Document:

Converted by EDGARwiz

 

 

 Exhibit 10.1

 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE 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 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

 RIVAL TECHNOLOGIES, INC.

SENIOR SECURED CONVERTIBLE NOTE
 

 		  

	
Issuance Date: December 9, 2009
	
Original Principal Amount: U.S. $659,441.62

 

 FOR VALUE RECEIVED, RIVAL TECHNOLOGIES, INC., a Nevada corporation (the “Maker”), hereby promises to pay to the order of EPSOM INVESTMENT SERVICES NV, a Nevis corporation (the “Payee”) the amount set out above as the Original Principal Amount (as may be reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due upon the Maturity Date (as defined below) on any acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at a rate per annum equal to the Interest Rate (as defined below), from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable on the Maturity Date, or by acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).  Certain capitalized terms used herein are defined in Paragraph 28.

The Note hereby secured is given in renewal and extension of the sum of $659,441.62 left owing and unpaid by the Maker upon that certain promissory note in the original principal sum of $500,000.00 dated August 1, 2007, executed by the Maker and payable to order of the Payee, and that certain promissory note in the original principal sum of $100,000.00 dated June 30, 2009, executed by the Maker and payable to order of the Payee.

 1.

Payments of Principal; Maturity.  On demand (the “Maturity Date”), the Maker shall pay to the Payee an amount equal to the Principal and the accrued Interest.  The Maturity Date may be extended at the option of the Payee.

2.
 
Interest; Interest Rate.  Interest on this Note shall accrue at the rate of 10 percent per annum, commencing on the Issuance Date and shall be computed on the basis of a 360-day year and actual days elapsed, unless the maximum legal interest rate would thereby be exceeded, in which event, to the extent necessary to avoid exceeding such maximum rate, interest shall be computed on the basis of the actual number of days elapsed in the applicable calendar year in which it accrued.  It is the intention of the Maker and the Payee to conform strictly to applicable usury laws.  It is therefore agreed that (a) the aggregate of all Interest and other charges constituting Interest under applicable law and contracted for, chargeable or receivable under this Note or otherwise in connection with this loan transaction, shall never exceed the maximum amount of Interest, nor produce a rate in excess of the maximum contract rate of Interest the Payee may charge the Maker under applicable law and in regard to which the Maker may not successfully assert the claim or defense of usury, and (b) if any excess Interest is provided for, it shall be deemed a mistake and the same shall be refunded to the Maker or credited on the unpaid Principal balance hereof and this Note shall be automatically deemed reformed so as to permit only the collection of the maximum legal contract rate and amount of Interest.

3.
 
Conversion of this Note.  This Note shall be convertible into shares of common stock of the Maker, no par value per share (the “Common Stock”), on the terms and conditions set forth in this Paragraph 3.

(a)
 
Conversion Right.  Subject to the provisions of Paragraph 3(d), at any time or times on or after the Issuance Date, the Payee shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Paragraph 3(c), at the Conversion Rate (as defined below).  The Maker shall not issue any fraction of a share of Common Stock upon any conversion.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the Maker 

 

 
 

 

 shall round such fraction of a share of Common Stock up to the nearest whole share.  The Maker shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(b)
 
Conversion Rate.  The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Paragraph 3(a) shall be determined by dividing (x) the Conversion Amount by (y) the Conversion Price then in effect (the “Conversion Rate”).

(i)
 “Conversion Amount” means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.

 (ii)

“Conversion Price” means the Closing Sale Price of the Common Stock on the last Trading Day prior to the date the Payee provides the Maker with notice of conversion.

(c)
 
Mechanics of Conversion.
 
(i)
 Optional Conversion.  To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Payee shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion (the “Conversion Notice”) to the Maker, and (B) if required by Paragraph 3(c)(iv), surrender this Note to a nationally recognized overnight delivery service for delivery to the Maker (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction).  On or before the next Trading Day following the date of receipt of a Conversion Notice, the Maker shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Payee and the Transfer Agent.  On or before the second (2
nd) Trading Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Maker shall (1) (X) provided that the Transfer Agent is participating in the Fast Automated Securities Transfer Program of DTC credit such aggregate number of shares of Common Stock to which the Payee shall be entitled to the Payee’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Payee or its designee, for the number of shares of Common Stock to which the Payee shall be entitled, and (2) pay to the Payee in cash an amount equal to the accrued and unpaid Interest on the Conversion Amount up to and including the Conversion Date.  If this Note is physically surrendered for conversion as required by Paragraph 3(c)(iv) and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Maker shall as soon as practicable and in no event later than three Business Days after receipt of this Note and at its own expense, issue and deliver to the Payee a new Note (in accordance with Paragraph 18(d)) representing the outstanding Principal not converted.  The Person or Persons entitled to receive the shares of Common
 Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

(ii)
 
Maker’s Failure to Timely Convert.  If within three Trading Days after the Maker’s receipt of the facsimile copy of a Conversion Notice the Maker shall fail to issue and deliver a certificate to the Payee or credit the Payee’s balance account with DTC for the number of shares of Common Stock to which the Payee is entitled upon the Payee’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day, the Payee purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Payee of Common Stock issuable upon such conversion that the Payee anticipated receiving from the Maker (a “Buy-In”), then the Maker shall, within three Business Days after the Payee’s request and in the Payee’s sole discretion, either (A) pay cash to the Payee in an amount equal to the Payee’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Maker’s obligation to deliver such certificate (and to issue Common Stock) shall terminate, or (B) promptly honor its obligation to deliver to the Payee a certificate or certificates representing Common Stock and pay cash to the Payee in an amount equal to the excess (if any) of the Buy-In Price over the product of (1) such number of shares of Common Stock, times (2) the Closing Bid Price on the Conversion Date.

(d)
 
Registration; Book-Entry.  The Maker shall maintain a register (the “Register”) for the recordation of the name and addressee of the Payee and the principal amount of the Note held by the Payee (the “Registered 

 2

 

 

 

 Note”).  The entries in the Register shall be conclusive and binding for all purposes absent manifest error.  The Maker and the Payee shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of Principal and Interest hereunder, notwithstanding notice to the contrary.  A Registered Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register.  Upon its receipt of a request to assign or sell all or part of any Registered Note by the Payee, the Maker shall record the information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Paragraph 17.  Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Payee shall not be required to physically surrender this Note to the Maker unless (A) the full Conversion Amount represented by this Note is being converted, or (B) the Payee has provided the Maker with prior written notice (which notice may be included in a Conversion Notice) requesting physical surrender and reissue of this Note.  The Payee and the Maker shall maintain records showing the Principal and Interest and the dates of any conversions or shall use such other method, reasonably satisfactory to the Payee and the Maker, so as not to require physical surrender of this Note upon conversion.

(e)
 
Legends.  The Payee understands that the certificates or other instruments representing the Note and, until such time as the resale of the Conversion Shares shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE 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 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY.

The legend set forth above shall be removed and the Maker shall issue a certificate without such legend to the holder of the securities upon which it is stamped, or issue to such holder by electronic delivery at the applicable balance account at DTC, unless otherwise required by state securities laws, if: (i) such securities are registered for resale under the Securities Act of 1933, as amended (the “Securities Act”), (ii) in connection with a sale, assignment or other transfer, such holder provides the Maker with an opinion of counsel, in a form reasonably acceptable to the Maker, to the effect that such sale, assignment or transfer of the securities may be made without registration under the applicable requirements of the Securities Act, or (iii) such holder provides the Maker with reasonable assurance that the securities can be sold, assigned or transferred pursuant to Rule 144, promulgated pursuant to the Securities Act.

4.
 
Events of Default.  Each of the following events shall constitute an “Event of Default:”

(a)
 The suspension from trading or failure of the Common Stock to be listed on the Principal Market or on an Eligible Market for a period of five consecutive Trading Days or for more than an aggregate of 10 Trading Days in any 365-day period;

(b)
 The Maker’s (i) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within 10 Business Days after the applicable Conversion Date, or (ii) written notice to the Payee, including by way of public announcement or through any of its authorized agents, at any time, of its intention not to comply with a request for conversion of the Note into shares of Common Stock that is tendered in accordance with the provisions of this Note;

(c)
 At any time following the tenth consecutive Business Day that the Payee’s Authorized Share Allocation is less than the number of shares of Common Stock that the Payee would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations on conversion set forth in Paragraph 3(d) or otherwise);

 3

 

 

 

 (d)

The Maker’s failure to pay to the Payee any amount of Principal or Interest, or other amounts when and as due under this Note, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby to which the Payee is a party;

(e)
 The Maker or any of its Subsidiaries, pursuant to or within the meaning of Title 11, U.S. Code, or any similar federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official
 (a “Custodian”), (iv) makes a general assignment for the benefit of its creditors, or (v) admits in writing that it is generally unable to pay its debts as they become due;

(f)
 A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Maker or any of its Subsidiaries in an involuntary case, (ii) appoints a Custodian of the Maker or any of its Subsidiaries, or (iii) orders the liquidation of the Maker or any of its Subsidiaries;

(g)
 A final judgment or judgments for the payment of money aggregating in excess of $10,000 are rendered against the Maker or any of its Subsidiaries and which judgments are not, within 60 days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; provided, however, that any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $10,000 amount set forth above so long as the Maker provides the Payee a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Payee) to the effect that such judgment is covered by insurance or an indemnity and the Maker will receive the proceeds of such insurance or indemnity within 30 days of the issuance of such judgment;

(h)
 The Maker breaches any representation, warranty, covenant or other term or condition of the Security Agreement or this Note, except, in the case of a breach of a covenant which is curable and cured within 10 Business Days;

(i)
 Any breach or failure in any respect to comply with (i) Paragraph 15 of this Note, or (ii) any of the Potential Partner Conditions;

(j)
 To the knowledge of the Maker, the SEC commencing either a formal or informal investigation of the Maker and/or its Subsidiaries, which has not been concluded in the Maker’s favor within 120 days;

(k)
 The inability of the Common Stock to be transferred with DTC through the Deposit Withdrawal Agent Commission system; or

(l)
 The Security Agreement shall for any reason fail or cease to create a valid and perfected and, except to the extent permitted by the terms thereof, first priority lien in favor of the Payee on any Collateral (as defined in the Security Agreement) purported to be covered thereby.

5.
 
Rights Upon Fundamental Transaction and Change of Control.
 (a)

Assumption.  The Maker shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all of the obligations of the Maker under this Note and the other Transaction Documents in accordance with the provisions of this Paragraph 5(a) pursuant to written agreements in form and substance satisfactory to the Payee and approved by the Payee prior to such Fundamental Transaction, including agreements to deliver to the Payee in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the Principal and the Interest rates of this Note, having similar conversion rights, and having similar ranking to this Note, and satisfactory to the Payee, and (ii) the Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible Market.  Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Note referring to the “Maker” shall refer instead to the Successor Entity), and may exercise every right and power of the 

 4

 

 

 

 Maker and shall assume all of the obligations of the Maker under this Note with the same effect as if the Successor Entity had been named as the Maker herein.  Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Payee confirmation that there shall be issued upon conversion or payment of this Note at any time after the consummation of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the conversion of this Note prior to such Fundamental Transaction, such shares of publicly traded common stock (or their equivalent) of the Successor Entity, as adjusted in accordance with the provisions of this Note.  The provisions of this Paragraph shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of this Note.

(b)
 
Change of Control Redemption Right.  No sooner than 15 days nor later than 10 days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier to the Payee (a “Change of Control Notice”).  At any time during the period beginning after the Payee’s receipt of a Change of Control Notice and ending 10 Trading Days after the consummation of such Change of Control, the Payee may require the Maker to redeem all or any portion of this Note by delivering written notice
thereof (“Change of Control Redemption Notice”) to the Maker, which Change of Control Redemption Notice shall indicate the Conversion Amount the Payee is electing to be redeemed.  The portion of this Note subject to redemption pursuant to this Paragraph 5 shall be redeemed by the Maker in cash at the a price equal to the greater of (i) the product of the Change of Control Premium and the product of (x) the sum of the Conversion Amount being redeemed and any accrued and unpaid Interest with respect to such Conversion Amount and (y) the quotient determined by dividing (A) the Closing Sale Price of the Common Stock immediately following the public announcement of such proposed Change of Control by (B) the Conversion Price and (ii) 150% of the sum of the Conversion Amount being redeemed and any accrued and unpaid Interest with respect to such Conversion Amount subject to such Change of Control Redemption (the “Change of Control Redemption Price”).  Redemptions required by this Paragraph 5 shall be made in accordance with the provisions of Paragraph 15 and shall have priority to payments to shareholders in connection with a Change of Control.  To the extent redemptions required by this Paragraph 5(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Maker, such redemptions shall be deemed to be voluntary prepayments.  Notwithstanding anything to the contrary in this Paragraph 5, until the Change of Control Redemption Price (together with any interest thereon) is paid in full, the Conversion Amount submitted for redemption under this Paragraph 5(c) may be converted, in whole or in part, by the Payee into shares of Common Stock, or in the event the Conversion Date is after the consummation of the Change of Control, shares of publicly traded common stock (or their equivalent) of the Successor Entity pursuant to Paragraph 3.  The parties hereto agree that in the event of the Maker’s redemption of any portion of this Note under this Paragraph 5(b), the Payee’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Payee.  Accordingly, any redemption premium due under this Paragraph 5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Payee’s actual loss of its investment opportunity and not as a penalty.

6.
 
Rights Upon Issuance of Purchase Rights and Other Corporate Events.
 (a)

Purchase Rights.  If at any time the Maker 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 Common Stock (the “Purchase Rights”), then the Payee will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Payee could have acquired if the Payee had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) 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)
 
Other Corporate Events.  In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with
respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Maker shall make appropriate provision to ensure that the Payee will thereafter have the right to receive upon conversion of this Note, at the Payee’s option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Payee would have been entitled with 

 5

 

 

 

 respect to such shares of Common Stock had such shares of Common Stock been held by the Payee upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note), or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Payee would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate.  Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Payee.  The provisions of this Paragraph shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note.

7.
 
Rights Upon Issuance of Other Securities.
 (a)

Adjustment of Conversion Price upon Issuance of Common Stock.  If at any time after the Issuance Date, the Maker issues or sells, or in accordance with this Paragraph 7(a) is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Maker, but excluding shares of Common Stock deemed to have been issued or sold by the Maker in connection with any Excluded Security) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Conversion Price in effect immediately prior to such issue or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to the New Issuance Price.  For purposes of determining the adjusted Conversion Price under this Paragraph 7(a), the following shall be applicable:

(i)
 
Issuance of Options.  If the Maker in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then all of such shares of Common Stock underlying such Option shall be deemed to be outstanding and to have been issued and sold by the Maker at the time of the granting or sale of such Option for such price per share.  For purposes of this Paragraph 7(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Maker with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option.  No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual
 issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)
 
Issuance of Convertible Securities.  If the Maker in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then all shares of Common Stock issuable upon conversion of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Maker at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this Paragraph 7(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Maker with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security.  No further adjustment of the Conversion Price shall be made upon the actual issuance of such shares of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Paragraph 7(a), no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(iii)
 
Change in Option Price or Rate of Conversion.  If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion,  exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or 

 6

 

 

 

 exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of this Paragraph 7(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Issuance Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change.  No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)
 
Calculation of Consideration Received.  In case any Option is issued in connection with the issue or sale of other securities of the Maker, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Maker.  If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Maker therefor.  If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Maker will be the fair
 value of such consideration as determined in good faith by the Board of Directors of the Maker, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Maker will be the Closing Sale Price of such publicly traded securities on the date of receipt.  If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Maker is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Maker and the Payee.  If such parties are unable to reach agreement within 10 days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five Business Days after the tenth day following the Valuation Event by an independent, reputable appraiser jointly selected by the Maker and the Payee.  The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Maker.

(v)
 
Record Date.  If the Maker takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities, or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)
 
Adjustment of Conversion Price upon Subdivision or Combination of Common Stock.  If the Maker at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced.  If the Maker at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

(c)
 
Other Events.  If any event occurs of the type contemplated by the provisions of this Paragraph 7 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Maker’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Payee under this Note; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Paragraph 7.

 

 7

 

 

 

 8.

Maker’s Right of Redemption.  For as long as no Event of Default has occurred and is continuing, the Maker at its option shall have the right to redeem and prepay this Note, in whole or in part, at any time without any penalty.

9.
 
Security.  This Note is secured to the extent and in the manner set forth in that certain Security Agreement executed by the Maker and the Payee on even date herewith (the “Security Agreement”).

 10.

Noncircumvention.  The Maker hereby covenants and agrees that the Maker will not, by amendment of its Articles of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all reasonable action as may be required to protect the rights of the Payee of this Note.

11.
 
Reservation of Authorized Shares.
 (a)

Reservation.  The Maker initially shall reserve out of its authorized and unissued Common Stock a number of shares of Common Stock equal to 175% of the Conversion Rate with respect to the Conversion Amount of this Note as of the Issuance Date.  So long as this Note is outstanding, the Maker shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of this Note, 175% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of this Note; provided that at no time shall the number of shares of Common Stock so reserved be less than the number of shares required to be reserved pursuant to the previous sentence (without regard to any limitations on conversions) (the “Required Reserve Amount”).  The initial number of shares of Common Stock reserved for conversions of this Note and each increase in the number of shares so reserved shall be allocated pro rata among the Payee based on the principal amount of this Note held by the Payee and any transferee of this Note or increase in the number of reserved shares, as the case may be (the “Authorized Share Allocation”).  In the event that the Payee shall sell or otherwise transfer any of this Note, each transferee shall be allocated a pro rata portion of the Payee’s Authorized Share Allocation.  Any shares of Common Stock reserved and allocated to any Person which ceases to hold this Note shall be allocated to the remaining holders of this Note, pro rata based on the principal amount of this Note then held by such holders.

(b)
 
Insufficient Authorized Shares.  If at any time while any of this Note remains outstanding the Maker does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of this Note at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then the Maker shall immediately take all action necessary to increase the Maker’s authorized shares of Common Stock to an amount sufficient to allow the Maker to reserve the Required Reserve Amount for this Note then outstanding.  Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 45 days after the occurrence of such Authorized Share Failure, the Maker shall hold a meeting of its shareholders for the approval of an increase in the number of authorized shares of Common Stock.  In connection with such meeting, the Maker shall provide each shareholder with a proxy or information statement and shall use its best efforts to solicit its shareholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the shareholders that they approve such proposal.

 12.

Payee’s Redemptions.  The Maker shall deliver the applicable Event of Default Redemption Price to the Payee within five Business Days after the Maker’s receipt of the Payee’s Event of Default Redemption Notice.  If the Payee has submitted a Change of Control Redemption Notice in accordance with Paragraph 5(b), the Maker shall deliver the applicable Change of Control Redemption Price to the Payee concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control and within five Business Days after the Maker’s receipt of such notice otherwise. If the Payee has submitted a Financing Transaction Redemption Notice, the Maker shall deliver the applicable Maker Redemption Price within five Business Days after the Maker’s receipt of such notice.  In the event of a redemption of less than all of the Conversion Amount of this Note, the Maker shall promptly cause to be issued and delivered to the Payee a new Note (in accordance with Paragraph 18(d)) representing the outstanding Principal which has not been redeemed.  In the event that the Maker does not pay the applicable Redemption Price to the Payee within the time period required, at any time thereafter and until the Maker pays such unpaid Redemption Price in full, the Payee shall have the option, 

 8

 

 

 

 in lieu of redemption, to require the Maker to promptly return to the Payee all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price has not been paid.  Upon the Maker’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void with respect to such Conversion Amount, (y) the Maker shall immediately return this Note, or issue a new Note (in accordance with Paragraph 18(d)) to the Payee representing the sum of such Conversion Amount to be redeemed together with accrued and unpaid Interest with respect to such Conversion Amount and (z) the Conversion Price of this Note or such new Note shall be adjusted to the lesser of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided and (B) the lowest Closing Bid Price during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Maker and ending on and including the date on which the applicable Redemption Notice is voided.

13.
 
Restriction on Redemption and Cash Dividends.  Until the Note has been converted, redeemed or otherwise satisfied in accordance with the terms hereof, the Maker shall not, directly or indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on its capital stock without the prior express written consent of the Payee.

14.
 
Voting Rights.  The Payee shall have no voting rights as the holder of this Note, except as required by law, including but not limited to the Nevada Revised Statutes, and as expressly provided in this Note.

15.
 
Covenants of the Maker.
 (a)

Senior Rank.  This Note shall be senior to all other Indebtedness of the Maker and its Subsidiaries.

(b)
 
Incurrence of Indebtedness.  So long as this Note is outstanding, the Maker shall not, and the Maker shall not permit any of its Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness, other than (i) the Indebtedness evidenced by this Note, and (ii) Permitted Indebtedness.

(c)
 
Existence of Liens.  So long as this Note is outstanding, the Maker shall not, and the Maker shall not permit any of its Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by the Maker or any of its Subsidiaries (collectively, the “Liens”) other than Permitted Liens.

(d)
 
Restricted Payments.  The Maker shall not, and the Maker shall not permit any of its Subsidiaries to, directly or indirectly, redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Permitted Indebtedness, whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time and without being cured would constitute, an Event of Default has occurred and is continuing.

(e)
 
Sales of Equity Securities.  The Maker will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its equity or Common Stock Equivalents, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of common equity of the Maker, without the prior written consent of the Payee.

(f)
 
Internal Accounting and Disclosure Controls.  The Maker and each of its Subsidiaries shall maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference (the “Internal Accounting Controls”).  To the best of its knowledge, the Maker maintains disclosure controls and 

 9

 

 

 

 procedures (as such term is defined in Rule 13a-14 under the Exchange Act) that are reasonably effective in ensuring that information required to be disclosed by the Maker in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Maker in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Maker’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.

(g)
 
Dispositions.  So long as any of the Obligations are outstanding, the Maker shall not, and the Maker shall not permit any of its Subsidiaries to, convey, sell, lease or sublease, transfer or otherwise dispose of, whether in one transaction or a series of related transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired (or agree to do any of the foregoing); provided, however, that the Maker and its Subsidiaries may (i) sell inventory in the ordinary course of business, (ii) dispose of obsolete or worn-out equipment in the ordinary course of business, and (iii) dispose of the non-core assets.

(h)
 
Additional Collateral Security.  The Maker shall cause each Subsidiary of the Maker or any such Subsidiary not in existence on the Issuance Date, to execute and deliver to the Payee promptly and in any event within five Business Days after the formation, acquisition or change in status thereof (i) a Security Agreement and (ii) such other agreements, instruments, approvals, legal opinions or other documents reasonably requested by the Payee in order to create, perfect, establish the first priority of (subject to Permitted Liens) or otherwise protect any Lien purported to be covered by any such Security Agreement or otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and agreements contained in the this Note and that all property and assets of such Subsidiary shall become Collateral for the Obligations.

(i)
 
No Change in Capital Structure or Corporate Charter.  The Maker shall not make any change in its the Articles of Incorporation or Bylaws or authorized capital stock without first obtaining the written consent of the Payee, which may be withheld in its sole and unfettered discretion.

(j)
 
Changes in the Board of Directors and Management of the Maker.  The Payee may require that the Maker shall make changes to the Maker’s Board of Directors and officers at such time as the Payee may direct in its sole and unfettered discretion.  To that end, the Maker has delivered to the Payee written resignations of all current officers and members of the Board of Directors of the Maker, which resignations state that such persons will resign their respective positions at such time as the Payee may choose to accept.  During the term of this Note, if any additional officers and directors of the Maker are appointed or elected, each such additional officer and director shall execute a resignation which states that such person will resign his position at such time as the Payee may choose to accept.  In addition, the current directors of the Maker have passed a resolution of the Board of Directors of the Maker appointing to the Board of the Directors of the Maker those persons selected by the Payee, which persons shall constitute a majority of the Board of Directors of the Maker, which resolution will take effect immediately before the resignations of the members of the Board of the Maker as demanded by the Payee.

16.
 
Vote to Issue, or Change the Terms of the Note.  The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Payee shall be required for any change or amendment to this Note.  In no event shall any amendment, modification or waiver be made to this Note which would adversely affect the Payee without the written consent of the Payee.

17.
 
Transfer.  The Payee acknowledges and agrees that this Note may only be offered, sold, assigned or transferred by the Payee without the consent of the Maker, provided that the provisions of this Agreement are complied with in all respects.

18.
 
Reissuance of this Note.
 (a)

Transfer.  If this Note is to be transferred, the Payee shall surrender this Note to the Maker, whereupon the Maker will issue, promptly following the satisfaction of the provisions of this Agreement, and deliver upon the order of the Payee a new Note (in accordance with Paragraph 18(d)), in the name of the validly registered assigns or transferee, representing the outstanding Principal being transferred by the Payee and, if less then the entire outstanding Principal is being transferred, a new Note (in accordance with Paragraph 18(d)) to the 

 10

 

 

 

 Payee representing the outstanding Principal not being transferred.  The Payee and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Paragraph 3(c)(iii) and this Paragraph 18(a), following conversion or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on the face of this Note.

(b)
 
Lost, Stolen or Mutilated Note.  Upon receipt by the Maker of evidence reasonably satisfactory to the Maker of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Payee to the Maker in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Maker shall execute and deliver to the Payee a new Note (in accordance with Paragraph 18(d)) representing the outstanding Principal.

(c)
 
Note Exchangeable for Different Denominations.  This Note is exchangeable, upon the surrender hereof by the Payee at the principal office of the Maker, for a new Note or Notes (in accordance with Paragraph 18(d) and in principal amounts of at least $25,000) representing in the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal as is designated by the Payee at the time of such surrender.

 (d)

Issuance of New Notes.  Whenever the Maker is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or in the case of a new Note being issued pursuant to Paragraph 18(a) or Paragraph 18(c), the Principal designated by the Payee which, when added to the Principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued Interest on the Principal, from the Issuance Date.

19.
 
Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and the Security Agreement at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Payee’s right to pursue actual and consequential damages for any failure by the Maker to comply with the terms of this Note.  Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Payee and shall not, except as expressly provided herein, be subject to any other obligation of the Maker (or the performance thereof).  The Maker acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Payee and that the remedy at law for any such breach may be inadequate.  The Maker therefore agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

20.
 
Payment of Collection, Enforcement and Other Costs.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Payee otherwise takes action to collect amounts due under this Note or to enforce the provisions of this Note, or (b) there occurs any bankruptcy, reorganization, receivership of the Maker or other proceedings affecting the Maker’s creditors’ rights and involving a claim under this Note, then the Maker shall pay the costs incurred by the Payee for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements.

21.
 
Construction; Headings.  This Note shall be deemed to be jointly drafted by the Maker and the Payee and shall not be construed against any person as the drafter hereof.  The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.

22.
 
Failure or Indulgence Not Waiver.  No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

 11

 

 

 

 23.

Dispute Resolution.  In the case of a dispute as to the determination of the Closing Bid Price, the Closing Sale Price, the Average Market Price or the Weighted Average Price or the arithmetic calculation of the Conversion Rate or any Redemption Price, the Maker shall submit the disputed determinations or arithmetic calculations via facsimile within one Business Day of receipt of the Conversion Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Payee.  If the Payee and the Maker are unable to agree upon such determination or calculation within one Business Day of such disputed determination or arithmetic calculation being submitted to the Payee, then the Maker shall, within one Business Day submit via facsimile (a) the disputed determination of the Closing Bid Price, the Closing Sale Price, the Average Market Price or the Weighted Average Price to an independent, reputable investment bank selected by the Maker and approved by the Payee (such approval not to be unreasonably withheld or delayed), or (b) the disputed arithmetic calculation of the Conversion Rate or any Redemption Price to the Maker’s independent, outside accountant.  The Maker, at the Maker’s expense, shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Maker and the Payee of the results no later than five Business Days from the time it receives the disputed determinations or calculations.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

24.
 
Notices; Payments.
 (a)

Notices.  All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by electronic transmission, or, if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, with postage prepaid and addressed to the party to receive same, if to the Maker, addressed to Mr. Douglas B. Thomas at 375 N. Stephanie Street, Suite 1411, Henderson, Nevada 89014, telephone (702) 990-0884 and email info@rvti.com; and if to the Payee, addressed to Mr. David Craven at World Trade Center 10, Route De L’aeroport, CH 1215 Geneva 15, and telephone 011 41 22 799 0800; provided, however, that if any party shall have designated a different address by notice to the other parties given as provided above, then any subsequent notice shall be addressed to such party at the last address so designated.

(b)
 
Payments.  Whenever any payment of cash is to be made by the Maker to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Maker and sent via overnight courier service to such Person at such address as previously provided to the Maker in writing; provided that the Payee may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Maker with prior written notice setting out such request and the Payee’s wire transfer instructions.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any Interest Date which is not the date on which
 this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of Interest due on such date.

25.
 
Cancellation.  After all Principal, accrued Interest and other amounts at any time owed on this Note has been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Maker for cancellation and shall not be reissued.

26.
 
Waiver of Notice.  To the extent permitted by law, the Maker hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note.

27.
 
Governing Law; Jurisdiction; Jury Trial.  This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to any conflicts of laws provisions thereof.  Each party hereby irrevocably submits to the personal jurisdiction of the United States District Court located in Clark County, Nevada, as well as of the courts of the State of Nevada in Henderson County, Nevada over any suit, action or proceeding arising out of or relating to this Agreement.  Each party hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such mediation, arbitration, suit, action or proceeding brought in any such county and any claim that any such mediation, arbitration, suit, action or proceeding brought in such county has been brought in an inconvenient forum.  THE MAKER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY

 12

 

 

 

 .

 28.

Certain Definitions.  For purposes of this Note, the following terms shall have the following meanings:

(a)
 “Approved Stock Plan” means any employee benefit plan which has been approved by the Board of Directors of the Maker, pursuant to which the Maker’s securities may be issued to any employee, consultant, officer or director for services provided to the Maker.

(b)
 “Average Market Price” means, for any given date, the lesser of (i) the arithmetic average of the Weighted Average Price of the Common Stock during the 20 consecutive Trading Day period ending on the third Trading Day immediately prior to such given date, and (ii) the arithmetic average of the Weighted Average Price of the Common Stock during the five consecutive Trading Day period commencing during the 20
th consecutive Trading Day period ending on the third Trading Day immediately prior to such given date provided, that all such determinations shall be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction that proportionately decreases or increases the Common Stock during such periods.

(c)
 “Bloomberg” means Bloomberg Financial Markets.

(d)
 “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.

(e)
 “Calendar Month” means the period beginning on and including the first of each calendar month and ending on and including the last day of such calendar month.

(f)
 “Change of Control” means any Fundamental Transaction other than (i) any reorganization, recapitalization or reclassification of the Common Stock in which holders of a majority of the Maker’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (ii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Maker.

(g)
 “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Maker and the Payee.  If the Maker and the Payee are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Paragraph 23.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

(h)
 “Common Stock Equivalents” means, collectively, Options and Convertible Securities.

(i)
 “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if 

 13

 

 

 

 the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 (j)

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

(k)
 “Eligible Market” means, the Principal Market, The New York Stock Exchange, Inc., the Nasdaq Capital Market, the Nasdaq Global Market or the American Stock Exchange.

 (l)

“Excluded Securities” means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan up to a maximum of five percent (5%) of the outstanding Common Stock; (ii) upon conversion of, or in exchange for, this Note; and (iii) upon conversion of any Options or Convertible Securities which are outstanding on the day immediately preceding the Issuance Date, provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the Issuance Date.

(m)
 “Financing Transaction” means that the Maker or any of its Subsidiaries engages in a debt, equity or any other financing or series of financing transactions...

(n)
 “Fundamental Transaction” means that the Maker shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Maker is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Maker to another Person, or (iii) allow another Person or Persons to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Person or Persons making or party to, such purchase, tender or exchange offer), (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of either the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act)
 is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Voting Stock of the Maker.

(o)
 “GAAP” means United States generally accepted accounting principles, consistently applied.

(p)
 “Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) “capital leases” in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, (viii) all obligations issued, undertaken or assumed as part of any financing facility with respect to accounts receivables of the Maker and its Subsidiaries, including, without limitation, any factoring arrangement of such accounts receivables and (ix) all Contingent Obligations in respect of 

 14

 

 

 

 indebtedness or obligations of others of the kinds referred to in clauses (i) through (viii) above.

(q)
 “Interest Rate” means 10 percent per annum..

(r)
 “Issuance Date” means December 9, 2009.

(s)
 “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

(t)
 “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction. 

(u)
 “Payee” mean the holder of this Note representing at least a majority of the aggregate Principal amount of this Note then outstanding.

(v)
 “Permitted Indebtedness” means (A) Indebtedness incurred by the Maker that is made expressly subordinate in right of payment and priority to the Indebtedness evidenced by this Note, as reflected in a written agreement acceptable to the Payee and approved by the Payee in writing (which approval shall not be unreasonably delayed), and which Indebtedness does not provide at any time for (1) the payment, prepayment, repayment, repurchase or defeasance, directly or indirectly, of any principal or premium, if any, thereon until 91 days after the Maturity Date or later, and (2) total interest and fees at a rate in excess of the Interest Rate hereunder, (B) Indebtedness secured by Permitted Liens, (C) Indebtedness to trade creditors incurred in the ordinary course of
 business, and (D) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon the Maker or its Subsidiary, as the case may be.

(w)
 “Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens securing the Maker’s obligations under this Note, (v) Liens (A) upon or in any equipment (as defined in the Security Agreement) acquired or held by the Maker or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment, (vi) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clause (v) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vii) leases or subleases and licenses and sublicenses hereafter granted to others in the ordinary course of the Maker’s business, not interfering in any material respect with the business of the Maker and its Subsidiaries taken as a whole, (viii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods; and (ix) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Paragraph 4(a)(ix).

(x)
 “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity  and a government or any department or agency thereof.

(y)
 “Potential Partner Conditions” means at any time during the period commencing on the date of the consummation of any material transaction between the Maker and a Person and ending on the first anniversary of the Issuance Date, there shall be no disclosure that any executive officer of such Person has (i) exhibited dishonesty 

 15

 

 

 

 in the performance of his or her duties, which is materially and demonstrably injurious to the
Maker; or (ii) been convicted of (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude, in each case, which is materially and demonstrably injurious to the Maker.

(z)
 “Principal Market” means Over-the-Counter Bulletin Board.

(aa)
 “Redemption Notices” means, collectively, the Event of Default Redemption Notices, Change of Control Redemption Notices, the Maker Redemption Notice, Financing Transaction Redemption Notice, and, each of the foregoing, individually, a Redemption Notice.

(bb)
 “Redemption Prices” means, collectively, the Event of Default Redemption Price, Change of Control Redemption Price, and the Maker Redemption Amount, the Payee Optional Redemption Price and the Payee Partial Redemption Price and, each of the foregoing, individually, a Redemption Price.

 (cc)

“SEC” means the United States Securities and Exchange Commission.

(dd)
 “Successor Entity” means the Person, which may be the Maker, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made, provided that if such Person is not a publicly traded entity whose common stock or equivalent equity security is quoted or listed for trading on an Eligible Market, Successor Entity shall mean such Person’s Parent Entity.

(ee)
 “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York Time).

 (ff)

“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

(gg)
 “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30 a.m., New York Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by 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 Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as such 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 Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted Average Price cannot be calculated for a security on a particular 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 Maker and the Payee.  If the Maker and the Payee are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Paragraph 23.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

29.
 
Disclosure. Upon receipt or delivery by the Maker of any notice in accordance with the terms of this Note, unless the Maker has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Maker or its Subsidiaries, the Maker shall within one Business Day after any 

 16

 

 

 

 such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise.  In the event that the Maker believes that a notice contains material, nonpublic information, relating to the Maker or its Subsidiaries, the Maker shall indicate to the Payee contemporaneously with delivery of such notice, and in the absence of any such indication, the Payee shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Maker or its Subsidiaries.

 IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed as of the Issuance Date set out above.

RIVAL TECHNOLOGIES, INC.
 

 

 

 By:  
/s/ Douglas B. Thomas
     

Douglas B. Thomas, Chief Executive Officer

 17Converted by EDGARwiz

 Exhibit 10.2
            
SECURITY AGREEMENT
 This SECURITY AGREEMENT, dated as of December 9, 2009 (this “Agreement”) made by RIVAL TECHNOLOGIES, INC., a Nevada corporation (the “Debtor”) and EPSOM INVESTMENT SERVICES NV, a Nevis corporation (the “Secured Party”).

WHEREAS, on even date herewith, the Debtor, as the “Maker”) has executed and delivered to the Secured Party, as the “Payee,” that certain Senior Secured Convertible Note in the original principal amount of $659,441.62 (the “Note”); and

WHEREAS, the Note is in renewal and extension of those certain promissory notes executed by the Debtor in favor of the Secured Party in the amount of $500,000 on August 1, 2007 and $100,000 on June 30, 2009, respectively; and

WHEREAS, all capitalized terms used herein shall have the same meanings ascribed to those terms as defined in the Note, unless the context provides otherwise; and

WHEREAS, it is a condition precedent to the Secured Party providing the financing as described in the Note, the Debtor shall have executed and delivered to the Secured Party this Agreement providing for the grant to the Secured Party of a security interest in certain personal property of the Debtor to secure all of the Debtor’s obligations under the Note;

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Secured Party to perform under the Note, the Debtor agrees with the Secured Party, as follows:

1.
 
Definitions.

 Reference is hereby made to the Note for a statement of the terms thereof.  All terms used in this Agreement and the recitals hereto which are defined in the Note or in Articles 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of Nevada (the “Code”), and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided, that terms used herein which are defined in the Code as in effect in the State of Nevada on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Secured Party may otherwise determine.

The following terms shall have the respective meanings provided for in the Code: “Accounts,” “Cash Proceeds,” “Chattel Paper,” “Commercial Tort Claim,” “Commodity Account,” “Commodity Contracts,” “Deposit Account,” “Documents,” “Equipment,” “Fixtures,” “General Intangibles,” “Goods,” “Instruments,” “Inventory,” “Investment Property,” “Letter-of-Credit Rights,” “Noncash Proceeds,” “Payment Intangibles,” “Proceeds,” “Promissory Note,” “Security,” “Record,” “Security Account,” “Software,” and “Supporting Obligations.”

As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

“Copyright Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Debtor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright (including, without limitation, all Copyright Licenses set forth in
Schedule II hereto).
 “Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by the Debtor (including, without limitation, all copyrights described in
Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United 

 1

 

 

States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Event of Default” shall have the meaning set forth in the Note.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intellectual Property” means the Copyrights, Trademarks and Patents.

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

“Patent Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Debtor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in
Schedule II hereto).
 “Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in
Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings 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 reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Trademark Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Debtor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by the Debtor and now or hereafter covered by such licenses (including, without limitation, all Trademark Licenses described in
Schedule II hereto).
 “Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by the Debtor, including, without limitation, those described in
Schedule II hereto, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of the Debtor relating to the distribution of products and services in connection with which any of such marks are used.

 2.

Grant of Security Interest.  As collateral security for all of the “Obligations” (as defined in Paragraph 3 hereof), the Debtor, subject to the Permitted Liens, hereby pledges and assigns to the Secured Party, and grants to the Secured Party a continuing security interest in, all personal property of the Debtor, wherever located 

 2

 

 

and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:

(a)
 All Accounts;

(b)
 All Chattel Paper (whether tangible or electronic);

(c)
 The Commercial Tort Claims specified on
Schedule VI hereto;

 (d)

All Deposit Accounts, all cash and other property from time to time deposited therein and the monies and property in the possession or under the control of the Secured Party or any affiliate, representative, agent or correspondent of the Secured Party;

(e)
 All Documents;

(f)
 All Equipment;

(g)
 All Fixtures;

(h)
 All General Intangibles (including, without limitation, all Payment Intangibles);

(i)
 All Goods

(j)
 All Instruments (including, without limitation, Promissory Note and each certificated Security);

(k)
 All Inventory;

 (l)

All Investment Property;

(m)
 All Copyrights, Patents and Trademarks, and all Licenses;

(n)
 All Letter-of-Credit Rights;

(o)
 All Supporting Obligations;

(p)
 All other tangible and intangible personal property of the Debtor (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Debtor described in the preceding clauses of this Paragraph 2 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Debtor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of the Debtor or any other Person from time to time acting for the Debtor, in each case, to the extent of the Debtor’s rights therein, that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Paragraph 2 or are otherwise necessary or helpful in the collection or realization thereof; and

(q)
 All Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

in each case howsoever the Debtor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

 

 3
 

 

 
 3.

Security for Obligations.  The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (collectively, the “Obligations”):

(a)
 The payment by the Debtor, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Note, including, without limitation, (i) all principal of and interest on the Note (including, without limitation, all interest that accrues after the commencement of any Insolvency Proceeding of the Debtor, whether or not the payment of such interest is unenforceable or is not allowable due to the existence of such Insolvency Proceeding), and (ii) all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become due hereunder or the Note; and

(b)
 For so long as the Note is outstanding, the due performance and observance by the Debtor of all of its other obligations from time to time existing in respect of the Note, including without limitation, with respect to any conversion or redemption rights of the Secured Party under the Note.

 4.

Representations and Warranties.  The Debtor represents and warrants as of the date of this Agreement as follows:

(a)
 
Schedule 4 attached hereto sets forth (i) the exact legal name of the Debtor, and (ii) the state of incorporation, organization or formation and the organizational identification number of the Debtor in such state.

(b)
 There is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting the Debtor before any governmental authority or any arbitrator, or any order, judgment or award issued by any governmental authority or arbitrator, in each case, that may adversely affect the grant by the Debtor, or the perfection, of the security interest purported to be created hereby in the Collateral, or the exercise by the Secured Party of any of its rights or remedies hereunder.

(c)
 Except as disclosed on
Schedule 4(c) attached hereto, all federal, state and local tax returns and other reports required by applicable law to be filed by the Debtor have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon the Debtor or any property of the Debtor (including, without limitation, all federal income and social security taxes on employees’ wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with generally accepted accounting principles consistently applied (“GAAP”).

(d)
 All Equipment, Fixtures, Goods and Inventory of the Debtor now existing are, and all Equipment, Fixtures, Goods and Inventory of the Debtor hereafter existing will be, located and/or based at the addresses specified therefor in
Schedule 4(d) attached hereto, except that the Debtor will give the Secured Party written notice of any change in the location of any such Collateral within 20 days of such change, other than to locations set forth on
Schedule 4(d) attached hereto (or a new Schedule 4(d) delivered by the Debtor to the Secured Party from time to time) and with respect to which the Secured Party has filed financing statements and otherwise fully perfected its Liens thereon or will take such actions pursuant to Paragraph 5(n).  The Debtor’s chief place of business and chief executive office, the place where the Debtor keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in
Schedule 4(d) attached hereto.  None of the Accounts is evidenced by Promissory Note or other Instruments.  Set forth in
Schedule 4(d) attached hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory Note, Security and other Instrument owned by the Debtor, and (ii) each Deposit Account, Securities Account and Commodities Account of the Debtor, together with the name and address of each institution at which each such account is maintained, the account number for each such account and a description of the purpose of each such account.  Set forth in
Schedule 1 hereto is a complete and correct list of each trade name used by the Debtor and the name of, and each trade name used by, each person from which the Debtor has acquired any substantial part of the Collateral.

 4

 

 

(e)

The Debtor has delivered to the Secured Party complete and correct copies of each License described in
Schedule 1 attached hereto, including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement.  Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of the Debtor or any of its affiliates in respect thereof.  Each material License now existing is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms.  No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.

(f)
 The Debtor owns and controls, or otherwise possesses adequate rights to use, all Trademarks, Patents and Copyrights, which are the only trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity necessary to conduct its business in substantially the same manner as conducted as of the date hereof.  
Schedule 1 attached hereto sets forth a true and complete list of all registered copyrights, issued Patents, Trademarks, and Licenses annually owned or used by the Debtor as of the date hereof.  To the best knowledge of the Debtor, all such Intellectual Property of the Debtor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part.  Except as set forth in
Schedule 1 attached hereto, no such Intellectual Property is the subject of any licensing or franchising agreement.  The Debtor has no knowledge of any conflict with the rights of others to any such Intellectual Property and, to the best knowledge of the Debtor, the Debtor is not now infringing or in conflict with any such rights of others in any material respect, and to the best knowledge of the Debtor, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by the Debtor.  The Debtor has not received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.

(g)
 The Debtor is and will be at all times the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral free and clear of any Liens, except for Permitted Liens as defined in the Note on any Collateral.  Except for the Permitted Liens described herein, no effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as (i) may have been filed in favor of the Secured Party relating to this Agreement, and (ii) are described on
Schedule 4(g) attached hereto.

 (h)

The exercise by the Secured Party of any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting the Debtor or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of its properties.

(i)
 No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, is required for (i) the grant by the Debtor, or the perfection, of the security interest purported to be created hereby in the Collateral, or (ii) the exercise by the Secured Party of any of its rights and remedies hereunder, except (except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements described in
Schedule V hereto (or a new Schedule V delivered by the Debtor to the Secured Party from time to time), all of which financing statements have been duly filed and are in full force and effect or will be duly filed and in full force and effect, (B) with respect to Deposit Accounts, and all cash and other property from time to time deposited therein, for the execution of a control agreement with the depository institution with which such account is maintained, as provided in Paragraph 5(i), (C) with respect to the perfection of the security interest created hereby in the United States Intellectual Property and Licenses, for the recording of the appropriate Assignment for Security, substantially in the form of
Exhibit A hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (D) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (E) with respect to the perfection of the security interest created hereby in Titled Collateral, for the submission of an appropriate application requesting that the Lien of the Secured Party be noted on the Certificate of Title or certificate of ownership, completed and authenticated by the Debtor, together with the Certificate of Title or certificate of ownership, with respect to such Titled Collateral, to the appropriate governmental authority, (F) with respect to the perfection of the security interest created hereby in any 

 5

 

 

Letter-of-Credit Rights, for the consent of the issuer of the applicable letter of credit to the assignment of proceeds as provided in the Uniform Commercial Code as in effect in the applicable jurisdiction, (G) with respect to any action that may be necessary to obtain control of Collateral constituting Deposit Accounts, Commodity Contracts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions, and (H) the Secured Party having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral
 (subclauses (A), (B), (C), (D), (E), (F), G), and (H), each a “Perfection Requirement” and collectively, the “Perfection Requirements”).

(j)
 This Agreement, subject to the Permitted Liens creates in favor of the Secured Party a legal, valid and enforceable security interest in the Collateral as security for the Obligations.  The Perfection Requirements result in the perfection of such security interests.  Such security interests are, or in the case of Collateral in which the Debtor obtains rights after the date hereof, will be, perfected, first priority security interests, subject only to Permitted Liens and the Perfection Requirements and the financing statements described in
Schedule 4(g).  Such recordings and filings and all other action necessary to perfect and protect such security interest have been duly taken or will be taken pursuant to Paragraph 5(n), and, in the case of Collateral in which the Debtor obtains rights after the date hereof, will be duly taken, except for the Secured Party’s having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral after the date hereof and the other actions, filings and recordations described above, including the Perfection Requirements.

(k)
 As of the date hereof, the Debtor does not hold any Commercial Tort Claims nor has knowledge of any pending Commercial Tort Claims, except for such Commercial Tort Claims described in
Schedule 40k) attached hereto.

 5.

Covenants as to the Collateral.  So long as any of the Obligations shall remain outstanding, unless the Secured Party shall otherwise consent in writing:

(a)
 
Further Assurances.  The Debtor will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that the Secured Party may reasonably request in order to: (i) perfect and protect the security interest purported to be created hereby; (ii) enable the Secured Party to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the request of the Secured Party, each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Secured Party, indicating that such Chattel Paper, License or Collateral is subject to the security interest created hereby, (B) delivering and pledging to the Secured Party each Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter owned by the Debtor, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance satisfactory to the Secured Party, (C) executing and filing (to the extent, if any, that the Debtor’s signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or that the Secured Party may reasonably request in order to perfect and preserve the security interest purported to be created hereby, (D) furnishing to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each case as the Secured Party may reasonably request, all in reasonable detail, (E) if any of the Collateral shall be in the possession of a third party, notifying such Person of the Secured Party’s security interest created hereby and obtaining a written acknowledgment from such Person that such Person holds possession of the Collateral for the benefit of the Secured Party, which such written acknowledgement shall be in form and substance reasonably satisfactory to the Secured Party, (F) if at any time after the date hereof, the Debtor acquires or holds any Commercial Tort Claim, promptly notifying the Secured Party in a writing signed by the Debtor setting forth a brief description of such Commercial Tort Claim and granting to the Secured Party a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Secured Party, (G) upon the acquisition after the date hereof by the Debtor of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a Motor Vehicle or Equipment that is subject to a purchase money security interest), causing the Secured Party to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the same to the Secured Party in accordance with
Paragraph 5(j) hereof; and (H) taking all actions required by any earlier versions of the Uniform Commercial Code or by other law, as applicable, in any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

 6

 

 

(b)

Location of Equipment and Inventory.  The Debtor will keep the Equipment and Inventory (i) at the locations specified therefor on
Schedule III hereto, or (ii) at such other locations set forth on Schedule III (or a new
Schedule III delivered by the Debtor to Secured Party from time to time) and with respect to which the Secured Party has filed financing statements and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States, provided that within 20 days following the relocation of Equipment or Inventory to such other location or the acquisition of Equipment or Inventory, the Debtor shall deliver to the Secured Party a new
Schedule III indicating such new locations.

 (c)

Condition of Equipment.  The Debtor will maintain or cause the Equipment (necessary or useful to its business) to be maintained and preserved in good condition, repair and working order, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any Equipment of the Debtor within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Secured Party may request to such end.  The Debtor will promptly furnish to the Secured Party a statement describing in reasonable detail any such loss or damage in excess of $10,000 per occurrence to any Equipment.

(d)
 
Taxes, Etc.  The Debtor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.

(e)
 
Insurance.
 (i)

The Debtor will, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event, in amount, adequacy and scope reasonably satisfactory to the Secured Party.  To the extent requested by the Secured Party at any time and from time to time, each such policy for liability insurance shall provide for all losses to be paid on behalf of the Secured Party and the Debtor as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Secured Party.  To the extent requested by the Secured Party at any time and from time to time, each such policy shall in addition (A) name the Secured Party as an additional insured party thereunder (without any representation or warranty by or obligation upon the Secured Party) as their interests may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Secured Party on its own account notwithstanding any action, inaction or breach of representation or warranty by the Debtor, (C) provide that there shall be no recourse against the Secured Party for payment of premiums or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Secured Party by the insurer.  The Debtor will, if so requested by the Secured Party, deliver to the Secured Party original or duplicate policies of such insurance and, as often as the Secured Party may reasonably request, a report of a reputable insurance broker with respect to such insurance.  The Debtor will also, at the request of the Secured Party, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

 (ii)

Reimbursement under any liability insurance maintained by the Debtor pursuant to this Paragraph 5(e) may be paid directly to the Person who shall have incurred liability covered by such insurance.  In the case of any loss involving damage to Equipment or Inventory, any proceeds of insurance maintained by the Debtor pursuant to this Paragraph 5(e) shall be paid to the Secured Party (except as to which paragraph (iii) of this Paragraph 5(e) is not applicable), the Debtor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by the Debtor pursuant to this Paragraph 5(e) shall be paid by the Secured Party to the Debtor as reimbursement for the costs of such repairs or replacements.

 

 7

 

 

(iii)

All insurance payments in respect of such Equipment or Inventory shall be paid to the Secured Party and applied as specified in Paragraph 7(b) hereof.

(f)
 
Provisions Concerning the Accounts and the Licenses.
 (i)

The Debtor will (A) give the Secured Party at least 30 days’ prior written notice of any change in the Debtor’s name, identity or organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth in
Schedule 1 hereto, (C) immediately notify the Secured Party upon obtaining an organizational identification number, if on the date hereof the Debtor did not have such identification number, and (D) keep adequate records concerning the Accounts and Chattel Paper and permit representatives of the Secured Party during normal business hours on reasonable notice to the Debtor, to inspect and make abstracts from such Records and Chattel Paper.

 (ii)

The Debtor will, except as otherwise provided in this subparagraph (f), continue to collect, at its own expense, all amounts due or to become due under the Accounts.  In connection with such collections, the Debtor may (and, at the Secured Party’s direction, will) take such action as the Debtor or the Secured Party may deem necessary or advisable to enforce collection or performance of the Accounts; provided, however, that the Secured Party shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to the Secured Party and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Debtor thereunder directly to the Secured Party or its designated agent and, upon such notification and at the expense of the Debtor and to the extent permitted by law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Debtor might have done.  After receipt by the Debtor of a notice from the Secured Party that the Secured Party has notified, intends to notify, or has enforced or intends to enforce the Debtor’s rights against the account debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received by the Debtor in respect of the Accounts shall be received in trust for the benefit of the Secured Party hereunder, shall be segregated from other funds of the Debtor and shall be forthwith paid over to the Secured Party in the same form as so received (with any necessary endorsement) to be applied as specified in Paragraph 7(b) hereof, and (B) the Debtor will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any account debtor or obligor thereof or allow any credit or discount thereon.  In addition, upon the occurrence and during the continuance of an Event of Default, the Secured Party may (in its sole and absolute discretion) direct any or all of the banks and financial institutions with which the Debtor either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts to send immediately to the Secured Party by wire transfer (to such account as the Secured Party shall specify, or in such other manner as the Secured Party shall direct) all or a portion of such securities, cash, investments and other items held by such institution.  Any such securities, cash, investments and other items so received by the Secured Party shall be applied as specified in accordance with Paragraph 7(b) hereof.

 (iii)

Upon the occurrence and during the continuance of any breach or default under any material License referred to in
Schedule 1 attached hereto by any party thereto other than the Debtor, the Debtor party thereto will, promptly after obtaining knowledge thereof, give the Secured Party written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default, or will obtain or acquire an appropriate substitute License.

 (iv)

The Debtor will, at its expense, promptly deliver to the Secured Party a copy of each notice or other communication received by it by which any other party to any material License referred to in
Schedule 1 attached hereto purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by the Debtor thereto.

 (v)

The Debtor will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all action reasonably necessary to maintain such Licenses in full force and effect.  The Debtor will not, without the prior written consent of the 

 8

 

 

Secured Party, cancel, terminate, amend or otherwise modify in any respect, or waive any provision of, any material License referred to in
Schedule 1 attached hereto.

 (g)

Transfers and Other Liens.

 (i)

The Debtor will not sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except the Debtor may (A) sell or dispose of Inventory (including, without limitation, As-extracted Collateral) in the ordinary course of business, and (B) sell or dispose of assets the Debtor has determined, in good faith, not to be useful in the conduct of its business, and (C) sell or dispose of accounts in the course of collection in the ordinary course of business consistent with past practice.

 (ii)

The Debtor will not create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.

(h)
 
Intellectual Property.
 (i)

If applicable, the Debtor shall, upon the Secured Party’s written request, duly execute and deliver the applicable Assignment for Security in the form attached hereto as
Exhibit A.  The Debtor (either itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices and markings and using the Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment for non-use, and the Debtor will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may become invalidated; provided, however, that so long as no Event of Default has occurred and is continuing, the Debtor shall not have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement, or (C) that is substantially the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement.  The Debtor will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Intellectual Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees.  If any Intellectual Property (other than Intellectual Property described in the proviso to the first sentence of subparagraph (i) of this subparagraph (h)) is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Debtor shall (x) upon learning of such infringement, misappropriation, dilution or other violation, promptly notify the Secured Party and (y) to the extent the Debtor shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as the Debtor shall deem appropriate under the circumstances to protect such Intellectual Property.  The Debtor shall furnish to the Secured Party from time to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses as the Secured Party may reasonably request, all in reasonable detail and promptly upon request of the Secured Party, following receipt by the Secured Party of any such statements, schedules or reports, the Debtor shall modify this Agreement by amending
Schedule 1 attached hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary or, in the reasonable judgment of the Secured Party, desirable to subject such Intellectual Property and Licenses to the Lien and security interest created by this Agreement.  Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, the Debtor may not abandon or otherwise permit any Intellectual Property to become invalid without the prior 

 9

 

 

written consent of the Secured Party, and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Debtor will take such action as the Secured Party shall deem appropriate under the circumstances to protect such Intellectual Property.

 (ii)

In no event shall the Debtor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Secured Party prior written notice thereof.  Upon request of the Secured Party, the Debtor shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Secured Party may reasonably request to evidence the Secured Party’s security interest hereunder in such Intellectual Property and the General Intangibles of the Debtor relating thereto or represented thereby, and the Debtor hereby appoints the Secured Party its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the indefeasible payment in full in cash of all of the Obligations in full.

(i)
 
Deposit, Commodities and Securities Accounts.  Upon the Secured Party’s written request, the Debtor shall cause each bank and other financial institution with an account referred to in
Schedule IV hereto to execute and deliver to the Secured Party a control agreement, in form and substance reasonably satisfactory to the Secured Party, duly executed by the Debtor and such bank or financial institution, or enter into other arrangements in form and substance satisfactory to the Secured Party, pursuant to which such institution shall irrevocably agree,
inter alia, that (i) it will comply at any time with the instructions originated by the Secured Party to such bank or financial institution directing the disposition of cash, Commodity Contracts, securities, Investment Property and other items from time to time credited to such account, without further consent of the Debtor, which instructions the Secured Party will not give to such bank or other financial institution in the absence of a continuing Event of Default, (ii) all Commodity Contracts, securities, Investment Property and other items of the Debtor deposited with such institution shall be subject to a perfected, first priority security interest in favor of the Secured Party, (iii) any right of set off (other than recoupment of standard fees), banker’s Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the Secured Party, and (iv) upon receipt of written notice from the Secured Party during the continuance of an Event of Default, such bank or financial institution shall immediately send to the Secured Party by wire transfer (to such account as the Secured Party shall specify, or in such other manner as the Secured Party shall direct) all such cash, the value of any Commodity Contracts, securities, Investment Property and other items held by it.  Without the prior written consent of the Secured Party, the Debtor shall not make or maintain any Deposit Account, Commodity Account or Securities Account except for the accounts set forth in
Schedule IV attached hereto.  The provisions of this Paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Secured Party is the depositary, and (ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Debtor’s salaried or hourly employees.

(j)
 
Motor Vehicles.  To the extent that there are no Permitted Liens thereon:
 (i)

Upon the Secured Party’s written request, the Debtor shall deliver to the Secured Party originals of the certificates of title or ownership for all motor vehicles with a value in excess of $50,000, owned by it with the Secured Party listed as lienholder, for the benefit of the Secured Party.

(ii)
 The Debtor hereby appoints the Secured Party as its attorney-in-fact, effective the date hereof and terminating upon the termination of this Agreement, for the purpose of (A) executing on behalf of the Debtor title or ownership applications for filing with appropriate state agencies to enable motor vehicles now owned or hereafter acquired by the Debtor to be retitled and the Secured Party listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing such other documents and instruments on behalf of, and taking such other action in the name of, the Debtor as the Secured Party may deem necessary or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating in favor of the Secured Party a perfected Lien on the motor vehicles and exercising the rights and remedies of the Secured Party hereunder).  This appointment as attorney-in-fact is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

 10

 

 

(iii)

Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for each motor vehicle covered thereby.

(iv)
 So long as no Event of Default shall have occurred and be continuing, upon the request of the Debtor, the Secured Party shall execute and deliver to the Debtor such instruments as the Debtor shall reasonably request to remove the notation of the Secured Party as lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments shall be delivered, and the release effective, only upon receipt by the Secured Party of a certificate from the Debtor stating that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto in such case passing to the casualty insurance company therefor in settlement of the claim for such loss) and the amount that the Debtor will receive as sale proceeds or insurance proceeds.  Any proceeds of such sale or casualty loss shall be paid to the Secured Party hereunder immediately upon receipt, to be applied to the Obligations then outstanding.

(k)
 
Control.  The Debtor hereby agrees to take any or all action that may be necessary, desirable or that the Secured Party may reasonably request in order for the Secured Party to obtain control in accordance with Sections 9-105 – 9-107 of the Code with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

(l)
 
Inspection and Reporting.  The Debtor shall permit the Secured Party, or any agent or representatives thereof or such professionals or other Persons as the Secured Party may designate, during normal business hours, after reasonable notice in the absence of an Event of Default and not more than once a year in the absence of an Event of Default, (i) to examine and make copies of and abstracts from the Debtor’s records and books of account, (ii) to visit and inspect its properties, (iii) to verify materials, leases, Instruments, Accounts, Inventory and other assets of the Debtor from time to time, and (iv) to conduct audits, physical counts, appraisals and/or valuations, examinations at the locations of the Debtor.  The Debtor shall also permit the Secured Party, or any agent or representatives thereof or such professionals or other Persons as the Secured Party may designate to discuss the Debtor’s affairs, finances and accounts with any of its directors, officers, managerial employees, independent accountants or any of its other representatives.

(m)
 
Future Subsidiaries.  If the Debtor shall hereafter create or acquire any Subsidiary, simultaneously with the creation or acquisition of such Subsidiary, the Debtor shall (i) cause such Subsidiary to become a party to this Agreement as an additional “Debtor” hereunder, (ii) the Debtor shall deliver to Secured Party revised Schedules to this Agreement, as appropriate, (iii) shall duly execute and deliver a guaranty of the Obligations in favor of the Secured Party in form and substance reasonably acceptable to the Secured Party, and (iv) shall duly execute and/or deliver such opinions of counsel and other documents, in form and substance reasonably acceptable to the Secured Party, as the Secured Party shall reasonably request with respect thereto, provided that the Debtor that acquires a subsidiary on or within two days after the Issuance Date shall have 10 Business Days in which to satisfy the requirements of this Paragraph 5(m).

(n)
 
Fixture Filings.  Within 10 Business Days after the Issuance Date, the Debtor shall cause financing statements to be filed in the appropriate county clerk’s offices in order to perfect the security interest of the Secured Party in and to all Fixtures and As-extracted Collateral constituting Collateral on the Issuance Date or within two Business Days after the Issuance Date.

 6.

Additional Provisions Concerning the Collateral.

(a)
 The Debtor hereby (i) authorizes the Secured Party to file one or more Uniform Commercial Code financing or continuation statements, and amendments thereto, relating to the Collateral and (ii) ratifies such authorization to the extent that the Secured Party has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof.  A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

(b)
 The Debtor hereby irrevocably appoints the Secured Party as its attorney-in-fact and proxy, with full authority in the place and stead of the Debtor and in the name of the Debtor or otherwise, from time to time in the Secured Party’s discretion, so long as an Event of Default shall have occurred and is continuing, to 

 11

 

 

take any action and to execute any instrument which the Secured Party may reasonably deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Debtor under Paragraph 5 hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Secured Party pursuant to Paragraph 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Secured Party may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Secured Party and the Secured Party with respect to any Collateral, and (v) to execute assignments, licenses and other documents to enforce the rights of the Secured Party and the Secured Party with respect to any Collateral.  This power is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

(c)
     For the purpose of enabling the Secured Party to exercise rights and remedies hereunder, at such time as the Secured Party shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, the Debtor hereby grants to the Secured Party, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by the Debtor, wherever the same may be located, 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 programs used for the compilation or printout thereof.  Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Note that limit the right of the Debtor to dispose of its property, and Paragraph 5(g) and Paragraph 5(h) hereof, so long as no Event of Default shall have occurred and be continuing, the Debtor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business.  In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Secured Party shall from time to time, upon the request of the Debtor, execute and deliver any instruments, certificates or other documents, in the form so requested, which the Debtor shall have certified are appropriate (in the Debtor’s judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this subparagraph (c) as to any Intellectual Property).  Further, upon the indefeasible payment in full in cash of all of the Obligations, the Secured Party (subject to Paragraph 10(e) hereof) shall release and reassign to the Debtor all of the Secured Party’s right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever.  The exercise of rights and remedies hereunder by the Secured Party shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Debtor in accordance with the second sentence of this subparagraph (c).  The Debtor hereby releases the Secured Party from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Secured Party under the powers of attorney granted herein other than actions taken or omitted to be taken through the Secured Party’s gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.

(d)
     If the Debtor fails to perform any agreement or obligation contained herein, the Secured Party may itself perform, or cause performance of, such agreement or obligation, in the name of the Debtor or the Secured Party, and the expenses of the Secured Party incurred in connection therewith shall be payable by the Debtor pursuant to Paragraph 8 hereof and shall be secured by the Collateral.

(e)
     The powers conferred on the Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

(f)
     Anything herein to the contrary notwithstanding (i) the Debtor shall remain liable under the Licenses and otherwise with respect to any of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Secured Party of any of its rights hereunder shall not release the Debtor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Secured Party shall not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral, nor shall the 

 12

 

 

Secured Party be obligated to perform any of the obligations or duties of the Debtor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 7.

Remedies Upon Event of Default.  If any Event of Default shall have occurred and be continuing, subject to the Permitted Liens:

(a)
 The Secured Party may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Secured Party’s name or into the name of its nominee or nominees (to the extent the Secured Party has not theretofore done so) and thereafter receive, for the benefit of the Secured Party, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require the Debtor to, and the Debtor hereby agrees that it will at its expense and upon request of the Secured Party forthwith, assemble all or part of its respective Collateral as directed by the Secured Party and make it available to the Secured Party at a place or places to be designated by the Secured Party that is reasonably convenient to both parties, and the Secured Party may enter into and occupy any premises owned or leased by the Debtor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Secured Party’s rights and remedies hereunder or under law, without obligation to the Debtor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Secured Party may deem commercially reasonable.  The Debtor agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least 10 days’ notice to the Debtor of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification.  The Secured Party shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given.  The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  The Debtor hereby waives any claims against the Secured Party and the Secured Party arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that the Debtor may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof.  The Debtor hereby acknowledges that (1) any such sale of its respective Collateral by the Secured Party shall be made without warranty, (2) the Secured Party may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (3) such actions set forth in clauses (1) and (2) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.  In addition to the foregoing, (A) upon written notice to the Debtor from the Secured Party after and during the continuance of an Event of Default, the Debtor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (B) the Secured Party may, at any time and from time to time after and during the continuance of an Event of Default, upon 10 days’ prior notice to the Debtor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Secured Party shall in its sole discretion determine; and (C) the Secured Party may, at any time, pursuant to the authority granted in Paragraph 6 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of the Debtor, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.

(b)
 Any cash held by the Secured Party as Collateral and all Cash Proceeds received by the Secured Party in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall be applied (after payment of any amounts payable to the Secured Party pursuant to Paragraph 8 hereof) by the Secured Party against, all or any part of the Obligations in such order as the Secured Party shall elect, consistent with the provisions of the Securities Purchase Agreement.  Any surplus of such cash or Cash Proceeds held by the Secured Party and remaining after the indefeasible payment in full in cash of all of the Obligations shall 

 13

 

 

be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

(c)
 In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Secured Party and the Secured Party are legally entitled, the Debtor shall be liable for the deficiency, together with interest thereon at the highest rate specified in the Note for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to collect such deficiency.

(d)
 The Debtor hereby acknowledges that if the Secured Party complies with any applicable state, provincial or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.

(e)
 The Secured Party shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Secured Party’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that the Debtor lawfully may agree, the Debtor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Debtor hereby irrevocably waives the benefits of all such laws.

 8.

Indemnity and Expenses.

(a)
 The Debtor agrees, jointly and severally, to defend, protect, indemnify and hold the Secured Party and each of the Secured Party, jointly and severally, harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting from such Person’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.

(b)
 The Debtor agrees, jointly and severally, to pay to the Secured Party upon demand the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Secured Party and of any experts and agents (including, without limitation, any collateral trustee which may act as agent of the Secured Party), which the Secured Party may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Secured Party hereunder, or (iv) the failure by the Debtor to perform or observe any of the provisions hereof.

 9.

Notices.  All notices, requests and other communications hereunder shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by electronic transmission, or, if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, with postage prepaid and addressed to the party to receive same, if to the Debtor, addressed to Mr. Douglas B. Thomas at 375 N. Stephanie Street, Suite 1411, Henderson, Nevada 89014, telephone (702) 990-0884 and email info@rvti.com; and if to the Secured Party, addressed to Mr. David Craven at World Trade Center 10, Route De L’aeroport, CH 1215 Geneva 15, and telephone 011 41 22 799 0800; provided, however, that if any party shall have designated a different address by notice to the other parties given as provided above, then any subsequent notice shall be addressed to such party at the last address so designated.

 14

 

 

10.

Miscellaneous.

(a)
 No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the Debtor and the Secured Party, and no waiver of any provision of this Agreement, and no consent to any departure by the Debtor therefrom, shall be effective unless it is in writing and signed by the Debtor and the Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)
 No failure on the part of the Secured Party to exercise, and no delay in exercising, any right hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The rights and remedies of the Secured Party provided herein and in the Note are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.  The rights of the Secured Party hereunder or under the Note against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights hereunder or under the Note against such party or against any other Person, including but not limited to, the Debtor.

(c)
 Any provision of this Agreement that 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 portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(d)
 This Agreement, subject to the Permitted Liens, shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the indefeasible payment in full in cash of the Obligations, and (ii) be binding on the Debtor and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Secured Party and the Secured Party hereunder, to the benefit of the Secured Party and the Secured Party and their respective permitted successors, transferees and assigns.  Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to the Debtor, the Secured Party and the Secured Party may assign or otherwise transfer its rights and obligations under this Agreement and the Note, to any other Person and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Secured Party herein or otherwise.  Upon any such assignment or transfer, all references in this Agreement to the Secured Party shall mean the assignee of the Secured Party.  None of the rights or obligations of the Debtor hereunder may be assigned or otherwise transferred without the prior written consent of the Secured Party, and any such assignment or transfer without the consent of the Secured Party
 shall be null and void.

(e)
 Upon the indefeasible payment in full in cash of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the Debtor, and (ii) the Secured Party will, upon the Debtor’s request and at the Debtor’s expense, (A) return to the Debtor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Debtor such documents as the Debtor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever.

(f)
 This Agreement shall be governed by, construed and interpreted in accordance with the laws of the state of Nevada, except as required by mandatory provisions of law and except to the extent that the validity and perfection or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder, in respect of any particular collateral are governed by the law of a jurisdiction other than the state of Nevada.

(g)
 This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to any conflicts of laws provisions thereof.  Each party hereby irrevocably submits to the personal jurisdiction of the United States District Court located in Clark County, Nevada, as well as of the courts of the State of Nevada in Henderson County, Nevada over any suit, action or proceeding arising out of or relating to this Agreement.  Each party hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such mediation, arbitration, suit, action or proceeding brought in any such county and any claim that any such mediation, arbitration, suit, action or proceeding brought in such county has been brought in an inconvenient forum.

 15

 

 

(h)

The Debtor waives any right it may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this agreement or any of the other transaction documents, or any course of conduct, course of dealing, oral or written statement or other action of the parties hereto.

(i)
 The Debtor irrevocably consents to the service of process of any of the aforesaid courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Debtor at its address provided herein, such service to become effective 10 days after such mailing
.

(j)
 Nothing contained herein shall affect the right of the Secured Party to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Debtor or any property of the Debtor in any other jurisdiction.

(k)
 The Debtor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Paragraph any special, exemplary, punitive or consequential damages.

(l)
 Paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(m)
 This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one in the same Agreement.

(n)
 In the event of any conflict between the terms of this Agreement or the Note, the terms of the Note shall control.

N WITNESS WHEREOF, the Debtor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.

 RIVAL TECHNOLOGIES, INC.

 

 

 By
/s/ Douglas B. Thomas
 Douglas B. Thomas, Chief Executive Officer

 16
 

 
 
LISTS OF SCHEDULES AND EXHIBITS
 Schedule 4(g)

Legal Names; Organizational Identification Numbers; States or Jurisdiction of Organization

SCHEDULE II - INTELLECTUAL PROPERTY
 SCHEDULE III - LOCATIONS

SCHEDULE IV - PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS

SCHEDULE V - FINANCING STATEMENTS
 SCHEDULE VI - COMMERCIAL TORT CLAIMS

EXHIBIT A - ASSIGNMENT FOR SECURITY
 Schedule 4(g) - Effective Financing Statement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]