Document:

Exhibit 10.4

 

EXHIBIT B

 

FORM OF WARRANT

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN APPROPRIATE
EXCEPTION UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.  ANY TRANSFEREE OF THIS WARRANT SHOULD
CAREFULLY REVIEW THE TERMS OF THIS WARRANT, INCLUDING SECTION 2(f) HEREOF.  THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE
LESS THAN THE NUMBER SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(f) HEREOF.

 

MEDICOR LTD.

 

WARRANT TO PURCHASE COMMON STOCK

 

	
  Warrant
  No.:                                          

  	
  Number of
  Shares:
               

  
	
   

  	
   

  
	
  Date of Issuance:

  	
  April 26, 2006

  	
   

  
	
   

  	
   

  
	
  Expiration Date:

  	
  April 26, 2011

  	
   

  

 

MediCor Ltd., a Delaware
corporation (the “Company”), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged,                                           ,
the registered holder hereof or its permitted assigns, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this
Warrant (if required by Section 2(f)), at any time or times on or after
the date hereof, but not after 11:59 P.M. New York Time on the Expiration
Date (as defined below)                    (                   )
fully paid nonassessable shares of Common Stock (as defined below) of the
Company (the “Warrant Shares”)
at the purchase price per share provided in Section 1(b) below; provided,
however, that in no event shall the holder be entitled or required to
exercise this Warrant for a number of Warrant Shares in excess of that number
of Warrant Shares that, upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its Affiliates to exceed 4.99% (the “Maximum Percentage”) of the
outstanding shares of the Common Stock following such exercise.  For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the holder and
its Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect

 

 

to which the
determination of such proviso is being made, but shall exclude shares of Common
Stock that would be issuable upon (i) exercise of the remaining,
unexercised Warrants (as defined in Section 1(a) below) beneficially
owned by the holder and its Affiliates and (ii) exercise, conversion or
exchange of the unexercised, unconverted or unexchanged portion of any other
securities of the Company beneficially owned by the holder and its Affiliates
(including the Notes and any other convertible notes or preferred stock)
subject to a limitation on conversion, exercise or exchange analogous to the
limitation contained herein.  Except as
set forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of
1934 Act (as defined below).  For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock a holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-QSB or Form 10-Q
or Form 10-KSB or Form 10-K, as the case may be, (2) a more
recent public announcement by the Company or (3) any other written
(including e-mail) notice by the Company or its transfer agent setting forth
the number of shares of Common Stock outstanding.  Upon the written request of any holder, the
Company shall promptly, but in no event later than two (2) Business Days
following the receipt of such request, confirm in writing to any such holder
the number of shares of Common Stock outstanding as of the date of such request.  In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion,
exercise or exchange of securities of the Company, including the Warrants and
the Notes by such holder and its Affiliates, since the date as of which such
number of outstanding shares of Common Stock was reported.  For purposes of determining the maximum
number of shares of Common Stock that the Company may issue to the holder of
this Warrant upon exercise of this Warrant, such holder’s delivery of an
Exercise Notice (as defined in Section 2(a) below) with respect to
such exercise shall constitute a representation (on which the Company may rely
without investigation) by the holder of this Warrant that upon the issuance of
the shares of Common Stock to be issued to such holder pursuant to such exercise,
the shares of Common Stock beneficially owned by such holder and its Affiliates
shall not exceed the Maximum Percentage of the total outstanding shares of
Common Stock of the Company immediately after giving effect to such exercise as
determined in accordance with this paragraph. 
By written notice to the Company, the holder of this Warrant may from
time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the sixty-first (61)st day after such notice is delivered to the Company, and (ii) any
such increase or decrease will apply only to the holder of this Warrant and not
to any other holder of Warrants.

 

Section 1.                                            Securities
Purchase Agreement.

 

(a)                                  This
Warrant is one of the warrants issued pursuant to Section 1 of that
certain Securities Purchase Agreement dated as of April 26, 2006, among
the Company and the Persons (as defined below) referred to therein (as such
agreement may be amended from time to time as provided in such agreement, the “Securities Purchase Agreement”),
or issued in exchange or substitution therefor (all such warrants being collectively
referred to as the “Warrants”).  Each capitalized term used, and not otherwise

 

2

 

defined herein, shall have the meaning ascribed thereto in the
Securities Purchase Agreement.

 

(b)                                 Definitions.  The following words and terms as used in this
Warrant shall have the following meanings:

 

“1933 Act”
means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute.

 

“1934 Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, or any similar successor statute.

 

“Approved
Stock Plan” means any employee benefit plan that has been approved
by the Board of Directors and stockholders of the Company prior to the date of
the Securities Purchase Agreement and listed on Schedule 3(c) thereto,
pursuant to which the Company’s securities may be issued to any consultant,
employee, officer or director for services provided to the Company.

 

“Affiliate”
means any Person who is an “affiliate” as defined in Rule 12b-2 of the
General Rules and Regulations under the 1934 Act.

 

“Business Day” means any day other than Saturday, Sunday
or other day on which commercial banks in the city of New York are authorized
or required by law to remain closed.

 

“Common Stock” means (i) the Company’s common
stock, $0.001 par value per share, and (ii) any capital stock into which
such Common Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.

 

“Convertible Securities” means any stock or securities
(other than Options) directly or indirectly convertible into or exchangeable or
exercisable for Common Stock.

 

“Exempted Issuance” means (i) shares of
Common Stock issued or deemed to have been issued by the Company pursuant to an
Approved Stock Plan; (ii) shares issued or deemed to have been issued upon
the conversion, exchange or exercise of any Option or Convertible Security
outstanding on the date prior to the date of the Securities Purchase Agreement
and set forth in Schedule 3(c) to the Securities Purchase
Agreement, provided that the terms of such Option or Convertible
Security are not amended or otherwise modified on or after the date of the
Securities Purchase Agreement, and provided that the conversion price,
exchange price, exercise price or other purchase price is not reduced, adjusted
or otherwise modified and the number of shares of Common Stock issued or
issuable is not increased (whether by operation of, or in accordance with, the
relevant governing documents or otherwise) on or after the date of the Securities
Purchase Agreement; and (ii) shares of the Common Stock issued or deemed
to have been issued by the Company upon conversion of the Notes or exercise of
the Warrants.

 

3

 

“Expiration Date” means the date that is the fifth
anniversary of the Warrant Date (as defined in Section 14) or, if such
date does not fall on a Business Day, then the next Business Day.

 

“Option” means any rights, warrants or options to subscribe
for or purchase shares of Common Stock or Convertible Securities.

 

“Person” means any individual, firm, limited liability
company, partnership, joint venture, corporation, trust, unincorporated
organization, government (or any department, agency or political subdivision
thereof), or other entity of any kind, including any successor of such entity.

 

“Principal
Market” means, with respect to the Common Stock or any other
security, the principal securities exchange or trading market for the Common
Stock or such other security.

 

“Trading Day”
means any day on which the Common Stock is traded on the Principal Market; provided
that “Trading Day” shall not include any day on which the Common Stock is
scheduled to trade, or actually trades, on such exchange or market for less
than 4.5 hours.

 

“Warrant”
means this Warrant and all warrants issued in exchange, transfer or replacement
thereof pursuant to the terms of this Warrant.

 

“Warrant Exercise Price” shall be equal to, with respect
to any Warrant Share, $4.50, subject to adjustment as hereinafter provided.

 

“Weighted Average Price” means, for any security as of
any date, the dollar volume-weighted average price for such security on its
Principal Market during the period beginning at 9:30 a.m. New York City
time (or such other time as its Principal Market publicly announces is the
official open of trading) and ending at 4:00 p.m. New York City time (or
such other time as its Principal Market publicly announces is the official
close of trading) as reported by Bloomberg Financial Markets (or any successor
thereto, “Bloomberg”) through its “Volume at Price” functions, or if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m. New York City time
(or such other time as such over-the-counter market publicly announces is the
official open of trading), and ending at 4:00 p.m. New York City time (or
such other time as such over-the-counter market publicly announces is the
official close of trading) as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink
sheets” by the National Quotation Bureau, Inc.  If the Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the holder of this
Warrant.  If the Company and the holder
of this Warrant are unable to agree upon the fair

 

4

 

market value of the Common Stock, then such dispute shall be resolved
pursuant to Section 2 below.  All
such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during any period
during which the Weighted Average Price is being determined.

 

Section 2.                                            Exercise
of Warrant.

 

(a)                                  Subject
to the terms and conditions hereof, this Warrant may be exercised by the holder
hereof then registered on the books of the Company, in whole or in part, at any
time on any Business Day on or after the opening of business on the date hereof
and prior to 11:59 P.M. New York Time on the Expiration Date by (i) delivery
of a written notice, in the form of the exercise notice attached as Exhibit A
hereto (the “Exercise Notice”), of such holder’s election to
exercise this Warrant, which notice shall specify the number of Warrant Shares
to be purchased, (ii) (A) payment to the Company of an amount equal
to the Warrant Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”)
by wire transfer of immediately available funds (or by check if the Company has
not provided the holder of this Warrant with wire transfer instructions for
such payment) or (B) by notifying the Company that this Warrant is being
exercised pursuant to a Cashless Exercise (as defined in Section 2(e)),
and (iii) if required by Section 2(f) (or unless the holder has
previously delivered this Warrant to the Company and it or a new replacement
Warrant has not yet been delivered to the holder), the surrender to a common
carrier for overnight delivery to the Company as soon as practicable following
such date, of this Warrant (or, pursuant to Section 10, an indemnification
undertaking, in customary form, with respect to this Warrant in the case of its
loss, theft or destruction); provided, that if such Warrant Shares are
to be issued in any name other than that of the registered holder of this
Warrant, such issuance shall be deemed a transfer and the provisions of Section 7
shall be applicable.  In the event of any
exercise of the rights represented by this Warrant in compliance with this Section 2,
on the second (2nd) Business
Day (the “Warrant Share Delivery Date”) following the date of its
receipt of the Exercise Notice, the Aggregate Exercise Price (or notice of
Cashless Exercise) and, if required by Section 2 (or unless the holder of
this Warrant has previously delivered this Warrant to the Company and it or a
new replacement Warrant has not yet been delivered to the holder), this Warrant
(or, pursuant to Section 10, an indemnification undertaking, in customary
form, with respect to this Warrant in the case of its loss, theft or
destruction) (the “Exercise Delivery Documents”),
(A) provided that the Company’s transfer agent (the “Transfer Agent”) is participating
in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program and provided that the holder is eligible to
receive shares through DTC, the Company shall credit such aggregate number of
shares of Common Stock to which the holder shall be entitled to the holder’s or
its designee’s balance account with DTC through its Deposit Withdrawal Agent
Commission system or (B) the Company shall issue and deliver to the
address specified in the Exercise Notice, a certificate, registered in the name
of the holder or its designee, for the number of shares of Common Stock to
which the holder shall be entitled.  Upon
delivery of the Exercise Delivery Documents, the holder of this Warrant shall
be deemed for all purposes to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been exercised,

 

5

 

irrespective of the date of credit or delivery of the certificates
evidencing such Warrant Shares.  In the
case of a dispute as to the determination of the Warrant Exercise Price, the
Weighted Average Price of a security or the arithmetic calculation of the
number of Warrant Shares, the Company shall promptly issue to the holder the
number of shares of Common Stock that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the holder via facsimile
within two (2) Business Days after receipt of the holder’s Exercise
Notice.  If the holder and the Company
are unable to agree upon the determination of the Warrant Exercise Price, the
Weighted Average Price or arithmetic calculation of the number of Warrant
Shares within three (3) Business Days of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company shall promptly
(and in any event within two (2) Business Days) submit via facsimile (i) the
disputed determination of the Warrant Exercise Price or the Weighted Average
Price to an independent, reputable investment banking firm agreed to by the
Company and the holder of this Warrant or (ii) the disputed arithmetic
calculation of the number of Warrant Shares to its independent, outside public
accountant, as the case may be.  The
Company shall direct the investment banking firm or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company
and the holder of the results no later than three (3) Business Days after
the time it receives the disputed determinations or calculations.  Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive
absent demonstrable error.

 

(b)                                 If
this Warrant is submitted for exercise, as may be required by Section 2(f),
and unless the rights represented by this Warrant shall have expired or shall
have been fully exercised, the Company shall, as soon as practicable and in no
event later than three (3) Business Days after receipt of this Warrant
(the “Warrant Delivery Date”) and at its own expense, issue a
new Warrant identical in all respects to this Warrant exercised except it shall
represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which such Warrant is exercised (together with,
in the case of a Cashless Exercise, the number of Warrant Shares surrendered in
lieu of payment of the Exercise Price).

 

(c)                                  No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock issued upon exercise
of this Warrant shall be rounded up or down to the nearest whole number (with
0.5 rounded up).

 

(d)                                 If
the Company shall fail for any reason or for no reason (x) to issue and deliver
to the holder within three (3) Business Days of receipt of the Exercise
Delivery Documents a certificate for the number of shares of Common Stock to
which the holder is entitled or to credit the holder’s balance account with DTC
for such number of shares of Common Stock to which the holder is entitled upon
the holder’s exercise of this Warrant or (y) to issue and deliver to the
holder by the Warrant Delivery Date a new Warrant for the number of shares of
Common Stock to which such holder is entitled pursuant to Section 2(b) hereof,
if any, then the Company shall, in addition to any other remedies under this
Warrant or the Securities Purchase Agreement or otherwise available

 

6

 

to such holder, including any indemnification under Section 8 of
the Securities Purchase Agreement, pay as additional damages in cash to such
holder on each day after such third (3rd) Business Day that such shares of
Common Stock are not issued and delivered or credited to the holder, in the
case of clause (x) above, or such third (3rd) Business Day that such Warrant is
not delivered, in the case of clause (y) above, an amount equal to the sum of (i) if
the Company has failed to deliver or credit shares of Common Stock on or prior
to the Warrant Share Delivery Date, 0.5% of the product of (A) the number
of shares of Common Stock not issued or credited to the holder on or prior to
the Warrant Share Delivery Date and (B) the Weighted Average Price of the
Common Stock on the Warrant Share Delivery Date, and (ii) if the Company
has failed to deliver a Warrant to the holder on or prior to the Warrant
Delivery Date, 0.5% of the product of (x) the number of shares of Common
Stock issuable upon exercise of the Warrant as of the Warrant Delivery Date,
and (y) the Weighted Average Price of the Common Stock on the Warrant
Delivery Date; provided that in no event shall cash damages accrue
pursuant to this Section 2(d) during the period, if any, in which any
Warrant Shares are the subject of a bona fide dispute that is subject to and
being resolved pursuant to, and in compliance with the time periods and other
provisions of, the dispute resolution provisions of Section 2.  Alternatively, subject to the dispute
resolution provisions of Section 2, at the election of the holder made in
the holder’s sole discretion, the Company shall pay to the holder, in lieu of
the additional damages referred to in the preceding sentence (but in addition
to all other available remedies that the holder may pursue hereunder and under
the Securities Purchase Agreement (including indemnification pursuant to Section 8
thereof)), 120% of the amount that (A) the holder’s total purchase price
(including brokerage commissions, if any) for shares of Common Stock purchased
to make delivery in satisfaction of a sale by such holder of the shares of
Common Stock to which the holder is entitled but has not received upon an
exercise, exceeds (B) the net proceeds received by the holder from the
sale of the shares of Common Stock to which the holder is entitled but has not
received upon such exercise.

 

(e)                                  The
holder of this Warrant may, at its election and in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according
to the following formula (a “Cashless Exercise”):

 

	
   

  	
  Net Number = 

  	
  (A x B) - (A x
  C)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B

  	
   

  	
   

  	
   

  
	
   

  	
  For purposes of
  the foregoing formula:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A=

  	
  the total number
  of shares with respect to which this Warrant is then being exercised;

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B=

  	
  the Weighted
  Average Price of the Common Stock on the Trading Day immediately preceding
  the date of the delivery of the Exercise Delivery Documents; and

  
								

 

7

 

	
   

  	
   

  	
  C=

  	
  the Warrant
  Exercise Price then in effect for the applicable Warrant Shares at the time
  of such exercise.

  

 

For the avoidance of
doubt, (i) in connection with a Cashless Exercise, the holder shall only
be entitled to be issued and delivered or credited the Net Number of shares of
Common Stock on or prior to the corresponding Warrant Share Delivery Date and (ii) the
holder shall only be entitled to elect a Cashless Exercise if the Net Number is
greater than zero.

 

(f)                                    Book-Entry.  Notwithstanding anything to the contrary set
forth herein, upon exercise of this Warrant in accordance with the terms
hereof, the holder of this Warrant shall not be required to physically
surrender this Warrant to the Company unless it is being exercised for all of
the Warrant Shares represented by the Warrant. 
The holder and the Company shall each maintain records showing the
number of Warrant Shares exercised and issued and the dates of such exercises
or shall use such other method, reasonably satisfactory to the other, so as not
to require physical surrender of this Warrant upon each such exercise.  In the event of any dispute or discrepancy,
such records of the Company establishing the number of Warrant Shares to which
the holder is entitled shall be controlling and determinative in the absence of
demonstrable error.  Notwithstanding the
foregoing, if this Warrant is exercised as aforesaid, the holder may not
transfer this Warrant unless the holder first physically surrenders this
Warrant to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the holder a new Warrant of like tenor, registered as the
holder may request, representing in the aggregate the remaining number of
Warrant Shares represented by this Warrant. 
The holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following
exercises of any portion of this Warrant, the number of Warrant Shares
represented by this Warrant may be less than the number stated on the face
hereof.  Each Warrant shall bear the
following legend:

 

ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW
THE TERMS OF THIS WARRANT, INCLUDING SECTION 2(f) HEREOF.  THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE
LESS THAN THE NUMBER SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(f) HEREOF.

 

Section 3.                                            Representations,
Warranties and Covenants of the Company.

 

(a)                                  This
Warrant is, and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly issued.

 

(b)                                 All
Warrant Shares that may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes and Liens with respect to the issuance
thereof.

 

8

 

(c)                                  During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved at least 150%
of the number of shares of Common Stock needed to provide for the exercise of
the rights then represented by this Warrant (without regard to any limitations
on conversions) (the “Required
Reserve Amount”).  The initial
number of shares of Common Stock reserved for exercises of the Warrants and
each increase in the number of shares of Common Stock so reserved shall be
allocated pro rata among the holders of the Warrants based on the number of
Warrants then held by each holder of the Warrants or increase in the number of
reserved shares of Common Stock, as the case may be.  In the event any holder of the Warrants shall
sell or otherwise transfer any of such holder’s Warrants, each transferee shall
be allocated a pro rata portion of the number of shares of Common Stock
reserved for such transferor.  Any shares
of Common Stock reserved and allocated to any Person that ceases to hold any Warrants
shall be allocated to the remaining holders of the Warrants, pro rata based on
the number of Warrants then held by such holders.

 

(d)                                 If
at any time while any of the Warrants remain outstanding the Company does not
have a sufficient number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon exercise of the Warrants at
least a number of shares of Common Stock equal to the Required Reserve Amount,
then the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow
the Company to reserve the Required Reserve Amount for the Warrants then
outstanding.

 

(e)                                  If,
and so long as, any shares of Common Stock shall be listed on the American
Stock Exchange or another securities exchange or quoted on The NASDAQ Stock Market, Inc.
(“NASDAQ”), the shares of Common Stock issuable upon exercise of this
Warrant shall be so listed or quoted; and the Company shall so list on such
exchange or market, and shall maintain such listing of, any other shares of
capital stock of the Company issuable upon the exercise of this Warrant if and
so long as any shares of the same class shall be listed on such securities
exchange or market.

 

(f)                                    So
long as any of the Warrants are outstanding, the Company will, and will cause
each of its Subsidiaries to (i) conduct its operations in the ordinary
course of business consistent with past practice, (ii) maintain its
corporate existence and (iii) maintain and protect all material
Intellectual Property used in the business of the Company and its Subsidiaries.

 

(g)                                 The
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant.  Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above $0.001 per
share, and (ii) will take all such actions as may be necessary or
appropriate in order that the Company may validly and

 

9

 

legally issue fully paid and nonassessable shares of Common Stock upon
the exercise of this Warrant.

 

(h)                                 This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the assets of the Company and it shall be a condition to
the closing of any of the foregoing transactions that such successor entity (i) complies
with the terms of, and satisfies the conditions in, Section 9(b) below
and (ii) is a publicly traded corporation whose common stock is listed for
trading on a nationally recognized stock exchange or quoted on NASDAQ.

 

Section 4.                                            Taxes. The Company shall pay any and all taxes (excluding
income taxes, franchise taxes or other taxes levied on gross earnings, profits
or the like of the holder) that may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

 

Section 5.                                            Warrant
Holder Not Deemed a Stockholder.  Except
as set forth in Section 8 below, prior to the exercise of this Warrant,
the holder of this Warrant shall not be entitled to any rights as a stockholder
of the Company with respect to the Warrant Shares, including the right to vote
such shares, receive dividends or other distributions thereon or be notified of
stockholder meetings.  In addition,
nothing contained in this Warrant shall be construed as imposing any
liabilities on such holder to purchase any securities upon exercise of this Warrant
or otherwise or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company, except to the extent
specifically provided for herein. 
Notwithstanding this Section 5, the Company will provide the holder
of this Warrant with copies of the same information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.

 

Section 6.                                            Representations
of Holder.  The holder of this
Warrant, by the acceptance hereof, represents that it is acquiring this
Warrant, and upon exercise hereof (other than pursuant to a Cashless Exercise)
will acquire the Warrant Shares, for its own account and not with a view
towards, or for offer or resale in connection with, any distribution in
violation of the 1933 Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or any
of the Warrant Shares for any minimum or other specific term and reserves the
right to dispose of this Warrant and the Warrant Shares at any time pursuant to
a registration statement that has been declared and is effective under the 1933
Act or an exemption from the registration requirements of the 1933 Act.  The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an “accredited
investor” as such term is defined in Rule 501(a)(3) of Regulation D promulgated
by the Securities and Exchange Commission under the 1933 Act (an “Accredited
Investor”).

 

Section 7.                                            Ownership
and Transfer.  The Company shall
maintain at its principal executive offices (or such other office or agency of
the Company as it may designate by notice to the holder), a register for this
Warrant, in which the Company shall

 

10

 

record the name and address of the person in
whose name this Warrant has been issued, as well as the name and address of
each transferee.  The Company may treat
the person in whose name any Warrant is registered on the register as the owner
and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.

 

(a)                                  The
holder may assign or transfer some or all of its rights hereunder, subject to
compliance with the 1933 Act and the provisions of Section 2 of the
Securities Purchase Agreement without the consent of the Company.

 

(b)                                 The
Company is obligated to register the Warrant Shares for resale under the 1933
Act pursuant to the Registration Rights Agreement.  The shares of Common Stock issuable upon
exercise of this Warrant shall constitute Registrable Securities (as such term
is defined in the Registration Rights Agreement).  Each holder of this Warrant shall be entitled
to all the benefits afforded to a holder of any such Registrable Securities
under the Registration Rights Agreement and such holder, by its acceptance of
this Warrant, agrees to be bound by and to comply with the terms and conditions
of the Registration Rights Agreement applicable to such holder as a holder of
such Registrable Securities.

 

Section 8.                                            Adjustments
to Warrant Exercise Price.  The
Warrant Exercise Price, and the number and type of securities to be received
upon exercise of this Warrant, shall be adjusted from time to time as provided
in this Section 8.

 

(a)                                  In
the event that the Company shall at any time or from time to time, on or after
the Warrant Date and prior to the exercise of this Warrant, (A) pay a
dividend or make a distribution payable in shares of Common Stock on any class
of shares of capital stock of the Company, (B) subdivide its outstanding shares
of Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of shares or (D) issue
any shares of capital stock by reclassification of its shares of Common Stock,
then, and in each such case, (X) the aggregate number of Warrant Shares for
which this Warrant is exercisable (the “Warrant Share Number”) immediately
prior to such event shall be adjusted (and any other appropriate actions shall
be taken by the Company) so that the Warrant holder shall be entitled to receive
upon exercise of this Warrant the number of shares of Common Stock or other
securities of the Company that it would have owned or would have been entitled
to receive upon or by reason of any of the events described above, had this
Warrant been exercised immediately prior to the occurrence of such event and (Y)
the Warrant Exercise Price payable upon the exercise of this Warrant shall be
adjusted by multiplying such Warrant Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
issuable immediately thereafter.  An
adjustment made pursuant to this Section 8 shall become effective
immediately upon the opening of business on the day next following the record
date (subject to Section 8(g) below) in the case of a dividend or
distribution and shall become effective immediately upon the

 

11

 

opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.

 

(b)                                 In
the event that the Company shall at any time or from time to time, on or after
the Warrant Date and prior to the exercise of this Warrant, (A) issue shares
of Common Stock, Convertible Securities, or Options entitling the recipient
thereof to subscribe for or purchase shares of Common Stock, at a price per
share or (B) amend or otherwise modify the terms of any Convertible
Securities or Options to a price per share (such issuance, subscription or
purchase price or amended or modified price being referred to as the “New
Issue Price”), in either case, less than the Warrant Exercise Price then in
effect, then the Warrant Exercise Price in effect at the opening of business on
the day next following such issuance shall be adjusted to equal the New Issue
Price.  Such adjustment shall become
effective immediately upon the opening of business on the day next following
such issuance.  In determining whether
any shares of Common Stock are issued or issuable, or Convertible Securities or
Options entitle the holders of Warrants to subscribe for or purchase shares of
Common Stock at less than such Warrant Exercise Price, there shall be taken
into account any consideration received by the Company upon issuance of any
such securities, the conversion of any such Convertible Securities and upon
exercise of such Options the value of such consideration, if other than cash,
to be determined in good faith by the board of directors of the Company (the “Board
of Directors”) in the exercise of their fiduciary duty, with the
concurrence of the holders of at least a majority of the Warrants then
outstanding.  Notwithstanding the
foregoing or any other provision herein to the contrary, no adjustment to the Warrant
Exercise Price will be required as a result of any Exempted Issuance.

 

(c)                                  In
case the Company shall at any time or from time to time, on or after the Warrant
Date and prior to exercise of this Warrant, distribute to all holders of shares
of Common Stock (including any such distribution made in connection with a
merger or consolidation in which the Company is the resulting or surviving
Person and the Common Stock is not changed or exchanged) cash, evidences of
indebtedness of the Company, any Subsidiary or another issuer, securities of
the Company (including Convertible Securities), any Subsidiary or another
issuer or other assets (excluding dividends payable in shares of Common Stock
for which adjustment is made under another paragraph of this Section 8 and
any distribution in connection with an Exempted Issuance) or Options to
subscribe for or purchase of any of the foregoing, then, and in each
such case, the Warrant Exercise Price then in effect shall be adjusted (and any
other appropriate actions shall be taken by the Company) by multiplying the Warrant
Exercise Price in effect immediately prior to the date of such distribution by
a fraction (x) the numerator of which shall be the Weighted Average Price of
the Common Stock for the five (5) consecutive Trading Days immediately
prior to the date of distribution less the then fair market value (as
determined by the Board of Directors in the exercise of their fiduciary duties
with the concurrence of the holders of at least a majority of the Warrants then
outstanding) of the portion of the cash, evidences of indebtedness, securities
or other assets so distributed or of such Options to subscribe applicable to one
share of Common Stock and (y) the denominator of which shall be the Weighted
Average Price of the Common Stock for the five (5) consecutive Trading
Days immediately prior to the date of distribution (but such fraction shall not
be greater than one).  Such adjustment
shall be

 

12

 

made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.

 

(d)                                 In
the event that the Company shall at any time or from time to time, on or after
the Warrant Date and prior to the exercise of this Warrant, make a payment of
cash or other consideration to the holders of shares of Common Stock in respect
of a tender offer or exchange offer, other than an odd-lot offer, and the value
of the sum of (i) the aggregate cash and other consideration paid for such
shares of Common Stock, and (ii) any other consent or other fees paid to
holders of shares of Common Stock in respect of such tender offer or exchange
offer, expressed as an amount per share of Common Stock validly tendered or
exchanged pursuant to such tender offer or exchange offer, exceeds the Weighted
Average Price of the Common Stock on the Trading Day immediately prior to the
date any such tender offer or exchange offer is first publicly announced (the “Announcement
Date”), then the Warrant Exercise Price shall be adjusted in accordance
with the formula:

 

	
  R’ = R x

  	
    O’ x P  

  	
   

  
	
   

  	
  F + (P x O)

  	
   

  

 

For purposes of the
foregoing formula:

 

R = the Warrant Exercise
Price in effect at the expiration time of the tender offer or exchange offer
that is the subject of this Section 4(e)(iv) (the “Expiration Time”);

 

R’ = the Warrant Exercise
Price in effect immediately after the expiration time;

 

F = the fair market value
(as determined by the Board of Directors in the exercise of their fiduciary
duties with the concurrence of the holders of at least a majority of the Warrants
then outstanding) of the aggregate value of all cash and any other
consideration paid or payable for shares of Common Stock validly tendered or
exchanged and not withdrawn prior to the Expiration Time (the “Purchased
Shares”);

 

O = the number of shares of
Common Stock outstanding immediately after the Expiration Time less any
Purchased Shares;

 

O’ = the number of shares
of Common Stock outstanding immediately after the Expiration Time, plus any
Purchased Shares; and

 

P = the Weighted Average
Price of the Common Stock on the Trading Day next succeeding the Announcement
Date.

 

Such decrease, if any, shall become effective immediately upon the
opening of business on the day next following the Expiration Time.  In the event that Company is obligated to
purchase shares pursuant to any tender offer, but the Company is prevented by
applicable

 

13

 

law from effecting any such purchases or all such purchases are
rescinded, the Warrant Exercise Price shall again be adjusted to the Warrant
Exercise Price that would then be in effect if such tender or exchange offer
had not been made.  If the application of
this Section 8(d) to any tender or exchange offer would result in an increase
in the Warrant Exercise Price, no adjustment shall be made for such tender or
exchange offer under this Section 8(d).

 

(e)                                  No
adjustment in the Warrant Exercise Price shall be required unless such
adjustment would require a cumulative decrease of at least $0.01 in such price;
provided, however, that any adjustments that by reason of this Section 8
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment until made. 
All calculations under this Section 8(e) shall be made to the
nearest cent (with $.005 being rounded upward) or to the nearest one-tenth of a
share (with .05 of a share being rounded upward), as the case may be.

 

(f)                                    Whenever
the Warrant Exercise Price is adjusted as herein provided, the Company shall
promptly file with the Transfer Agent an officer’s certificate setting forth
the Warrant Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest
error.  Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the Warrant
Exercise Price setting forth the adjusted Warrant Exercise Price and the
effective date of such adjustment and shall mail such notice of such adjustment
of the Warrant Exercise Price to the holders of the Warrants at such holder’s
last address as shown on the stock records of the Company.

 

(g)                                 In
any case in which Section 8 provides that an adjustment shall become
effective on the day next following the record date for an event, the Company
may without penalty defer until the occurrence of such event issuing to the
holders of any Warrants exercised after such record date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such exercise by reason of the adjustment required by such event over and above
the shares of Common Stock issuable upon such conversion before giving effect
to such adjustment.

 

(h)                                 If
any action or transaction would require adjustment of the Warrant Exercise
Price pursuant to more than one subsection of this Section 8, only
one adjustment shall be made, and such adjustment shall be the amount of
adjustment that has the highest absolute value.

 

(i)                                     If,
at any time or from time to time on or after the Warrant Date and prior to the
exercise of this Warrant, any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company’s Board of
Directors will make an appropriate adjustment in the Warrant Exercise Price so
as to protect the rights of the holder; provided that no such adjustment will
increase the Warrant Exercise Price as otherwise determined pursuant to this Section 8.

 

14

 

Section 9.                                            Purchase
Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.

 

(a)                                  In
addition to any adjustments pursuant to Section 8 above, if at any time on
or after the Warrant Date and prior to the earlier of the Expiration Date or
the date on which this Warrant is exercised in whole the Company grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of its capital stock (the “Purchase
Rights”), then the holder of this Warrant will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights that such holder could have acquired if such holder had held
the number of shares of Common Stock acquirable upon complete exercise of this
Warrant immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.

 

(b)                                 Any
recapitalization, reorganization, reclassification, consolidation, merger, self
tender offer for all or substantially all shares of Common Stock, sale of all
or substantially all of the Company’s assets to another Person or other
transaction that is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is
referred to herein as “Organic
Change.”  Prior to the
consummation of any (i) sale of all or substantially all of the Company’s
assets to an acquiring Person (including, for the avoidance of doubt, the sale
of all or substantially all of the assets of the Company’s Subsidiaries in the
aggregate) or (ii) other Organic Change following which the Company is not
a surviving entity, the Company will secure from the Person purchasing such
assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written
agreement, in form and substance satisfactory to the holders representing at
least a majority of the shares of Common Stock issuable upon exercise of the Warrants
then outstanding (without regard to any limitation on exercise thereof), to
deliver to the Holder in exchange for this Warrant, a security of the Acquiring
Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant and reasonably satisfactory to the holders
representing at least a majority of the Warrants then outstanding.  Subject to Section 8, prior to the
consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the holders
representing at least a majority of Warrants then outstanding) to ensure that
the holder will thereafter have the right to acquire and receive in lieu of or
in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the exercise of this Warrant
(without regard to any limitations or restrictions on the exercise thereof)
such shares of stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for the number of
Shares that would have been acquirable and receivable upon the exercise of this
Warrant as of the date of such Organic Change (without taking into account any
limitations or restrictions on the exercise of this Warrant).

 

15

 

Section 10.                                      Lost, Stolen,
Mutilated or Destroyed Warrant.  Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of an indemnification undertaking by the holder to
the Company in customary form and reasonably satisfactory to the Company and,
in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company shall execute and deliver a new Warrant of like denomination and tenor
to such holder; provided, however, the Company shall not be
obligated to re-issue a Warrant if the holder contemporaneously exercises this
Warrant in its entirety and purchases the Warrant Shares as permitted
hereunder.

 

Section 11.                                      Notice.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

	
   

  	
  If to the
  Company:

  
	
   

  	
   

  
	
   

  	
   

  	
  MediCor Ltd.

  
	
   

  	
   

  	
  4560 S. Decatur Blvd., Suite 300

  
	
   

  	
   

  	
  Las Vegas, Nevada 89103

  
	
   

  	
   

  	
  Facsimile:

  	
  (702) 932-4561

  
	
   

  	
   

  	
  Attention:

  	
  Corporate
  Secretary/General Counsel

  

 

	
   

  	
  With copy to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Clifford Chance US LLP

  
	
   

  	
   

  	
  Facsimile:

  	
  (212) 878-8375

  
	
   

  	
   

  	
  Attention:

  	
  Alejandro E. Camacho

  

 

If to a holder of this Warrant, to it at the address
and facsimile number set forth on the Schedule of Purchasers to the
Securities Purchase Agreement, with copies to such holder’s representatives as
set forth on such Schedule of Purchasers, or, in the case of the holder or
any other Person named above, at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice to the other party in accordance with this Section 11
at least five (5) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or deposit with a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

 

16

 

Section 12.                                      Limitation on
Number of Warrant Shares.  The
Company shall not be obligated to issue any Warrant Shares upon exercise of the
Warrants if the issuance of such shares of Common Stock would exceed that
number of shares of Common Stock which the Company may issue upon exercise of
the Warrants and the Notes (the “Exchange
Cap”) without breaching any obligations that the Company has under
the rules or regulations of the Principal Market, if at the time of any
determination, the Common Stock is listed on a national securities exchange or quoted
on NASDAQ, except that such limitation shall not apply in the event that the
Company (a) obtains Stockholder Approval or (b) obtains a written
opinion from outside counsel to the Company that such approval is not required,
which opinion shall be reasonably satisfactory to the holders representing at
least a majority of the Warrant Shares then issuable upon exercise of
outstanding Warrants, at any time, without regard to any limitation on
exercise.  Until such Stockholder
Approval or written opinion is obtained, no holder of Warrants shall be issued,
upon exercise of any of the Warrants, Warrant Shares in an amount greater than
the difference of (i) such holder’s Cap Allocation Amount (as defined in
the Notes), minus (ii) the aggregate number of (x) Conversion Shares
that have been issued to such holder prior to such time upon conversion of any
Notes and (y) Warrant Shares that have been issued to such holder prior to
such time upon exercise of any Warrants. 
In the event that any holder of Warrants shall sell or otherwise
transfer any of such Warrants, the transferee shall be allocated a pro rata
portion of such holder’s Cap Allocation Amount. 
In the event that, after the Closing Date, any holder of the Warrants
shall convert all of such holder’s Notes and exercise all of such holder’s
Warrants into a number of shares of Common Stock which, in the aggregate, is
less than such holder’s Cap Allocation Amount, then the difference between such
holder’s Cap Allocation Amount and the number of Warrant Shares and Conversion
Shares actually issued to such holder shall be allocated to the respective Cap
Allocation Amounts of the remaining holders of Warrants and Notes on a pro rata
basis in proportion to the aggregate number of Warrant Shares and Conversion
Shares issuable upon exercise of the Warrants and conversion of the Notes (at
the then prevailing conversion price), if any, then held by each such holder,
without regard to any limitations on conversion or exercise.  In the event that upon the delivery of an
Exercise Notice the Company is prohibited from issuing Warrant Shares as a
result of the operation of this Section 12, the Company shall repurchase
for cash, within five (5) Business Days, the portion of this Warrant with
respect to which Warrant Shares cannot be issued as result of this Section 12,
at a price per Warrant Share equal to the difference between the Weighted
Average Price of the Common Stock and the Warrant Exercise Price of such
Warrant Shares as of the date of the attempted exercise.

 

Section 13.                                      Notice of
Certain Events .  The Company will
give written notice to the holder of this Warrant at least ten (10) Business
Days prior to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change (as defined above),
dissolution or liquidation, provided that such information shall be made
known to the public prior to or in conjunction with such notice being provided
to such holder to the extent it is material non-public information.  The

 

17

 

Company will also give written notice to the
holder of this Warrant at least ten (10) Business Days prior to the date
on which any Organic Change, dissolution or liquidation will take place, provided
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder to the extent it is
material non-public information.

 

Section 14.                                      Date.  The date of this Warrant is April 26, 2006 (the “Warrant Date”).  This Warrant, in all events, shall be
wholly void and of no effect after 11:59 P.M., New York Time, on the
Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 9(a) shall continue in full force and effect
after such date as to any Warrant Shares or other securities issued upon the
exercise of this Warrant.

 

Section 15.                                      Amendment and
Waiver.  Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of Warrants representing at least a majority of the shares of Common
Stock obtainable upon exercise of the Warrants then outstanding; provided
that no such action may increase the Warrant Exercise Price of any Warrant or
decrease the number of shares or change the class of stock obtainable upon
exercise of any Warrant without the written consent of the holder of such Warrant.

 

Section 16.                                      Governing Law;
Jurisdiction.  This Warrant shall be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant shall be
governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other country or jurisdiction) that would cause the
application of the laws of any jurisdiction or country other than the State of
New York.  The Company 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  The Company hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Warrant 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.

 

Section 17.                                      WAIVER OF JURY
TRIAL.  THE COMPANY, ON BEHALF OF ITSELF
AND ITS SUBSIDIARIES, HEREBY IRREVOCABLY WAIVES ANY RIGHTS THEY MAY HAVE
TO, AND AGREES NOT TO REQUEST,

 

18

 

A TRIAL BY JURY IN RESPECT OF ANY ACTION
BASED UPON, OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

Section 18.                                      Descriptive
Headings.  The descriptive headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.

 

Section 19.                                      Rules of
Construction.  Unless the context
otherwise requires, (a) all references to Articles, Sections, Schedules or
Exhibits are to articles, sections, schedules or exhibits contained in or
attached to this Warrant, (b) each accounting term not otherwise defined
in this Warrant has the meaning assigned to it in accordance with GAAP, (c) words
in the singular or plural include the singular and plural and pronouns stated
in either the masculine, the feminine or neuter gender shall include the
masculine, feminine and neuter and (d) the use of the word “including” in
this Warrant shall be by way of example rather than limitation.

 

* * * * * *

 

19

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be signed as of April     ,
2006.

 

 

	
   

  	
  MEDICOR LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

20

 

EXHIBIT A TO WARRANT

 

EXERCISE NOTICE

 

 

TO BE EXECUTED BY THE
REGISTERED HOLDER TO EXERCISE THIS WARRANT

 

 

MEDICOR LTD.

 

The undersigned holder
hereby exercises the right to purchase                                         
of the shares of Common Stock (“Warrant
Shares”) of MEDICOR LTD., a Delaware corporation (the “Company”), evidenced by the
attached Warrant (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.                                       Form of
Warrant Exercise Price.  The holder
intends that payment of the Warrant Exercise Price shall be made as:

 

	
   

  	
   

  	
   

  	
  a “Cash Exercise” with respect to
                               
  Warrant Shares; and/or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a “Cashless Exercise” with respect to
                               
  Warrant Shares.

  
	
   

  	
   

  	
   

  	
   

  

 

2.                                       Payment
of Warrant Exercise Price.  In the
event that the holder has elected a Cash Exercise with respect to some or all
of the Warrant Shares to be issued pursuant hereto, the holder shall pay the
Aggregate Exercise Price in the sum of $                             
to the Company in accordance with the terms of the Warrant.

 

3.                                       Delivery
of Warrant Shares.  The Company shall
deliver                       
Warrant Shares in accordance with the terms of the Warrant in the following
name and to the following address:

 

	
  Issue to:

  
	
   

  
	
  Address:

  
	
   

  
	
  Facsimile Number:

  
	
   

  
	
  Authorization:

  
	
   

  
	
  By:

  
	
   

  
	
  Title:

  
	
   

  
	
  Dated:

  
	
   

  
	
  DTC Participant Number and Name (if electronic book entry
  transfer):

  
	
   

  
	
  Account Number (if electronic book entry transfer):

  

 

A-1

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs [Transfer
Agent] to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated                            ,
200   from the Company and acknowledged and agreed to by U.S. Stock
Transfer Corp.

 

 

	
   

  	
  MEDICOR LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT B TO WARRANT

 

FORM OF WARRANT POWER

 

FOR VALUE RECEIVED, the
undersigned does hereby assign and transfer to                                  ,
Federal Tax Identification No.                     ,
a warrant to purchase                      
shares of the capital stock of MediCor Ltd., a Delaware corporation,
represented by warrant certificate no.             ,
standing in the name of the undersigned on the books of said corporation.  The undersigned does hereby irrevocably
constitute and appoint                      ,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.

 

Dated:                    ,
200  

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

B-1Exhibit
10.5

 

GUARANTEE AND COLLATERAL AGREEMENT

 

 

made by

 

 

MEDICOR LTD.

 

 

and

 

 

THE OTHER PLEDGORS FROM TIME TO TIME PARTY HERETO

 

 

in favor of

 

 

SILVER OAK CAPITAL, L.L.C.

as Collateral Agent

 

 

Dated as of April 26, 2006

 

IRS Circular 230 disclosure: To
ensure compliance with requirements imposed by the IRS, we inform you that any
U.S. federal tax advice contained in this document is not intended or written
to be used, and cannot be used, for the purpose of (i) avoiding penalties under
the Internal Revenue Code or (ii) promoting, marketing or recommending to
another party any transaction or matter that is contained in this document.

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 1 DEFINED TERMS

  	
  2

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Other
  Definitional Provisions

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 2 GUARANTEE

  	
  6

  
	
  2.1

  	
  Guarantee

  	
  6

  
	
  2.2

  	
  Right of
  Contribution

  	
  7

  
	
  2.3

  	
  No
  Subrogation

  	
  7

  
	
  2.4

  	
  Amendments,
  etc. with Respect to the Company Obligations

  	
  8

  
	
  2.5

  	
  Guarantee
  Absolute and Unconditional

  	
  8

  
	
  2.6

  	
  Reinstatement

  	
  9

  
	
  2.7

  	
  Payments

  	
  9

  
	
  2.8

  	
  Information

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 3 GRANT OF SECURITY INTEREST

  	
  10

  
	
   

  	
   

  
	
  SECTION 4 REPRESENTATIONS AND WARRANTIES

  	
  11

  
	
  4.1

  	
  Representations
  in Securities Purchase Agreement

  	
  11

  
	
  4.2

  	
  Title; No
  Other Liens

  	
  11

  
	
  4.3

  	
  Perfected
  First Priority Liens

  	
  11

  
	
  4.4

  	
  Jurisdiction
  of Organization; Location of Collateral

  	
  12

  
	
  4.5

  	
  Pledged
  Investments

  	
  12

  
	
  4.6

  	
  Receivables

  	
  13

  
	
  4.7

  	
  Intellectual
  Property

  	
  13

  
	
  4.8

  	
  Deposit
  Accounts; Securities Accounts; and Commodity Accounts

  	
  13

  
	
  4.9

  	
  Commercial
  Tort Claims

  	
  13

  
	
  4.10

  	
  Letter-of-Credit
  Rights

  	
  13

  
	
  4.11

  	
  Material
  Collateral

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 5 COVENANTS

  	
  14

  
	
  5.1

  	
  General
  Covenants

  	
  14

  
	
  5.2

  	
  Notices

  	
  14

  
	
  5.3

  	
  Maintenance
  of Insurance

  	
  14

  
	
  5.4

  	
  Payment of
  Obligations

  	
  15

  
	
  5.5

  	
  Maintenance
  of Perfected Security Interest; Further Documentation

  	
  15

  
	
  5.6

  	
  Changes in
  Locations, Name, etc.

  	
  15

  
	
  5.7

  	
  Delivery of
  Instruments and Chattel Paper

  	
  16

  
	
  5.8

  	
  Pledged
  Investments; Securities Accounts; Deposit Accounts

  	
  16

  
	
  5.9

  	
  Receivables

  	
  18

  
	
  5.10

  	
  Intellectual Property

  	
  18

  
	
  5.11

  	
  Electronic Chattel Paper and Transferable Records

  	
  19

  
	
  5.12

  	
  Letter-of-Credit Rights

  	
  20

  

 

 

	
  5.13

  	
  Commercial Tort Claims

  	
  20

  
	
  5.14

  	
  Notice of Creation or Acquisition of Additional
  Collateral

  	
  20

  
	
  5.15

  	
  Subordination of Indebtedness among Pledgors

  	
  21

  
	
  5.16

  	
  Permitted Restructuring

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 6 REMEDIAL PROVISIONS

  	
  22

  
	
  6.1

  	
  Certain Matters Relating to Receivables

  	
  22

  
	
  6.2

  	
  Communications with Obligors; Pledgors Remain Liable

  	
  23

  
	
  6.3

  	
  Pledged Investments

  	
  23

  
	
  6.4

  	
  Proceeds to be Turned Over to Collateral Agent

  	
  25

  
	
  6.5

  	
  Application of Proceeds

  	
  25

  
	
  6.6

  	
  Code and Other Remedies

  	
  25

  
	
  6.7

  	
  Private Sale; Registration Rights

  	
  26

  
	
  6.8

  	
  Deficiency

  	
  28

  
	
  6.9

  	
  Grant of License to Use Intellectual Property

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 7 THE COLLATERAL AGENT

  	
  28

  
	
  7.1

  	
  Collateral Agent’s Appointment as Attorney-in-Fact,
  etc.

  	
  28

  
	
  7.2

  	
  Duties of Collateral Agent

  	
  30

  
	
  7.3

  	
  Filing of Financing Statements

  	
  31

  
	
  7.4

  	
  Authority of Collateral Agent

  	
  31

  
	
   

  	
   

  	
   

  
	
  SECTION 8 MISCELLANEOUS

  	
  31

  
	
  8.1

  	
  Amendments in Writing

  	
  31

  
	
  8.2

  	
  Notices

  	
  31

  
	
  8.3

  	
  No Waiver; Cumulative Remedies

  	
  31

  
	
  8.4

  	
  Enforcement Expenses; Indemnification

  	
  31

  
	
  8.5

  	
  Successors and Assigns

  	
  32

  
	
  8.6

  	
  Counterparts; Pledgors’ Separate Agreements

  	
  32

  
	
  8.7

  	
  Severability

  	
  33

  
	
  8.8

  	
  Section Headings

  	
  33

  
	
  8.9

  	
  Integration

  	
  33

  
	
  8.10

  	
  GOVERNING LAW

  	
  33

  
	
  8.11

  	
  Submission To Jurisdiction; Waivers

  	
  33

  
	
  8.12

  	
  Acknowledgments

  	
  34

  
	
  8.13

  	
  Additional Guarantors and Pledgors

  	
  34

  
	
  8.14

  	
  Releases

  	
  35

  
	
  8.15

  	
  Foreign Pledgor Provisions

  	
  35

  
	
  8.16

  	
  Survival of Representations and Warranties

  	
  36

  
	
  8.17

  	
  WAIVER OF JURY TRIAL

  	
  36

  

 

ii

 

	
  SCHEDULES

  	
   

  
	
  4.3

  	
  Actions to Perfect

  	
   

  
	
  4.4

  	
  Jurisdiction of Organization; Location of Collateral

  	
   

  
	
  4.5

  	
  Pledged Investments

  	
   

  
	
  4.7

  	
  Intellectual Property

  	
   

  
	
  4.8

  	
  Deposit Accounts, Securities Accounts and Commodity
  Accounts

  	
   

  
	
  4.9

  	
  Commercial Tort Claims

  	
   

  
	
  4.10

  	
  Letter-of-Credit Rights

  	
   

  
	
  8.2

  	
  Notice Addresses of Pledgors

  	
   

  
	
   

  	
   

  	
   

  
	
  ANNEXES

  	
   

  
	
   

  	
   

  	
   

  
	
  I

  	
  Form of Acknowledgement of Pledge

  	
   

  
	
  II

  	
  Form of Assumption Agreement

  	
   

  
	
  III

  	
  Notice of Grant of Security Interest in Trademarks

  	
   

  
	
  IV

  	
  Notice of Grant of Security Interest in Patents

  	
   

  

 

iii

 

EXECUTION COPY

 

GUARANTEE AND COLLATERAL AGREEMENT

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of
April 26, 2006 (as amended, supplemented or otherwise modified from time
to time, this “Agreement”) by and among MEDICOR LTD., a Delaware
corporation (the “Company”), and each of the Guarantors (as defined
below) in favor of SILVER OAK CAPITAL, L.L.C., a Delaware limited liability
company, in its capacity as collateral agent pursuant to the Securities
Purchase Agreement (as defined below) (in such capacity, together with its
successors and assigns, the “Collateral Agent”), for the benefit of the
Collateral Agent and the other Secured Parties (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Securities Purchase
Agreement, dated as of April 26, 2006 (as amended, supplemented or otherwise
modified from time to time, the “Securities Purchase Agreement”) by and
among the Company, the several purchasers from time to time party thereto (the
“Purchasers”) and the Collateral Agent, the Company has agreed to issue
senior secured convertible notes in the aggregate principal amount of
$50,000,000 upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Company is a member of an affiliated
group of companies that includes each of the Guarantors (together with the
Company, the “Pledgors”);

 

WHEREAS, the Company and the other Pledgors are
engaged in related businesses, and each Pledgor will derive substantial direct
and indirect benefit from the issuance of the senior secured convertible notes
under the Securities Purchase Agreement; and

 

WHEREAS, it is a condition to the obligation of the
Purchasers to purchase the Notes (as defined in the Securities Purchase
Agreement) under the Securities Purchase Agreement that the Pledgors shall have
executed and delivered this Agreement.

 

NOW, THEREFORE, in consideration of the premises and
to induce the Collateral Agent and the Purchasers to enter into the Securities
Purchase Agreement and the Purchasers to purchase the Notes, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby agrees with the Collateral Agent, for the
benefit of the Collateral Agent and the other Secured Parties, as follows:

 

 

SECTION 1 

DEFINED TERMS

 

1.1           Definitions. (a) Unless otherwise defined herein, terms defined in the
Securities Purchase Agreement and used herein shall have the
meanings given to them in the Securities Purchase Agreement.

 

(b)           The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as so defined:  Accounts, Certificated Security, Chattel
Paper, Commercial Tort Claim, Commodity Account, Deposit Account, Documents,
Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Proceeds,
Promissory Note, Security, Securities Account, and Supporting Obligations.

 

(c)           The
following terms, in addition to those terms defined elsewhere in this
Agreement, shall have the following meanings:

 

“Capital Stock”:  any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of the
foregoing.

 

“Collateral Account”:  any collateral account established by the
Collateral Agent as provided in Section 6.1 or 6.4 herein.

 

“Company Obligations”:  the collective reference to each Obligation
of the Company to the Collateral Agent or any other Secured Party arising
under, out of, or in connection with any Transaction Document, or any other
document made, delivered or given in connection therewith.

 

“Copyright Licenses”:  any written agreements providing for the
grant by or to any Pledgor of any right under any Copyright, including any of
the foregoing referred to in Schedule 4.7.

 

“Copyrights”: 
(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 (including those listed in Schedule 4.7), all registrations
and recordings thereof, and all applications in connection therewith, including
all registrations, recordings and applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.

 

“Default”: 
as defined in the Notes.

 

2

 

“Disregarded Person”:  a Person who is disregarded as an entity
separate from its owner for United States federal income tax purposes pursuant
to Treasury Regulation Section 301.7701-2(c)(2).

 

“Dollars” and “$”:  dollars in lawful currency of the United
States.

 

“Excluded Equity”:  (i) any voting stock in excess of 66% of
each class of the outstanding voting stock of any direct Subsidiary of any one
or more Pledgors if such Subsidiary is a Foreign Subsidiary (other than
International Integrated Incorporated, a British Virgin Islands corporation)
and (ii) any Capital Stock of a Foreign Subsidiary that is a Disregarded
Person and which is a Guarantor. For the purposes of this definition, “voting
stock” means, as to any Issuer, the issued and outstanding shares of each class
of capital stock or other ownership interests of such issuer entitled to vote
(within the meaning of Treasury Regulations Section 1.956-2(c)(2)).

 

“Excluded Property”:  the collective reference to (i) all
Excluded Equity, and (ii) any permit, lease, license, contract, instrument
or other agreement held by any Pledgor that prohibits or requires the consent
of any Person other than the Company and its Affiliates as a condition to the
creation by such Pledgor of a Lien thereon, or any permit, lease, license,
contract, instrument or other agreement held by any Pledgor to the extent that
any Requirement of Law applicable thereto prohibits the creation of a Lien
thereon, but only, in each case, to the extent, and for so long as, such
prohibition is not terminated or rendered unenforceable or otherwise deemed
ineffective by the New York UCC or any other Requirement of Law and (iii)
Equipment owned by any Pledgor that is subject to a purchase money Lien or a
capital lease if the contract or other agreement in which such Lien is granted (or
in the documentation providing for such capital lease) prohibits or requires
the consent of any Person other than the Company and its Affiliates as a
condition to the creation of any other Lien on such Equipment; provided,
however, that “Excluded Property” shall not include any Proceeds,
substitutions or replacements of Excluded Property (unless such Proceeds,
substitutions or replacements would constitute Excluded Property).

 

“Foreign Pledgor”:  a Pledgor that is a Foreign Subsidiary.

 

“Foreign Subsidiary”:  a Subsidiary that is not a “United States
person” under and as defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended.

 

“Guarantor Obligations”:  with respect to any Guarantor, the collective
reference to (i) the Company Obligations and (ii) each Obligation of such
Guarantor to the Collateral Agent or any other Secured Party arising under, out
of, or in connection with any Transaction Document, or any other document made,
delivered or given in connection therewith.

 

“Guarantors”: 
the collective reference to each of the Subsidiaries of the Company who
are signatories hereto and any other entity that may become a party hereto as a
Guarantor as provided herein.

 

3

 

“Indebtedness”:  as defined in the Notes.

 

“Intellectual Property”:  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 the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.

 

“Issuers”: 
the collective reference to each issuer of a Pledged Investment.

 

“Material Intellectual Property”: with respect
to any Pledgor, at any time, Intellectual Property owned by or licensed to such
Pledgor that is necessary or otherwise material to the conduct of the business
of the Company and its Subsidiaries, taken as a whole; and “Material Patents”,
“Material Copyrights” and “Material Trademarks” mean all Patents,
Copyrights and Trademarks, respectively, that meet the criteria described
above.

 

“New York UCC”: 
the Uniform Commercial Code as from time to time in effect in the State
of New York.

 

“Obligations”: 
(i) the unpaid principal of and interest on (including interest
accruing, at the then applicable rate provided in the Securities Purchase
Agreement and the Notes after the maturity of the Notes and interest accruing
at the then applicable rate provided in the Securities Purchase Agreement and
the Notes after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to the Company
or any Subsidiary (whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding)) the Notes and (ii) all other
obligations and liabilities of the Company to the Collateral Agent or to any
other Secured Party whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Securities Purchase Agreement, any other
Transaction Document, or any other document made, delivered or given in
connection herewith or therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees and other charges of counsel to the Collateral Agent or to
any other Secured Party that are required to be paid by the Company or any
Subsidiary pursuant hereto) or otherwise.

 

“Patent Licenses”: any written agreements
providing for the grant by or to any Pledgor of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including any of
the foregoing referred to in Schedule 4.7.

 

“Patents”: 
(i) all letters patent of the United States, any other country or any
political subdivision thereof, and all reissues and extensions thereof,
including any of the foregoing referred to in Schedule
4.7, (ii) all applications for letters patent of the United
States or any other country, and all divisions, continuations and
continuations-in-part

 

4

 

thereof, including any of the foregoing referred to in
Schedule 4.7, and (iii) all
rights to obtain any reissues or extensions of the foregoing.

 

“Pledged Debt”: 
all Promissory Notes and all debt Securities issued to or held by any
Pledgor, including, but not limited to, the Promissory Notes listed in Schedule 4.5.

 

“Pledged Investments”:  the collective reference to the Pledged Debt
and the Pledged Stock.

 

“Pledged Stock”:  all the shares of Capital Stock together with
any other shares, stock certificates, options or rights of any nature
whatsoever in respect of the Capital Stock of any Person that may be issued or
granted to, or held by, any Pledgor while this Agreement is in effect
including, but not limited to, the Capital Stock listed in Schedule 4.5
but excluding any Excluded Equity.

 

“Receivable”: any right to payment for goods
sold or leased or for services rendered, whether or not such right is evidenced
by an Instrument or Chattel Paper and whether or not it has been earned by
performance (including any Account).

 

“Secured Obligations”:  (i) in the case of the Company, the Company
Obligations, and (ii) in the case of any Guarantor, the Guarantor Obligations.

 

“Secured Parties”:  means, collectively, (i) the Collateral
Agent, (ii) the holders of the Notes, (iii) the permitted successors
and assigns of any of the foregoing and (iv) the Indemnitees.

 

“Securities Act”:  the Securities Act of 1933, as amended.

 

“Subordination Agreement”:  the Subordination Agreement, dated as of
April 26, 2006 (as amended, supplemented or otherwise modified from time to
time) by and among the Subordinated Purchasers (as defined therein), the
Company and the Collateral Agent.

 

“Termination Date”:  the date on which all of the following shall
have occurred:  (i) the principal of and
accrued interest on all outstanding Notes shall have been indefeasibly paid in
full and (ii) all fees, expenses, premiums, indemnities and other amounts then
due and payable in respect of the Obligations shall have been paid in full; provided
that for purposes of Section 2, the Termination Date shall not occur until all
Company Obligations have been indefeasibly paid in full.

 

“Trademark Licenses”:  any written agreements providing for the grant
by or to any Pledgor of any right to use any Trademark, including any of the
foregoing referred to in Schedule 4.7.

 

“Trademarks”: 
(i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos
and

 

5

 

other source or business identifiers, and all goodwill
of the business symbolized by the foregoing, all registrations and recordings
thereof, and all applications in connection therewith in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, or any other country or any political subdivision thereof, and all
common-law rights related thereto, including any of the foregoing referred to
in Schedule 4.7, and (ii) the right to
obtain all renewals thereof; provided, that the grant of security
interest shall not include any intent-to-use Trademark application that may be
deemed invalidated, canceled or abandoned due to the grant and/or enforcement
of such security interest unless and until such time that an affidavit or
statement of use has been filed and accepted.

 

1.2           Other Definitional Provisions.
(a)  The words
“hereof”, “herein,” “hereto” and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, Annex and Schedule
references are to this Agreement unless otherwise specified.

 

(b)           The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

 

(c)           Where
the context requires, terms relating to the Collateral or any part thereof,
when used in relation to a Pledgor, shall refer to such Pledgor’s Collateral or
the relevant part thereof.

 

(d)           Unless
the context requires otherwise, (i) the words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”,
(ii) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, Capital Stock, securities, revenues, accounts,
leasehold interests and contract rights, (iii) any definition of or
reference to any agreement, instrument or other document shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any applicable
restrictions set forth herein or in any other Transaction Document),
(iv) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any applicable restrictions set
forth herein or in any other Transaction Document), and (v) any reference
to any law shall include all statutory and regulatory provisions consolidating,
amending, replacing or interpreting such law and any reference to any law or
regulation shall, unless otherwise specified, refer to such law or regulation
as amended, modified or supplemented from time to time.

 

SECTION 2 

GUARANTEE

 

2.1           Guarantee. (a)  Each of the
Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the
Collateral Agent and the

 

6

 

other Secured Parties the prompt and complete payment and performance
by the Company when due (whether at the stated maturity, by acceleration or
otherwise) of the Company Obligations.

 

(b)           Anything
herein or in any other Transaction Document to the contrary notwithstanding,
the maximum liability of each Guarantor hereunder and under the other
Transaction Documents shall in no event exceed the amount which can be validly
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).

 

(c)           Each
Guarantor agrees that the Company Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of the Collateral Agent and the other Secured Parties hereunder.

 

(d)           The
guarantee contained in this Section 2 shall remain in full force and effect
until the Termination Date, notwithstanding that from time to time prior
thereto the Company may be free from any Company Obligations.

 

(e)           No
payment made by the Company, any of the Guarantors, any other guarantor or any
other Person, or received or collected by the Collateral Agent or any other
Secured Party from the Company, any of the Guarantors, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Company Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Company Obligations or any payment received or
collected from such Guarantor in respect of the Company Obligations), remain
liable for the Company Obligations up to the maximum liability of such
Guarantor hereunder until the Termination Date.

 

2.2           Right of Contribution. Each
Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder which
has not paid its proportionate share of such payment. Each Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 2.3. The
provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Collateral Agent and the other Secured
Parties, and each Guarantor shall remain liable to the Collateral Agent and the
other Secured Parties for the full amount guaranteed by such Guarantor
hereunder.

 

2.3           No Subrogation.
Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any
Guarantor by the Collateral Agent or any other Secured Party, no Guarantor
shall be entitled to be subrogated to any of the rights of the Collateral Agent
or any other Secured Party against the Company or any other Guarantor or any
collateral security or guarantee or right of

 

7

 

offset held by the Collateral Agent or any other Secured Party for the
payment of the Company Obligations, nor shall any Guarantor seek or be entitled
to seek any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder, until the
Termination Date. If any amount shall be paid to any Guarantor on account of
such subrogation, contribution or reimbursement rights at any time when all of
the Company Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Collateral Agent and the other Secured
Parties, segregated from other funds of such Guarantor, and shall, immediately
upon receipt by such Guarantor, be turned over to the Collateral Agent, for the
benefit of the Collateral Agent and the other Secured Parties, in the exact
form received by such Guarantor (duly indorsed by such Guarantor to the
Collateral Agent, if required), to be applied against the Company Obligations,
whether matured or unmatured, in such order as the Collateral Agent may
determine.

 

2.4           Amendments, etc. with Respect to
the Company Obligations. Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, (i) any demand for payment of any
of the Company Obligations made by the Collateral Agent or any other Secured
Party may be rescinded by the Collateral Agent or such other Secured Party, as
the case may be, and any of the Company Obligations continued, (ii) the Company
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Collateral Agent or any other Secured Party, (iii) the
Securities Purchase Agreement and the other Transaction Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Collateral
Agent or any other Secured Party may deem advisable from time to time, (iv) any
collateral security, guarantee or right of offset at any time held by the
Collateral Agent or any other Secured Party for the payment of the Company
Obligations may be sold, exchanged, waived, surrendered or released, or
(v) the Collateral Agent or any other Secured Party shall have failed to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Company Obligations or for the guarantee contained in this Section 2 or
any property subject thereto.

 

2.5           Guarantee Absolute and
Unconditional. Each Guarantor waives any and all notice of the creation,
renewal, extension or
accrual of any of the Company Obligations and notice of or proof of reliance by
the Collateral Agent or any other Secured Party upon the guarantee contained in
this Section 2 or acceptance of the guarantee contained in this Section 2; the
Company Obligations shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended, modified or waived, in
reliance upon the guarantee contained in this Section 2 and the grant of the
security interests pursuant to Section 3; and all dealings between the
Company and any of the Guarantors, on the one hand, and the Collateral Agent
and the other Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2 and

 

8

 

the grant of the security interests pursuant to Section 3. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Company or any of the Guarantors with
respect to the Company Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 and the grant of the security
interests pursuant to Section 3 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (i) the
validity or enforceability of the Securities Purchase Agreement or any other
Transaction Document, any of the Company Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Collateral Agent or any other Secured
Party, (ii) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Company or any other Person against the Collateral Agent or any other
Secured Party, or (iii) any other circumstance whatsoever (with or without
notice to or knowledge of the Company or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Company for the Company Obligations, or of such Guarantor under the guarantee
contained in this Section 2 and the grant of the security interests
pursuant to Section 3, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, the Collateral Agent or any other Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against the Company, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Company Obligations, or any right of offset with respect thereto, and any
failure by the Collateral Agent or any other Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Company, any other Guarantor or any other Person, or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Company, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Collateral Agent or any other Secured Party against any
Guarantor. For the purposes hereof, “demand” shall include the commencement and
continuance of any legal proceedings.

 

2.6           Reinstatement. The guarantee
contained in this Section 2 shall continue to be effective, or be reinstated,
as the case may be, if
at any time payment, or any part thereof, of any of the Company Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any other Secured Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Company or any Guarantor or any substantial
part of its property, or otherwise, all as though such payments had not been
made.

 

2.7           Payments. Each Guarantor
hereby guarantees that payments hereunder will be paid to the Collateral Agent,
for the benefit of the
Collateral Agent and

 

9

 

the other Secured Parties, without set-off or counterclaim in
immediately available funds in Dollars in accordance with the Securities
Purchase Agreement and the Notes.

 

2.8           Information. Each Guarantor
assumes all responsibility for being and keeping itself informed of the Company’s and each other
Guarantor’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Company Obligations and the nature,
scope and extent of the risks that such Guarantor assumes and incurs hereunder,
and agrees that the Collateral Agent and the other Secured Parties will not
have any duty to advise such Guarantor of information known to it or any of
them regarding such circumstances or risks.

 

SECTION 3 

GRANT OF SECURITY INTEREST

 

Each Pledgor hereby pledges to the Collateral Agent,
and hereby grants to the Collateral Agent, in each case for the benefit of the
Collateral Agent and the other Secured Parties, a security interest in any and
all property and assets now owned or at any time hereafter acquired by such
Pledgor, or in which such Pledgor now has or at any time in the future may
acquire any right, title or interest (collectively, the “Collateral”),
as collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of such
Pledgor’s Secured Obligations including, but not limited to:

 

(a)           all
Accounts;

 

(b)           all
Chattel Paper;

 

(c)           all
Commercial Tort Claims;

 

(d)           all
Deposit Accounts;

 

(e)           all
Documents;

 

(f)            all
Equipment;

 

(g)           all
General Intangibles, including all Intellectual Property;

 

(h)           all
Instruments;

 

(i)            all
Inventory;

 

(j)            all
Investment Property;

 

(k)           all
Letter-of-Credit Rights;

 

(l)            without
limiting the generality of the foregoing, all Fixtures, all Intellectual
Property, all Pledged Investments and all Receivables;

 

10

 

(m)          all
books and records pertaining to the Collateral;

 

(n)           all
Goods and other personal property not otherwise described above; and

 

(o)           to
the extent not otherwise included, all Proceeds and products of any and all of
the foregoing, and all Supporting Obligations with respect to any of the
foregoing;

 

provided,
however, that “Collateral” shall not include any Excluded
Property; and provided, further, that if any Excluded Property
would have otherwise constituted Collateral, when such property shall cease to
be Excluded Property, such property shall be deemed at all times from and after
the date hereof to constitute Collateral.

 

SECTION 4 

REPRESENTATIONS AND WARRANTIES

 

To induce the Purchasers to enter into the Securities
Purchase Agreement and to purchase the Notes pursuant thereto, each of the
Company and each Pledgor, as to itself, hereby represents and warrants to the
Collateral Agent and the other Secured Parties as of the date hereof that:

 

4.1           Representations in Securities
Purchase Agreement. The representations and warranties set forth in Section 3 of the
Securities Purchase Agreement as they relate to any Pledgor or to the
Transaction Documents to which any Pledgor is a party, each of which is hereby
incorporated herein by reference, are true and correct, and shall be
incorporated by reference herein as if they were fully set forth herein, provided
that each reference in each such representation and warranty to the Company’s
knowledge shall, for the purposes of this Section 4.1, be deemed to be a
reference to the Pledgors’ knowledge.

 

4.2           Title; No Other Liens. Except
for the security interest granted to the Collateral Agent, for the benefit of
the Collateral Agent and
the other Secured Parties, pursuant to this Agreement and the other Liens
permitted to exist on the Collateral by the Securities Purchase Agreement, the
Notes and the other Transaction Documents, if any, such Pledgor owns each item
of the Collateral free and clear of any and all Liens or claims, options or
rights of others. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except such as have been filed in favor of the Collateral Agent for the benefit
of the Collateral Agent and the other Secured Parties, pursuant to this
Agreement or as are permitted by the Securities Purchase Agreement, the Notes
and the other Transaction Documents, if any.

 

4.3           Perfected First Priority Liens.
This Agreement is effective to create in favor of the Collateral Agent, for the
benefit of the
Collateral Agent and the other Secured Parties, a legal, valid and enforceable
security interest in the Collateral.

 

11

 

Upon completion of the filings and other actions specified on Schedule 4.3 to this Agreement
(which, in the case of all filings and other documents referred to on such Schedule 4.3, have been delivered
to the Collateral Agent in completed and, where applicable, duly executed
form), the security interest created by this Agreement together with such
filings shall constitute a fully perfected security interest in all right,
title and interest of the Pledgors in such Collateral as security for the
Secured Obligations, in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 3(bb) of the Securities Purchase Agreement and
Section 11(c) of the Notes).

 

4.4           Jurisdiction of Organization; Location
of Collateral. (a)  On the date
hereof, such Pledgor’s jurisdiction and type of organization, legal
name, organizational identification number, if any, and the location of its
chief executive office or sole place of business are specified on Schedule 4.4.

 

(b)           On
the date hereof, the material Inventory and the material Equipment (other than
mobile goods and goods in transit) of such Pledgor are kept at the locations
listed on Schedule 4.4.

 

(c)           Schedule 4.4 also lists (i) all of
such Pledgor’s jurisdictions and types of organization, legal names and
locations of chief executive office or sole place of business for the five
years preceding the date hereof, if different from those referred to in Section
4.4(a), and (ii) the locations of such Pledgor’s material Inventory and the
material Equipment (other than mobile goods and goods in transit) for the four
months preceding the date hereof if different from those referred to in Section
4.4(b).

 

4.5           Pledged Investments. (a)  Schedule
4.5 sets forth a complete and accurate list of all Pledged Stock
and Pledged Debt held by
such Pledgor as of the date hereof.

 

(b)           The
shares of Pledged Stock pledged by such Pledgor hereunder constitute all the
issued and outstanding shares of all classes of the Capital Stock of each
Issuer owned by such Pledgor other than Excluded Equity. Such shares represent
all of the outstanding shares of Capital Stock of each such Issuer which is a
Subsidiary other than Excluded Equity and except as noted on such Schedule 4.5. All the shares of the
Pledged Stock have been duly and validly issued and are fully paid and
nonassessable.

 

(c)           Each
issue of Pledged Debt constitutes a legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.

 

(d)           Such
Pledgor is the record and beneficial owner of, and has good and marketable
title to, the Pledged Investments pledged by it hereunder, free of

 

12

 

any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement.

 

4.6           Receivables. (a)  No amount
payable to such Pledgor under or in connection with any Receivable is evidenced by any Instrument
or Chattel Paper which has not been delivered to the Collateral Agent.

 

(b)           None
of the Receivables are owed to the Pledgors by obligors that are Governmental
Authorities.

 

4.7           Intellectual Property. (a)  Schedule 4.7 lists all applications
for registration and registered Intellectual Property owned by such
Pledgor in its own name on the date hereof.

 

(b)           On
the date hereof, all Material Intellectual Property is valid, subsisting,
unexpired and enforceable, has not been abandoned and does not, to the
knowledge of such Pledgor, infringe the intellectual property rights of any
other Person.

 

(c)           No
holding, decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of, or such Pledgor’s rights
in, any Material Intellectual Property.

 

(d)           No
action or proceeding is pending, or to the knowledge of such Pledgor
threatened, on the date hereof (i) seeking to limit, cancel or question the
validity of any Material Intellectual Property or such Pledgor’s ownership
interest therein, or (ii) which, if adversely determined, would have a material
adverse effect on the value of any Material Intellectual Property.

 

4.8           Deposit Accounts; Securities
Accounts; and Commodity Accounts. On the date hereof, such Pledgor does not have any Deposit
Accounts, Commodity Accounts or Securities Accounts that are not listed on Schedule 4.8 hereto.

 

4.9           Commercial Tort Claims. On the
date hereof, such Pledgor does not hold any Commercial Tort Claim which might reasonably
result in awarded damages (less any and all legal and other expenses incurred
or reasonably expected to be incurred by such Pledgor) in excess of $25,000
that is not listed on Schedule 4.9
hereto.

 

4.10         Letter-of-Credit Rights. On the
date hereof, such Pledgor is not the beneficiary under any letter of credit with a face amount in
excess of $25,000 issued in favor of such Pledgor that is not listed on Schedule 4.10  hereto.

 

4.11         Material Collateral. Such
Pledgor does not own, or have any other right or interest in, any asset or
property included in the
Collateral that cannot be perfected in the manner described in Section 4.3
(collectively, the “Non-Perfected Assets”), except for Non-Perfected
Assets which together with the Non-Perfected Assets of all other Pledgors in
the aggregate are not material to the Company and its Subsidiaries taken as a
whole.

 

13

 

SECTION 5

 

COVENANTS

 

The Company, as to itself and each of its Subsidiaries
(other than the Pledgors), and each other Pledgor, as to itself, covenants and
agrees with the Collateral Agent and the other Secured Parties that, from and
after the date of this Agreement until the Termination Date:

 

5.1           General Covenants. (a)  Without the prior written consent of the
Collateral Agent, unless expressly permitted by the Securities
Purchase Agreement, the Notes or any other Transaction Document, such Pledgor
will not (i) sell, assign, transfer, exchange, abandon, or otherwise dispose
of, or grant any option with respect to, the Collateral or any interest therein
except for sales of inventory in the ordinary course of business, (ii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral or any interest therein, or (iii)
enter into any agreement or undertaking restricting the right or ability of
such Pledgor or any Secured Party to sell, assign or transfer or vote any of
the Collateral or any interest therein.

 

(b)           In
addition, such Pledgor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Pledgor or any of its
Subsidiaries.

 

5.2           Notices. Such Pledgor will
advise the Collateral Agent promptly of:

 

(a)           any
Lien (other than security interests created hereby or Liens permitted under the
Securities Purchase Agreement, the Notes or any other Transaction Document) on
any of the Collateral; and

 

(b)           the
occurrence of any other event which could reasonably be expected to have a
material adverse effect on the security interests created hereby.

 

5.3           Maintenance of Insurance. (a)  Such Pledgor
will maintain, with financially sound and reputable companies, insurance
policies as required by Section 3(r) of the Securities Purchase Agreement
and Section 11(m) of the Notes, such policies to be in such form and amounts
and having such coverage as may be reasonably satisfactory to the Collateral
Agent.

 

(b)           All
such insurance shall (i) provide that no cancellation, material reduction in
amount or material change in coverage thereof shall be effective until at least
30 days after receipt by the Collateral Agent of written notice thereof,
(ii) name the Collateral Agent as additional insured or loss payee, (iii) if
reasonably requested by the Collateral Agent, include a breach of warranty
clause and (iv) be reasonably satisfactory in all other material respects to
the Collateral Agent.

 

14

 

(c)           The
Company shall deliver to the Collateral Agent a report of a reputable insurance
broker with respect to such insurance during the month of April in each
calendar year and such supplemental reports with respect thereto as the
Collateral Agent may from time to time reasonably request.

 

5.4           Payment of Obligations. Such
Pledgor will pay and discharge or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of such Pledgor (to the extent
such reserves are required by GAAP) and such proceedings could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion
of the Collateral or any material interest therein.

 

5.5           Maintenance of Perfected Security
Interest; Further Documentation. (a)  Such Pledgor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against
the claims and demands of all Persons whomsoever.

 

(b)           Such
Pledgor will furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.

 

(c)           At
any time and from time to time, upon the written request of the Collateral
Agent, and at the sole expense of such Pledgor, such Pledgor will promptly and
duly execute and deliver, and, if applicable, have recorded, such further
instruments and documents and take such further actions as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including (i) the filing of any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby and (ii) in the case of
Investment Property, Deposit Accounts, Letter-of-Credit Rights and any other
relevant Collateral, taking any actions necessary to enable the Collateral
Agent to obtain “control” (within the meaning of the applicable Uniform Commercial
Code) with respect thereto.

 

5.6           Changes in Locations, Name, etc.  Such Pledgor will not, except upon
30 days’ prior written notice to the Collateral Agent and
delivery to the Collateral Agent of all additional financing statements and
other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for
herein:

 

15

 

(i)            change
its jurisdiction of organization or, in the case of any Pledgor that is not a
registered organization (as defined in the New York UCC), the location of its
chief executive office or sole place of business from that referred to in
Section 4.4; or

 

(ii)           change
its name, identity or corporate structure.

 

5.7           Delivery of Instruments and
Chattel Paper. All (i) Promissory Notes issued by any Pledgor and held by another Pledgor and (ii) if
any amount payable under or in connection with any of the other Collateral
shall be or become evidenced by any Instrument (other than checks received in
the ordinary course of business) or Chattel Paper, such Instrument or Chattel
Paper shall be delivered as soon as possible (but in any event within five
Business Days) to the Collateral Agent, duly indorsed in a manner satisfactory
to the Collateral Agent, to be held as Collateral pursuant to this Agreement.

 

5.8           Pledged Investments; Securities
Accounts; Deposit Accounts.  (a)  If any Pledged Investments now owned or hereafter acquired by
any Pledgor are certificated Securities and (i) are issued by any Pledgor or
any Subsidiary of a Pledgor or (ii) issued by any other Person and not held in
a Securities Account, such Pledgor shall deliver as soon as possible (but in
any event within five Business Days) the certificates evidencing the same to
the Collateral Agent in the exact form received, duly indorsed by such Pledgor
to the Collateral Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Pledgor and with, if
the Collateral Agent so requests, signature guaranteed, to be held by the
Collateral Agent, subject to the terms hereof, as additional collateral
security for such Pledgor’s Secured Obligations.

 

(b)           If
any Pledged Investments now owned or hereafter acquired by any Pledgor are
uncertificated Securities and, in either case, (i) are issued by any Pledgor or
any Subsidiary of a Pledgor or (ii) issued by any other Person and not held in
a Securities Account, such Pledgor shall notify the Collateral Agent as soon as
possible (but in any event within five Business Days) thereof and, at the
Collateral Agent’s request and option, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, either (i) cause the
Issuer to agree to comply with instructions from the Collateral Agent as to
such securities, without further consent of any Pledgor, or (ii) arrange for
the Collateral Agent to become the registered owner of the securities.

 

(c)           If
such Pledgor shall now or hereafter have rights in any Securities Account with
any securities intermediary, such Pledgor shall notify the Collateral Agent as
soon as possible (but in any event within five Business Days) thereof and,
pursuant to an Account Control Agreement, cause such securities intermediary to
agree to comply with entitlement orders or other instructions originated by the
Collateral Agent to such securities intermediary as to the securities or other
financial assets contained therein without consent from such Pledgor.

 

16

 

(d)           If
such Pledgor shall now or hereafter have rights in any Deposit Account
maintained with any bank, such Pledgor shall notify the Collateral Agent as
soon as possible (but in any event within five Business Days) thereof and,
pursuant to an Account Control Agreement, cause such bank to agree to comply
with instructions to such bank originated by the Collateral Agent directing the
disposition of funds in such Deposit Account without consent from such Pledgor.

 

(e)           The
Collateral Agent agrees with each of the Pledgors that the Collateral Agent
shall not give any such entitlement orders, instructions or directions referred
to in paragraph (b), (c) or (d) above to any Issuer, securities intermediary or
bank, and shall not withhold its consent to the exercise of any withdrawal or
dealing right by any Pledgor, unless an Event of Default has occurred and is
continuing, or, after giving effect to any such investment and withdrawal
rights, would occur. The provisions of this paragraph shall not apply to any
financial assets credited to a Securities Account for which the Collateral
Agent is the securities intermediary or Account as to which the Collateral
Agent is the bank.

 

(f)            Except
as provided in Section 6.3, such Pledgor shall be entitled to receive all cash
dividends and distributions paid in respect of the Pledged Investments (except
liquidating or distributing dividends). Any sums paid upon or in respect of the
Pledged Investments upon the liquidation or dissolution of any Issuer or at a
time when a Pledgor is not permitted to receive such sums under Section 6.3
shall be paid over to the Collateral Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the Pledged
Investments or any property shall be distributed upon or with respect to the
Pledged Investments pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property
so distributed shall, unless otherwise subject to a perfected security interest
in favor of the Collateral Agent, be delivered to the Collateral Agent to be
held by it hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged
Investments shall be received by such Pledgor, such Pledgor shall, until such
money or property is paid or delivered to the Collateral Agent, hold such money
or property in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of such Pledgor, as additional collateral security
for the Obligations.

 

(g)           In
the case of each Pledgor that is also an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this Agreement relating to the
Pledged Investments issued by it and will comply with such terms insofar as
such terms are applicable to it, including complying with instructions from the
Secured Party as to such Pledged Investments, without further consent of any
Pledgor, (ii) it will notify the Collateral Agent promptly in writing of
the occurrence of any of the events described in Sections 5.8(a), (b) and (f) with respect to the Pledged Investments issued
by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis
mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) or 6.7 with respect to the Pledged Investments
issued by it.

 

17

 

(h)           In
the case of each Issuer that is not a Pledgor, such Issuer shall, and the
Pledgor of the Pledged Investments issued by such Issuer shall cause such
Issuer to, acknowledge and agree to the pledge and grant of a security interest
in the Pledged Investments by a writing in the form of Annex I hereto.

 

(i)            To
the extent permitted by applicable law, any Subsidiary of the Company as of the
date of this Agreement, with the exception of ES Holdings SAS, a French
corporation, and Eurosilicone SAS, a French corporation, that is not a
Guarantor or Pledgor hereunder shall execute and deliver, within ten days of
the Closing Date, a negative pledge agreement (or as applicable, a joinder
agreement to an existing negative pledge agreement) pursuant to which such Subsidiary
will undertake not to create, incur or permit to exist, any Lien or other
interest in breach of Section 5.1 herein with respect to any of its assets now
held or hereinafter acquired.

 

5.9           Receivables. (a)  Other than in
the ordinary course of business consistent with its past practice, such Pledgor will not
(i) grant any extension of the time of payment of any Receivable,
(ii) compromise or settle any Receivable for less than the full amount
thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable, or (v) amend, supplement or modify any Receivable in any
manner that could adversely affect the value thereof.

 

(b)           Such
Pledgor will deliver to the Collateral Agent a copy of each material demand,
notice or document received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the aggregate amount of the then
outstanding Receivables.

 

5.10         Intellectual Property. (a)  Such Pledgor
(either itself or through licensees) will (i) continue to use each Material Trademark on each
and every trademark class of goods applicable to its current product or service
lines in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required
by applicable Requirements of Law, (iv) not knowingly adopt or use any mark
which is confusingly similar or a colorable imitation of such Trademark unless
the Collateral Agent shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not do any act or knowingly omit to do any
act whereby such Trademark may become invalidated or impaired in any way.

 

(b)           Such
Pledgor (either itself or through licensees) will not do any act, or omit to do
any act, whereby any Material Patent may become forfeited, abandoned or
dedicated to the public.

 

(c)           Such
Pledgor (either itself or through licensees) (i) will employ each Material
Copyright and (ii) will not do any act or knowingly omit to do any act whereby
any material portion of the Copyrights may become invalidated or otherwise
impaired or fall into the public domain.

 

18

 

(d)           Such
Pledgor (either itself or through licensees) will not do any act that knowingly
infringes the intellectual property rights of any other Person.

 

(e)           Such
Pledgor will notify the Collateral Agent as soon as possible (but in any event
within five Business Days) if it knows, or has reason to know, that any
application or registration relating to any Material Intellectual Property may
become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal
in any country) regarding such Pledgor’s ownership of, or the validity of, any
Material Intellectual Property or such Pledgor’s right to register the same or
to own and maintain the same.

 

(f)            Whenever
such Pledgor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Pledgor shall report such filing to the
Collateral Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Collateral Agent, such
Pledgor shall execute and deliver, and have recorded, if applicable, any and
all agreements, instruments, documents, and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in any Intellectual
Property.

 

(g)           Such
Pledgor will take all reasonable and necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of the
Material Intellectual Property, including filing of applications for renewal,
affidavits of use and affidavits of incontestability.

 

(h)           In
the event that any Material Intellectual Property is infringed, misappropriated
or diluted by a third party, such Pledgor shall (i) take such actions as
such Pledgor shall reasonably deem appropriate under the circumstances to
protect such Intellectual Property and (ii) if such Intellectual Property
is of material economic value, promptly notify the Collateral Agent after it
learns thereof and, after taking reasonable and customary measures to stop such
infringement, sue for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.

 

5.11         Electronic Chattel Paper and
Transferable Records. If any Pledgor at any time holds or acquires an
interest in any
Electronic Chattel Paper or any “transferable record,” as that term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction, such Pledgor shall promptly notify the
Collateral Agent thereof and, at the request of the Collateral Agent,

 

19

 

shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control under New York UCC
Section 9-105 of such Electronic Chattel Paper or control under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as so
in effect in such jurisdiction, of such transferable record. The Collateral
Agent agrees with such Pledgor that the Collateral Agent will arrange, pursuant
to procedures reasonably satisfactory to the Collateral Agent and so long as
such procedures will not result in the Collateral Agent’s loss of control, for
the Pledgor to make alterations to the Electronic Chattel Paper or transferable
record permitted under New York UCC Section 9-105 or, as the case may be,
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a
party in control to allow without loss of control, unless an Event of Default
has occurred and is continuing or would occur after taking into account any
action by such Pledgor with respect to such Electronic Chattel Paper or
transferable record.

 

5.12         Letter-of-Credit Rights. If any
Pledgor is at any time a beneficiary under any letter of credit now or hereafter issued in favor
of such Pledgor in amounts in the aggregate for all Pledgors in excess of
$25,000, such Pledgor shall promptly notify the Collateral Agent thereof and
such Pledgor shall, at the request of the Collateral Agent, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral
Agent, use commercially reasonable efforts to either (i) arrange for the
issuer and any confirmer of such letters of credit to consent to an assignment
to the Collateral Agent of the proceeds of any drawing under such letters of
credit or (ii) arrange for the Collateral Agent to become the transferee
beneficiary of such letters of credit, with the Collateral Agent agreeing, in
each case, that the proceeds of any drawing under such letters of credit are to
be applied as provided in the Securities Purchase Agreement.

 

5.13         Commercial Tort Claims. If any
Pledgor shall at any time hold or acquire any Commercial Tort Claim which might reasonably
result in awarded damages (less any and all legal and other expenses incurred
or reasonably expected to be incurred by such Pledgor) in excess of $25,000,
such Pledgor shall promptly notify the Collateral Agent in writing signed by
such Pledgor of the brief details thereof and grant to the Collateral Agent,
for the benefit of the Collateral Agent and the other 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
reasonably satisfactory to the Collateral Agent.

 

5.14         Notice of Creation or Acquisition of
Additional Collateral. Within 45 days after the end of each fiscal quarter, Company shall
furnish the Collateral Agent with a report listing for such quarter:

 

(a)           any
Subsidiary formed or acquired by any Pledgor;

 

(b)           any
certificated Securities or uncertificated Securities not held in a Securities
Account acquired by any Pledgor;

 

20

 

(c)           any
change in name, jurisdiction of organization, chief executive officer of any
Pledgor;

 

(d)           all
Promissory Notes, Instruments or Chattel Paper received by any Pledgor;

 

(e)           any
Securities Account, Commodities Account or Deposit Account opened by any
Pledgor;

 

(f)            all
applications for and registration received by any Pledgor in respect of any
Intellectual Property;

 

(g)           any
Letter of Credit Rights acquired by any Pledgor; and

 

(h)           any
Commercial Tort Claims acquired by any Pledgor.

 

5.15         Subordination of Indebtedness among
Pledgors. Each Pledgor hereby agrees that any Indebtedness of any other Pledgor now or
hereafter owing to such Pledgor, whether heretofore, now or hereafter created
(the “Pledgor Subordinated Debt”), is hereby subordinated to all of the
Obligations to the extent set forth in this Section 5.15. From and after the
receipt from the Collateral Agent of a notice that (i) a Default has occurred
and continuing and (ii) that the Collateral Agent is exercising its rights
under this Section 5.15 (a “Notice of Actionable Default”) and prior to
the withdrawal of all pending Notices of Actionable Default, the Pledgor
Subordinated Debt shall not be paid in whole or in part until the Obligations
have been paid in full and this Agreement is terminated and of no further force
or effect. No Pledgor shall accept any payment of or on account of any Pledgor
Subordinated Debt at any time in contravention of the foregoing or the
Securities Purchase Agreement. From and after the delivery by the Collateral
Agent of a Notice of Actionable Default and prior to the withdrawal of all
pending Notices of Actionable Default, each Pledgor shall pay to the Collateral
Agent any payment of all or any part of the Pledgor Subordinated Debt and any
amount so paid to the Collateral Agent shall be applied to payment of the
Obligations in such order as the Collateral Agent may elect. Each payment on
the Pledgor Subordinated Debt received in violation of any of the provisions
hereof shall be deemed to have been received by such Pledgor as trustee for the
Collateral Agent and the other Secured Parties and shall be paid over to the
Collateral Agent immediately on account of the Obligations, but without
otherwise affecting in any manner such Pledgor’s liability herein. Each Pledgor
agrees to file all claims against any Pledgor in any bankruptcy or other
proceeding in which the filing of claims is required by law in respect of any
Pledgor Subordinated Debt, and the Collateral Agent shall be entitled to all of
such Pledgor’s rights thereunder. If for any reason a Pledgor fails to file
such claim at least ten Business Days prior to the last date on which such
claim should be filed, such Pledgor hereby irrevocably appoints the Collateral
Agent as its true and lawful attorney-in-fact and is hereby authorized to act as
attorney-in-fact in such Pledgor’s name to file such claim or, in the
Collateral Agent’s discretion, to assign such claim to and cause proof of claim
to be filed in the name of the Collateral Agent or its nominee. In all such
cases, whether in administration, bankruptcy or otherwise, the person or
persons authorized to pay such claim shall pay to the Collateral

 

21

 

Agent the full amount payable on the claim in the
proceeding, and, to the full extent necessary for that purpose, each Pledgor
hereby assigns to the Collateral Agent all of such Pledgor’s rights to any
payments or distributions to which such Pledgor otherwise would be entitled. If
the amount so paid is greater than such Pledgor’s liability hereunder and under
the other Transaction Documents, the Collateral Agent shall pay the excess
amount to the party entitled thereto. In addition, each Pledgor hereby
irrevocably appoints the Collateral Agent as its attorney in fact to exercise
all of such Pledgor’s voting rights in respect of any Pledgor Subordinated Debt
(other than in its capacity as a debtor or a debtor-in-possession) in
connection with any bankruptcy proceeding or any plan for the reorganization of
any Pledgor. Each Pledgor that is an obligor on any Pledgor Subordinated Debt
hereby consents to the provisions of this Section 5.15 and agrees to be bound
by them.

 

5.16         Permitted Restructuring. Notwithstanding
the foregoing provisions of this Section 5, (i) each Pledgor other than the Company shall be
entitled to be liquidated, dissolved or wound up or to be merged with or
otherwise transfer any of its assets and liabilities to the Company or one or
more Subsidiaries of the Company, so long as the Pledgor (x) gives the
Collateral Agent at least 90 days’ prior written notice of such transaction and
(y) delivers to the Collateral Agent all such documents and takes all such
other actions as are reasonably requested by the Collateral Agent in order to
ensure that the Company or one or more of its Subsidiaries assumes all
obligations of the Pledgor under this Agreement and pledges, on terms at least
as favorable as existed immediately prior to the applicable transaction, all
Collateral pledged by such Pledgor immediately prior to such transaction and
(ii) the Company shall be entitled to cause International Integrated
Incorporated, a British Virgin Islands corporation, to elect to be a
Disregarded Person.

 

SECTION 6 

REMEDIAL PROVISIONS

 

6.1           Certain Matters Relating to
Receivables. (a)  The Collateral Agent
shall have the right to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Pledgor shall furnish all such assistance and information
as the Collateral Agent may reasonably require in connection with such test
verifications. At any time and from time to time, upon the Collateral Agent’s
reasonable request and at the expense of the relevant Pledgor, such Pledgor
shall cause independent public accountants or others satisfactory to the
Collateral Agent to furnish to the Collateral Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.

 

(b)           The
Collateral Agent hereby authorizes each Pledgor to collect such Pledgor’s
Receivables, and the Collateral Agent may curtail or terminate said authority
at any time after the occurrence and during the continuance of an Event of
Default. If required by the Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default, any payments of Receivables,
when collected by

 

22

 

any Pledgor,
(i) shall be immediately (and, in any event, within two Business Days)
deposited by such Pledgor in the exact form received, duly indorsed by such
Pledgor to the Collateral Agent if required, in a Collateral Account maintained
under the sole dominion and control of the Collateral Agent, subject to
withdrawal by the Collateral Agent only as provided in Section 6.5, and
(ii) until so turned over, shall be held by such Pledgor in trust for the
Collateral Agent and the other Secured Parties, segregated from other funds of
such Pledgor. Each such deposit of payments of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.

 

(c)           After
the occurrence and during the continuance of an Event of Default, at the
Collateral Agent’s request, each Pledgor shall deliver to the Collateral Agent
all original and other documents evidencing, and relating to, the agreements
and transactions which gave rise to the Receivables, including all original
orders, invoices and shipping receipts.

 

6.2           Communications with Obligors;
Pledgors Remain Liable. (a)  The Collateral Agent, in its own name
or in the name of
others, may at any time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Receivables or other
contracts to verify with them to the Collateral Agent’s satisfaction the
existence, amount and terms of any Receivables or other contracts.

 

(b)           Upon
the request of the Collateral Agent at any time after the occurrence and during
the continuance of an Event of Default, each Pledgor shall notify obligors on
the Receivables or other contracts that the Receivables or other contracts have
been assigned to the Collateral Agent and that payments in respect thereof
shall be made directly to the Collateral Agent.

 

(c)           Anything
herein to the contrary notwithstanding, each Pledgor shall remain liable under
each of the Receivables and all other contracts included in the Collateral to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement giving
rise thereto. The Collateral Agent and the other Secured Parties shall not have
any obligation or liability under any Receivable (or any agreement giving rise
thereto) or other contracts by reason of or arising out of this Agreement or
the receipt by the Collateral Agent or any other Secured Party of any payment
relating thereto, nor shall the Collateral Agent or any other Secured Party be
obligated in any manner to perform any of the obligations of any Pledgor under
or pursuant to any Receivable (or any agreement giving rise thereto) or other
contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, 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 it or to which it may be entitled at any time
or times.

 

6.3           Pledged Investments. (a)  Unless an Event
of Default shall have occurred and be continuing and the Collateral Agent shall have
given notice to the relevant Pledgor of the Collateral Agent’s intent to
exercise its corresponding rights

 

23

 

pursuant to Section 6.3(b), each Pledgor shall be
permitted to receive all cash dividends and other distributions paid in respect
of the Pledged Stock and all cash payments made in respect of the Pledged Debt,
in each case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Securities
Purchase Agreement and the Notes and to exercise all voting and corporate or
other rights with respect to the Pledged Investments; provided, however,
that no vote shall be cast or corporate or other right exercised or other
action taken which, in the Collateral Agent’s reasonable judgment, would impair
the Collateral or which would be inconsistent with or result in any violation
of any provision of the Notes, this Agreement or any other Transaction
Document.

 

(b)           If
an Event of Default shall occur and be continuing and the Collateral Agent
shall give notice of its intent to exercise its rights pursuant to this Section
6.3(b) to the relevant Pledgor or Pledgors, (i) the Collateral Agent shall
have the right to receive any and all cash dividends, payments or other
Proceeds paid in respect of the Pledged Investments and make application
thereof to the Obligations in such order as the Collateral Agent may determine,
and/or (ii) any or all of the Pledged Investments may be registered in the name
of the Collateral Agent or its nominee, and the Collateral Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining
to such Pledged Investments at any meeting of shareholders of the relevant
Issuer or Issuers or otherwise and (y) any and all rights of conversion,
exchange and subscription and any other rights, privileges or options
pertaining to such Pledged Investments as if it were the absolute owner thereof
(including the right to exchange at its discretion any and all of the Pledged
Investments upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate or other structure of any Issuer, or
upon the exercise by any Pledgor or the Collateral Agent of any right,
privilege or option pertaining to such Pledged Investments, and in connection
therewith, the right to deposit and deliver any and all of the Pledged
Investments with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Collateral Agent may
determine), all without liability except to account for property actually
received by it, but the Collateral Agent and the other Secured Parties shall
have no duty to any Pledgor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing. Each
Pledgor hereby appoints the Collateral Agent, which appointment shall be
exercisable only upon the occurrence and during the continuance of an Event of
Default, such Pledgor’s true and lawful attorney-in-fact and grants to the
Collateral Agent an IRREVOCABLE PROXY to exercise any action contemplated by
the immediately preceding sentence in any manner the Collateral Agent
reasonably deems advisable for or against all matters submitted or which may be
taken by the shareholders. The power-of-attorney granted hereby is coupled with
an interest and shall be irrevocable.

 

(c)           Each
Pledgor hereby authorizes and instructs each Issuer of any Pledged Investments
pledged by such Pledgor hereunder to (i) comply with any instruction received
by it from the Collateral Agent in writing that (x) states that an Event of
Default has occurred and is continuing and (y) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from
such Pledgor, and each Pledgor agrees that each Issuer shall be fully protected
in so complying, and (ii) 

 

24

 

unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Investments directly to the Collateral Agent.

 

6.4           Proceeds to be Turned Over to
Collateral Agent. In addition to the rights of the Collateral Agent specified
in Section 6.1 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by any Pledgor consisting of cash, checks and
other near-cash items shall be held by such Pledgor in trust for the Collateral
Agent and the other Secured Parties, segregated from other funds of such
Pledgor, and shall, as soon as possible (but in any event within five Business
Days) following receipt by such Pledgor, be turned over to the Collateral Agent
in the exact form received by such Pledgor (duly indorsed by such Pledgor to
the Collateral Agent, if required). All Proceeds received by the Collateral
Agent hereunder shall be held by the Collateral Agent in a Collateral Account
maintained under its sole dominion and control. All Proceeds while held by the
Collateral Agent in a Collateral Account (or by such Pledgor in trust for the
Collateral Agent and the other Secured Parties) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5 hereof.

 

6.5           Application of Proceeds. At
such intervals as may be agreed upon by the Company and the Collateral Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Collateral
Agent’s election, the Collateral Agent may, or at the direction of the holders
of at least a majority of the aggregate principal amount of the Notes then
outstanding shall, apply all or any part of Proceeds constituting Collateral,
whether or not held in any Collateral Account, and any proceeds of the
guarantee set forth in Section 2, in payment of the Obligations in such order
as the Collateral Agent may elect, and any part of such funds which the
Collateral Agent elects not so to apply shall continue to be held as collateral
security for the Obligations. Any balance of such Proceeds remaining after the
Termination Date or after all Events of Default have been cured or waived shall
be paid over to the Company or to whomsoever may be lawfully entitled to
receive the same.

 

6.6           Code and Other Remedies. If an
Event of Default shall occur and be continuing, the Collateral Agent may exercise, in addition to
all other rights and remedies granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations,
all rights and remedies of a secured party under the New York UCC or any other
applicable law. Without limiting the generality of the foregoing, the
Collateral Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Pledgor or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the Collateral
or any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker’s board or
office of the Collateral Agent or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem

 

25

 

best, for cash or on credit or for future delivery
without assumption of any credit risk. The Collateral Agent or any other
Secured Party shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Pledgor, which right or equity is hereby waived and released.
Each Pledgor further agrees, at the Collateral Agent’s request, if an Event of
Default shall occur and be continuing, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Pledgor’s premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Collateral Agent, including reasonable attorneys’ fees and
other charges, to the payment in whole or in part of the Obligations, in such
order as the Collateral Agent may elect and only after such application and
after the payment by the Collateral Agent of any other amount required by any
provision of law, including Section 9-615(a)(3) and (4) of the New York UCC, need
the Collateral Agent account for the surplus, if any, to any Pledgor. To the
extent permitted by applicable law, each Pledgor waives all claims, damages and
demands it may acquire against the Collateral Agent arising out of the exercise
by it of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.

 

6.7           Private Sale; Registration Rights.
(a)  If the Collateral Agent shall
determine to exercise its right to sell any or all of the Pledged
Investments pursuant to Section 6.6, and if in the opinion of the Collateral
Agent it is necessary or advisable to have the Pledged Investments, or that
portion thereof to be sold, registered under the provisions of the Securities
Act, the relevant Pledgor will, at any time and from time to time, upon the
written request of the Collateral Agent, use its best efforts to take or to
cause the Issuer of such Pledged Investments to take such action, and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of the Collateral Agent to permit the public sale of such
Pledged Investments including to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
agreements, instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Collateral Agent, necessary or advisable
to register and sell the Pledged Investments, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Investments, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto or in the opinion of any underwriters selected by Collateral Agent to
effectuate such purchase. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, any underwriter and their respective
officers, directors, affiliates and controlling persons from and against all
loss,

 

26

 

liability, expenses, costs of counsel (including reasonable fees and
other charges of legal counsel to the Collateral Agent) and claims (including
the costs of investigation) that they may incur insofar as such loss,
liability, expense or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus (or any amendment or
supplement thereto) or in any notification or offering circular, or arises out
of or is based upon any alleged omission to state a material fact required to
be stated therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to such
Pledgor or the Issuer of such Pledged Investment by the Collateral Agent
expressly for use therein. Each Pledgor further agrees, upon written request,
to use its best efforts to qualify, file or register, or cause the Issuer of
such Pledged Investments to (x) qualify, file or register any of the
Pledged Investments under the “Blue Sky” or other securities laws of such
states as may be requested by the Collateral Agent and keep effective, or cause
to be kept effective, all such qualifications, filings or registrations and
(y) to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act. Each Pledgor will bear
all costs and expenses of carrying out its obligations under this Section 6.7.

 

(b)           Each
Pledgor recognizes that the Collateral Agent may be unable to effect a public
sale of any or all the Pledged Investments, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such circumstances,
agrees that no such private sale shall be deemed to have been made in a
commercially unreasonable manner solely because it has had such a result. The
Collateral Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.

 

(c)           Each
Pledgor agrees to use its best efforts to do or cause to be done all such other
acts as may be necessary to make such sale or sales of all or any portion of
the Pledged Investments pursuant to this Section 6.7 valid and binding and in
compliance with any and all applicable Requirements of Law. Each Pledgor
further agrees that a breach of any of the covenants contained in this Section
6.7 will cause irreparable injury to the Collateral Agent, that the Collateral
Agent has no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Pledgor, and such Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Securities Purchase Agreement.

 

27

 

6.8           Deficiency. Each Pledgor shall
remain liable for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Secured Obligations and the fees and
other charges of any attorneys employed by the Collateral Agent to collect such
deficiency.

 

6.9           Grant of License to Use
Intellectual Property. For the purpose of enabling the Collateral Agent to
exercise rights and
remedies under this Agreement at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Pledgor hereby
grants to the Collateral Agent an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the Pledgors)
to use, license or sublicense any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Pledgor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The license
(i) shall be subject to those exclusive Copyright Licenses, Patent Licenses and
Trademark Licenses granted by the Pledgors to other Persons in effect on the
date hereof and those granted by any Pledgor hereafter, as permitted under the
Transaction Documents, to the extent conflicting, (ii) may be exercised, at the
option of the Collateral Agent, only upon the occurrence and during the
continuation of an Event of Default, provided, that any license,
sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Pledgors notwithstanding any
subsequent cure of an Event of Default, and (iii) apply to the use of the
Trademarks in connection with goods and services of similar type and quality to
those theretofore sold by such Pledgor under such Trademark.

 

SECTION 7 

THE COLLATERAL AGENT

 

7.1           Collateral Agent’s Appointment as
Attorney-in-Fact, etc. (a)  Each Pledgor hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Pledgor hereby gives the Collateral Agent the power and right,
on behalf of such Pledgor, without notice to or assent by such Pledgor, to do
any or all of the following upon the occurrence and during the continuation of
an Event of Default:

 

(i)            in
the name of such Pledgor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Receivable or with respect to any other
Collateral, and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the

 

28

 

Collateral Agent for the purpose of collecting any and all such moneys
due under any Receivable or with respect to any other Collateral whenever
payable;

 

(ii)           in
the case of any Intellectual Property, execute and deliver, and have recorded,
any and all agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent’s security
interest in such Intellectual Property and the goodwill and general intangibles
of such Pledgor relating thereto or symbolized thereby;

 

(iii)          pay
or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this
Agreement or any other Transaction Document and pay all or any part of the
premiums therefor and the costs thereof;

 

(iv)          execute,
in connection with any sale provided for in Sections 6.6 or 6.7, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral;

 

(v)           direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Collateral
Agent or as the Collateral Agent shall direct;

 

(vi)          ask
or demand for, collect and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral;

 

(vii)         sign
and indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;

 

(viii)        commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral;

 

(ix)           defend
any suit, action or proceeding brought against such Pledgor with respect to any
Collateral;

 

(x)            settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Collateral Agent may deem
appropriate;

 

(xi)           assign
any Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Trademark pertains), throughout the world for such term or
terms, on such conditions, and in such manner, as the Collateral Agent shall in
its sole discretion determine; and

 

29

 

(xii)          generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral Agent
were the absolute owner thereof for all purposes, and do, at the Collateral
Agent’s option and such Pledgor’s expense (including reasonable attorneys’
fees), at any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and the Collateral Agent’s security interests therein and to effect
the intent of this Agreement, all as fully and effectively as such Pledgor
might do.

 

(b)           If
any Pledgor fails to perform or comply with any of its agreements contained
herein or in any contract included in the Collateral, the Collateral Agent, at
its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.

 

(c)           The
expenses of the Collateral Agent incurred in connection with actions undertaken
as provided in this Section 7.1, together with interest thereon at a rate per
annum equal to 2% per month from the date of payment by the Collateral Agent to
the date reimbursed by the relevant Pledgor, shall be payable by such Pledgor
to the Collateral Agent on demand.

 

(d)           Each
Pledgor hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until this
Agreement is terminated and the security interests created hereby are released.

 

7.2           Duties of Collateral Agent. (a)  The
Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Collateral Agent
deals with similar property for its own account.

 

(b)           None
of the Collateral Agent or any other Secured Party or any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.

 

(c)           The
powers conferred on the Collateral Agent hereunder are solely to protect the
interests of the Collateral Agent and the other Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent to exercise
any such powers. The Collateral Agent and the other Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Pledgor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

 

30

 

7.3           Filing of Financing Statements.
Each Pledgor authorizes the Collateral Agent to file or record financing statements, any amendments
thereto and other filing or recording documents or instruments with respect to
the Collateral without the signature of such Pledgor in such form and in such
offices as the Collateral Agent reasonably determines appropriate to perfect
the security interests of the Collateral Agent and the other Secured Parties
under this Agreement including any financing statement describing the
collateral as “all assets,” “all personal property” or any similar description.
A photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.

 

7.4           Authority of Collateral Agent.
Each Pledgor acknowledges that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
other Secured Parties, be governed by the Securities Purchase Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Collateral Agent and the Pledgor, the Collateral
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Pledgor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.

 

SECTION 8 

MISCELLANEOUS

 

8.1           Amendments in Writing. None of
the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 10(e) of the Securities
Purchase Agreement.

 

8.2           Notices. All notices, requests
and demands to or upon the Secured Parties or the Pledgors hereunder shall be effected in the manner
provided for in Section 10(f) of the Securities Purchase Agreement;
provided that any such notice, request or demand to or upon the Pledgors shall
be addressed to them at their notice address set forth on Schedule 8.2.

 

8.3           No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the part of the Collateral Agent or any
other Secured Party, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right,
remedy, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any other rights, remedies, powers or privileges provided by
law.

 

8.4           Enforcement Expenses; Indemnification.
(a)  Each
Pledgor agrees to pay or reimburse the Collateral Agent and each other Secured
Party for all its

 

31

 

costs and expenses incurred in collecting against such Pledgor its
Secured Obligations or otherwise enforcing or preserving any rights under this
Agreement and the other Transaction Documents to which such Pledgor is a party,
including the fees and other charges of counsel (such as the allocated fees and
expenses of in-house counsel) to the Collateral Agent or such Secured Party.

 

(b)           Each
Pledgor agrees to pay, indemnify and hold the Collateral Agent and each other
Secured Party harmless from any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise, sales and other similar taxes that may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.

 

(c)           Each
Pledgor agrees to pay, indemnify and hold the Collateral Agent and the other
Secured Parties and the other Indemnitees harmless from any and all Indemnified
Liabilities and claims with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Company
would be required to do so pursuant to Section 8 of the Securities
Purchase Agreement.

 

(d)           The
agreements in this Section 8.4 shall survive the termination of this
Agreement and the repayment of the Obligations and all other amounts payable
under the Securities Purchase Agreement, the Notes and the other Transaction
Documents.

 

8.5           Successors and Assigns. This
Agreement shall be binding upon the successors and assigns of each Pledgor and shall inure to the
benefit of the Collateral Agent and the other Secured Parties and their
respective successors and assigns and, to the extent expressly provided herein,
their respective officers, directors, employees, affiliates, agents, advisors
and controlling persons including as provided in Section 8.4; provided
that no Pledgor may assign or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent and any attempted assignment or transfer without such consent
shall be null and void.

 

8.6           Counterparts; Pledgors’ Separate
Agreements. This Agreement may be executed by one or more of the parties to this Agreement
on any number of separate counterparts (including by facsimile transmission),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. Delivery of an executed signature page of this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart hereof. This Agreement shall become effective as to any
Pledgor when a counterpart hereof executed on behalf of such Pledgor shall have
been delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent. This Agreement shall be construed
as a separate agreement with respect to each Pledgor and may be amended,
modified, supplemented, waived or released with respect to any Pledgor without
the approval of any other Pledgor and without affecting the obligations of any
other Pledgor hereunder.

 

32

 

8.7           Severability.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

8.8           Section
Headings. The Section headings used in this Agreement are for convenience
of reference only and are
not to affect the construction hereof or be taken into consideration in the
interpretation hereof.

 

8.9           Integration. This Agreement
and the other Transaction Documents represent the agreement of the Pledgors, the Collateral Agent and
the other Secured Parties with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Collateral Agent or any other Secured Party relative to the subject
matter hereof and thereof not expressly set forth or referred to herein or in
the other Transaction Documents.

 

8.10         GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAW PROVISION THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).

 

8.11         Submission To Jurisdiction; Waivers.
(a)  Each Pledgor hereby irrevocably and unconditionally:

 

(b)           submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Transaction Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;

 

(c)           consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same and agrees not
to commence any action suit, or proceeding relating to this Agreement or any
other Transaction Document other than in such courts except to the extent
mandated by applicable law;

 

(d)           agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Pledgor at its address referred
to in Section 8.2 or at such other address of which the Collateral Agent
shall have been notified pursuant thereto;

 

33

 

(e)           agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and

 

(f)            waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section 8.11 any
special, exemplary, punitive or consequential damages.

 

8.12         Acknowledgments. Each Pledgor
hereby acknowledges that:

 

(a)           it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Transaction Documents to which it is a party;

 

(b)           the
Collateral Agent and the other Secured Parties have no fiduciary relationship
with or duty to any Pledgor arising out of or in connection with this Agreement
or any of the other Transaction Documents, and the relationship between the
Pledgors, on the one hand, and the Collateral Agent and the other Secured
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

 

(c)           no
joint venture is created hereby or by the other Transaction Documents or
otherwise exists by virtue of the transactions contemplated hereby.

 

8.13         Additional Guarantors and Pledgors.
(a)  Each Person that is not a Subsidiary of the Company as of the
date of this Agreement,
but becomes a Subsidiary of the Company after such date, and is (x) not a
Foreign Subsidiary or (y) a Foreign Subsidiary that is also a Disregarded
Person (unless such Disregarded Person is owned by a Foreign Subsidiary
(including through one or more Disregarded Persons wholly owned by a Foreign
Subsidiary)) shall become a Guarantor and Pledgor for all purposes of this Agreement
promptly upon becoming a Subsidiary by execution and delivery by such
Subsidiary of an Assumption Agreement in the form of Annex II hereto (it
being understood for the avoidance of doubt that any pledge or security granted
by such Person shall not include any Excluded Property). Upon the execution and
delivery by any Subsidiary of an Assumption Agreement, the supplemental
schedules attached to such Assumption Agreement shall be incorporated into and
become a part of and supplement the Schedules to this Agreement and each
reference to such Schedules shall mean and be a reference to such Schedules as
supplemented pursuant to each Assumption Agreement.

 

(b)           Each
Person that is not a Subsidiary of the Company as of the date of this
Agreement, but becomes a Subsidiary of the Company after such date, and does
not become a Guarantor or Pledgor for the purposes of this Agreement shall, and
the Pledgors shall cause such Subsidiary to, to the extent permitted by
applicable law, join the negative pledge agreement referred to in Section
5.8(i) herein, expressly acknowledge the negative pledge contained therein and
agree to be bound by all the terms thereof.

 

34

 

8.14         Releases. (a)  On the Termination Date, the Collateral shall
be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination and
the guarantee in Section 2 with respect to such surviving obligations) of the
parties hereto shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Pledgors. At the request and sole expense of any Pledgor
following any such termination, the Collateral Agent shall deliver to such
Pledgor any Collateral held by the Collateral Agent hereunder, and execute and
deliver to such Pledgor such documents as such Pledgor shall reasonably request
to evidence such termination.

 

(b)           If
any of the Collateral shall be sold, transferred or otherwise disposed of by
any Pledgor in a transaction permitted by the Securities Purchase Agreement,
then the Collateral Agent, at the request and sole expense of such Pledgor,
shall execute and deliver to such Pledgor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby
on such Collateral. At the request and sole expense of the Company, a Pledgor
which is a Subsidiary of the Company shall be released from its obligations
hereunder in the event that all the Capital Stock of such Pledgor shall be
sold, transferred or otherwise disposed of in a transaction permitted by the
Securities Purchase Agreement; provided that the Company shall have
delivered to the Collateral Agent, at least ten Business Days (or such shorter
period reasonably acceptable to the Collateral Agent) prior to the date of the
proposed release, a written request for release identifying the relevant
Pledgor and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Company stating that such transaction is in
compliance with the Securities Purchase Agreement and the other Transaction
Documents.

 

8.15         Foreign Pledgor Provisions. Each
Pledgor that is a Foreign Pledgor agrees as follows:

 

(a)           The
Foreign Pledgor hereby irrevocably and unconditionally appoints CT Corporation
System (the “Process Collateral Agent”), with an office on the date
hereof at 111 Eighth Avenue, New York, New York 10011 as its agent to receive
on behalf of such Foreign Pledgor and its property service of copies of the
summons and complaint and any other process which may be served in any action
referred to in Section 8.11 or proceeding in any New York State or Federal
court and agrees promptly to appoint a successor Process Collateral Agent in
The City of New York (which successor Process Collateral Agent shall accept
such appointment in writing in form and substance reasonably satisfactory  to the Collateral Agent) prior to the
termination for any reason of the appointment of the initial Process Collateral
Agent. In any action or proceeding in a New York State or Federal court sitting
in The City of New York, such service may be made on such Foreign Pledgor by
delivering a copy of such process to such Foreign Pledgor in care of the
Process Collateral Agent at such Process Collateral Agent’s above address and
by depositing a copy of such process in the mails by certified or registered
air mail, addressed to such Foreign Pledgor at its address referred to in
Section 8.2 (such service to be effective upon such receipt by the Process

 

35

 

Collateral Agent and the depositing of such process in the mails as
aforesaid). Such Foreign Pledgor hereby irrevocably and unconditionally
authorizes and directs such Process Collateral Agent to accept such service on
its behalf.

 

(b)           To
the extent that such Foreign Pledgor has or hereafter acquires any immunity
(sovereign or otherwise) from any legal action, suit or proceeding, from
jurisdiction of any court or from set-off or any legal process (whether service
or notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) with respect to itself or any of
its property, such Foreign Pledgor hereby irrevocably waives and agrees not to
plead or claim such immunity in respect of its obligations under this Agreement
and the other Transaction Documents.

 

(c)           The
Obligations of such Foreign Pledgor shall, notwithstanding any judgment in a
currency (the “Judgment Currency”) other than Dollars, be discharged
only to the extent that on the Business Day following receipt by the Collateral
Agent of any sum adjudged to be so due in the Judgment Currency, Collateral
Agent may in accordance with normal banking procedures purchase Dollars with
the Judgment Currency; if the amount of Dollars so purchased is less than the
sum originally due to Collateral Agent in Dollars, such Foreign Pledgor agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify
Collateral Agent against such loss, and if the amount of Dollars so purchased
exceeds the sum originally due to Collateral Agent, Collateral Agent agrees to
remit to such Foreign Pledgor, such excess.

 

8.16         Survival of Representations and
Warranties. All representations and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement.

 

8.17         WAIVER OF JURY TRIAL. EACH PLEDGOR, THE COLLATERAL AGENT AND, BY ACCEPTANCE OF THE BENEFITS
HEREOF, EACH OTHER SECURED PARTY, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO, HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

[Remainder of Page Intentionally Left Blank]

 

36

 

IN WITNESS WHEREOF, each of the undersigned has caused
this Guarantee and Collateral Agreement to be duly executed and delivered as of
the date first above written.

 

 

	
   

  	
  MEDICOR LTD., as
  Company and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney

  
	
   

  	
   

  	
  Name: Theodore R. Maloney

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTERNATIONAL INTEGRATED INCORPORATED, as Guarantor
  and

  Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney

  
	
   

  	
   

  	
  Name: Theodore R. Maloney

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICOR MANAGEMENT INC., as

  Guarantor and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney

  
	
   

  	
   

  	
  Name: Theodore R. Maloney

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICOR AESTHETICS, as Guarantor

  and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney

  
	
   

  	
   

  	
  Name: Theodore R. Maloney

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICOR DEVELOPMENT COMPANY,

  as Guarantor and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney

  
	
   

  	
   

  	
  Name: Theodore R. Maloney

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  

 

37

 

	
   

  	
  III ACQUISITION CORPORATION, as

  Guarantor and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Marc S.
  Sperberg

  
	
   

  	
   

  	
  Name: Marc S. Sperberg

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HPL BIOMEDICAL, INC., as Guarantor

  and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jim J. McGhan

  
	
   

  	
   

  	
  Name: Jim J. McGhan

  
	
   

  	
   

  	
  Title: Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INTELLECTUAL PROPERTY

  INTERNATIONAL INC., as Guarantor and

  Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Theodore
  R. Maloney 

  
	
   

  	
   

  	
  Name: Theodore R. Maloney 

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  SILVER OAK CAPITAL, L.L.C., as Collateral Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Michael
  L. Gordon

  	
   

  	
   

  
	
   

  	
  Name: Michael L. Gordon

  	
   

  
	
   

  	
  Title: Managing Member

  	
   

  
					

 

38

 

Schedule 4.3

 

ACTIONS TO PERFECT

 

	
  MediCor Ltd.
  (Delaware)

  	
   

  	
   

  
	
  Shares of
  MediCor Latin America S.A. de C.V.

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Shares of
  International Integrated Incorporated

  	
   

  	
  Same

  
	
  Shares of
  MediCor Europe Holdings ApS (Denmark)

   

  	
   

  	
  Filing of UCC-1
  Financing Statement; execution of Issuer Control Agreement

  
	
  Contracts
  (including leases), Accounts, Chattel Paper, Documents, Equipment, General
  Intangibles, Instruments, Inventory, Other Investment Property

  	
   

  	
  Filing of UCC-1
  Financing Statement

   

  
	
  Euro Account

  	
   

  	
  Filing of UCC-1
  Financing Statement; execution of Account Control Agreement

  
	
  Dollar Account

  	
   

  	
  Same

  
	
  International
  Integrated Incorporated (BVI)

  	
   

  	
   

  
	
  Shares of
  MediCor Management, Inc.

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Shares of
  MediCor Aesthetics

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Shares of
  MediCor Development Company

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Contracts
  (including leases), Accounts, Chattel Paper, Documents, Equipment, General
  Intangibles, Instruments, Inventory, Other Investment Property

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  MediCor
  Management Inc. (DE)

  	
   

  	
   

  
	
  Shares of III
  Acquisition Corporation

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Shares of HPL
  BioMedical, Inc

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  MediCor
  Aesthetics (NV)

  	
   

  	
   

  
	
  Contracts
  (including leases), Accounts, 

  	
   

  	
  Filing of UCC-1
  Financing Statement

  

 

 

	
  Chattel Paper,
  Documents, Equipment, General Intangibles, Instruments, Inventory, Other
  Investment Property

  	
   

  	
   

  
	
  Inventory

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  Accounts
  receivable

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  MediCor
  Development Company (DE)

  	
   

  	
   

  
	
  Shares of
  Intellectual Property International Inc.

  	
   

  	
  Filing of UCC-1
  Financing Statement; shares to be held by Collateral Agent in NY

  
	
  Patents

  	
   

  	
  Filing of UCC-1
  Financing Statement; filing with PTO

  
	
  Trademarks

  	
   

  	
  Filing of UCC-1
  Financing Statement; filing with PTO

  
	
  Contracts
  (including leases), Accounts, Chattel Paper, Documents, Equipment, General
  Intangibles, Instruments, Inventory, Other Investment Property

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  III Acquisition
  Corporation (DE)

  	
   

  	
   

  
	
  Contracts
  (including leases), Accounts, Chattel Paper, Documents, Equipment, General
  Intangibles, Instruments, Inventory, Other Investment Property

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  Inventory

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  Accounts
  receivable

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  HPL BioMedical, Inc.
  (DE)

  	
   

  	
   

  
	
  Inventory

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  Trademarks

  	
   

  	
  Filing of UCC-1
  Financing Statement; filing with PTO

  
	
  Accounts
  receivable

  	
   

  	
  Filing of UCC-1
  Financing Statement

  
	
  Intellectual
  Property International, Inc. (DE)

  	
   

  	
   

  
	
  Patents

  	
   

  	
  Filing of UCC-1
  Financing Statement; filing with PTO

  
	
  Trademarks

  	
   

  	
  Filing of UCC-1
  Financing Statement; filing with PTO

  

 

 

Schedule 4.4

 

JURISDICTION OF
ORGANIZATION; LOCATION OF COLLATERAL

 

	
  Pledgor’s

  Legal Name &

  Identification No.

  	
   

  	
  Type and

  Jurisdiction of

  Organization

  	
   

  	
  Location
  of Chief

  Executive Office

  	
   

  	
  Locations
  of

  Material Inventory

  & Equipment

  	
   

  	
  Different

  Prior Locations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MediCor Ltd. 3327048

  	
   

  	
  Delaware Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  International Integrated Inc. 340493

  	
   

  	
  British Virgin Islands Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  N/A

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  
	
  MediCor Management Inc. 3103838

  	
   

  	
  Delaware Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  N/A

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  
	
  MediCor Aesthetics E0016512005-8

  	
   

  	
  Nevada Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  N/A

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  
	
  MediCor Development Company 3602054

  	
   

  	
  Delaware Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  
	
  Intellectual Property International Inc. 3595764

  	
   

  	
  Delaware Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  N/A

  	
   

  	
  Austin, TX

  	
   

  
	
  III Acquisition Corporation dba PIP.America 3106120

  	
   

  	
  Delaware Corporation

  	
   

  	
  Santa Barbara, Santa Barbara, California

  	
   

  	
  Santa Barbara, Santa Barbara, California

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  
	
  HPL Biomedical, Inc. dba Biodermis, Inc.
  3133850

  	
   

  	
  Delaware Corporation

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  	
  Las Vegas, Clark, Nevada

  	
   

  

 

 

Schedule 4.5

 

PLEDGED INVESTMENTS

 

Pledged Stock:

 

	
  Registered

  Owner

  	
   

  	
  Issuer

  	
   

  	
  Stock

  Certificate No.

  	
   

  	
  Number and Class of

  Shares

  	
   

  	
  Percentage of

  Equity Interest

  	
   

  
	
  MediCor Ltd.

  	
   

  	
  International
  Integrated Incorporated

  	
   

  	
  1

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  MediCor Ltd.

  	
   

  	
  MediCor Europe
  Holdings ApS

  	
   

  	
  Uncertificated

  	
   

  	
  DKK 81,900.00

  	
   

  	
  65%

  	
   

  
	
  MediCor
  Management Inc.

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  1

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  MediCor
  Management Inc.

  	
   

  	
  III Acquisition
  Corporation dba PIP.America

  	
   

  	
  2

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  MediCor
  Development Company

  	
   

  	
  Intellectual
  Property International Inc.

  	
   

  	
  4

  	
   

  	
  2 Common

  	
   

  	
  100%

  	
   

  
	
  International
  Integrated Incorporated

  	
   

  	
  MediCor
  Aesthetics

  	
   

  	
  1

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  International
  Integrated Incorporated

  	
   

  	
  MediCor
  Development Company

  	
   

  	
  1

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  International
  Integrated Incorporated

  	
   

  	
  MediCor
  Management Inc.

  	
   

  	
  2

  	
   

  	
  1,000 Common

  	
   

  	
  100%

  	
   

  
	
  MediCor Ltd. /
  MediCor Management Inc.

  	
   

  	
  MediCor Latin
  America, S.A. de C.V.

  	
   

  	
  1

  	
   

  	
  32,500 Common

  	
   

  	
  65%

  	
   

  

 

Pledged Debt:

 

	
  Issuer

  	
   

  	
  Payee

  	
   

  	
  Principal Amount

  	
   

  	
  Date of

  Note

  	
   

  	
  Maturity

  Date

  	
   

  
	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule 4.7

 

INTELLECTUAL
PROPERTY

 

COPYRIGHTS AND COPYRIGHT
LICENSES OWNED

 

See attached pages.

 

 

PATENT REPORT

MediCor

 

	
  Title

  	
   

  	
  Country

  	
   

  	
  Application

  No./Filing Date

  	
   

  	
  Patent.

  No./Reg. Date

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  Implant filling material
  and method

  	
   

  	
  US Federal

  	
   

  	
  10/839559

  May 5, 2004

  	
   

  	
   

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  Silicone mask for
  cryosurgery and method

  	
   

  	
  US Federal

  	
   

  	
  95445089

  May 19, 1995

  	
   

  	
  5901707

  May 11, 1999

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Expired

  	
   

  
	
  Implantable prosthetic body used as implantable
  prostetic body, e.g. breast implants, comprises thin elastomeric container,
  and pliable viscous cohesive mass contained within container

  	
   

  	
  US Federal

  	
   

  	
  533168 

  December 30, 2003

  	
   

  	
   

  	
   

  	
  Intellectual

  Property 

  International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  Mask to protect healthy
  tissue during cryosurgical removal of diseased tissue from the skin- is
  elastomer sheet with silicone gel layer on underside which remains adherent
  to skin at low temp.

  	
   

  	
  Australia

  	
   

  	
  AU 9657535

  May 16, 1996

  	
   

  	
  AU9657535

  November 29, 1996

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Mask to protect healthy
  tissue during cryosurgical removal of diseased tissue from the skin- is
  elastomer sheet with silicone gel layer on underside which remains adherent
  to skin at low temp.

  	
   

  	
  Brazil

  	
   

  	
  BR9612881

  May 16, 1996 1996

  	
   

  	
  BR 9612881

  December 31, 2002

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Breast implant

  	
   

  	
  European Patent

  	
   

  	
  WO 97951290

  December 10, 1997

  	
   

  	
  9826735

  June 25, 1998

  	
   

  	
  Laboratoires
  Eurosilicone

  	
   

  	
  Registered

  	
   

  
	
  Anatomical breast
  implant with controllable and stable positioning

  	
   

  	
  European Patent

  	
   

  	
  EP2002790537

  October 23, 2002

  	
   

  	
  WO

  2004041128

  	
   

  	
  Laboratoires
  Eurosilicone

  	
   

  	
  Registered

  	
   

  

 

 

	
  Title

  	
   

  	
  Country

  	
   

  	
  Application

  No./Filing Date

  	
   

  	
  Patent.

  No./Reg. Date

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  May 21, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mask to protect healthy
  tissue during cryosurgical removal of diseased tissue from the skin- is
  elastomer sheet with silicone gel layer on underside which remains adherent
  to skin at low temp.

  	
   

  	
  European Patent

  	
   

  	
  WO 96US7201

  May 16, 1996

  	
   

  	
  WO 9636293

  November 21, 1996

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Mask to protect healthy
  tissue during cryosurgical removal of diseased tissue from the skin- is
  elastomer sheet with silicone gel layer on underside which remains adherent
  to skin at low temp.

  	
   

  	
  European Patent

  	
   

  	
  EP 96915880

  May 16, 1996

  	
   

  	
  EP 955931

  November 17, 1999

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Implantable prosthetic
  body used as implantable prostetic body, e.g. breast implants, comprises thin
  elastomeric container, and pliable viscous cohesive mass contained within
  container

  	
   

  	
  European Patent

  	
   

  	
  WO 2004US35213

  October 25, 2004

  	
   

  	
   

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  An improved artificial
  airway device

  	
   

  	
  European Patent

  	
   

  	
  96904959

  March 6, 1996

  	
   

  	
  813432

  December 29, 1997

  	
   

  	
  Biosil Limited

  	
   

  	
  Registered

  	
   

  
	
  An improved artificial
  airway device

  	
   

  	
  Patent Cooperation
  Treaty

  	
   

  	
  PCT/GB96/0516

  March 6, 1996

  	
   

  	
   

  	
   

  	
  Biosil Limited

  	
   

  	
  Pending

  	
   

  
	
  Artificial airway device
  with sealing cuff for distal end

  	
   

  	
  US Federal

  	
   

  	
  08/913020

  November 4, 1997

  	
   

  	
  5865176

  February 2,

  	
   

  	
  Biosil Limited

  	
   

  	
  Registered

  	
   

  

 

 

	
  Title

  	
   

  	
  Country

  	
   

  	
  Application

  No./Filing Date

  	
   

  	
  Patent.

  No./Reg. Date

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1999

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prostetic anal sphincter

  	
   

  	
  US Federal

  	
   

  	
  08/551052

  October 31, 1995

  	
   

  	
  5593443

  January 14, 1997

  	
   

  	
  Biosil Limited

  	
   

  	
  Registered

  	
   

  
	
  Urinary sphincter device

  	
   

  	
  United Kingdom

  	
   

  	
  00228122

  September 18, 2000

  	
   

  	
  2355937

  May 9, 2001

  	
   

  	
  Biosil Limited

  	
   

  	
  Registered

  	
   

  
	
  Endotracheal tube
  allowing oesophageal access

  	
   

  	
  United Kingdom

  	
   

  	
  9604630

  March 5, 1996

  	
   

  	
  2298580

  September 11, 1996

  	
   

  	
  Biosil Limited

  	
   

  	
  Registered

  	
   

  
	
  Textured silicone
  implant prosthesis

  	
   

  	
  US Federal

  	
   

  	
  304764

  January 31, 1989

  	
   

  	
  4955909

  September 11, 1990

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Bio-osmotic gel for
  implant prostheses

  	
   

  	
  US Federal

  	
   

  	
  496234

  March 20, 1990

  	
   

  	
  5067965

  November 26, 1991

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Bio-osmotic gel for
  implant prosthesis

  	
   

  	
  Canada

  	
   

  	
   

  	
   

  	
  2057044

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Bio-osmotic gel for
  implant prosthesis

  	
   

  	
  Germany

  	
   

  	
   

  	
   

  	
  69119754.7

  	
   

  	
  Intellectual Property

  	
   

  	
  Registered

  	
   

  

 

 

	
  Title

  	
   

  	
  Country

  	
   

  	
  Application

  No./Filing Date

  	
   

  	
  Patent.

  No./Reg. Date

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  International, Inc.

  	
   

  	
   

  	
   

  
	
  Bio-osmotic gel for
  implant prosthesis

  	
   

  	
  France

  	
   

  	
   

  	
   

  	
  0521015

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Bio-osmotic gel for
  implant prosthesis

  	
   

  	
  Great Britain

  	
   

  	
   

  	
   

  	
  0521015

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Rheologically modified
  and osmotically balanced fi

  	
   

  	
  US Federal

  	
   

  	
  924457

  August 29, 1997

  	
   

  	
  5997574

  December 7, 1999

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Saline implant having
  single valve with primary an

  	
   

  	
  US Federal

  	
   

  	
  318036

  May 25, 1999

  	
   

  	
  6162251

  December 19, 2000

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  Leak-proof implant

  	
   

  	
  US Federal

  	
   

  	
  711255

  August 24, 2005

  	
   

  	
   

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  Leak-proof implant

  	
   

  	
  Patent Cooperation
  Treaty

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual Property
  International, Inc.

  	
   

  	
  In preparation

  	
   

  
	
  Silicone gel composition
  and dispenser therefor (Pro-Sil)

  	
   

  	
  US Federal

  	
   

  	
  913656

  	
   

  	
   

  	
   

  	
  Intellectual Property

  	
   

  	
  Pending

  	
   

  

 

 

	
  Title

  	
   

  	
  Country

  	
   

  	
  Application

  No./Filing Date

  	
   

  	
  Patent.

  No./Reg. Date

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  August 6, 2004

  	
   

  	
   

  	
   

  	
  International, Inc.

  	
   

  	
   

  	
   

  

 

 

TRADEMARK REPORT

MediCor

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  AMD
  and design

  	
   

  	
  US
  Federal

  	
   

  	
  76/050336

  May 15, 2000

  	
   

  	
  2561197

  April 16, 2002

  	
   

  	
  10

  	
   

  	
  Biosil
  Limited

  	
   

  	
  Registered

  	
   

  
	
  BEAUTY
  IS NATURAL...PERFECTION IS SURGICAL and design

  	
   

  	
  US
  Federal

  	
   

  	
  78/658204

  June 24, 2005

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Published
  ITU

  	
   

  
	
  BIODERMIS

  	
   

  	
  US
  Federal

  	
   

  	
  76/409086

  May 17, 2002

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  HPL
  Biomedical, Inc.

  	
   

  	
  Pending

  	
   

  
	
  CRYOSIL

  	
   

  	
  US
  Federal

  	
   

  	
  76/018979

  March 3, 2000

  	
   

  	
  2447839

  May 1, 2001

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  DERMASOF
  and design

  	
   

  	
  US
  Federal

  	
   

  	
  76/632997

  March 7, 2005

  	
   

  	
  3058626

  February 14, 2006

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  EPI-DERM

  	
   

  	
  US
  Federal

  	
   

  	
  76/001047

  March 13, 2000

  	
   

  	
  2440827

  April 3, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  EPIFOAM

  	
   

  	
  US
  Federal

  	
   

  	
  76/411916

  May 24, 2002

  	
   

  	
  2771043

  October 7, 2003

  	
   

  	
  5

  	
   

  	
  HPL
  Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  EPITAB

  	
   

  	
  US
  Federal

  	
   

  	
  76/161090

  October 30, 2000

  	
   

  	
  2506421

  November 13, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  HYDROGOLD

  	
   

  	
  US
  Federal

  	
   

  	
  76/179320

  December 4, 2000

  	
   

  	
  2769658

  September 30, 2003

  	
   

  	
  5

  	
   

  	
  HPL
  Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
  MEDICOR

  	
   

  	
  US Federal

  	
   

  	
  78/221425

  March 4, 2003

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Published
  ITU

  	
   

  
	
  PRO-SIL

  	
   

  	
  US
  Federal

  	
   

  	
  78/465469

  August 11, 004

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Published

  	
   

  
	
  SCARAID

  	
   

  	
  US
  Federal

  	
   

  	
  75/745886

  July 7, 1999

  	
   

  	
  2424688

  January 30, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  SILGEL

  	
   

  	
  US
  Federal

  	
   

  	
  75/482243

  May 8, 1998

  	
   

  	
  2305528

  January 4, 2000

  	
   

  	
  5, 10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  SILQUECLENZ

  	
   

  	
  US
  Federal

  	
   

  	
  75/308208

  June 13, 1997

  	
   

  	
  2496490

  October 9, 2001

  	
   

  	
  3

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  THERAFOAM

  	
   

  	
  US
  Federal

  	
   

  	
  76/381190

  March 11, 2002

  	
   

  	
  2788109

  December 2, 2003

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  XERAGEL

  	
   

  	
  US
  Federal

  	
   

  	
  75/401684

  December 8, 1997

  	
   

  	
  2216398

  January 5, 1999

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  COGEL

  	
   

  	
  Australia

  	
   

  	
  808654

  September 29, 1999

  	
   

  	
  808654

  September 29, 1999

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOR

  	
   

  	
  Australia

  	
   

  	
  808656

  September 29, 1999

  	
   

  	
  808656

  September 29, 1999

  	
   

  	
  5, 10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  NAGOSIL

  	
   

  	
  Australia

  	
   

  	
  808657

  September 29, 1999

  	
   

  	
  808657

  September 29, 1999

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOTEX

  	
   

  	
  Australia

  	
   

  	
  808658

  September 29, 1999

  	
   

  	
  808658

  September 29, 1999

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  SILGEL

  	
   

  	
  Australia

  	
   

  	
  808655

  September 29, 1999

  	
   

  	
  808655

  September 29, 1999

  	
   

  	
  5

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  AMD
  and design

  	
   

  	
  Community
  Trademarks

  	
   

  	
  737890

  January 29, 1998

  	
   

  	
  737890

  June 17, 1999

  	
   

  	
  10

  	
   

  	
  Biosil
  Limited

  	
   

  	
  Registered

  	
   

  
	
  BEAUTY
  IS NATURAL...PERFECTION IS SURGICAL

  	
   

  	
  Community
  Trademarks

  	
   

  	
  4448916

  June 16, 2005

  	
   

  	
   

  	
   

  	
  5, 10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  BIODERMIS

  	
   

  	
  Community
  Trademarks

  	
   

  	
  4013587

  September 8, 2004

  	
   

  	
   

  	
   

  	
  5, 10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  COGEL

  	
   

  	
  Community
  Trademarks

  	
   

  	
  408450

  November 14, 1996

  	
   

  	
  408450

  January 8, 1999

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  EUROSILICONE

  	
   

  	
  Community
  Trademarks

  	
   

  	
  4151502

  December 2, 2004

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  MEDICOR

  	
   

  	
  Community
  Trademarks

  	
   

  	
  4151494

  December 2, 2004

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  NAGOR

  	
   

  	
  Community
  Trademarks

  	
   

  	
  989483

  November 19, 1998

  	
   

  	
  989483

  July 19, 2000

  	
   

  	
  5, 10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOSIL

  	
   

  	
  Community
  Trademarks

  	
   

  	
  219881

  April 9, 1996

  	
   

  	
  219881

  November 16, 1998

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOTEX

  	
   

  	
  Community
  Trademarks

  	
   

  	
  119923

  April 9, 1996

  	
   

  	
  219923

  September 11, 1998

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  SILGEL

  	
   

  	
  Community
  Trademarks

  	
   

  	
  584722

  July 9, 1997

  	
   

  	
   

  	
   

  	
  5, 10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Pending

  	
   

  
	
  XERAGEL

  	
   

  	
  Community
  Trademarks

  	
   

  	
  4013595

  September 8, 2004

  	
   

  	
  4013595

  November 16, 2005

  	
   

  	
  5

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  ES
  LABORATOIRES EUROSILICONE and design

  	
   

  	
  France

  	
   

  	
  02
  3140673

  January 9, 2002

  	
   

  	
  02
  3140673

  	
   

  	
  10

  	
   

  	
  Laboratoires
  Eurosilicone

  	
   

  	
  Registered

  	
   

  
	
  BEAUTY
  IS NATURAL...PERFECTION IS SURGICAL

  	
   

  	
  Mexico

  	
   

  	
  680521

  October 5, 2004

  	
   

  	
  861692

  November 29, 2004

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  COGEL

  	
   

  	
  Mexico

  	
   

  	
  377559

  June 2, 1999

  	
   

  	
  675270

  October 23, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  EUROSILICONE

  	
   

  	
  Mexico

  	
   

  	
  680524

  October 5, 2004

  	
   

  	
  856874

  October 26, 2004

  	
   

  	
  44

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  EUROSILICONE

  	
   

  	
  Mexico

  	
   

  	
  680523

  October 5, 2004

  	
   

  	
  856873

  October 26, 2004

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  KOMURO

  	
   

  	
  Mexico

  	
   

  	
  680520

  October 5, 2004

  	
   

  	
  856872

  October 26, 2004

  	
   

  	
  10

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  MEDICOR
  and design

  	
   

  	
  Mexico

  	
   

  	
  680527

  October 5, 2004

  	
   

  	
  904977

  October 26, 2005

  	
   

  	
  44

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  NAGOR

  	
   

  	
  Mexico

  	
   

  	
  377561

  June 2, 1999

  	
   

  	
  675271

  October 23, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOSIL

  	
   

  	
  Mexico

  	
   

  	
  377557

  June 2, 1999

  	
   

  	
  643042

  February 24, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOTEX

  	
   

  	
  Mexico

  	
   

  	
  377558

  June 2, 1999

  	
   

  	
  675269

  October 23, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  SILGEL

  	
   

  	
  Mexico

  	
   

  	
  377560

  June 2, 1999

  	
   

  	
  699500

  May 29, 2001

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  COGEL
  and design

  	
   

  	
  South
  Korea

  	
   

  	
  4020030007200

  February 17, 2003

  	
   

  	
  4006012730000

  December 1, 2004

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOR
  and design

  	
   

  	
  South
  Korea

  	
   

  	
  4020030007206

  February 17, 2003

  	
   

  	
  4006012740000

  December 1, 2004

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOSIL
  and design

  	
   

  	
  South
  Korea

  	
   

  	
  4020030007199

  February 17, 2003

  	
   

  	
  4006012720000

  December 1, 2004

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOTEX
  and design

  	
   

  	
  South
  Korea

  	
   

  	
  4020030007198

  February 17, 2003

  	
   

  	
  4006012710000

  December 1, 2004

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  SILGEL
  and design

  	
   

  	
  South
  Korea

  	
   

  	
  4020030007205

  February 17, 2003

  	
   

  	
  4005953380000

  October 8, 2004

  	
   

  	
  5, 10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  SILGEL

  	
   

  	
  Spain

  	
   

  	
  2371254M6

  January 16, 2001

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Pending

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  COGEL
  and design

  	
   

  	
  United
  Kingdom

  	
   

  	
  2223645

  February 26, 2000

  	
   

  	
  2223645

  August 4, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOR
  and design

  	
   

  	
  United
  Kingdom

  	
   

  	
  2223646

  February 26, 2000

  	
   

  	
  2223646

  August 4, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGORENHANCE

  	
   

  	
  United
  Kingdom

  	
   

  	
  2311031

  September 19, 2002

  	
   

  	
  2311031

  June 13, 2003

  	
   

  	
  10,
  36

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOSIL
  and design

  	
   

  	
  United
  Kingdom

  	
   

  	
  2223647

  February 26, 2000

  	
   

  	
  2223647

  August 18, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  NAGOTEX
  and design

  	
   

  	
  United
  Kingdom

  	
   

  	
  2223644

  Februay 26, 2000

  	
   

  	
  2223644

  August 4, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  
	
  SILGEL
  and design

  	
   

  	
  United
  Kingdom

  	
   

  	
  2223696

  February 26, 2000

  	
   

  	
  2223696

  August 11, 2000

  	
   

  	
  10

  	
   

  	
  Nagor
  Limited

  	
   

  	
  Registered

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  APTEX

  	
   

  	
  Mexico

  	
   

  	
  680519

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  CRISTALLINE
  APTEX PARAGEL

  	
   

  	
  Mexico

  	
   

  	
  680517

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  CRISTALLINE
  PARAGEL

  	
   

  	
  Mexico

  	
   

  	
  680515

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  CRISTALLINE
  VERATEX PARAGEL

  	
   

  	
  Mexico

  	
   

  	
  680516

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  EPI-DERM

  	
   

  	
  Argentina

  	
   

  	
  2,550,571

  October 28, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  EPI-DERM

  	
   

  	
  Argentina

  	
   

  	
  2,550,572

  October 28, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  EPIFOAM

  	
   

  	
  Argentina

  	
   

  	
  2,550,574

  October 28, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  EUROSILICONE

  	
   

  	
  Mexico

  	
   

  	
  680522

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  MEDICOR

  	
   

  	
  Mexico

  	
   

  	
  680494

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  MEDICOR

  	
   

  	
  Mexico

  	
   

  	
  680525

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  

 

 

	
  Mark

  	
   

  	
  Country

  	
   

  	
  Serial No./

  Filing Date

  	
   

  	
  Reg No./

  Registered

  	
   

  	
  International

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  PARAGEL

  	
   

  	
  Mexico

  	
   

  	
  680526

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  VERTEX

  	
   

  	
  Mexico

  	
   

  	
  680518

  October 5, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  XERAGEL

  	
   

  	
  Turkey

  	
   

  	
  13377/95

  November 17, 1995

  	
   

  	
  166546

  November 17, 1995

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
  XERAGEL

  	
   

  	
  Argentina

  	
   

  	
  2,550,575

  October 28, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
  Pending

  	
   

  
	
  BIODERMIS

  	
   

  	
  Argentina

  	
   

  	
  Pending

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPIFOAM

  	
   

  	
  Argentina

  	
   

  	
  2,550,573

  October 28, 2004

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Intellectual
  Property International, Inc.

  	
   

  	
   

  	
   

  

 

 

Schedule 4.8

 

DEPOSIT
ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITY ACCOUNTS

 

	
  MediCor Ltd.

  	
   

  	
  Bus. Services – USD

  Account# MO-28570

  Bus. Services – Euro

  Account# MO-28571

  	
   

  	
  UBS Financial Services

  1000 Harbor Boulevard

  Weehawken, NJ 07086

  

 

 

Schedule 4.9

 

COMMERCIAL
TORT CLAIMS

 

None

 

 

Schedule 4.10

 

LETTER-OF-CREDIT
RIGHTS

 

None

 

 

Schedule 8.2

 

NOTICE ADDRESSES OF
PLEDGORS

 

	
  MediCor Ltd.

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  	
   

  	
  International Integrated Incorporated

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  
	
   

  	
   

  	
   

  
	
  MediCor Latin America S.A. de C.V.

  Juarez 18A

  Col. Tlacopac

  01040, Mexico D.F.

  	
   

  	
  MediCor Europe Holdings ApS

  c/o Kromann Reumert

  Sundkrogsgade 5

  DK-2100 Copenhagen, DENMARK

  
	
   

  	
   

  	
   

  
	
  MediCor Europe B.V.

  Weitjes 7

  4924 BJ

  Drimmelen, THE NETHERLANDS

  	
   

  	
  Biosil U.K. Limited

  c/o Clifford Chance LLP

  10 Upper Bank Street

  London, England E14 5JJ

  UNITED KINGDOM

  
	
   

  	
   

  	
   

  
	
  Dermatological Medical
  Products & Specialties, S.A. de C.V. (dba MediCor Mexico S.A. de
  C.V.)

  Juarez 18A

  Col. Tlacopac

  01040, Mexico D.F.

  	
   

  	
  MediCor Services Company S.A. de C.V.

  Juarez 18A

  Col. Tlacopac

  01040, Mexico D.F.

  
	
   

  	
   

  	
   

  
	
  ES Holdings SAS

  Z.I. de la Peyroliere, B.P. 68

  84400 Apt, Vaucluse, FRANCE

  	
   

  	
  Eurosilicone SAS

  Z.I. de la Peyroliere, B.P. 68

  84400 Apt, Vaucluse, FRANCE

  
	
   

  	
   

  	
   

  
	
  International Integrated USA Incorporated

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  	
   

  	
  International Integrated Europe Ltd.

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  
	
   

  	
   

  	
   

  
	
  MediCor Aesthetics

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  	
   

  	
  MediCor Development Company

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  
	
   

  	
   

  	
   

  
	
  MediCor Management Inc.

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  	
   

  	
  Intellectual Property International Inc.

  4560 S. Decatur Blvd., Suite 300

  Las Vegas, NV 89103

  
	
   

  	
   

  	
   

  
	
  III Acquisition Corporation

  (dba PIP.America)

  1221 Chapala St., 3rd Floor

  Santa Barbara, CA 93101

  	
   

  	
  HPL Biomedical, Inc.

  (dba Biodermis Inc.)

  6000 S. Eastern Ave., Suite 9D

  Las Vegas, NV 89119

  
	
   

  	
   

  	
   

  
	
  Biosil Limited

  P.O. Box 21

  Global House, Isle of Man Business Park

  Cooil Road

  Douglas, Isle of Man IM99 1AX

  UNITED KINGDOM

  (Note: past executive offices)

  	
   

  	
  Nagor Limited

  P.O. Box 21

  Global House, Isle of Man Business Park

  Cooil Road

  Douglas, Isle of Man IM99 1AX

  UNITED KINGDOM

  
	
   

  	
   

  	
   

  
	
  Biosil Limited

  127 Deerdykes View

  Westfield Industrial Estate

  Cumbernauld, Scotland G68 9HN

  UNITED KINGDOM

  (Note: future executive offices)

  	
   

  	
  MediCor Deutschland GmbH

  Ahornallee 13a

  83627 München

  GERMANY 

  

 

 

Annex I to

Guarantee and Collateral Agreement

 

FORM OF
ACKNOWLEDGEMENT OF PLEDGE

 

ACKNOWLEDGEMENT OF
PLEDGE, dated as of April [    ], 2006 (as amended,
supplemented or otherwise modified from time to time, this “Agreement”),
by MEDICOR LATIN AMERICA S.A. DE C.V., a Mexican corporation (the “Acknowledging
Pledgee”) in favor of SILVER OAK CAPITAL, L.L.C., a Delaware limited
liability company, in its capacity as collateral agent (in such capacity
together with its successors and assigns, the “Collateral Agent”)
pursuant to the Securities Purchase Agreement (as defined in the Guarantee and
Collateral Agreement referred to below). 
All capitalized terms used but not defined herein shall have the meaning
ascribed to them in the Guarantee and Collateral Agreement.

 

W  I  T  N  E
S  S  E  T  H:

 

WHEREAS, in connection
with the Guarantee and Collateral Agreement, dated as of April [    ],
2006 (as amended, supplemented or otherwise modified from time to time, the “Guarantee
and Collateral Agreement”), by and among the Pledgors in favor of the
Collateral Agent, the Pledged Investments, other than any Excluded Equity,
issued by the Acknowledging Pledgee have been pledged to the Collateral Agent;
and

 

WHEREAS, pursuant to Section 5.8(h) of
the Guarantee Collateral Agreement, the Acknowledging Pledgee is required to
acknowledge and agree to the pledge and the grant of the security interest in
such Pledged Investments.

 

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

 

Pledge Acknowledgment.  The Acknowledging Pledgee hereby acknowledges
and agrees that (i) it has received a true and complete copy of the
Guarantee and Collateral Agreement, (ii) it shall be bound by the terms of
the Guarantee and Collateral Agreement relating to the Pledged Investments
issued by it and will comply with such terms insofar as such terms are
applicable to it, including complying with instructions from the Secured Party as
to such Pledged Investments, without further consent of any Pledgor, (iii) it
will notify the Collateral Agent promptly in writing of the occurrence of any
of the events described in Sections 5.8(a), (b) and (f) of the
Guarantee and Collateral Agreement with respect to the Pledged Investments
issued by it and (iv) the terms of Sections 6.3(c) and 6.7 of the
Guarantee and Collateral Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 of the Guarantee and Collateral Agreement with respect to the Pledged
Investments issued by it.

 

 

Notices. 
Any notices, requests or other communications to the Acknowledging
Pledgee hereunder must be in writing and personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or by
prepaid facsimile, telecopy, telegram (with messenger delivery specified), or
other method of electronic communication, the address listed in the signature pages hereto.  The parties may change the address at which
they receive notice by giving notice to each other in the foregoing
manner.  Notices, requests or other
communications sent in accordance with this Section 2 shall be deemed to
be received on the earlier of the date of actual receipt or five calendar days
after deposit in United States mail.

 

Amendments in Writing; No Waiver; Cumulative Remedies.  None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Collateral Agent in accordance with Section 10(e) of
the Securities Purchase Agreement and the Acknowledging Pledgee; provided that
any provision of this Agreement may be waived by the Collateral Agent in
accordance with Section 10(e) of the Securities Purchase Agreement in
a letter or agreement executed by the Collateral Agent or by facsimile
telecopy, telegram or other method of electronic communication from the
Collateral Agent.

 

No failure to
exercise, nor any delay in exercising, on the part of the Collateral Agent, any
right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

 

The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by
law.

 

Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of the Acknowledging Pledgee and shall inure to the
benefit of the Collateral Agent and its respective successors and assigns;
provided that the Acknowledging Pledgee may not assign or otherwise transfer
any of their rights or obligations under this Agreement without the prior
written consent of the Collateral Agent and any attempted assignment or
transfer without such consent shall be null and void.

 

Counterparts. 
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by facsimile
transmission), each of which shall be deemed an original and all of which taken
together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof.

 

Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions 

 

 

hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

Section Headings.  The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.

 

GOVERNING LAW. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PROVISION THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).

 

Submission To Jurisdiction; Waivers.  The Acknowledging Pledgee hereby irrevocably
and unconditionally submits itself and its property 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 suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is improper.  The Acknowledging Pledgee
hereby irrevocably waives personal service of process and consent to process
being served in any such suit, action or proceeding by mailing a copy thereof
to the Acknowledging Pledgee at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. 
The Acknowledging Pledgee hereby irrevocably and unconditionally
appoints CT Corporation System (the “Pledgee Process Collateral Agent”), with
an office on the date hereof at 111 Eighth Avenue, New York, New York 10011 as
its agent to receive on behalf of such Acknowledging Pledgee and its property
service of copies of the summons and complaint and any other process which may
be served in any action referred to above or any other proceeding in any New
York State or Federal court and agrees promptly to appoint a successor Pledgee
Process Collateral Agent in The City of New York (which successor Pledgee
Process Collateral Agent shall accept such appointment in writing in form and
substance reasonably satisfactory to the Collateral Agent) prior to the
termination for any reason of the appointment of the initial Pledgee Process
Collateral Agent.  In any action or
proceeding in a New York State or Federal court sitting in The City of New
York, such service may be made on such Acknowledging Pledgee by delivering a
copy of such process to such Acknowledging Pledgee in care of the Pledgee
Process Collateral Agent at such Pledgee Process Collateral Agent’s above
address and by depositing a copy of such process in the mails by certified or
registered air mail, addressed to such Acknowledging Pledgee at its address
referred to in Section 2 of this Agreement (such service to be effective
upon such receipt by the Pledgee Process Collateral Agent and the depositing of
such process in the mails as aforesaid). Such Acknowledging Pledgee hereby
irrevocably and unconditionally authorizes and directs such Pledgee Process
Collateral Agent to accept such service on its behalf.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.

 

 

Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

Survival of Representations and Warranties.  All representations and warranties made
hereunder and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement.

 

WAIVER OF JURY TRIAL.  THE ACKNOWLEDGING PLEDGEE AND BY ITS
ACCEPTANCE HEREOF, THE COLLATERAL AGENT, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM
THEREIN WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO, HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Pronouns. 
All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, or neuter, singular or plural, as the
identity of the person or persons may require.

 

[Signatures follow on next page.]

 

 

IN WITNESS WHEREOF, the undersigned have executed this
Acknowledgement of Pledge as of       day of       ,
2006.

 

	
   

  	
  MEDICOR LATIN AMERICA
  S.A. DE 

  C.V.,

  
	
   

  	
  a Mexican corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
    Name:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o MediCor Ltd.

  4560 South Decatur Blvd.

  Suite 300

  Las Vegas, Nevada  89103

  Attention:  General

  Counsel/Secretary

  Facsimile:  702-932-4561

  

 

ACCEPTED and agreed as of
       day of          ,
2006.

 

	
   

  	
  MEDICOR LTD.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
    Name:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4560 South Decatur
  Blvd.

  Suite 300

  Las Vegas, Nevada  89103

  Attention:  General Counsel/Secretary

  Facsimile:  702-932-4561

  

 

 

Annex II to

Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT,
dated as of         , 200  ,
made by               ,
a              
(the “Additional Pledgor”), in favor of            ,
as Collateral Agent for the benefit of the Collateral Agent and the other
Secured Parties.  All capitalized terms
not defined herein shall have the meaning ascribed to them in the Guarantee and
Collateral Agreement referred to below.

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, MEDICOR LTD., a
Delaware corporation (the “Company”), the Purchasers and the Collateral
Agent, among others, have entered into a Securities Purchase Agreement, dated
as of April [    ], 2006 (as amended, supplemented or
otherwise modified from time to time, the “Securities Purchase Agreement”);

 

WHEREAS, in connection
with the Securities Purchase Agreement, the Company and certain of its
Affiliates (other than the Additional Pledgor) have entered into the Guarantee
and Collateral Agreement, dated as of April [    ],
2006, (as amended, supplemented or otherwise modified from time to time, the “Guarantee
and Collateral Agreement”) in favor of the Collateral Agent, for the
benefit of the Collateral Agent and the other Secured Parties;

 

WHEREAS, the Securities
Purchase Agreement requires the Additional Pledgor to become a party to the
Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional
Pledgor has agreed to execute and deliver this Assumption Agreement in order to
become a party to the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS
AGREED:

 

1.             Guarantee and Collateral
Agreement.  By executing and
delivering this Assumption Agreement, the Additional Pledgor, as provided in Section 8.13
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Guarantor and Pledgor thereunder with
the same force and effect as if originally named therein as a Guarantor and
Pledgor and, without limiting the generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Guarantor and Pledgor
thereunder.  In furtherance of the
foregoing, the Additional Pledgor, as security for the payment and performance
in full of the Obligations, does (x) hereby create and grant to the
Collateral Agent, for the benefit of the Collateral Agent and the other Secured
Parties, a security interest in all of the Additional Pledgor’s right, title
and interest in and to the Collateral of the Additional Pledgor and
(y) jointly and severally with the other Guarantors, unconditionally and
irrevocably guarantee the prompt and complete payment and performance by the
Company when due (whether at 

 

 

the stated maturity by
acceleration or otherwise) of the Company Obligations.  Each reference to a “Subsidiary”, a “Pledgor”
or a “Guarantor” in the Guarantee and Collateral Agreement shall be deemed to
include the Additional Pledgor.  The
Guarantee and Collateral Agreement is hereby incorporated herein by
reference.  The information set forth in
Annex 1-A hereto is hereby added to the information set forth in Schedules                   (1)
to the Guarantee and Collateral Agreement. 
The Additional Pledgor hereby represents and warrants as to itself that
each of the representations and warranties contained in Section 4 of the
Guarantee and Collateral Agreement applicable to it is true and correct on and
as the date hereof (after giving effect to this Assumption Agreement) as if
made on and as of such date.

 

2.             Representations of Additional
Pledgor.  The Additional Pledgor
represents and warrants to the Collateral Agent and the other Secured Parties
that this Assumption Agreement has been duly authorized, executed and delivered
by it and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

 

3.             Counterparts; Binding Effect.  This Assumption Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which, when taken together,
shall constitute a single contract.  This
Assumption Agreement shall become effective when (a) the Collateral Agent
shall have received a counterpart of this Assumption Agreement that bears the
signature of the Additional Pledgor and (b) the Collateral Agent has
executed a counterpart hereof.  Delivery
of an executed counterpart of a signature page of this Assumption
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Assumption Agreement.

 

4.             Full Force and Effect.  Except as expressly supplemented hereby, the
Guarantee and Collateral Agreement shall remain in full force and effect.

 

5.             Severability.  Any provision of this Assumption Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
in such jurisdiction of the remaining provisions hereof and of the Guarantee
and Collateral Agreement; and the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

6.             Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 8.2 of the Guarantee
and Collateral Agreement.  

 

(1)          Refer
to each Schedule which needs to be supplemented.

 

 

All communications and
notices hereunder to the Additional Pledgor shall be given to it at the address
set forth under its signature below.

 

7.             Fees and Expenses.  The Additional Pledgor agrees to reimburse
the Collateral Agent and each other Secured Party for its reasonable
out-of-pocket expenses in connection with this Assumption Agreement, including
the reasonable fees and other charges of counsel to the Collateral Agent and
each other Secured Party.

 

8.             GOVERNING LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PROVISION THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

IN WITNESS WHEREOF, the
undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.

 

	
   

  	
  [ADDITIONAL PLEDGOR], as Guarantor 

  and Pledgor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  

 

	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  AGREED TO AND ACCEPTED

  
	
   

  
	
  SILVER OAK CAPITAL, L.L.C., as Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
    Name:

  
	
    Title:

  

 

 

Annex III to

Guarantee and Collateral Agreement

 

Notice of
Grant of Security Interest in Trademarks

 

NOTICE OF GRANT OF
SECURITY INTEREST IN TRADEMARKS (the “Notice”), dated as of April [    ],
2006, made by each of Intellectual Property International, Inc., a
Delaware limited partnership corporation and HPL BioMedical, Inc., a
Delaware corporation (collectively, “Grantors”), in favor of Silver Oak
Capital, L.L.C., a Delaware limited liability company (“Secured Party”).

 

WHEREAS, the Grantors are
the owners of the trademarks and service marks set forth on Schedule 1
attached hereto, including the associated registrations and applications for
registration set forth in Schedule 1 attached hereto (collectively, the “Trademarks”);
and

 

WHEREAS, pursuant to the
Guarantee and Collateral Agreement dated as of the date hereof by and among
Medicor, Ltd., a Delaware corporation, each of the Grantors set forth therein
and the Secured Party (the “Guarantee and Collateral Agreement”), the
Grantors granted, assigned and conveyed to Secured Party a security interest
in, and lien on, certain intellectual property owned by the Grantors, including
the Trademarks and the goodwill of the business symbolized by the Trademarks
and all products and proceeds of the foregoing (collectively, the “Trademark
Collateral”); and

 

WHEREAS, pursuant to the
Guarantee and Collateral Agreement, the Grantors agreed to execute and deliver
to Secured Party this Notice for purposes of filing the same with the United
States Patent and Trademark Office (the “PTO”) to confirm, evidence and
perfect the security interest in the Trademark Collateral granted pursuant to
the Guarantee and Collateral Agreement;

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions of the Guarantee and
Collateral Agreement, the Grantors hereby further confirm, and put on the
public record, their grant to Secured Party of a security interest in and lien
on the Trademark Collateral.

 

The Grantors hereby
request the relevant trademark office and/or governing body to file and record
the same together with the annexed Schedule 1.

 

The Grantors and the
Secured Party hereby acknowledge and agree that the security interest in the
Trademark Collateral may only be terminated in accordance with the terms of the
Guarantee and Collateral Agreement.

 

IN WITNESS WHEREOF, the
undersigned has caused this Notice to be duly executed and delivered as of the
date first above written.

 

 

	
   

  	
  INTELLECTUAL PROPERTY INTERNATIONAL,

  
	
   

  	
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HPL BIOMEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this    
day of         ,        
before me personally came        , to me
known to be the person who signed the foregoing instrument and who being duly
sworn by me did depose and state that [he, she] is the          
of Intellectual Property International, Inc.; [he, she] signed the
instrument in the name of Intellectual Property International, Inc.; and
[he, she] had the authority to sign the instrument on behalf of Intellectual
Property International, Inc.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

	
  STATE OF

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY OF

  	
  )

  	
   

  

 

On this      
day of       ,      
before me personally came         , to
me known to be the person who signed the foregoing instrument and who being
duly sworn by me did depose and state that [he, she] is the        
of HPL Biomedical, Inc.; [he, she] signed the instrument in the name of
HPL Biomedical; and [he, she] had the authority to sign the instrument on
behalf of HPL Biomedical, Inc..

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

Schedule 1

 

	
  Mark

  	
   

  	
  Serial No./ 

  Filing Date

  	
   

  	
  Reg No./ 

  Registered

  	
   

  	
  International 

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  BEAUTY IS NATURALPERFECTION IS SURGICAL and design

  	
   

  	
  78/658204

  June 24, 2005

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Published

  ITU

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BIODERMIS

  	
   

  	
  76/409086

  May 17, 2002

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Pending

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CRYOSIL

  	
   

  	
  76/018979

  March 3, 2000

  	
   

  	
  2447839

  May 1, 2001

  	
   

  	
  10

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DERMASOF and design

  	
   

  	
  76/632997

  March 7, 2005

  	
   

  	
  3058626

  February 14, 2006

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPI-DERM

  	
   

  	
  76/001047

  March 13, 2000

  	
   

  	
  2440827

  April 3, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPIFOAM

  	
   

  	
  76/411916

  May 24, 2002

  	
   

  	
  2771043

  October 7, 2003

  	
   

  	
  5

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EPITAB

  	
   

  	
  76/161090

  October 30, 2000

  	
   

  	
  2506421

  November 13, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HYDROGOLD

  	
   

  	
  76/179320

  December 4, 2000

  	
   

  	
  2769658

  September 30, 2003

  	
   

  	
  5

  	
   

  	
  HPL Biomedical, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MEDICOR

  	
   

  	
  78/221425

  March 4, 2003

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Published

  ITU

  	
   

  

 

 

	
  Mark

  	
   

  	
  Serial No./ 

  Filing Date

  	
   

  	
  Reg No./ 

  Registered

  	
   

  	
  International 

  Class

  	
   

  	
  Owner

  	
   

  	
  Status

  	
   

  
	
  PRO-SIL

  	
   

  	
  78/465469

  August 11, 2004

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Published

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCARAID

  	
   

  	
  75/745886

  July 7, 1999

  	
   

  	
  2424688

  January 30, 2001

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SILQUECLENZ

  	
   

  	
  75/308208

  June 13, 1997

  	
   

  	
  2496490

  October 9, 2001

  	
   

  	
  3

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THERAFOAM

  	
   

  	
  76/381190

  March 11, 2002

  	
   

  	
  2788109

  December 2, 2003

  	
   

  	
  10

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XERAGEL

  	
   

  	
  75/401684

  December 8, 1997

  	
   

  	
  2216398

  January 5, 1999

  	
   

  	
  5

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  Registered

  	
   

  

 

 

Annex IV to

Guarantee and Collateral Agreement

 

Notice of Grant of Security Interest in Patents

 

NOTICE OF GRANT OF
SECURITY INTEREST IN PATENTS (the “Notice”), dated as of April [    ],
2006, made by Intellectual Property International, Inc., a Delaware (“Grantor”),
in favor of Silver Oak Capital, L.L.C., a Delaware limited liability company (“Secured
Party”).

 

WHEREAS, the Grantor is
the owner of the issued patents and patent applications set forth on Schedule 1
attached hereto (collectively, the “Patents”); and

 

WHEREAS, pursuant to the
terms and conditions of the Guarantee and Collateral Agreement dated as of the
date hereof by and among Medicor Ltd., a Delaware corporation, each of the
Guarantors set forth therein and the Secured Party (the “Guarantee and
Collateral Agreement”), the Grantor granted, assigned and conveyed to
Secured Party a security interest in, and lien on, certain intellectual
property owned by the Grantor, including the Patents and all products and
proceeds of the foregoing (collectively, the “Patent Collateral”); and

 

WHEREAS, pursuant to the
Guarantee and Collateral Agreement, the Grantor agreed to execute and deliver
to Secured Party this Notice for purposes of filing the same with the United
States Patent and Trademark Office (the “PTO”) to confirm, evidence and
perfect the security interest in the Patent Collateral granted pursuant to the
Guarantee and Collateral Agreement;

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions of the Guarantee and
Collateral Agreement, the Grantor hereby further confirms, and puts on the
public record, its grant to Secured Party of a security interest in, and lien,
on the Patent Collateral.

 

The Grantor hereby
requests the PTO to file and record the same together with the annexed Schedule 1.

 

The Grantor and the
Secured Party hereby acknowledge and agree that the security interest in the
Patent Collateral may only be terminated in accordance with the terms of the
Guarantee and Collateral Agreement.

 

 

IN WITNESS WHEREOF, the
undersigned has caused this Notice to be duly executed and delivered as of the
date first above written.

 

	
   

  	
  INTELLECTUAL PROPERTY 

  INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  

 

On this       day of
       ,      ,
before me personally came         , to
me known to be the person who signed the foregoing instrument and who being
duly sworn by me did depose and state that [he, she] is the          
of Intellectual Property International, Inc.; [he, she] signed the
instrument in the name of Intellectual Property International, Inc.; and
[he, she] had the authority to sign the instrument on behalf of Intellectual
Property International, Inc.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

Schedule 1

 

	
  Title

  	
   

  	
  Owner

  	
   

  	
  Application 

  No./Filing 

  Date

  	
   

  	
  Patent. 

  No./Reg. Date

  	
   

  	
  Status

  	
   

  
	
  Implant filling material and method

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  10/839559

  May 5, 2004

  	
   

  	
   

  	
   

  	
  Pending

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Implantable prosthetic body used as implantable
  prostatic body, e.g. breast implants, comprises thin elastomeric container,
  and pliable viscous cohesive mass contained within container

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  533168

  December 30, 2003

  	
   

  	
   

  	
   

  	
  Pending

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Textured silicone implant prosthesis

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  304764

  January 31, 1989

  	
   

  	
  4955909

  September 11, 1990

  	
   

  	
  Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bio-osmotic gel for implant prostheses

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  496234

  March 20, 1990

  	
   

  	
  5067965

  November 26, 1991

  	
   

  	
  Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rheologically modified and osmotically balanced

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  924457

  August 29, 1997

  	
   

  	
  5997574

  December 7, 1999

  	
   

  	
  Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Saline implant having single valve with primary

  	
   

  	
  Intellectual Property International, Inc.

  	
   

  	
  318036

  May 25, 1999

  	
   

  	
  6162251

  December 19, 2000

  	
   

  	
  Issued

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]