Parties with respect to their respective security
interests in the Trademark Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

     

    5.           AUTHORIZATION TO
SUPPLEMENT.  If any Grantor shall obtain rights to any new
trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. To the extent required under the Security
Agreement, Grantors shall give prompt notice in writing to Secured Parties with
respect to any such new trademarks or renewal or extension of any trademark
registration.   Without limiting each Grantor’s obligations under
this Section 5, Grantors hereby authorize Secured Parties unilaterally to modify
this Agreement by amending Schedule
I to include any such new trademark rights of
Grantors.  Notwithstanding the foregoing, no failure to so modify this
Trademark Security Agreement or amend Schedule
I shall in any way affect, invalidate or detract from any Secured Party’s
continuing security interest in all Collateral, whether or not listed on Schedule
I.

     

    6.           COUNTERPARTS.  This
Trademark Security Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof. In proving this Trademark Security Agreement or any
other Transaction Document in any judicial proceedings, it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom such enforcement is sought.

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    7.           CONSTRUCTION.  Unless
the context of this Trademark Security Agreement or any other Transaction
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and  “including” are not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase
“and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Trademark Security Agreement or any other Transaction
Document refer to this Trademark Security Agreement or such other Transaction
Document, as the case may be, as a whole and not to any particular provision of
this Trademark Security Agreement or such other Transaction Document, as the
case may be. Section, subsection, clause, schedule, and exhibit references
herein are to this Agreement unless otherwise specified. Any reference in this
Trademark Security Agreement or in any other Transaction Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein or in any other Transaction Document to
the satisfaction in full of the Secured Obligations shall mean the indefeasible
(i) payment in full in cash and discharge or (ii) other satisfaction in
accordance with the terms of the Transaction Documents and discharge, in each
case, of all Secured Obligations in full. Any reference herein to any Person
shall be construed to include such Person’s permitted successors and permitted
assigns. Any requirement of a writing contained herein or in any other
Transaction Document shall be satisfied by the transmission of a Record and any
Record so transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein. The language
used in this Trademark Security Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. For clarification purposes, the
Recitals are part of this Trademark Security Agreement.

     

    8.           TERMINATION. This
Trademark Security Agreement shall automatically terminate upon the indefeasible
satisfaction and discharge of all of the Secured Obligations in
full.

     

    [signature pages
follow]

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    IN
WITNESS WHEREOF, each Grantor has caused this Trademark Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  GRANTORS:

                                	
                                  MAGNUM
      D’OR RESOURCES, INC., a Nevada corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      
	 
      	 
      	 
      
	 
      	
                                  MAGNUM
      RECYCLING USA, INC., a Nevada corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      
	 
      	 
      	 
      
	 
      	
                                  MAGNUM
      ENGINEERING INTERNATIONAL, INC., a Delaware corporation

                                
	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      
	 
      	
                                  Name:

                                	 
      
	 
      	
                                  Title:

                                	 
      


                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    SCHEDULE
I

    to

    TRADEMARK SECURITY
AGREEMENT

     

    Trademark
Registrations/Applications

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Grantor

                                        	 	
                                          Country

                                        	 	
                                          Mark

                                        	 	
                                          Application/
      

                                          Registration
      No.

                                        	 	
                                          App/Reg
      Date

                                        
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      	 	 
      


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Trade
Names

     

    Common Law
Trademarks

     

    Trademarks Not Currently In
Use

     

    Trademark
Licenses