EX-10.1

LOAN AND SECURITY AGREEMENT


          This LOAN AND SECURITY AGREEMENT, dated as of November 15, 2007 (this “Agreement”), is among Fearless International, Inc., a Nevada
corporation (the “Company”), all of the subsidiaries of the Company (such subsidiaries, the “Guarantors” and
together with the Company, the “Debtors”) and the holders of the Company’s Secured Promissory Notes due, unless earlier pursuant to the terms therein, March 15, 2008 and
issued on November 14, 2007 in the original aggregate principal amount of $600,000 (collectively, the “Notes”) signatory hereto, their endorsees, transferees and assigns
(collectively, the “Secured Parties”). 


W I T N E S S E T H:


          WHEREAS, the Secured Parties have severally agreed to extend the loans to the Company evidenced by the Notes;


          WHEREAS, pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the “Guarantee”), the Guarantors have jointly and
severally agreed to guarantee and act as surety for payment of such Notes; and 


          WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the Notes, each Debtor has agreed to execute and deliver to the Secured Parties this Agreement and to grant the Secured
Parties, pari passu with each other Secured Party and through the Agent, a security interest in certain property of such Debtor to
secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Notes and the Guarantors’ obligations under the Guarantee. 


          NOW, THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows: 


          1.      Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but
not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “proceeds” and “supporting
obligations”) shall have the respective meanings given such terms in Article 9 of the UCC. 


            (a)      “Collateral” means
      the collateral in which the Secured Parties are granted a security interest
      by this Agreement and which shall include the following personal property
      of the Debtors, whether presently owned or existing or hereafter acquired
      or coming into existence, wherever situated, and all additions and accessions
      thereto and all substitutions and replacements thereof, and all proceeds,
      products and accounts thereof, including, without limitation, all proceeds
      from the sale or transfer of the Collateral and of insurance covering the
      same and of any tort claims in connection therewith, and all



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  dividends, interest, cash, notes, securities,
      equity interest or other property at any time and from time to time acquired,
      receivable or otherwise distributed in respect of, or in exchange for,
      any or all of the Pledged Securities (as defined below): 




            (i)      All
      goods, including, without limitation, (A) all machinery, equipment, computers,
      motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
      and general tools, fixtures, test and quality control devices and other
      equipment of every kind and nature and wherever situated, together with
      all documents of title and documents representing the same, all additions
      and accessions thereto, replacements therefor, all parts therefor, and
      all substitutes for any of the foregoing and all other items used and useful
      in connection with any Debtor’s businesses and all improvements thereto;
      and (B) all inventory; 

             (ii)     All
      contract rights and other general intangibles, including, without limitation,
      all partnership interests, membership interests, stock or other securities,
      rights under any of the Organizational Documents, agreements related to
      the Pledged Securities, licenses, distribution and other agreements, computer
      software (whether “off-the-shelf”, licensed from any third party
      or developed by any Debtor), computer software development rights, leases,
      franchises, customer lists, quality control procedures, grants and rights,
      goodwill, trademarks, service marks, trade styles, trade names, patents,
      patent applications, copyrights, and income tax refunds;

             (iii)    All
      accounts, together with all instruments, all documents of title representing
      any of the foregoing, all rights in any merchandising, goods, equipment,
      motor vehicles and trucks which any of the same may represent, and all
      right, title, security and guaranties with respect to each account, including
      any right of stoppage in transit;

             (iv)    All
      documents, letter-of-credit rights, instruments and chattel paper; 

             (v)     All
      commercial tort claims; 

             (vi)    All
      deposit accounts and all cash (whether or not deposited in such deposit
      accounts); 

             (vii)    All
      investment property; 

             (viii)    All
      supporting obligations; and 

             (ix)     All
      files, records, books of account, business papers, and computer programs;
      and 

             (x)      the
      products and proceeds of all of the foregoing Collateral set forth in clauses
      (i)-(ix) above. 



 

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            Without
      limiting the generality of the foregoing, the “Collateral” shall
      include all investment property and general intangibles respecting ownership
      and/or other equity interests in each Guarantor, including, without limitation,
      the shares of capital stock and the other equity interests listed on Schedule
      H hereto (as the same may be modified from
      time to time pursuant to the terms hereof), and any other shares of capital
      stock and/or other equity interests of any other direct or indirect subsidiary
      of any Debtor obtained in the future, and, in each case, all certificates
      representing such shares and/or equity interests and, in each case, all
      rights, options, warrants, stock, other securities and/or equity interests
      that may hereafter be received, receivable or distributed in respect of,
      or exchanged for, any of the foregoing and all rights arising under or
      in connection with the Pledged Securities, including, but not limited to,
      all dividends, interest and cash. 

             Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment
      of any asset which, in the event of an assignment, becomes void by operation
      of applicable law or the assignment of which is otherwise prohibited by
      applicable law (in each case to the extent that such applicable law is
      not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other
      similar applicable law); provided, however,
      that to the extent permitted by applicable law, this Agreement shall create
      a valid security interest in such asset and, to the extent permitted by
      applicable law, this Agreement shall create a valid security interest in
      the proceeds of such asset. 




            (b)      “Intellectual
        Property” means the collective reference
        to all rights, priorities and privileges relating to intellectual property,
        whether arising under United States, multinational or foreign laws or
        otherwise, including, without limitation, (i) all copyrights arising
        under the laws of the United States, any other country or any political
        subdivision thereof, whether registered or unregistered and whether published
        or unpublished, all registrations and recordings thereof, and all applications
        in connection therewith, including, without limitation, all registrations,
        recordings and applications in the United States Copyright Office, (ii)
        all letters patent of the United States, any other country or any political
        subdivision thereof, all reissues and extensions thereof, and all applications
        for letters patent of the United States or any other country and all
        divisions, continuations and continuations-in-part thereof, (iii) all
        trademarks, trade names, corporate names, company names, business names,
        fictitious business names, trade dress, service marks, logos, domain
        names and other source or business identifiers, and all goodwill associated
        therewith, now existing or hereafter adopted or acquired, all registrations
        and recordings thereof, and all applications in connection therewith,
        whether in the United States Patent and Trademark Office or in any similar
        office or agency of the United States, any State thereof or any other
        country or any political subdivision thereof, or otherwise, and all common
        law rights related thereto, (iv) all trade secrets arising under the
        laws of the United States, any other country or any political subdivision
        thereof, (v) all rights to obtain any reissues, renewals or extensions
        of the foregoing, (vi) all licenses for any of the foregoing, and (vii)
        all causes of action for infringement of the foregoing. 



 

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          (c)      “Majority
      in Interest” means, at any time of determination,
      the majority in interest (based on then-outstanding principal amounts of
      Notes at the time of such determination) of the Secured Parties. 
    

               (d)      “Necessary
          Endorsement” means undated stock
          powers endorsed in blank or other proper instruments of assignment
          duly executed and such other instruments or documents as the Agent
          (as that term is defined below) may reasonably request. 

               (e)      “Obligations” means
        all of the liabilities and obligations (primary, secondary, direct, contingent,
        sole, joint or several) due or to become due, or that are now or may
        be hereafter contracted or acquired, or owing to, of any Debtor to the
        Secured Parties, including, without limitation, all obligations under
        this Agreement, the Notes, the Guarantee and any other instruments, agreements
        or other documents executed and/or delivered in connection herewith or
        therewith, in each case, whether now or hereafter existing, voluntary
        or involuntary, direct or indirect, absolute or contingent, liquidated
        or unliquidated, whether or not jointly owed with others, and whether
        or not from time to time decreased or extinguished and later increased,
        created or incurred, and all or any portion of such obligations or liabilities
        that are paid, to the extent all or any part of such payment is avoided
        or recovered directly or indirectly from any of the Secured Parties as
        a preference, fraudulent transfer or otherwise as such obligations may
        be amended, supplemented, converted, extended or modified from time to
        time. Without limiting the generality of the foregoing, the term “Obligations” shall
        include, without limitation: (i) principal of, and interest on the Notes
        and the loans extended pursuant thereto; (ii) any and all other fees,
        indemnities, costs, obligations and liabilities of the Debtors from time
        to time under or in connection with this Agreement, the Notes, the Guarantee
        and any other instruments, agreements or other documents executed and/or
        delivered in connection herewith or therewith; and (iii) all amounts
        (including but not limited to post-petition interest) in respect of the
        foregoing that would be payable but for the fact that the obligations
        to pay such amounts are unenforceable or not allowable due to the existence
        of a bankruptcy, reorganization or similar proceeding involving any Debtor. 

               (f)      “Organizational
          Documents” means with respect to
          any Debtor, the documents by which such Debtor was organized (such
          as a certificate of incorporation, certificate of limited partnership
          or articles of organization, and including, without limitation, any
          certificates of designation for preferred stock or other forms of preferred
          equity) and which relate to the internal governance of such Debtor
          (such as bylaws, a partnership agreement or an operating, limited liability
          or members agreement). 

               (g)      “Pledged
          Securities” shall have the meaning
          ascribed to such term in Section 4(i). 

               (h)      “UCC” means
        the Uniform Commercial Code of the State of New York and or any other
        applicable law of any state or states which has jurisdiction with respect
        to all, or any portion of, the Collateral or this Agreement, from time
        to time. It is the intent of the parties that defined terms in the UCC
        should be construed in their broadest sense so that the term “Collateral” will
        be construed in its broadest sense. Accordingly if




 

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  there are, from time to time, changes
      to defined terms in the UCC that broaden the definitions, they are incorporated
      herein and if existing definitions in the UCC are broader than the amended
      definitions, the existing ones shall be controlling.




          2.      Grant of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Notes and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of all of the Obligations, each Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a security interest in and to, a lien upon and a
right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security Interest” and, collectively, the
“Security Interests”). 


          3.      Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, each Debtor shall deliver or cause to be delivered to the Agent (a) any
and all certificates and other instruments representing or evidencing the Pledged Securities, and (b) any and all certificates and other instruments or documents representing any of the other Collateral, in each case, together with all Necessary
Endorsements. The Debtors are, contemporaneously with the execution hereof, delivering to Agent, or have previously delivered to Agent, a true and correct copy of each Organizational Document governing any of the Pledged Securities. 


          4.      Representations, Warranties, Covenants and Agreements of the Debtors. Except
as set forth under the corresponding section of the disclosure schedules delivered
to the Secured Parties concurrently herewith (the “Disclosure Schedules”),
which Disclosure Schedules shall be deemed a part hereof, each Debtor represents
and warrants to, and covenants and agrees with, the Secured Parties as follows: 


            (a)      Each
      Debtor has the requisite corporate, partnership, limited liability company
      or other power and authority to enter into this Agreement and the Notes
      and otherwise to carry out its obligations hereunder. The execution, delivery
      and performance by each Debtor of this Agreement and the Notes and the
      filings contemplated therein have been duly authorized by all necessary
      action on the part of such Debtor and no further action is required by
      such Debtor. This Agreement and, as for the Company, the Notes, have been
      duly executed by each Debtor. This Agreement and the Notes constitute the
      legal, valid and binding obligation of each Debtor, enforceable against
      each Debtor in accordance with its terms except as such enforceability
      may be limited by applicable bankruptcy, insolvency, reorganization and
      similar laws of general application relating to or affecting the rights
      and remedies of creditors and by general principles of equity. The
      Notes and the shares issued pursuant to Section 4(ss) are duly authorized
      and, when issued, will be duly and validly issued, fully paid and nonassessable,
      free and clear of all liens imposed by the Company. 

              (b)      The
      Debtors have no place of business or offices where their respective books
      of account and records are kept (other than temporarily at the offices
      of its attorneys or accountants) or places where Collateral is stored or
      located, except as set forth on Schedule A attached
      hereto. Except as specifically set forth on Schedule
      A, each Debtor is the record owner of the
      real property where such Collateral is located, and there



 

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  exist no mortgages or other liens on
      any such real property except for Permitted Liens (as defined in the Notes).
      Except as disclosed on Schedule A,
      none of such Collateral is in the possession of any consignee, bailee,
      warehouseman, agent or processor. 

             (c)      Except
      for Permitted Liens (as defined in the Notes) and except as set forth on Schedule
      B attached hereto, the Debtors are the sole
      owner of the Collateral (except for non-exclusive licenses granted by any
      Debtor in the ordinary course of business), free and clear of any liens,
      security interests, encumbrances, rights or claims, and are fully authorized
      to grant the Security Interests. Except as set forth on Schedule
      B attached hereto, there is not on file in
      any governmental or regulatory authority, agency or recording office an
      effective financing statement, security agreement, license or transfer
      or any notice of any of the foregoing (other than those that will be filed
      in favor of the Secured Parties pursuant to this Agreement) covering or
      affecting any of the Collateral. Except as set forth on Schedule
      B attached hereto and except pursuant to
      this Agreement, as long as this Agreement shall be in effect, the Debtors
      shall not execute and shall not knowingly permit to be on file in any such
      office or agency any other financing statement or other document or instrument
      (except to the extent filed or recorded in favor of the Secured Parties
      pursuant to the terms of this Agreement). 

             (d)      No
      written claim has been received that any Collateral or Debtor's use of
      any Collateral violates the rights of any third party. There has been no
      adverse decision to any Debtor's claim of ownership rights in or exclusive
      rights to use the Collateral in any jurisdiction or to any Debtor's right
      to keep and maintain such Collateral in full force and effect, and there
      is no proceeding involving said rights pending or, to the best knowledge
      of any Debtor, threatened before any court, judicial body, administrative
      or regulatory agency, arbitrator or other governmental authority. 

             (e)      Each
      Debtor shall at all times maintain its books of account and records relating
      to the Collateral at its principal place of business and its Collateral
      at the locations set forth on Schedule A attached
      hereto and may not relocate such books of account and records or tangible
      Collateral unless it delivers to the Secured Parties at least 30 days prior
      to such relocation (i) written notice of such relocation and the new location
      thereof (which must be within the United States) and (ii) evidence that
      appropriate financing statements under the UCC and other necessary documents
      have been filed and recorded and other steps have been taken to perfect
      the Security Interests to create in favor of the Secured Parties a valid,
      perfected and continuing perfected first priority lien in the Collateral. 

             (f)      This
      Agreement creates in favor of the Secured Parties a valid security interest
      in the Collateral, subject only to Permitted Liens (as defined in the Notes)
      securing the payment and performance of the Obligations. Upon making the
      filings described in the immediately following paragraph, all security
      interests created hereunder in any Collateral which may be perfected by
      filing Uniform Commercial Code financing statements shall have been duly
      perfected. Except for the filing of the Uniform Commercial Code financing
      statements referred to in the immediately following paragraph, the recordation
      of the Intellectual Property Security Agreement (as defined



 

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  below) with respect to copyrights and
      copyright applications in the United States Copyright Office referred to
      in paragraph (m), the execution and delivery of deposit account control
      agreements satisfying the requirements of Section 9-104(a)(2) of the UCC
      with respect to each deposit account of the Debtors, and the delivery of
      the certificates and other instruments provided in Section 3, no action
      is necessary to create, perfect or protect the security interests created
      hereunder. Without limiting the generality of the foregoing, except for
      the filing of said financing statements, the recordation of said Intellectual
      Property Security Agreement, and the execution and delivery of said deposit
      account control agreements, no consent of any third parties and no authorization,
      approval or other action by, and no notice to or filing with, any governmental
      authority or regulatory body is required for (i) the execution, delivery
      and performance of this Agreement, (ii) the creation or perfection of the
      Security Interests created hereunder in the Collateral or (iii) the enforcement
      of the rights of the Agent and the Secured Parties hereunder. 

              (g)      Each
      Debtor hereby authorizes the Agent to file one or more financing statements
      under the UCC, with respect to the Security Interests, with the proper
      filing and recording agencies in any jurisdiction deemed proper by it. 

              (h)      The
      execution, delivery and performance of this Agreement and the Notes by
      the Debtors does not (i) violate any of the provisions of any Organizational
      Documents of any Debtor or any judgment, decree, order or award of any
      court, governmental body or arbitrator or any applicable law, rule or regulation
      applicable to any Debtor or (ii) conflict with, or constitute a default
      (or an event that with notice or lapse of time or both would become a default)
      under, or give to others any rights of termination, amendment, acceleration
      or cancellation (with or without notice, lapse of time or both) of, any
      agreement, credit facility, debt or other instrument (evidencing any Debtor's
      debt or otherwise) or other understanding to which any Debtor is a party
      or by which any property or asset of any Debtor is bound or affected. If
      any, all required consents (including, without limitation, from stockholders
      or creditors of any Debtor) necessary for any Debtor to enter into and
      perform its obligations hereunder have been obtained. 

              (i)       The
      capital stock and other equity interests listed on Schedule
      H hereto (the “Pledged
      Securities”) represent all of the capital
      stock and other equity interests of the Guarantors, and represent all capital
      stock and other equity interests owned, directly or indirectly, by the
      Company. All of the Pledged Securities are validly issued, fully paid and
      nonassessable, and the Company is the legal and beneficial owner of the
      Pledged Securities, free and clear of any lien, security interest or other
      encumbrance except for the security interests created by this Agreement
      and other Permitted Liens (as defined in the Notes).

             (j)       The
      ownership and other equity interests in partnerships and limited liability
      companies (if any) included in the Collateral (the “Pledged
      Interests”) by their express terms do
      not provide that they are securities governed by Article 8 of the UCC and
      are not held in a securities account or by any financial intermediary. 



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            (k)      Except
      for Permitted Liens (as defined in the Notes), each Debtor shall at all
      times maintain the liens and Security Interests provided for hereunder
      as valid and perfected first priority liens and security interests in the
      Collateral in favor of the Secured Parties until this Agreement and the
      Security Interest hereunder shall be terminated pursuant to Section 11
      hereof. Each Debtor hereby agrees to defend the same against the claims
      of any and all persons and entities. Each Debtor shall safeguard and protect
      all Collateral for the account of the Secured Parties. At the request of
      the Agent, each Debtor will sign and deliver to the Agent on behalf of
      the Secured Parties at any time or from time to time one or more financing
      statements pursuant to the UCC in form reasonably satisfactory to the Agent
      and will pay the cost of filing the same in all public offices wherever
      filing is, or is deemed by the Agent to be, necessary or desirable to effect
      the rights and obligations provided for herein. Without limiting the generality
      of the foregoing, each Debtor shall pay all fees, taxes and other amounts
      necessary to maintain the Collateral and the Security Interests hereunder,
      and each Debtor shall obtain and furnish to the Agent from time to time,
      upon demand, such releases and/or subordinations of claims and liens which
      may be required to maintain the priority of the Security Interests hereunder. 

             (l)       No
      Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
      dispose of any of the Collateral (except for non-exclusive licenses granted
      by a Debtor in its ordinary course of business and sales of inventory by
      a Debtor in its ordinary course of business) without the prior written
      consent of a Majority in Interest. 

             (m)     Each
      Debtor shall keep and preserve its equipment, inventory and other tangible
      Collateral in good condition, repair and order and shall not operate or
      locate any such Collateral (or cause to be operated or located) in any
      area excluded from insurance coverage. 

             (n)      Each
      Debtor shall maintain with financially sound and reputable insurers, insurance
      with respect to the Collateral, including Collateral hereafter acquired,
      against loss or damage of the kinds and in the amounts customarily insured
      against by entities of established reputation having similar properties
      similarly situated and in such amounts as are customarily carried under
      similar circumstances by other such entities and otherwise as is prudent
      for entities engaged in similar businesses but in any event sufficient
      to cover the full replacement cost thereof. Each Debtor shall cause each
      insurance policy issued in connection herewith to provide, and the insurer
      issuing such policy to certify to the Agent, that (a) the Agent will be
      named as lender loss payee and additional insured under each such insurance
      policy; (b) if such insurance be proposed to be cancelled or materially
      changed for any reason whatsoever, such insurer will promptly notify the
      Agent and such cancellation or change shall not be effective as to the
      Agent for at least thirty (30) days after receipt by the Agent of such
      notice, unless the effect of such change is to extend or increase coverage
      under the policy; and (c) the Agent will have the right (but no obligation)
      at its election to remedy any default in the payment of premiums within
      thirty (30) days of notice from the insurer of such default. If no Event
      of Default (as defined in the Notes) exists and if the proceeds arising
      out of any claim or series of



 

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  related claims do not exceed $100,000,
      loss payments in each instance will be applied by the applicable Debtor
      to the repair and/or replacement of property with respect to which the
      loss was incurred to the extent reasonably feasible, and any loss payments
      or the balance thereof remaining, to the extent not so applied, shall be
      payable to the applicable Debtor; provided, however,
      that payments received by any Debtor after an Event of Default occurs and
      is continuing or in excess of $100,000 for any occurrence or series
      of related occurrences shall be paid to the Agent on behalf of the Secured
      Parties and, if received by such Debtor, shall be held in trust for the
      Secured Parties and immediately paid over to the Agent unless otherwise
      directed in writing by the Agent. Copies of such policies or the related
      certificates, in each case, naming the Agent as lender loss payee and additional
      insured shall be delivered to the Agent at least annually and at the time
      any new policy of insurance is issued. 

             (o)      Each
      Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
      the Secured Parties promptly, in sufficient detail, of any material adverse
      change in the Collateral, and of the occurrence of any event which would
      have a material adverse effect on the value of the Collateral or on the
      Secured Parties’ security interest, through the Agent, therein. 

              (p)      Each
      Debtor shall promptly execute and deliver to the Agent such further deeds,
      mortgages, assignments, security agreements, financing statements or other
      instruments, documents, certificates and assurances and take such further
      action as the Agent may from time to time request and may in its sole discretion
      deem necessary to perfect, protect or enforce the Secured Parties’ security
      interest in the Collateral including, without limitation, if applicable,
      the execution and delivery of a separate security agreement with respect
      to each Debtor’s Intellectual Property (“Intellectual
      Property Security Agreement”) in which
      the Secured Parties have been granted a security interest hereunder, substantially
      in a form reasonably acceptable to the Agent, which Intellectual Property
      Security Agreement, other than as stated therein, shall be subject to all
      of the terms and conditions hereof. 

             (q)      Each
      Debtor shall permit the Agent and its representatives and agents to inspect
      the Collateral during normal business hours and upon reasonable prior notice,
      and to make copies of records pertaining to the Collateral as may be reasonably
      requested by the Agent from time to time. 

             (r)      Each
      Debtor shall take all steps reasonably necessary to diligently pursue and
      seek to preserve, enforce and collect any rights, claims, causes of action
      and accounts receivable in respect of the Collateral. 

             (s)      Each
      Debtor shall promptly notify the Secured Parties in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal
      process levied against any Collateral and of any other information received
      by such Debtor that may materially affect the value of the Collateral,
      the Security Interest or the rights and remedies of the Secured Parties
      hereunder. 



 

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            (t)      All
      information heretofore, herein or hereafter supplied to the Secured Parties
      by or on behalf of any Debtor with respect to the Collateral is accurate
      and complete in all material respects as of the date furnished. 

             (u)      The
      Debtors shall at all times preserve and keep in full force and effect their
      respective valid existence and good standing and any rights and franchises
      material to its business. 

             (v)      No
      Debtor will change its name, type of organization, jurisdiction of organization,
      organizational identification number (if it has one), legal or corporate
      structure, or identity, or add any new fictitious name unless it provides
      at least 30 days prior written notice to the Secured Parties of such change
      and, at the time of such written notification, such Debtor provides any
      financing statements or fixture filings necessary to perfect and continue
      the perfection of the Security Interests granted and evidenced by this
      Agreement. 

             (w)      Except
      in the ordinary course of business, no Debtor may consign any of its inventory
      or sell any of its inventory on bill and hold, sale or return, sale on
      approval, or other conditional terms of sale without the consent of the
      Agent which shall not be unreasonably withheld. 

             (x)      No
      Debtor may relocate its chief executive office to a new location without
      providing 30 days prior written notification thereof to the Secured Parties
      and so long as, at the time of such written notification, such Debtor provides
      any financing statements or fixture filings necessary to perfect and continue
      the perfection of the Security Interests granted and evidenced by this
      Agreement. 

             (y)     Each
      Debtor was organized and remains organized solely under the laws of the
      state set forth next to such Debtor’s name in Schedule
      D attached hereto, which Schedule
      D sets forth each Debtor’s organizational
      identification number or, if any Debtor does not have one, states that
      one does not exist. 

             (z)      (i)
      The actual name of each Debtor is the name set forth in Schedule
      D attached hereto; (ii) no Debtor has any
      trade names except as set forth on Schedule
      E attached hereto; (iii) no Debtor has used
      any name other than that stated in the preamble hereto or as set forth
      on Schedule E for
      the preceding five years; and (iv) no entity has merged into any Debtor
      or been acquired by any Debtor within the past five years except as set
      forth on Schedule E. 

             (aa)    At
      any time and from time to time that any Collateral consists of instruments,
      certificated securities or other items that require or permit possession
      by the secured party to perfect the security interest created hereby, the
      applicable Debtor shall deliver such Collateral to the Agent. 

             (bb)    Each
      Debtor, in its capacity as issuer, hereby agrees to comply with any and
      all orders and instructions of Agent regarding the Pledged Interests consistent
      with



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  the terms of this Agreement without the
      further consent of any Debtor as contemplated by Section 8-106 (or any
      successor section) of the UCC. Further, each Debtor agrees that it shall
      not enter into a similar agreement (or one that would confer “control” within
      the meaning of Article 8 of the UCC) with any other person or entity. 

             (cc)    Each
      Debtor shall cause all tangible chattel paper constituting Collateral to
      be delivered to the Agent, or, if such delivery is not possible, then to
      cause such tangible chattel paper to contain a legend noting that it is
      subject to the security interest created by this Agreement. To the extent
      that any Collateral consists of electronic chattel paper, the applicable
      Debtor shall cause the underlying chattel paper to be “marked” within
      the meaning of Section 9-105 of the UCC (or successor section thereto). 

             (dd)    If
      there is any investment property or deposit account included as Collateral
      that can be perfected by “control” through an account control
      agreement, the applicable Debtor shall cause such an account control agreement,
      in form and substance in each case satisfactory to the Agent, to be entered
      into and delivered to the Agent for the benefit of the Secured Parties. 

             (ee)    To
      the extent that any Collateral consists of letter-of-credit rights, the
      applicable Debtor shall cause the issuer of each underlying letter of credit
      to consent to an assignment of the proceeds thereof to the Secured Parties. 

             (ff)     To
      the extent that any Collateral is in the possession of any third party,
      the applicable Debtor shall join with the Agent in notifying such third
      party of the Secured Parties’ security interest in such Collateral
      and shall use its best efforts to obtain an acknowledgement and agreement
      from such third party with respect to the Collateral, in form and substance
      reasonably satisfactory to the Agent. 

             (gg)    If
      any Debtor shall at any time hold or acquire a commercial tort claim, such
      Debtor shall promptly notify the Secured Parties in a writing signed by
      such Debtor of the particulars thereof and grant to the Secured Parties
      in such writing a security interest therein and in the proceeds thereof,
      all upon the terms of this Agreement, with such writing to be in form and
      substance satisfactory to the Agent. 

             (hh)    Each
      Debtor shall immediately provide written notice to the Secured Parties
      of any and all accounts which arise out of contracts with any governmental
      authority and, to the extent necessary to perfect or continue the perfected
      status of the Security Interests in such accounts and proceeds thereof,
      shall execute and deliver to the Agent an assignment of claims for such
      accounts and cooperate with the Agent in taking any other steps required,
      in its judgment, under the Federal Assignment of Claims Act or any similar
      federal, state or local statute or rule to perfect or continue the perfected
      status of the Security Interests in such accounts and proceeds thereof. 

              (ii)    Each
      Debtor shall cause each subsidiary of such Debtor to immediately become
      a party hereto (an “Additional Debtor”),
      by executing and delivering an Additional Debtor Joinder in substantially
      the form of Annex A attached
      hereto and comply with the provisions hereof applicable to the Debtors.
      Concurrent therewith, the



 

11











  Additional Debtor shall deliver replacement
      schedules for, or supplements to all other Schedules to (or referred to
      in) this Agreement, as applicable, which replacement schedules shall supersede,
      or supplements shall modify, the Schedules then in effect. The Additional
      Debtor shall also deliver such opinions of counsel, authorizing resolutions,
      good standing certificates, incumbency certificates, organizational documents,
      financing statements and other information and documentation as the Agent
      may reasonably request. Upon delivery of the foregoing to the Agent, the
      Additional Debtor shall be and become a party to this Agreement with the
      same rights and obligations as the Debtors, for all purposes hereof as
      fully and to the same extent as if it were an original signatory hereto
      and shall be deemed to have made the representations, warranties and covenants
      set forth herein as of the date of execution and delivery of such Additional
      Debtor Joinder, and all references herein to the “Debtors” shall
      be deemed to include each Additional Debtor. 

             (jj)     Each
      Debtor shall vote the Pledged Securities to comply with the covenants and
      agreements set forth herein and in the Notes. 

             (kk)   Each
      Debtor shall register the pledge of the applicable Pledged Securities on
      the books of such Debtor. Each Debtor shall notify each issuer of Pledged
      Securities to register the pledge of the applicable Pledged Securities
      in the name of the Secured Parties on the books of such issuer. Further,
      except with respect to certificated securities delivered to the Agent,
      the applicable Debtor shall deliver to Agent an acknowledgement of pledge
      (which, where appropriate, shall comply with the requirements of the relevant
      UCC with respect to perfection by registration) signed by the issuer of
      the applicable Pledged Securities, which acknowledgement shall confirm
      that: (a) it has registered the pledge on its books and records; and (b)
      at any time directed by Agent during the continuation of an Event of Default,
      such issuer will transfer the record ownership of such Pledged Securities
      into the name of any designee of Agent, will take such steps as may be
      necessary to effect the transfer, and will comply with all other instructions
      of Agent regarding such Pledged Securities without the further consent
      of the applicable Debtor. 

             (ll)     In
      the event that, upon an occurrence of an Event of Default, Agent shall
      sell all or any of the Pledged Securities to another party or parties (herein
      called the “Transferee”)
      or shall purchase or retain all or any of the Pledged Securities, each
      Debtor shall, to the extent applicable: (i) deliver to Agent or the Transferee,
      as the case may be, the articles of incorporation, bylaws, minute books,
      stock certificate books, corporate seals, deeds, leases, indentures, agreements,
      evidences of indebtedness, books of account, financial records and all
      other Organizational Documents and records of the Debtors and their direct
      and indirect subsidiaries; (ii) use its best efforts to obtain resignations
      of the persons then serving as officers and directors of the Debtors and
      their direct and indirect subsidiaries, if so requested; and (iii) use
      its best efforts to obtain any approvals that are required by any governmental
      or regulatory body in order to permit the sale of the Pledged Securities
      to the Transferee or the purchase or retention of the Pledged Securities
      by Agent and allow the Transferee or Agent to continue the business of
      the Debtors and their direct and indirect subsidiaries. 



 

12











            (mm)   Without
      limiting the generality of the other obligations of the Debtors hereunder,
      each Debtor shall promptly (i) cause to be registered at the United States
      Copyright Office all of its material copyrights, (ii) cause the security
      interest contemplated hereby with respect to all Intellectual Property
      registered at the United States Copyright Office or United States Patent
      and Trademark Office to be duly recorded at the applicable office, and
      (iii) give the Agent notice whenever it acquires (whether absolutely or
      by license) or creates any additional material Intellectual Property.

              (nn)    Each
      Debtor will from time to time, at the joint and several expense of the
      Debtors, promptly execute and deliver all such further instruments and
      documents, and take all such further action as may be necessary or desirable,
      or as the Agent may reasonably request, in order to perfect and protect
      any security interest granted or purported to be granted hereby or to enable
      the Secured Parties to exercise and enforce their rights and remedies hereunder
      and with respect to any Collateral or to otherwise carry out the purposes
      of this Agreement. 

             (oo)    Schedule
        F attached hereto lists all of the patents,
        patent applications, trademarks, trademark applications, registered copyrights,
        and domain names owned by any of the Debtors as of the date hereof. Schedule
        F lists all material licenses in favor
        of any Debtor for the use of any patents, trademarks, copyrights and
        domain names as of the date hereof. All material patents and trademarks
        of the Debtors have been duly recorded at the United States Patent and
        Trademark Office and all material copyrights of the Debtors have been
        duly recorded at the United States Copyright Office. 

             (pp)    Except
      as set forth on Schedule G attached
      hereto, none of the account debtors or other persons or entities obligated
      on any of the Collateral is a governmental authority covered by the Federal
      Assignment of Claims Act or any similar federal, state or local statute
      or rule in respect of such Collateral. 

             (qq)    Concurrently
      herewith, the Company shall have delivered an opinion of legal counsel
      in form and substance reasonably satisfactory to the Secured Parties and
      a duly executed Guarantee from each subsidiary of the Company. 

             (rr)     Concurrently
      herewith, the Company shall have delivered to the Secured Party a pledge
      and security agreement, in form and substance reasonably satisfactory to
      the Secured Parties pursuant to which third party shareholders of the Company
      pledge at least 2,000,000 shares of common stock of the Company (the “Common
      Stock”) to the Secured Parties. 

             (ss)     Concurrently
      herewith, the Company shall have instructed its transfer agent to issue
      ratably to the Secured Parties, in the aggregate, 3,200,000 shares of Common
      Stock and the Company shall cause such shares to be delivered to each Secured
      Party (or Feldman Weinstein & Smith LLP) on or before November 23,
      2007.  If,
      at any time there is not an effective registration statement filed with
      the U.S. Securities and Exchange Commission (the “Commission”)
      covering all of such shares and the Company shall determine to prepare
      and file with the Commission a registration statement relating



 

13











  to an offering for its own account or
      the account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued
      solely in connection with any acquisition of any entity or business or
      equity securities issuable in connection with the Company’s stock
      option or other employee benefit plans, then the Company shall deliver
      to each Secured Party a written notice of such determination and, if within
      fifteen days after the date of the delivery of such notice, any such Secured
      Party shall so request in writing, the Company shall include in such registration
      statement all or any part of such shares such Secured Party requests to
      be registered; provided, however,
      in the event the Company does not include such shares in a registration
      statement on or before March 31, 2008, a Secured Party shall have the right
      to demand the Company to file a registration statement within 30 days and
      use best efforts to cause such registration statement to be declared effective
      within 120 days of demand. 

             (tt)     To
      the extent it may lawfully do so, each Debtor hereby agrees not to insist
      upon or plead or in any manner whatsoever claim, and will resist any and
      all efforts to be compelled to take the benefit or advantage of, usury
      laws wherever enacted, now or at any time hereafter in force, in connection
      with any claim, action or proceeding that may be brought by any Secured
      Party in order to enforce any right or remedy under any this Agreement
      or the Notes. Notwithstanding any provision to the contrary contained in
      this Agreement and the Notes, it is expressly agreed and provided that
      the total liability of the Debtors under the Notes for payments in the
      nature of interest shall not exceed the maximum lawful rate authorized
      under applicable law (the “Maximum Rate”),
      and, without limiting the foregoing, in no event shall any rate of interest
      or default interest, or both of them, when aggregated with any other sums
      in the nature of interest that the Debtors may be obligated to pay under
      the Notes exceed such Maximum Rate. It is agreed that if the maximum contract
      rate of interest allowed by law and applicable to the Notes is increased
      or decreased by statute or any official governmental action subsequent
      to the date hereof, the new maximum contract rate of interest allowed by
      law will be the Maximum Rate applicable to the Notes from the effective
      date forward, unless such application is precluded by applicable law. If
      under any circumstances whatsoever, interest in excess of the Maximum Rate
      is paid by a Debtor to any Secured Party with respect to indebtedness evidenced
      by the Notes, such excess shall be applied by such Secured Party to the
      unpaid principal balance of any such indebtedness or be refunded to the
      Debtors, the manner of handling such excess to be at such Secured Party’s
      election. 

             (uu)    The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by the Company under the Securities Act and the Exchange
      Act of 1934, as amended (the “Exchange
      Act”) since December 8, 2006 (the foregoing
      materials, including the exhibits thereto and documents incorporated by
      reference therein, being collectively referred to herein as the “SEC
      Reports”) on a timely basis or has received
      a valid extension of such time of filing and has filed any such SEC Reports
      prior to the expiration of any such extension. As of their respective dates,
      the SEC Reports complied in all material respects with the requirements
      of the Securities Act and the Exchange Act, as applicable, and none of
      the SEC Reports, when filed, contained any untrue statement of a material
      fact or omitted to state a material fact required to be



 

14











  stated therein or necessary in order
      to make the statements therein, in the light of the circumstances under
      which they were made, not misleading. The financial statements of the Company
      included in the SEC Reports comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission
      with respect thereto as in effect at the time of filing. Such financial
      statements have been prepared in accordance with United States generally
      accepted accounting principles applied on a consistent basis during the
      periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the
      notes thereto and except that unaudited financial statements may not contain
      all footnotes required by GAAP, and fairly present in all material respects
      the financial position of the Company and its consolidated Subsidiaries
      as of and for the dates thereof and the results of operations and cash
      flows for the periods then ended, subject, in the case of unaudited statements,
      to normal, immaterial, year-end audit adjustments. Since
      the date of the latest audited financial statements included within the
      SEC Reports, except as specifically disclosed in a subsequent SEC Report
      filed prior to the date hereof, (i) there has been no event, occurrence
      or development that has had or that could reasonably be expected to result
      in a material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Debtors, taken as
      a whole, (ii) the Company has not incurred any liabilities (contingent
      or otherwise) other than (A) trade payables and accrued expenses incurred
      in the ordinary course of business consistent with past practice and (B)
      liabilities not required to be reflected in the Company’s financial
      statements pursuant to GAAP or disclosed in filings made with the Commission,
      (iii) the Company has not altered its method of accounting, (iv) the Company
      has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to purchase or redeem any shares of its capital stock and (v) the Company
      has not issued any equity securities to any officer, director or affiliate,
      except pursuant to existing Company stock option plans. No event, liability
      or development has occurred or exists with respect to the Debtors or their
      respective business, properties, operations or financial condition, that
      would be required to be disclosed by the Company under applicable securities
      laws at the time this representation is made or deemed made that has not
      been publicly disclosed at least one Trading Day prior to the date that
      this representation is made. 

             (vv)    The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act of 2002 which are applicable to it as of the date hereof. 

             (xx)    The
      Company has no knowledge of any facts or circumstances which lead it to
      believe that it will file for reorganization or liquidation under the bankruptcy
      or reorganization laws of any jurisdiction within one year from the date
      hereof. Schedule 4(xx) sets
      forth as of the date hereof all outstanding secured and unsecured Indebtedness
      of the Company or any Subsidiary, or for which the Company or any Subsidiary
      has commitments. For the purposes of this Agreement, “Indebtedness” means
      (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of indebtedness of others, whether or not the same are or should be reflected
      in the Company’s balance sheet (or the



 

15











  notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of any lease payments in excess of $50,000 due under leases required
      to be capitalized in accordance with GAAP. No Debtor is in default with
      respect to any Indebtedness. 

             (zz)    All
      disclosure furnished by or on behalf of the Debtors to the Secured Parties
      regarding the Debtors, their business and the transactions contemplated
      hereby, including the Disclosure Schedules to this Agreement, is true and
      correct and does not contain any untrue statement of a material fact or
      omit to state any material fact necessary in order to make the statements
      made therein, in light of the circumstances under which they were made,
      not misleading. The press releases disseminated by the Company during the
      twelve months preceding the date of this Agreement taken as a whole do
      not contain any untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary in order to make
      the statements therein, in light of the circumstances under which they
      were made and when made, not misleading.



          5.      Effect of Pledge on Certain Rights.  If any of the Collateral subject to this Agreement consists of
nonvoting equity or ownership interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests upon the occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement of any of Agent’s rights hereunder shall not be deemed to be the type of
event which would trigger such conversion rights notwithstanding any provisions in the Organizational Documents or agreements to which any Debtor is subject or to which any Debtor is party. 


          6.      Defaults. The following events shall be “Events of Default”: 


            (a)      The
      occurrence of an Event of Default (as defined in the Notes) under the Notes; 

             (b)      Any
      representation or warranty of any Debtor in this Agreement shall prove
      to have been incorrect in any material respect when made; 

             (c)      The
      failure by any Debtor to observe or perform any of its obligations hereunder
      for five (5) days after delivery to such Debtor of notice of such failure
      by or on behalf of a Secured Party unless such default is capable of cure
      but cannot be cured within such time frame and such Debtor is using best
      efforts to cure same in a timely fashion; or 

             (d)      If
      any provision of this Agreement shall at any time for any reason be declared
      to be null and void, or the validity or enforceability thereof shall be
      contested by any Debtor, or a proceeding shall be commenced by any Debtor,
      or by any governmental authority having jurisdiction over any Debtor, seeking
      to establish the invalidity or 



 

16











  unenforceability thereof, or any Debtor
      shall deny that any Debtor has any liability or obligation purported to
      be created under this Agreement. 



          7.      Duty To Hold In Trust.


            (a)      Upon
      the occurrence of any Event of Default and at any time thereafter, each
      Debtor shall, upon receipt of any revenue, income, dividend, interest or
      other sums subject to the Security Interests, whether payable pursuant
      to the Notes or otherwise, or of any check, draft, note, trade acceptance
      or other instrument evidencing an obligation to pay any such sum, hold
      the same in trust for the Secured Parties and shall forthwith endorse and
      transfer any such sums or instruments, or both, to the Secured Parties,
      pro-rata in proportion to their respective then-currently outstanding principal
      amount of Notes for application to the satisfaction of the Obligations
      (and if any Note is not outstanding, pro-rata in proportion to the initial
      purchases of the remaining Notes).

             (b)      If
      any Debtor shall become entitled to receive or shall receive any securities
      or other property (including, without limitation, shares of Pledged Securities
      or instruments representing Pledged Securities acquired after the date
      hereof, or any options, warrants, rights or other similar property or certificates
      representing a dividend, or any distribution in connection with any recapitalization,
      reclassification or increase or reduction of capital, or issued in connection
      with any reorganization of such Debtor or any of its direct or indirect
      subsidiaries) in respect of the Pledged Securities (whether as an addition
      to, in substitution of, or in exchange for, such Pledged Securities or
      otherwise), such Debtor agrees to (i) accept the same as the agent of the
      Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
      of the Secured Parties; and (iii) to deliver any and all certificates or
      instruments evidencing the same to Agent on or before the close of business
      on the fifth business day following the receipt thereof by such Debtor,
      in the exact form received together with the Necessary Endorsements, to
      be held by Agent subject to the terms of this Agreement as Collateral. 



          8.      Rights and Remedies Upon Default.


             (a)
           Upon the occurrence of any Event of Default and at any time thereafter,
      the Secured Parties, acting through the Agent, shall have the right to
      exercise all of the remedies conferred hereunder and under the Notes, and
      the Secured Parties shall have all the rights and remedies of a secured
      party under the UCC. Without limitation, the Agent, for the benefit of
      the Secured Parties, shall have the following rights and powers: 




             (i)      The
      Agent shall have the right to take possession of the Collateral and, for
      that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove
      the same, and each Debtor shall assemble the Collateral and make it available
      to the Agent at places which the Agent shall reasonably select, whether
      at such Debtor's premises or elsewhere, and make available to the Agent,
      without rent, all of such Debtor’s respective premises and facilities
      for the purpose of the Agent taking possession of, removing or putting
      the Collateral in saleable or disposable form. 



 

17











            (ii)      Upon
      notice to the Debtors by Agent, all rights of each Debtor to exercise the
      voting and other consensual rights which it would otherwise be entitled
      to exercise and all rights of each Debtor to receive the dividends and
      interest which it would otherwise be authorized to receive and retain,
      shall cease. Upon such notice, Agent shall have the right to receive, for
      the benefit of the Secured Parties, any interest, cash dividends or other
      payments on the Collateral and, at the option of Agent, to exercise in
      such Agent’s discretion all voting rights pertaining thereto. Without
      limiting the generality of the foregoing, Agent shall have the right (but
      not the obligation) to exercise all rights with respect to the Collateral
      as it were the sole and absolute owner thereof, including, without limitation,
      to vote and/or to exchange, at its sole discretion, any or all of the Collateral
      in connection with a merger, reorganization, consolidation, recapitalization
      or other readjustment concerning or involving the Collateral or any Debtor
      or any of its direct or indirect subsidiaries. 

             (iii)     The
      Agent shall have the right to operate the business of each Debtor using
      the Collateral and shall have the right to assign, sell, lease or otherwise
      dispose of and deliver all or any part of the Collateral, at public or
      private sale or otherwise, either with or without special conditions or
      stipulations, for cash or on credit or for future delivery, in such parcel
      or parcels and at such time or times and at such place or places, and upon
      such terms and conditions as the Agent may deem commercially reasonable,
      all without (except as shall be required by applicable statute and cannot
      be waived) advertisement or demand upon or notice to any Debtor or right
      of redemption of a Debtor, which are hereby expressly waived. Upon each
      such sale, lease, assignment or other transfer of Collateral, the Agent,
      for the benefit of the Secured Parties, may, unless prohibited by applicable
      law which cannot be waived, purchase all or any part of the Collateral
      being sold, free from and discharged of all trusts, claims, right of redemption
      and equities of any Debtor, which are hereby waived and released. 

             (iv)     The
      Agent shall have the right (but not the obligation) to notify any account
      debtors and any obligors under instruments or accounts to make payments
      directly to the Agent, on behalf of the Secured Parties, and to enforce
      the Debtors’ rights against such account debtors and obligors. 

             (v)      The
      Agent, for the benefit of the Secured Parties, may (but is not obligated
      to) direct any financial intermediary or any other person or entity holding
      any investment property to transfer the same to the Agent, on behalf of
      the Secured Parties, or its designee. 

             (vi)      The
      Agent may (but is not obligated to) transfer any or all Intellectual Property
      registered in the name of any Debtor at the United States Patent and Trademark
      Office and/or Copyright Office into the name of the Secured Parties or
      any designee or any purchaser of any Collateral. 



 

18











            (b)      The
      Agent shall comply with any applicable law in connection with a disposition
      of Collateral and such compliance will not be considered adversely to affect
      the commercial reasonableness of any sale of the Collateral. The Agent
      may sell the Collateral without giving any warranties and may specifically
      disclaim such warranties. If the Agent sells any of the Collateral on credit,
      the Debtors will only be credited with payments actually made by the purchaser.
      In addition, each Debtor waives any and all rights that it may have to
      a judicial hearing in advance of the enforcement of any of the Agent’s
      rights and remedies hereunder, including, without limitation, its right
      following an Event of Default to take immediate possession of the Collateral
      and to exercise its rights and remedies with respect thereto. 

             (c)      For
      the purpose of enabling the Agent to further exercise rights and remedies
      under this Section 8 or elsewhere provided by agreement or applicable law,
      each Debtor hereby grants to the Agent, for the benefit of the Agent and
      the Secured Parties, an irrevocable, nonexclusive license (exercisable
      without payment of royalty or other compensation to such Debtor) to use,
      license or sublicense following an Event of Default, any Intellectual Property
      now owned or hereafter acquired by such Debtor, and wherever the same may
      be located, and including in such license access to all media in which
      any of the licensed items may be recorded or stored and to all computer
      software and programs used for the compilation or printout thereof. 



          9.      Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees
and other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of Notes at the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which
the Secured Parties are legally entitled, the Debtors will be liable for the deficiency, together with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable
fees of any attorneys employed by the Secured Parties to collect such deficiency.  To the extent permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured Parties arising out of the repossession, removal,
retention or sale of the Collateral, unless due solely to the gross negligence or willful misconduct of the Secured Parties as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction. 


          10.    Securities
Law Provision. Each Debtor recognizes that Agent
may be limited in its ability to effect a sale to the public of all or part of
the Pledged Securities by  reason of certain prohibitions in the Securities Act
of 1933, as amended (the “Securities Act”),
or other federal or state securities laws (collectively, the “Securities
Laws”), and may be compelled to resort to
one or more sales to a restricted group of purchasers who may be required to
agree to acquire the

 

19











Pledged Securities for their own account, for investment and not with a view to the distribution or resale thereof.  Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the Pledged Securities
were sold to the public, and that Agent has no obligation to delay the sale of any Pledged Securities for the period of time necessary to register the Pledged Securities for sale to the public under the Securities Laws. Each Debtor shall cooperate
with Agent in its attempt to satisfy any requirements under the Securities Laws (including, without limitation, registration thereunder if requested by Agent) applicable to the sale of the Pledged Securities by Agent. 


          11.    Costs
and Expenses. Each Debtor agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any  filing
required hereunder, including without limitation, any financing statements pursuant
to the UCC, continuation statements, partial releases and/or termination statements
related thereto or any expenses of any searches reasonably required by the  Agent.
The Debtors shall also pay all other claims and charges which in the reasonable
opinion of the Agent is reasonably likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interests therein. The Debtors will also,
upon  demand, pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, which the Agent, for the benefit of the Secured Parties, may incur
in connection with  (i) the enforcement of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Collateral, or (iii) the exercise or enforcement of any of the rights
of the Secured Parties under the  Notes. Until so paid, any fees payable hereunder
shall be added to the principal amount of the Notes and shall bear interest at
the Default Rate. 


          12.    Responsibility
for Collateral. The Debtors assume all liabilities
and responsibility in connection with all Collateral, and the  Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the Agent nor any  Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
 Collateral for sale, and (b) each Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or performed
by such Debtor thereunder. Neither the Agent nor any Secured Party shall have
any  obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Secured Party
of any payment relating to any of the Collateral, nor shall the Agent or any
Secured Party be  obligated in any manner to perform any of the obligations of
any Debtor under or pursuant to any such contract or agreement, to make inquiry
as to the nature or sufficiency of any payment received by the Agent or any Secured
Party in respect of the  Collateral or as to the sufficiency of any performance
by any party under any such contract or agreement, to present or file any claim,
to take any action to enforce any performance or to collect the payment of any
amounts which may have been  assigned to the Agent or to which the Agent or any
Secured Party may be entitled at any time or times. 


          13.    Security
Interests Absolute. All rights of the Secured Parties
and all obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a)  any lack of validity or enforceability of this Agreement,
the Notes or any agreement entered into in

 

20











connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of
or any consent to any departure from the Notes or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any insurance claims or matters
made or arising in connection with the Collateral; or (e) any other circumstance which might otherwise constitute any legal or equitable defense available to a Debtor, or a discharge of all or any part of the Security Interests granted hereby. Until
the Obligations shall have been paid and performed in full, the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy.
Each Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment received by the Secured Parties hereunder
shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other
than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral
which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. Each Debtor waives any defense arising by reason of the application of the statute of limitations to any obligation secured hereby. 


          14.     Term
of Agreement. This Agreement and the Security Interests
shall terminate on the date on which all payments under the Notes have been
indefeasibly paid in full and all other Obligations have been paid or discharged;
provided, however, that all indemnities of the Debtors contained in this Agreement
(including, without limitation, Annex B hereto) shall survive and remain operative
 and in full force and effect regardless of the termination of this Agreement. 


          15.     Power
of Attorney; Further Assurances. 


            (a)      Each
      Debtor authorizes the Agent, and does hereby make, constitute and appoint
      the Agent and its officers, agents, successors or assigns with full power
      of substitution, as such Debtor’s true and lawful attorney-in-fact,
      with power, in the name of the Agent or such Debtor, to, after the occurrence
      and during the continuance of an Event of Default, (i) endorse any note,
      checks, drafts, money orders or other instruments of payment (including
      payments payable under or in respect of any policy of insurance) in respect
      of the Collateral that may come into possession of the Agent; (ii) to sign
      and endorse any financing statement pursuant to the UCC or any invoice,
      freight or express bill, bill of lading, storage or warehouse receipts,
      drafts against debtors, assignments, verifications and notices in connection
      with accounts, and other documents relating to the 



 

21











  Collateral; (iii) to pay or discharge
      taxes, liens, security interests or other encumbrances at any time levied
      or placed on or threatened against the Collateral; (iv) to demand, collect,
      receipt for, compromise, settle and sue for monies due in respect of the
      Collateral; (v) to transfer any Intellectual Property or provide licenses
      respecting any Intellectual Property; and (vi) generally, at the option
      of the Agent, and at the expense of the Debtors, at any time, or from time
      to time, to execute and deliver any and all documents and instruments and
      to do all acts and things which the Agent deems necessary to protect, preserve
      and realize upon the Collateral and the Security Interests granted therein
      in order to effect the intent of this Agreement and the Notes all as fully
      and effectually as the Debtors might or could do; and each Debtor hereby
      ratifies all that said attorney shall lawfully do or cause to be done by
      virtue hereof. This power of attorney is coupled with an interest and shall
      be irrevocable for the term of this Agreement and thereafter as long as
      any of the Obligations shall be outstanding. The designation set forth
      herein shall be deemed to amend and supersede any inconsistent provision
      in the Organizational Documents or other documents or agreements to which
      any Debtor is subject or to which any Debtor is a party. Without limiting
      the generality of the foregoing, after the occurrence and during the continuance
      of an Event of Default, each Secured Party is specifically authorized to
      execute and file any applications for or instruments of transfer and assignment
      of any patents, trademarks, copyrights or other Intellectual Property with
      the United States Patent and Trademark Office and the United States Copyright
      Office. 

              (b)      On
      a continuing basis, each Debtor will make, execute, acknowledge, deliver,
      file and record, as the case may be, with the proper filing and recording
      agencies in any jurisdiction, including, without limitation, the jurisdictions
      indicated on Schedule C attached
      hereto, all such instruments, and take all such action as may reasonably
      be deemed necessary or advisable, or as reasonably requested by the Agent,
      to perfect the Security Interests granted hereunder and otherwise to carry
      out the intent and purposes of this Agreement, or for assuring and confirming
      to the Agent the grant or perfection of a perfected security interest in
      all the Collateral under the UCC. 

             (c)      Each
      Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact,
      with full authority in the place and instead of such Debtor and in the
      name of such Debtor, from time to time in the Agent’s discretion,
      to take any action and to execute any instrument which the Agent may deem
      necessary or advisable to accomplish the purposes of this Agreement, including
      the filing, in its sole discretion, of one or more financing or continuation
      statements and amendments thereto, relative to any of the Collateral without
      the signature of such Debtor where permitted by law, which financing statements
      may (but need not) describe the Collateral as “all assets” or “all
      personal property” or words of like import, and ratifies all such
      actions taken by the Agent. This power of attorney is coupled with an interest
      and shall be irrevocable for the term of this Agreement and thereafter
      as long as any of the Obligations shall be outstanding. 



          16.    Notices.
    Any and all notices or other communications or deliveries required or permitted
    to be provided hereunder shall be in writing and  shall be deemed given and
    effective

 

22











on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a business day or later
than 5:30 p.m. (New York City time) on any business day, (c) the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 


          17.     Other
Security. To the extent that the Obligations are
now or hereafter secured by property other than the Collateral or by the  guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Agent shall have the right, in its sole discretion, to pursue, relinquish,
subordinate, modify or take any other action with respect thereto, without  in
any way modifying or affecting any of the Secured Parties’ rights and remedies
hereunder. 


          18.     Appointment
of Agent.  The Secured Parties hereby appoint Midsummer
Ventures, LP to act as their agent (“Agent”)
for purposes of exercising any and all rights and remedies of the Secured Parties
hereunder. Such appointment shall continue until revoked in writing by a Majority
in Interest, at which time a Majority in Interest shall appoint  a new Agent.
The Agent shall have the rights, responsibilities and immunities set forth in Annex
B hereto. 


          19.     Miscellaneous. 


            (a)      No
      course of dealing between the Debtors and the Secured Parties, nor any
      failure to exercise, nor any delay in exercising, on the part of the Secured
      Parties, any right, power or privilege hereunder or under the Notes shall
      operate as a waiver thereof; nor shall any single or partial exercise of
      any right, power or privilege hereunder or thereunder preclude any other
      or further exercise thereof or the exercise of any other right, power or
      privilege. 

             (b)      All
      of the rights and remedies of the Secured Parties with respect to the Collateral,
      whether established hereby or by the Notes or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently. 

             (c)      This
      Agreement, together with the exhibits and schedules hereto, contain the
      entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into this Agreement and the exhibits and schedules hereto. No provision
      of this Agreement may be waived, modified, supplemented or amended except
      in a written instrument signed, in the case of an amendment, by the Debtors
      and the Secured Parties or, in the case of a waiver, by the party against
      whom enforcement of any such waived provision is sought.



 

23











            (d)      If
      any term, provision, covenant or restriction of this Agreement is held
      by a court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set
      forth herein shall remain in full force and effect and shall in no way
      be affected, impaired or invalidated, and the parties hereto shall use
      their commercially reasonable efforts to find and employ an alternative
      means to achieve the same or substantially the same result as that contemplated
      by such term, provision, covenant or restriction. It is hereby stipulated
      and declared to be the intention of the parties that they would have executed
      the remaining terms, provisions, covenants and restrictions without including
      any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

             (e)      No
      waiver of any default with respect to any provision, condition or requirement
      of this Agreement shall be deemed to be a continuing waiver in the future
      or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of any
      party to exercise any right hereunder in any manner impair the exercise
      of any such right. 

             (f)       This
      Agreement shall be binding upon and inure to the benefit of the parties
      and their successors and permitted assigns. The Company and the Guarantors
      may not assign this Agreement or any rights or obligations hereunder without
      the prior written consent of each Secured Party (other than by merger).
      Any Secured Party may assign any or all of its rights under this Agreement
      to any Person to whom such Secured Party assigns or transfers any Securities,
      provided such transferee agrees in writing to be bound, with respect to
      the transferred Securities, by the provisions of this Agreement that apply
      to the “Secured Parties.” 

             (g)      Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement. 

             (h)      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each Debtor agrees that all proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and the Notes (whether brought against a
      party hereto or its respective affiliates, directors, officers, shareholders,
      partners, members, employees or agents) shall be commenced exclusively
      in the state and federal courts sitting in the City of New York, Borough
      of Manhattan. Each Debtor hereby irrevocably submits to the exclusive jurisdiction
      of the state and federal courts sitting in the City of New York, Borough
      of Manhattan 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 proceeding,
      any claim that it is not personally subject to the jurisdiction of any
      such court, that such proceeding is improper. Each party hereto hereby
      irrevocably waives personal service of process and consents to process
      being served in any such proceeding by mailing a copy thereof via registered
      or certified



 

24











  mail or overnight delivery (with evidence
      of delivery) to such party at the address in effect for notices to it under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be
      deemed to limit in any way any right to serve process in any manner permitted
      by law. EACH PARTY HERETO HEREBY IRREVOCABLY
        WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
        RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
        TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. If
        any party shall commence a proceeding to enforce any provisions of this
        Agreement, then the prevailing party in such proceeding shall be reimbursed
        by the other party for its reasonable attorney’s fees and other
        costs and expenses incurred with the investigation, preparation and prosecution
      of such proceeding.

             (i)      This
      Agreement may be executed in any number of counterparts, each of which
      when so executed shall be deemed to be an original and, all of which taken
      together shall constitute one and the same Agreement. In the event that
      any signature is delivered by facsimile transmission or .pdf electronic
      data file, such signature shall create a valid binding obligation of the
      party executing (or on whose behalf such signature is executed) the same
      with the same force and effect as if such facsimile or .pdf signature were
      the original thereof. 

             (j)      All
      Debtors shall jointly and severally be liable for the obligations of each
      Debtor to the Secured Parties hereunder. 

             (k)     Each
      Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured
      Parties and their respective partners, members, shareholders, officers,
      directors, employees and agents (and any other persons with other titles
      that have similar functions) (collectively, “Indemnitees”)
      from and against any and all losses, claims, liabilities, damages, penalties,
      suits, costs and expenses, of any kind or nature, (including fees relating
      to the cost of investigating and defending any of the foregoing) imposed
      on, incurred by or asserted against such Indemnitee in any way related
      to or arising from or alleged to arise from this Agreement or the Collateral,
      except any such losses, claims, liabilities, damages, penalties, suits,
      costs and expenses which result from the gross negligence or willful misconduct
      of the Indemnitee as determined by a final, nonappealable decision of a
      court of competent jurisdiction. 

             (l)      Nothing
      in this Agreement shall be construed to subject Agent or any Secured Party
      to liability as a partner in any Debtor or any if its direct or indirect
      subsidiaries that is a partnership or as a member in any Debtor or any
      of its direct or indirect subsidiaries that is a limited liability company,
      nor shall Agent or any Secured Party be deemed to have assumed any obligations
      under any partnership agreement or limited liability company agreement,
      as applicable, of any such Debtor or any if its direct or indirect subsidiaries
      or otherwise, unless and until any such Secured Party exercises its right
      to be substituted for such Debtor as a partner or member, as applicable,
      pursuant hereto. 



 

25











            (m)     To
      the extent that the grant of the security interest in the Collateral and
      the enforcement of the terms hereof require the consent, approval or action
      of any partner or member, as applicable, of any Debtor or any direct or
      indirect subsidiary of any Debtor or compliance with any provisions of
      any of the Organizational Documents, the Debtors hereby grant such consent
      and approval and waive any such noncompliance with the terms of said documents. 

             (n)      The
      obligations of each Secured Party under this Agreement are several and
      not joint with the obligations of any other Secured Party, and no Secured
      Party shall be responsible in any way for the performance or non-performance
      of the obligations of any other Secured Party under this Agreement or the
      Notes. Nothing contained herein, and no action taken by any Secured Party
      pursuant thereto, shall be deemed to constitute the Secured Parties as
      a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Secured Parties are in any way acting
      in concert or as a group with respect to such obligations or the transactions
      contemplated by this Agreement. Each Secured Party shall be entitled to
      independently protect and enforce its rights, including without limitation
      the rights arising out of this Agreement and the Notes, and it shall not
      be necessary for any other Secured Party to be joined as an additional
      party in any proceeding for such purpose. Each Secured Party has been represented
      by its own separate legal counsel in their review and negotiation of this
      Agreement and the Notes. For reasons of administrative convenience only,
      Secured Parties and their respective counsel have chosen to communicate
      with the Company through FWS. FWS does not represent all of the Secured
      Parties but only Midsummer Ventures, LP. The Company has elected to provide
      all Secured Parties with the same terms for the convenience of the Company
      and not because it was required or requested to do so by the Secured Parties.
      Midsummer shall be reimbursed $10,000 out of the proceeds of the Notes
      for legal fees and expenses incurred in connection with the negotiation
      and consummation of the transactions contemplated hereunder. 



[SIGNATURE PAGES FOLLOW]

 

 

 

 

 

26











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


FEARLESS INTERNATIONAL, INC. 

	By:	 

	 	 Name:                                                                                     
  
	 	 Title:
  





Address for Notice: 

 

 


FEARLESS YACHTS LLC 

	By:	 

	 	Name:                                                                                      
	 	Title: 





Address for Notice: 

 

 

 


[SIGNATURE PAGE OF HOLDERS FOLLOWS] 

 

 

 

 

 


27 












[SIGNATURE PAGE OF HOLDERS TO FRLE SA] 


  Name of Investing Entity: __________________________

        

    Signature of Authorized Signatory of Investing
    entity: _________________________

      

    Name of Authorized Signatory: _________________________

    

    Title of Authorized Signatory: __________________________



Advanced Amount:

  

  Address for Notice:

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

 

 

 

 


28












[INSERT SCHEDULES]

 

 

 

 

 

 

 

 

29











ANNEX A 

to 

LOAN AND SECURITY

AGREEMENT 


FORM OF ADDITIONAL DEBTOR JOINDER


Loan and Security Agreement dated as of [_____ ___, 200__
made by 

[_____________
 and its subsidiaries party thereto from time to time, as Debtors 

to and in favor of 

the Secured Parties identified therein (the
“Security Agreement”) 


          Reference is made to the Security Agreement as defined above; capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in, or by reference in, the Security Agreement. 


          The undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the Secured Parties referred to above, the undersigned shall (a) be an Additional Debtor under the Security Agreement, (b) have all the rights
and obligations of the Debtors under the Security Agreement as fully and to the same extent as if the undersigned was an original signatory thereto and (c) be deemed to have made the representations and warranties set forth therein as of the date of
execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY
AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN. 


          Attached hereto are supplemental and/or replacement Schedules to the Security Agreement, as applicable. 


          An executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured Parties may rely on the matters set forth herein on or after the date hereof. This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Parties.

 

 











          IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on behalf of the undersigned. 


[Name of Additional Debtor] 






  By: 

      

      Name: 

      Title: 

      

      Address: 



 

 

Dated: 

 

 

 











[ANNEX B 

to 

LOAN AND SECURITY

AGREEMENT 


THE AGENT


                    1.  Appointment. The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings
provided in the Loan and Security Agreement to which this Annex B is attached (the "Agreement")), by their acceptance of the benefits of the Agreement, hereby designate Midsummer Ventures,
LP (the “Agent”) as the Agent to act as specified herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its
behalf under the provisions of the Agreement and any other Transaction Document (as such term is defined in the Notes) and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of its duties hereunder by or through its agents or employees. 


                    2.  Nature of Duties. The Agent shall have no duties or responsibilities except those expressly set forth
in the Agreement.  Neither the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted by it as such under the Agreement or hereunder or in connection herewith or
therewith, be responsible for the consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction.  The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement or any other Transaction Document a fiduciary relationship in respect of any
Debtor or any Secured Party; and nothing in the Agreement or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or any other
Transaction Document except as expressly set forth herein and therein. 


                    3.  Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems
appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Company and its subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation
and continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii) its own appraisal of the creditworthiness of the Company and its
subsidiaries, and of the value of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Secured Party with any credit, market or other information with respect
thereto, whether coming into its possession before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtors or any












Secured Party for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for the execution, effectiveness, genuineness,
validity, enforceability, perfection, collectibility, priority or sufficiency of the Agreement or any other Transaction Document, or for the financial condition of the Debtors or the value of any of the Collateral, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions or conditions of the Agreement or any other Transaction Document, or the financial condition of the Debtors, or the value of any of the Collateral, or the existence or
possible existence of any default or Event of Default under the Agreement, the Notes or any of the other Transaction Documents. 


                    4.  Certain Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the
Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and
shall be entitled to act or refrain from acting in accordance with the instructions of Secured Parties holding a majority in principal amount of Notes (based on then-outstanding principal amounts of Notes at the time of any such determination); if
such instructions are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured
Parties in respect of actions to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining.  Without limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and the Debtors shall have no right to question or challenge the authority of, or
the instructions given to, the Agent pursuant to the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected to expose it to personal liability or (ii) is contrary to this
Agreement, the Transaction Documents or applicable law. 


                    5.  Reliance.  The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement
and the other Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts
selected by it.  Anything to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral exists or is owned by the Debtors or is cared for, protected or insured or that the liens
granted pursuant to the Agreement have been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority. 












                    6.  Indemnification. To the extent that the Agent is not reimbursed and indemnified by the Debtors, the
Secured Parties will jointly and severally reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Notes, from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement or any other Transaction
Document, or in any way relating to or arising out of the Agreement or any other Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted solely from
the Agent's own gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary to protect the Agent for
costs and expenses associated with taking such action. 


                    7. Resignation by the Agent.


            (a)  The
      Agent may resign from the performance of all its functions and duties under
      the Agreement and the other Transaction Documents at any time by giving
      30 days' prior written notice (as provided in the Agreement) to the Debtors
      and the Secured Parties. Such resignation shall take effect upon the appointment
      of a successor Agent pursuant to clauses (b) and (c) below. 

             (b)  Upon
      any such notice of resignation, the Secured Parties, acting by a Majority
      in Interest, shall appoint a successor Agent hereunder. 

             (c)  If
      a successor Agent shall not have been so appointed within said 30-day period,
      the Agent shall then appoint a successor Agent who shall serve as Agent
      until such time, if any, as the Secured Parties appoint a successor Agent
      as provided above. If a successor Agent has not been appointed within such
      30-day period, the Agent may petition any court of competent jurisdiction
      or may interplead the Debtors and the Secured Parties in a proceeding for
      the appointment of a successor Agent, and all fees, including, but not
      limited to, extraordinary fees associated with the filing of interpleader
      and expenses associated therewith, shall be payable by the Debtors on demand. 



                    8.  Rights with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall not, and
shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or any
of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than
as set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights,











powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After any retiring Agent’s resignation or removal hereunder as Agent, the
provisions of the Agreement including this Annex B shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.