Document:

gthp_ex1043

 

Exhibit 10.43

 

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this "Agreement")
is made and entered into effective
as of the ___ day of
December, 2019,
by and between
GUIDED THERAPEUTICS,
INC., a Delaware corporation (the "Company")
and the undersigned creditor of the Company
(the "Creditor").

 

WITNESSETH:

WHEREAS, the
Creditor is the payee of certain obligations owed to the Creditor
by the Company as set
forth on Exhibit
A
hereto (the "Obligations");

 

WHEREAS, in
satisfaction in full
of the Obligations, the
Creditor is willing to accept certain securities of the Company
as set forth on
Exhibit B
hereto (the
"Securities" and such
transaction, the "Exchange");

 

WHEREAS, the Exchange is
being made in reliance upon the exemption from registration
provided by Section 4(a)(2) of the Securities
Act; and

 

WHEREAS, the
Company and the Creditor desire to enter into
this Agreement to evidence and
set forth the terms of
the exchange of
the Securities for and in
satisfaction of the Obligations;

 

NOW, THEREFORE, in consideration of the mutual
covenants herein contained,
and intending to be legally
bound hereby, the parties hereto, being duly sworn, do covenant,
agree and certify
as follows:

 

1.             Recitals.
The parties hereto acknowledge and agree that the
foregoing recitals are true and
accurate and
constitute part of
this Agreement to the
same extent as if
contained in the body
hereof.

 

2.             Definitions.
In addition to the terms
defined elsewhere
in this Agreement: (a) capitalized
terms that are not otherwise defined herein have the meanings given
to
such terms in the
Obligations (as defined herein), and
(b) the following terms have the
meanings set
forth in this Section I .
I:

 

"Affiliate"
means any Creditor that,
directly or indirectly
through one or
more intermediaries, controls or
is controlled by or is under common control
with a
Creditor, as such
terms are used in and construed
under Rule 405 under the Securities Act.

 

"Board
of
Directors"
means the board of directors of the
Company.

 

"Common
Stock" means
the common stock of
the Company, par value
$0.001 per share, and
any other class of
securities into which
such securities may hereafter be reclassified
or changed.

 

1

 

"Exchange
Act"
means the Securities
Exchange Act of
1934, as
amended, and
the rules and regulations promulgated thereunder.

 

“Liens" means
a lien, charge,
pledge, security interest,
encumbrance, right
of first
refusal, preemptive right or other
restriction.

"Creditor" means
an individual or
corporation,
partnership, trust,
incorporated or unincorporated
association, joint
venture, limited liability
company, joint stock
company, government (or an agency or
subdivision thereof) or
other entity of
any kind.

 

"Securities" has
the meaning set forth in the
Preamble of this Agreement.

 

"Securities
Act" means
the Securities Act of
1933,
as amended, and
the rules and regulations promulgated
thereunder.

3.             Exchange
and
Satisfaction. The
Obligations are
hereby surrendered by
the Creditor and exchanged
for the Securities and
other considerations according to the following
terms and
conditions.

 

a. 

As of December
____, 2019, the Creditor
currently holds unsecured notes
with Company
in the amount of ________________, including
both principal and
interest, Both the Company and Creditor wish
to continue their relationship under mutually
agreeable
terms.

 

b. 

In lieu of
agreeing to dismiss the
entire amount of what
the Creditor is currently
owed by the
Company, the Creditor
agrees to accept in exchange ___________ shares of the Company's Stock
and warrants to purchase
the Company's common
shares, pursuant
to a separate
warrant agreement to be
executed once the Company has successfully
completed a new
financing as
defined in Section 3c.
below. The schedule of warrants to purchase common shares of Guided Therapeutics is listed
below:

 

(i) 

Warrants to purchase ___________ shares at $0.20 (twenty
cents) each.

(ii) 

Warrants to purchase __________
shares at $0.25 (twenty-five cents)
each.

(iii) 

Warrants to purchase __________
shares at $0.75
(seventy-five cents) each.

 

All warrants will be exercisable immediately upon
issuance and
will expire after three years. Warrants will
not have a cashless
exercise provision unless
they are not registered
within six (6) months of
issuance.

 

c. 

Both parties agree
that the exchange of debt for equity
contemplated by
this Agreement shall occur once the Company has
successfully raised a minimum of
one million dollars ($1,000,000)
in a new
financing.

 

d. 

A 10%
blocker shall
be effected such that the Creditor agrees to restrict its
holdings of the Company's Common
Shares to
less
than 10% of the total number of the
Company’s outstanding common shares at one
point in time.

 

 

2

 

  

4. 

Representations
and Warranties of the Company. The Company hereby makes the following
representations and warranties to Creditor:

 

(a) 

Authorization;
Enforcement. The Company has
the requisite corporate power and authority to enter into and to
consummate the transactions, contemplated
by this Agreement and otherwise to carry out its obligations
hereunder The execution and delivery of this Agreement by the
Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company's stockholders in connection he11 with or
therewith. This Agreement have been (or upon delivery will have
been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the
valid and binding obligations of the Company enforceable again t
the Company in accordance with their terms,
except: {i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
there laws of general application affecting enforcement of
creditors' rights generally, ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and
contribution pro

may
be limited by applicable law.

 

(b) 

Issuance of the
Securities. The
Securities are duly authorized and, hence issued and paid for in
accordance with this Agreement, will be duly and validly issued,
fully paid and non-assessable, free and clear of all Liens imposed
by the Company.
The shares of Common Stock underlying
the Securities (if any), when issued in accordance with
the.terms of the Securities, will be validly
issued, fully paid and non-assessable, free and clear of
all Liens imposed by the Company other than restrictions on
transfer required by law.

 

5. Representations and
Warranties of the Creditor. Creditor hereby represents and  warrants
as of the date hereof and as of the Closing Date to the Company as
follows (unless as of a specific date therein):

 

(a)                   Own
Account. Creditor understands that the Securities are "restricted
securities":
and have not been registered under the
Securities Act or any applicable state securities law and is
acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or
any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing and such Securities in violation of the Securities Act
or any applicable state securities law and as no direct or indirect
arrangement or understandings with any other Creditors to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such
Creditor's right to sell the
Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws). The
Creditor is acquiring the Securities hereunder in the ordinary
course of its business.

 

(b)                   Creditor's
Status. At the time the Creditor was offered the Securities, it was
and as of the date hereof it is, an "accredited investor'' as
defined in Rule 501 (a) under the Securities Act.

(c)             Experience
of Creditor. Creditor, either alone or together representatives,
has such knowledge, sophistication and experience in business and
fin matters so as to be capable of evaluating the merits and risks
of the prospective invest in the Securities, and has so evaluated
the merits and risks of such investment. Creditor is
able to bear the economic risk of an investment in the Securities
and, present time,
is able to afford a complete loss of
such investment.

 

6.            Release.
The Creditor acknowledges and agrees
that it shall have no her rights or interest in, and shall
not receive any further consideration, payment or distribution of
any kind with respect to, the Obligations. In such regard, the
Creditor hereby waives, relinquishes, remises and releases all
rights, claims, interests or liabilities, known and own, of any
nature whatsoever in law or equity which the Creditor may
previously have had o may now or hereafter have as against or to
receive from the Company arising out of, resulting from or relating
to the Obligations or any rights or interest of the Creditor with
respect thereto.

 

7.            Transfer
Restrictions. The Securities
may only be disposed of in compliance with state and federal
securities laws.
In connection with any transfer of
Securities other than pursuant to an effective registration
statement or Rule 144 under the Securities Act, o the Company or to
an Affiliate of a Creditor, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration o such 1 transferred
Securities under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms
of this Agreement. The Creditors agree to the imprinting of a
legend on any of the Securities in the following
form:

 

 

3

 

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO
WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE)] HAS [NOT] BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (“THE
"SECURITIES ACT"), AND
ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A. TRANSACTION
NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE]
[CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

8. Further
Assurances. The Creditor shall hereafter, without further
consideration execute and deliver promptly to the Company such
further consents,
waivers,
assignments,
endorsements and other documents and
instruments, and to take all such further
actions, as the Company
may from time to time reasonably request with respect to the
exchange and satisfaction of the Obligations Interest and the
consummation in full thereof.

 

9.            Successors
and Assigns. This Agreement is
binding upon,
and shall inure t
the

benefit of, the parties hereto and their
respective successors and assigns.

10.            Counterparts.
This Agreement may be executed in
multiple counterparts,
each of which shall be deemed
an original and all of which, when taken
together, shall constitute one and the same
instrument.

 

IN WITNESS WHEREOF, the parties
hereto have affixed their hands and seal by signing this Agreement
as of the day and year first above written.

 

 

[Signatures on Following Page]

 

 

 

4

 

  

 

Company:

 

Guided
Therapeutics, Inc.

 

By:
__________________________

 

Name:
Gene Cartwright

 

Title:
CEO

 

 

 

 

 

             Creditor:

 

 

By:
__________________________

 

Name:
________________________

 

For:
________________________

 

Address:
_____________________

 

 

 

 

5gthp_ex1044

 

Exhibit 10.44

 

 SECURITY
AGREEMENT

This SECURITY AGREEMENT, dated as of December 30,
2019 (this “Agreement”),
is among Guided Therapeutics, Inc., a Delaware corporation (the
“Company”),
all of the Subsidiaries of the Company (such subsidiaries, the
“Guarantors” and together with the Company, the
“Debtors”)
and the holders (including their endorsees, transferees and assigns
collectively, the “Secured
Parties”) signatory to
that certain Securities Purchase Agreement, dated as of December
30, 2019 (“Purchase
Agreement”) for the
issuance of the of shares of Series D Convertible Preferred Stock
(“Preferred
Stock”) which are
exchangeable into the Company’s 12% Senior Secured
Convertible Debentures due three (3) years following their
issuance, in the original aggregate principal amount of $738,000.00
(collectively, the “Debentures”).

W I T N E S S E T H:

WHEREAS, in order to induce the Secured Parties to
purchase the shares of Series D Convertible Preferred Stock and
extend the loans evidenced by the Debentures, each Debtor has
agreed to execute and deliver to the Secured Parties this Agreement
and to grant the Secured Parties, pari passu
with each other Secured Party and
through the Agent (as defined in Section 18 hereof), a security
interest in certain property of such Debtor to secure the prompt
payment, performance and discharge in full of all of the
Company’s obligations under the Debentures and Series D
Convertible Preferred Stock.

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

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

(a) “Collateral”
means the collateral in which the Secured Parties are granted a
security interest by this Agreement and which shall include the
following personal property of the Debtors, whether presently owned
or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation, all proceeds
from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith,
and all dividends, interest, cash, notes, securities, equity
interest or other property at any time and from time to time
acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined
below):

 

 

1

 

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

Debtor’s
businesses and all improvements thereto; and (B) all
inventory;

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

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

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

(v)
All commercial tort claims;

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

(vii)
All investment property;

(viii)
All supporting obligations;

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

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

 

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

 

 

2

 

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

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

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

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

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

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

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

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

(i) “UCC” means the Uniform Commercial Code of the
State of New York and or any other applicable law of any state or
states which has jurisdiction with respect to all, or any portion
of, the Collateral or this Agreement, from time to time. It is the
intent of the parties that defined terms in the UCC should be
construed in their broadest sense so that the term
“Collateral” will be construed in its broadest sense.
Accordingly if there are, from time to time, changes to defined
terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are
broader than the amended definitions, the existing ones shall be
controlling.

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

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

 

3

 

 

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

(a)
Each Debtor has the requisite corporate, partnership, limited
liability company or other power and authority to enter into this
Agreement and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by each Debtor of this
Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and
no further action is required by such Debtor. This Agreement has
been duly executed by each Debtor. This Agreement constitutes the
legal, valid and binding obligation of each Debtor, enforceable
against each Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to
or affecting the rights and remedies of creditors and by general
principles of equity.

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

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

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

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

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

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

paragraph,
the recordation of the Intellectual Property Security Agreement (as
defined in Section 4(p) hereof) with respect to copyrights and
copyright applications in the United States Copyright Office
referred to in paragraph (m), the execution and delivery of deposit
account control agreements satisfying the requirements of Section
9-104(a)(2) of the UCC with respect to each deposit account of the
Debtors, and the delivery of the certificates and other instruments
provided in Section 3, no action is necessary to create, perfect or
protect the security interests created hereunder. Without limiting
the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property
Security Agreement, and the execution and delivery of said deposit
account control agreements, no consent of any third parties and no
authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required for (i) the execution, delivery and performance of this
Agreement, (ii) the creation or perfection of the Security
Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Agent and the Secured Parties
hereunder.

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

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

 

4

 

 

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

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

(k)
Except for Permitted Liens (as defined in the Debentures), each
Debtor shall at all times maintain the liens and Security Interests
provided for hereunder as valid and perfected first priority liens
and security interests in the Collateral in favor of the Secured
Parties until this Agreement and the Security Interest hereunder
shall be terminated pursuant to Section 14 hereof. Each Debtor
hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all
Collateral for the account of the Secured Parties. At the request
of the Agent, each Debtor will sign and deliver to the Agent on
behalf of the Secured Parties at any time or from time to time one
or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Agent and will pay the cost of filing the same
in all public offices wherever filing is, or is deemed by the Agent
to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the
foregoing, each Debtor shall pay all fees, taxes and other amounts
necessary to maintain the Collateral and the Security Interests
hereunder, and each Debtor shall obtain and furnish to the Agent
from time to time, upon demand, such releases and/or subordinations
of claims and liens which may be required to maintain the priority
of the Security Interests hereunder.

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

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

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

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

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

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

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

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

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

 

5

 

 

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

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

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

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

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

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

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

 

 

 

6

 

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

(bb)
Each Debtor, in its capacity as issuer, hereby agrees to comply
with any and all orders and instructions of Agent regarding the
Pledged Interests consistent with the terms of this Agreement
without the further consent of any Debtor as contemplated by
Section 8-106 (or any successor section) of the UCC. Further, each
Debtor agrees that it shall not enter into a similar agreement (or
one that would confer “control” within the meaning of
Article 8 of the UCC) with any other person or entity.

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

(dd)
If there is any investment property or deposit account included
as

Collateral
that can be perfected by “control” through an account
control agreement, the

applicable
Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Agent, to be entered
into and delivered to the Agent for the benefit of the Secured
Parties.

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

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

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

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

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

 

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

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

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

 

 

7

 

 

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

 

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

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

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

5. Effect of Pledge on Certain
Rights. If any of the
Collateral subject to this Agreement consists of nonvoting equity
or ownership interests (regardless of class, designation,
preference or rights) that may be converted into voting equity or
ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of
the other stock or assets of the issuer), it is agreed that the
pledge of such equity or ownership

interests
pursuant to this Agreement or the enforcement of any of
Agent’s rights hereunder shall

not
be deemed to be the type of event which would trigger such
conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which any Debtor is
subject or to which any Debtor is party.

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

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

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

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

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

 

 

 

8

 

7. Duty To Hold In
Trust.

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

(b)
If any Debtor shall become entitled to receive or shall receive any
securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged
Securities acquired after the date hereof, or any options,
warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of
capital, or issued in connection with any reorganization of such
Debtor or any of its direct or indirect subsidiaries) in respect of
the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), such
Debtor agrees to (i) accept the same as the agent of the Secured
Parties;

(ii)
hold the same in trust on behalf of and for the benefit of the
Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to Agent on or before the close of
business on the fifth business day following the receipt thereof by
such Debtor, in the exact form received together with the Necessary
Endorsements, to be held by Agent subject to the terms of this
Agreement as Collateral.

 

8. Rights and Remedies Upon
Default.

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

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

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

 

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

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

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

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

 

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

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

 

9

 

 

9. Applications of
Proceeds. The proceeds of any
such sale, lease or other disposition of the Collateral hereunder
or from payments made on account of any insurance policy insuring
any portion of the Collateral shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing
for sale, selling, and the like (including, without limitation, any
taxes, fees and other costs incurred in connection therewith) of
the Collateral, to the reasonable attorneys’ fees and
expenses incurred by the Agent in enforcing the Secured
Parties’ rights hereunder and in connection with collecting,
storing and disposing of the Collateral, and then to satisfaction
of the Obligations pro rata among the Secured Parties (based on
then-outstanding principal amounts of Debentures at the time of any
such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall
pay to the applicable Debtor any surplus proceeds. If, upon the
sale, license or other disposition of the Collateral, the proceeds
thereof are insufficient to pay all amounts to which the Secured
Parties are legally entitled, the Debtors will be liable for the
deficiency, together with

interest thereon, at the rate of 18% per annum or
the lesser amount permitted by applicable law (the
“Default
Rate”), and the
reasonable fees of any attorneys employed by the Secured Parties to
collect such deficiency. To the extent permitted by applicable law,
each Debtor waives all claims, damages and demands against the
Secured Parties arising out of the repossession, removal, retention
or sale of the Collateral, unless due solely to the gross
negligence or willful misconduct of the Secured Parties as
determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction.

10. Securities Law
Provision. Each Debtor
recognizes that Agent may be limited in its ability to effect a
sale to the public of all or part of the Pledged Securities by
reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively,
the “Securities
Laws”), and may be
compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged
Securities for their own account, for investment and not with a
view to the distribution or resale thereof. Each Debtor agrees that
sales so made may be at prices and on terms less favorable than if
the Pledged Securities were sold to the public, and that Agent has
no obligation to delay the sale of any Pledged Securities for the
period of time necessary to register the Pledged Securities for
sale to the public under the Securities Laws. Each Debtor shall
cooperate with Agent in its attempt to satisfy any requirements
under the Securities Laws (including, without limitation,
registration thereunder if requested by Agent) applicable to the
sale of the Pledged Securities by Agent.

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

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

 

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

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

 

 

10

 

15. Power of Attorney; Further
Assurances.

(a)
Each Debtor authorizes the Agent, and does hereby make, constitute
and appoint the Agent and its officers, agents, successors or
assigns with full power of substitution, as such Debtor’s
true and lawful attorney-in-fact, with power, in the name of the
Agent or such Debtor, to, after the occurrence and during the
continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the
Agent; (ii) to sign and endorse any financing statement pursuant to
the UCC or any invoice, freight or express bill, bill of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to
demand, collect, receipt for, compromise, settle and sue for monies
due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Agent, and at the expense
of the Debtors, at any time, or from time to time, to execute and
deliver any and all documents and instruments and to do all acts
and things which the Agent deems necessary to protect, preserve and
realize upon the Collateral and the Security Interests granted
therein in order to effect the intent of this Agreement and the
Debentures all as fully and effectually as the Debtors might or
could do; and each Debtor hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest and shall be irrevocable
for the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding. The designation set forth herein
shall be deemed to amend and supersede any inconsistent provision
in the Organizational Documents or other documents or agreements to
which any Debtor is subject or to which any Debtor is a party.
Without limiting the generality of the foregoing, after the
occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any
patents, trademarks, copyrights or other Intellectual Property with
the United States Patent and Trademark Office and the United States
Copyright Office.

(b) On a continuing basis, each Debtor will make,
execute, acknowledge, deliver, file and record, as the case may be,
with the proper filing and recording agencies in any jurisdiction,
including, without limitation, the jurisdictions indicated
on Schedule C
attached hereto, all such instruments,
and take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Agent, to perfect the
Security Interests granted hereunder and otherwise to carry out the
intent and purposes of this Agreement, or for assuring and
confirming to the Agent the grant or perfection of a perfected
security interest in all the Collateral under the UCC. (c) Each
Debtor hereby irrevocably appoints the Agent as such Debtor’s
attorney-in-fact, with full authority in the place and instead of
such Debtor and in the name of such Debtor, from time to time in
the Agent’s discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in
its sole discretion, of one or more financing or continuation
statements and amendments thereto, relative to any of the
Collateral without the signature of such Debtor where permitted by
law, which financing statements may (but need not) describe the
Collateral as “all assets” or “all personal
property” or words of like import, and ratifies all such
actions taken by the Agent. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be
outstanding.

 

1.

Notices. All notices, requests, demands and other
communications hereunder shall be subject to the notice provision
of the Purchase Agreement (as such term is defined in the
Debentures).

2.

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

18. Appointment of
Agent. The Secured Parties
hereby appoint Fieldhouse Capital Management Inc. to act as their
agent (“Fieldhouse”
or “Agent”)
for purposes of exercising any and all rights and remedies of the
Secured Parties hereunder. Such appointment shall continue until
revoked in writing by a Majority in Interest, at which time a
Majority in Interest shall appoint a new Agent, provided that
Fieldhouse may not be removed as Agent unless Fieldhouse shall then
hold less than $738,000 in principal amount of
Debentures;provided,
further,
that such removal may occur only if each of the other Secured
Parties shall then hold not less than an aggregate of $738,000 in
principal amount of Debentures. The Agent shall have the rights,
responsibilities and immunities set forth in Annex B
hereto.

19. Miscellaneous.

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

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

(c)
This Agreement, together with the exhibits and schedules hereto,
contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement
and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Debtors and the Secured Parties holding 67% or more of the
principal amount of Debentures then outstanding, or, in the case of
a waiver, by the party against whom enforcement of any such waived
provision is sought.

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

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

 

11

 

 

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

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

(h)
Except to the extent mandatorily governed by the jurisdiction or
situs where the Collateral is located, all questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Except to the
extent mandatorily governed by the jurisdiction or situs where the
Collateral is located, each Debtor agrees that all proceedings
concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Debentures
(whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of
Manhattan. Except to the extent mandatorily governed by the
jurisdiction or situs where the Collateral is located, each Debtor
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such
proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.

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

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

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

liabilities,
damages, penalties, suits, costs and expenses which result from the
gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of
competent jurisdiction. This indemnification provision is in
addition to, and not in limitation of, any other indemnification
provision in the Debentures, the Purchase Agreement (as such term
is defined in the Debentures) or any other agreement, instrument or
other document executed or delivered in connection herewith or
therewith.

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

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

 

 

[SIGNATURE
PAGES FOLLOW]

 

 

12

 

IN WITNESS WHEREOF, the parties hereto
have caused this Security
Agreement to be

duly executed on the day and year
first
above written.

GUIDED THERAPEUTICS, INC.

 

By: /s/ Gene S.
Cartwright

 

Name: Gene S.
Cartwright

Title: CEO

 

INTERSCAN, INC.

By: /s/ Gene S.
Cartwright

 

Name: Gene S.
Cartwright

Title: CEO

 

 

 

[SIGNATURE PAGE OF
HOLDERS FOLLOWS]

 

 

13

 

[SIGNATURE PAGE OF HOLDERS TO GTHP SA] Name of
Investing Entity: __________________________ Signature of Authorized
Signatory of Investing entity:
_________________________ Name of Authorized Signatory:
_________________________ Title of Authorized Signatory:
__________________________

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

 

 

14

 

SCHEDULE
A

Principal Place of
Business of Debtors:

Locations Where
Collateral is Located or Stored:

SCHEDULE
B

SCHEDULE
C

 

SCHEDULE
D

Legal
Names and Organizational Identification Numbers

 

SCHEDULE
E

Names;
Mergers and Acquisitions

 

SCHEDULE
F

Intellectual
Property

SCHEDULE
G

Account
Debtors

 

SCHEDULE
H

Pledged
Securities

 

 

15

 

ANNEX
A to SECURITY AGREEMENT

 

FORM
OF ADDITIONAL DEBTOR JOINDER

Security Agreement
dated as of December 30, 2019 made by Guided Therapeutics, Inc. and
its subsidiaries party thereto from time to time, as Debtors to and
in favor of the Secured Parties identified therein (the
“Security
Agreement”)

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

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

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

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

 

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

By:
Name: Title:

Address:

Dated:

 

 

16

 

ANNEX
B to SECURITY AGREEMENT

 

THE
AGENT

1.

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

2.

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

 

3.
Lack of Reliance on the
Agent. Independently and without reliance upon the Agent,
each Secured Party, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent investigation of
the financial condition and affairs of the Company and its
subsidiaries in connection with such Secured Party’s
investment in the Debtors, the creation and continuance of the
Obligations, the transactions contemplated by the Transaction
Documents, and the taking or not taking of any action in connection
therewith, and (ii) its own appraisal of the creditworthiness of
the Company and its subsidiaries, and of the value of the
Collateral from time to time, and the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Secured Party with any credit, market or other
information with respect thereto, whether coming into its
possession before any Obligations are incurred or at any time or
times thereafter. The Agent shall not be responsible to the Debtors
or any Secured Party for any recitals, statements, information,
representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith, or
for the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency
of the Agreement or any other Transaction Document, or for the
financial condition of the Debtors or the value of any of the
Collateral, or be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or
conditions of the Agreement or any other Transaction Document, or
the financial condition of the Debtors, or the value of any of the
Collateral, or the existence or possible existence of any default
or Event of Default under the Agreement, the Debentures, the
Certificate of Designation of the Series D Convertible Preferred
Stock or any of the other Transaction Documents.

 

 

17

 

 

1.

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

2.

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

3.

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

 

 

 

18

 

7.
Resignation by the
Agent.

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

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

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

 

8.
Rights with respect to
Collateral. Each
Secured Party agrees with all other Secured Parties and the Agent
(i) that it shall not, and shall not attempt to, exercise any
rights with respect to its security interest in the Collateral,
whether pursuant to any other agreement or otherwise (other than
pursuant to this Agreement), or take or institute any action
against the Agent or any of the other Secured Parties in respect of
the Collateral or its rights hereunder (other than any such action
arising from the breach of this Agreement) and (ii) that such
Secured Party has no other rights with respect to the Collateral
other than as set forth in this Agreement and the other Transaction
Documents. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations under the
Agreement. After any retiring Agent’s resignation or removal
hereunder as Agent, the provisions of the Agreement including this
Annex B shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.

 

19

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