Document:

Reimbursement Agreement

 Exhibit 10.9 
  
 REIMBURSEMENT AGREEMENT 
  
 between 
  
 BUY.COM, INC. 
  
 and 
  
 SCOTT A. BLUM 
 and the 
 SCOTT A. BLUM SEPARATE 
 PROPERTY TRUST U/D/T 8/2/95 

 TABLE OF CONTENTS 
  

					
	 SECTION 1
	 	DEFINITIONS	  	1
			
	 1.1
	 	Certain Defined Terms	  	1
			
	 1.2
	 	Accounting Terms	  	4
			
	 1.3
	 	Other Definitional Provisions	  	5
			
	 SECTION 2
	 	REIMBURSEMENT OBLIGATIONS	  	5
			
	 2.1
	 	Payments	  	5
			
	 2.2
	 	Reimbursement Obligations	  	5
			
	 2.3
	 	Interest on the Relateds	  	6
			
	 2.4
	 	Liens, Permitted Liens	  	6
			
	 2.5
	 	Usury Savings	  	6
			
	 2.6
	 	Termination	  	6
			
	 SECTION 3
	 	CONDITIONS TO GUARANTIES	  	7
			
	 3.1
	 	Conditions to Execute Each Guaranty	  	7
			
	 SECTION 4
	 	COMPANY’S REPRESENTATIONS AND WARRANTIES	  	7
			
	 4.1
	 	Organization, Standing and Corporate Power	  	7
			
	 4.2
	 	Related Documents Authorized	  	8
			
	 4.3
	 	No Conflict	  	8
			
	 4.4
	 	Litigation	  	8
			
	 4.5
	 	Financial Condition	  	8
			
	 4.6
	 	Deposit Accounts	  	9
			
	 4.7
	 	Disclosure	  	9
			
	 4.8
	 	Environmental Matters	  	9
			
	 4.9
	 	Title to Properties; Liens	  	9
			
	 4.10
	 	Payment of Taxes	  	10
			
	 4.11
	 	Regulation U	  	10
			
	 4.12
	 	Licenses, Permits, etc.	  	10

  

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	 SECTION 5
	 	COMPANY’S AFFIRMATIVE COVENANTS	  	11
			
	 5.1
	 	Corporate Existence, Etc.	  	11
			
	 5.2
	 	Payment of Taxes and Claims	  	11
			
	 5.3
	 	Maintenance of Properties; Insurance	  	11
			
	 5.4
	 	Financial Information	  	11
			
	 5.5
	 	Inspection	  	11
			
	 5.6
	 	Compliance with Laws, Etc.	  	12
			
	 5.7
	 	Notice of Certain Events	  	12
			
	 5.8
	 	Intentionally Omitted	  	12
			
	 SECTION 6
	 	COMPANY’S NEGATIVE COVENANTS	  	12
			
	 6.1
	 	Intentionally Omitted	  	12
			
	 6.2
	 	intentionally Omitted	  	12
			
	 6.3
	 	Liens	  	12
			
	 6.4
	 	Restricted Payments	  	13
			
	 6.5
	 	Relateds, Investments, Contingent Liabilities	  	13
			
	 6.6
	 	Consolidation, Merger, Acquisition	  	14
			
	 6.7
	 	Asset Sales	  	14
			
	 6.8
	 	Agreements; Billing Practices	  	14
			
	 6.9
	 	Remedies of Guarantors	  	15
			
	 SECTION 7
	 	EVENTS OF DEFAULT	  	15
			
	 7.1
	 	Failure to Pay	  	15
			
	 7.2
	 	Breach of Covenant	  	15
			
	 7.3
	 	Breach of Representation or Warranty	  	15
			
	 7.4
	 	Intentionally Omitted	  	15
			
	 7.5
	 	Bankruptcy or Insolvency	  	15

  

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	 7.6
	 	Intentionally Omitted	  	16
			
	 7.7
	 	Intentionally Omitted	  	16
			
	 7.8
	 	Intentionally Omitted	  	16
			
	 7.9
	 	Invalidity of Related Documents	  	16
			
	 SECTION 8
	 	MISCELLANEOUS	  	17
			
	 8.1
	 	Survival of Warranties	  	17
			
	 8.2
	 	Failure or Indulgence Not Waiver	  	17
			
	 8.3
	 	Modification	  	17
			
	 8.4
	 	Notices	  	18
			
	 8.5
	 	Severability	  	18
			
	 8.6
	 	Effectiveness; Binding Effect; Governing Law	  	18
			
	 8.7
	 	Waiver of Jury Trial	  	19
			
	 8.8
	 	Consent to Jurisdiction	  	19
			
	 8.9
	 	Assignability	  	19
			
	 8.10
	 	Costs and Expenses	  	19
			
	 8.11
	 	Counterparts	  	20
			
	 8.12
	 	Headings	  	20

  

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 EXHIBIT 1 - NONEXCLUSIVE LIST OF GUARANTIES 
  

 -iv- 

 REIMBURSEMENT AGREEMENT 
  
 This Reimbursement Agreement (the “Agreement”) is dated as of the last date executed by the parties below, and
entered into by and between Buy.com, Inc., a Delaware corporation (the “Company”) on one part, and Scott A. Blum, an adult individual with an address at [***] (“Blum”) and the Scott A. Blum Separate Property Trust U/D/T 8/2/95, a trust having an address at [***], by and through Scott A. Blum as trustee (the
“Trust” and, together with Blum, the “Guarantors”) on the other part. 
  
 RECITALS 
  
 WHEREAS, the
Company has or may enter into agreements or other business relationships (as such may be amended, supplemented or replaced, the “Agreements”) with vendors and other third parties (collectively, together with their successors and assigns,
the “Suppliers”) for the provision of goods and/or services, which Agreements may involve the provision of certain trade credit and/or other financial accommodations by Suppliers to Company; 
  
 WHEREAS, the Guarantors have agreed or may in the future agree, subject to
the terms and conditions contained herein, to execute in favor of the Suppliers one or more guaranties or other sureties, including through the provision, posting or collateralizing of a letter of credit or other provision of collateral or security
(collectively, and in whatever form, the “Guaranties”) to guaranty payment of the Company’s obligations under the Agreements (the “Indebtedness”) or to support the credit of Company with Suppliers or other third parties; and

  
 WHEREAS, the Guarantors are willing to execute the Guaranties
in favor of the Suppliers and to make certain financial accommodations to Company as set forth herein if and only if the Company covenants to reimburse the Guarantors for all obligations of the Guarantors under the Guaranties (the
“Guarantors’ Liabilities”) on the terms and conditions set forth herein and also executes a Security Agreement granting Guarantors a first priority Lien (subject only to Permitted Liens) on the Collateral to secure the reimbursement
and other obligations of the Company to the Guarantors hereunder; 
  
 NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows: 
  

	SECTION 1	DEFINITIONS 

  
 1.1 Certain Defined Terms 
  
 The following terms used in this Agreement shall have the following meanings: 
  
 “Agreement” means this Reimbursement Agreement dated as of the last day executed and all
schedules and exhibits hereto, as such may be amended or supplemented from time to time. 

	[***] 	Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange
Commission. 

  

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 “Business Day” means any day excluding Saturday, Sunday and any day on
which the lending institutions located in the states of California or New York are authorized by law or other governmental action to close. 
  
 “Capital Lease” means any lease of any property (whether real, personal or mixed) by the Company or any of its
Subsidiaries as lessee that is accounted for as a capital lease on the balance sheet of such entity in accordance with GAAP. 
  
 “Collateral Documents” means (i) the Security Agreement, and (ii) any other security agreements, pledge agreements,
assignments, financing statements or other agreement, document, instrument or certificate executed or delivered by the Company or any of its Subsidiaries pursuant to this Agreement. 
  
 “Collateral” means, collectively, all of the real, personal and mixed property (including
capital stock) in which Liens are purported to be granted by the Collateral Documents. 
  
 “Company SEC Documents” has the meaning given to that term in subsection 4.5 hereof. 
  
 “Company” has the meaning assigned in the
introductory clause of this Agreement. 
  
 “Dollars” or “$” means dollars in the lawful currency of the United States of America. 
  
 “Environmental Laws” means any and all current or future statutes, ordinances, orders, rules, regulations, guidance
documents, judgments, governmental authorizations, or any other requirements of governmental authorities relating to (i) environmental matters, or (ii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to the Company or its Subsidiaries or any of its or their facilities. 
  
 “Event of Default” means each of the events set forth in Section 7 hereof. 
  
 “GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination. 
  

 -2- 

 “Governmental Authority” means any federal, state or local governmental
authority, agency or court in the United States, or other comparable Execution Copy or similar governmental authority, agency or court in a jurisdiction outside of the United States, in each case applicable to the Company or its Subsidiaries.

  
 “Guaranties” has the meaning
given to that term in the recitals and includes, without limitation, the guaranties and other accommodations referenced on Exhibit 1 hereto, as such Exhibit may be amended from time to time. 
  
 “Guarantors” has the meaning assigned in
the introductory clause of this Agreement. 
  
 “Indebtedness” has the meaning given to that term in the recitals. 
  
 “Lien” means any lien, mortgage, pledge, security interest, charge, hypothecation or encumbrance of any kind, including
any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest. 
  
 “Payment” or “Payments” means one or more of the payments made by either Guarantor to the Suppliers, or
any of them, under any Guaranty in respect of the Liabilities, including without limitation any and all expenses incurred by the Suppliers, or any of them, and paid by a Guarantor under a Guaranty. 
  
 “Permitted Liens” means each of the
encumbrances set forth in subsection 6.3 hereof. 
  
 “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever
nature. 
  
 “Regulation D” means
Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time. 
  
 “Reimbursement Obligations” means all obligations of every nature of the Company under this Agreement and the other
Related Documents, whether or not such obligation is reduced to judgment, liquidated, unliquidated, fixed or contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such obligation is discharged, stayed
or otherwise affected by any bankruptcy, insolvency, reorganization or other similar proceeding. Without limiting the generality of the foregoing, the Reimbursement Obligations of the Company include the obligations to pay principal, interest,
charges, expenses, fees, reasonable attorneys’ fees and disbursements and other amounts payable by the Company under this Agreement or any other Related Document to which it is a party and to reimburse any amount in respect of any of the
foregoing that a Guarantor, in its sole discretion, may elect to pay or advance on behalf of the Company in accordance with the Security Agreement. 
  

 -3- 

 “Related Documents” means this Agreement and the Collateral Documents.

  
 “Restricted Payment” means
(i) any dividend or other distribution, direct or indirect, in respect of or on account of any shares of any class of stock of the Company now or hereafter outstanding, (ii) any redemption, retirement, sinking find or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of stock of the Company now or hereafter outstanding (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of the Company now or hereafter outstanding; and (iv) any payment, discharge or satisfaction of any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other
than (A) the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included in the Company SEC Documents or specifically listed or referred to in a writing from the Company to the Guarantors, (B) the payment of any indebtedness, claims,
liabilities or obligations incurred in the ordinary course of the Company’s business consistent with past practice, (C) payments made with respect to the acquisition of assets under subsection 6.6 hereof; or (D) payments otherwise permitted or
required by the terms of any other agreement, relationship or obligation between Company and either Guarantor. 
  
 “Security Agreement” means any security agreement(s) executed and delivered by the Company in favor of either or both
Guarantors, as such security agreement(s) may be amended or supplemented or otherwise modified from time to time, including without limitation that Security Agreement entered into by and between the Company and the Guarantors dated of even date
herewith. 
  
 “Subsidiary” means
a corporation, partnership, trust, limited liability company or other business entity of which more than 50% of the shares of stock or other ownership interests having ordinary voting power (without regard to the occurrence of any contingency) to
elect a majority of the board of directors or other managers of such entity are at the time owned, directly, or indirectly through one or more Subsidiaries, or both, by the Company. 
  
 “Suppliers” has the meaning given to such term in the recitals. 
  
 “Termination Date” has the meaning given to
that term in subsection 2.6 hereof. 
  
 1.2 Accounting
Terms 
  
 For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. 
  

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 1.3 Other Definitional Provisions 
  
 References to “Sections” and “subsections” shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in subsection 1.1 hereof may, unless the context otherwise requires, be used in the singular or the plural depending on the reference. 
  

	SECTION 2	REIMBURSEMENT OBLIGATIONS 

  
 2.1 Payments 
  
 A. Payments Under Guaranty. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Company
herein set forth, the Guarantors hereby agree to execute and deliver to the Suppliers such of the Guaranties as the Guarantors deem appropriate in their sole and absolute discretion. Notwithstanding anything to the contrary herein, in any other
agreement or relationship between Company or either Guarantor or under applicable law, neither Guarantor shall be under any obligation to execute any Guaranty. 
  

2.2 Reimbursement Obligations 
  
 A. Mandatory Repayments. Each Guarantor shall notify Company of each Payment made by such Guarantor on the day that such Payment was made, and the Company
hereby unconditionally promises and agrees that it shall pay to such Guarantor the principal amount of such Payment, together with accrued interest thereon, if any, (i) on the same day as the notice of the making of such Payment if the notice from
Guarantor to Company of the making of such Payment was given on or prior to 10:00 a.m. (California time) on such day or (ii) on the day following the notice of the making of such Payment if the notice from Guarantor to Company of the making of such
Payment was given after 10:00 a.m. (California time) on such day. All repayments of any Payment shall include payment of accrued interest on the principal amount so repaid, and amounts so received by the Guarantor shall be applied first to the
payments of amounts due under subsection 8.10 hereof, then to the payment of interest accrued on such Reimbursement Obligations, and finally to the principal amounts of any such Reimbursement Obligations. 
  
 B. Manner and Time of Repayment. All payments of principal, interest and fees
hereunder shall be made without defense, set off and counterclaim and in same day funds and delivered to the appropriate Guarantor not later than 3:00 p.m. (California time) on the date due at the address stated below for delivering notice to such
Guarantor, or at such other address as such Guarantor may inform the Company by written notice; funds received by a Guarantor after that time shall be deemed to have been paid by the Company on the next succeeding Business Day. 
  
 C. Repayments on Non-Business Days. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, the payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder. 
  

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 2.3 Interest on the Relateds 
  
 A. Rate of Interest. Company’s Reimbursement Obligations hereunder shall bear interest on the unpaid principal amount
thereof from the date the respective Payment is made through the date when Reimbursement Obligation is fully, finally and irrevocably paid at a rate equal to 10.5%. 
  
 B. Default Interest. Upon and during the occurrence of an Event of Default hereunder, all outstanding Reimbursement
Obligations shall bear interest payable upon demand at a rate that is equal to 2.5% per annum in excess of the rate of interest otherwise payable under this Agreement. 
  
 C. Computation of Interest. Interest on the Reimbursement Obligations shall be computed on the basis of a 360-day year and
the actual number of days elapsed in the period during which it accrues. 
  
 2.4 Liens, Permitted Liens 
  
 All Reimbursement Obligations shall be secured by first priority Liens and security interests in and to all Collateral as contemplated by this Agreement and the other Related Documents, subject only to Permitted Liens. 
  
 2.5 Usury Savings 
  
 Notwithstanding any provision of any Related Document, Company is not and
shall not be required to pay interest at a rate or any fee or charge in an amount prohibited by applicable law. If interest or any fee or charge payable on any date would be in a prohibited amount, then such interest, fee or charge will be
automatically reduced to the maximum amount that is not prohibited, and any interest, fee or charge for subsequent periods (to the extent not prohibited by applicable law) will be increased accordingly until the Guarantors receive payment, of
the full amount of each such reduction. To the extent that any prohibited amount is actually received by a Guarantor, then such amount will be automatically deemed to constitute a repayment of principal indebtedness hereunder. 
  
 2.6 Termination 
  
 On and as of the date (the “Termination Date”) that (i) the
Liabilities of the Guarantors under each Guaranty have been cancelled or terminated in whole, (ii) all the Payments have been repaid in full by the Company, and (iii) all other Reimbursement Obligations under this Agreement and the other Related
Documents, including without limitation those arising under subsection 8.10 herein, have been fully, finally and irrevocably paid in full; then this Agreement shall terminate and be of no further force or effect, and neither the Guarantors nor the
Company shall have any further rights, duties or obligations hereunder. 
  

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	SECTION 3	CONDITIONS TO GUARANTIES 

  
 The obligation of the Guarantors to execute the Guaranties and to arrange for the financial accommodations to Company hereunder is subject to the
satisfaction of all of the following conditions: 
  
 3.1
Conditions to Execute Each Guaranty 
  
 The agreement of
the Guarantors to execute any Guaranty and to arrange for the financial accommodations to Company hereunder is and shall be subject to prior or concurrent satisfaction of the following conditions: 
  
 A. The Guarantor shall have received executed and acknowledged (where
applicable) originals of this Agreement and the other Related Documents to which the Company is a party. 
  
 B. The Guarantors shall have received properly authorized and executed copies of the following: (i) the Security Agreement, (ii) the UCC-1 financing
statement(s) executed in connection with the Security Agreement, (iii) the Grant of Patent Security Interest substantially in the form attached to the Security Agreement, and (iv) the Grant of Trademark Interest substantially in the form attached to
the Security Agreement. 
  
 C. Representations and Warranties;
Performance of Agreements. The Company shall have delivered to the Guarantors an Officer’s Certificate, in form and substance satisfactory to each Guarantor, to the effect that the representations and warranties in Section 4 hereof are true,
correct and complete in all material respects on and as of the date hereof to the same extent as though made on and as of that date (or, to the extent such representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material respects on and as of such earlier date) and that the Company shall have performed in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the date hereof except as otherwise disclosed to and agreed to in writing by each Guarantor. 
  

	SECTION 4	COMPANY’S REPRESENTATIONS AND WARRANTIES 

  
 In order to induce the Guarantors to enter into this Agreement, to execute the Guaranties and to make the financial accommodations to Company hereunder,
the Company represents and warrants to the Guarantors that as of the date of execution of any Guaranty requested by Company the following statements are and shall be true, correct and complete, except as specifically disclosed on in writing to the
Guarantors: 
  
 4.1 Organization, Standing and Corporate
Power 
  
 The Company is and each of its Subsidiaries is a
corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate or limited liability company power and authority to carry on
its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business as a foreign corporation or limited 

  

 -7- 

 
liability company and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed would not have a material adverse effect on the Company. The Company has made available to the Guarantors or its affiliates
complete and correct copies of its certificate of incorporation and bylaws and the certificate of incorporation and bylaws or other organizational documents of its Subsidiaries, in each case as amended to the date of this Agreement. 
  
 4.2 Related Documents Authorized 
  
 As of the date hereof, or within two (2) days of the date hereof, and at all
times during the effectiveness of this Agreement, the execution, delivery and performance of the Related Documents (i) have been, or will be, duly authorized by all necessary corporate action on the part of the Company and (ii) do not require the
consent or approval of any Governmental Authority or other regulatory authority; are not in contravention of or conflict with any law or regulation or any term or provision of any material contract, in each case that would result in a Material
Adverse Change; and this Agreement has been duly executed and delivered by the Company and constitute legally valid and binding obligations of the Company, enforceable in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally. 
  
 4.3 No Conflict 
  
 As of the date hereof and at all times during the effectiveness of this Agreement, the execution, delivery and performance of this Agreement and the other
Related Documents will not breach or constitute a default under any material contract; and such execution, delivery and performance will not result in the creation or imposition of any lien, charge or encumbrance on, or security interest in, any of
its or any of its Subsidiaries’ property pursuant to the provisions of any of the foregoing, in each case that would result in a material adverse effect. 
  

4.4 Litigation 
  
 Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement and publicly available or as specifically disclosed in a
writing from the Company to the Guarantors, there is no suit, action, investigation, audit or proceeding pending or, to the knowledge of the Company, overtly threatened against the Company or any of its Subsidiaries. There is no decree, injunction,
judgment, order, ruling, assessment or writ of any Governmental Entity applicable to the Company or any of its Subsidiaries or to which any of its or their respective assets may be bound, and there is no other decree, injunction, judgment, order,
ruling, assessment or writ applicable to the Company or any of its Subsidiaries or to which any of its or their respective assets may be bound that would create a material adverse effect. 
  
 4.5 Financial Condition 
  
 The Company has since February 8, 2000 timely filed with the SEC any required reports and forms and other documents (the “Company SEC
Documents”). As of their respective dates, the Company SEC Documents complied in all material respects with the 

  

 -8- 

 
requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Documents and none of the Company SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents complied as to form, when filed, in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present, in all material respects, the financial position of the Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of the unaudited statements to normal year-end audit adjustments). Except as set forth in the Company SEC Documents filed prior to the date of this Agreement and publicly available and except
for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the most recent balance sheet included in the Company SEC Documents, neither the Company nor any of its Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a balance sheet of the Company and its consolidated Subsidiaries or in the
notes thereto. 
  
 4.6 Deposit Accounts 
  
 The Company shall maintain the same accounts with the same depository
institutions as it presently maintains as its primary cash accounts. 
  
 4.7 Disclosure 
  
 No information, exhibit or
report furnished to a Guarantor by or on behalf of the Company or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact
(known to the Company, in the case of any document not furnished by it) necessary in order to make the statements contained therein not misleading in light of the circumstances in which the same were made. 
  
 4.8 Environmental Matters 
  
 The Company has reasonably concluded that no event or condition has occurred
or is occurring with respect to the Company or any of its Subsidiaries relating to any Environmental Law, except as specifically disclosed in a writing from the Company to the Guarantors, which individually or in the aggregate has had or could
reasonably be expected to have a material adverse effect. 
  
 4.9
Title to Properties; Liens 
  
 The Company has previously
and specifically disclosed in writing to the Guarantors a list of each real property lease to which the Company or any of its Subsidiaries is a 

  

 -9- 

 
party. True and correct copies of each such real property lease, including all amendments thereto, have been made available to the Guarantors. Neither the
Company nor any of its Subsidiaries owns any real property. The Company and its Subsidiaries have good and marketable title to, or valid leasehold interests in, all their properties and assets except where such failure would not have a material
adverse effect on the Company. The tangible assets of the Company and each of its Subsidiaries are in a good state of maintenance and repair and are not materially defective except for ordinary wear and tear and are adequate for their current uses.

  
 4.10 Payment of Taxes 
  
 Each of the Company and its Subsidiaries has timely filed all material
federal, state, local and foreign tax returns, declarations, estimates, information returns, statements and reports (“Returns”) required to be filed by it through the date hereof and shall timely file all such Returns required to be filed
on or before the Termination Date. All such Returns are and will be true, complete and correct in all material respects. The Company and each of its Subsidiaries has paid and discharged (or the Company has paid and discharged on such
Subsidiary’s behalf) all material taxes due from them, other than such taxes as are adequately reserved for on the most recent financial statements contained in the SEC Documents filed prior to the date of this Agreement and publicly available.

  
 4.11 Regulation U 
  
 The Company and each of its Subsidiaries is not engaged, principally or as
one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System). 
  
 4.12 Licenses, Permits, etc. 
  
 Except as specifically disclosed in a writing from the Company to the
Guarantors, (a) to the best knowledge of the Company, the Company owns and possesses all material licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, necessary for the
operation of its business, without known conflict with the rights of others, in each case the failure of which would result in a material adverse effect; and (b) to the best knowledge of the Company, there is no material violation by any person of
any right of the Company with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Company, in each case the failure of which would result in a material adverse effect. 
  

 -10- 

	SECTION 5	COMPANY’S AFFIRMATIVE COVENANTS 

  
 The Company covenants and agrees that so long as either Guarantor has any obligations under any Guaranty in favor of the Suppliers, or any of them, or any
amounts or Reimbursement Obligations are owing or remain outstanding hereunder and unless this Agreement has been terminated pursuant to subsection 2.6 hereof, the Company shall do, and shall cause each of its Subsidiaries to do, all of the
following: 
  
 5.1 Corporate Existence, Etc. 
  
 At all times preserve and keep in full force and effect its and its
Subsidiaries’ corporate existence, rights, franchises and licenses material to its business and those of each of its Subsidiaries; provided, however, that the corporate existence of any such Subsidiary may be terminated if such
termination is in the best interest of the Company and is not materially disadvantageous to the Guarantors. 
  
 5.2 Payment of Taxes and Claims 
  
 Make or rescind any express or deemed election relating to taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to taxes, or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income tax return for the taxable year ending
December 31, 2001, except as may be required by applicable law; provided, however, nothing herein shall be deemed to prohibit the filing of the Company’s federal income tax return for the taxable year ended December 31, 2002. 
  
 5.3 Maintenance of Properties; Insurance 
  
 Maintain or cause to be maintained in good repair, working order and
condition all material properties used in the business of the Company and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. The Company and each of its Subsidiaries will
maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its properties and business and the properties and business of its Subsidiaries against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar businesses and similarly situated, of such types and in such amounts as are customarily carried under similar circumstances by such other corporations. The Company and
each of its Subsidiaries will comply with any other insurance requirement set forth in any other Related Document. 
  
 5.4 Financial Information 
  
 The Company shall, and shall cause each of its Subsidiaries to, furnish promptly to the Guarantors, (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the requirements of federal or state securities laws and (b) all other information concerning its business, properties and personnel as a Guarantor may reasonably request.

  
 5.5 Inspection 
  
 Upon reasonable prior written notice, permit any authorized representatives
designated by a Guarantor to visit and inspect any of the properties of the Company or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their
affairs, finances and accounts with its and their officers and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably requested. 
  

 -11- 

 5.6 Compliance with Laws, Etc. 
  
 Exercise, and cause each of its Subsidiaries to exercise, all due diligence in order to comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority, including, without limitation, all Environmental Laws, noncompliance with which could reasonably be expected to cause, either individually or in the aggregate, a material
adverse effect. 
  
 5.7 Notice of Certain Events

  
 The Company shall give prompt written notice to the
Guarantors, and each Guarantor shall give prompt written notice to the Company, of (i) any representation or warranty made by it contained in this Agreement that is qualified as to materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or inaccurate in any material respect, (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement or (iii) the occurrence of any change or event having, or which insofar as can reasonably be foreseen to have, a material adverse effect on the Company; provided, however, that no such notification shall (A)
affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement or (B) limit or otherwise affect the remedies available hereunder to the party receiving such
notice. 
  
 5.8 Intentionally Omitted 
  

	SECTION 6	COMPANY’S NEGATIVE COVENANTS 

  
 The Company covenants and agrees that so long as a Guarantor has any obligations under any Guaranty in favor of the Suppliers, or any of them, or any
amounts or Reimbursement Obligations are owing or remain outstanding hereunder and unless this Agreement has been terminated pursuant to subsection 2.6 hereof, the Company shall not do, nor shall it allow any of its Subsidiaries to do, any of the
following without the written consent of the Guarantors: 
  
 6.1
Intentionally Omitted 
  
 6.2 intentionally Omitted

  
 6.3 Liens 
  
 Directly or indirectly, create, incur, assume or permit to exist any Lien on
or with respect to the Collateral, except the following (collectively, the “Permitted Liens”): 
  
 (i) Liens for taxes, assessments or governmental charges or claims the payment of which is not at the time required by subsection 4.10 hereof; 

 
 (ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen, landlords and customs agents and authorities and other Liens imposed 

  

 -12- 

 
by law incurred in the ordinary course of business, if such reserve or other appropriate provision, if any, as shall be required by sound accounting
principles shall have been made therefor; 
  
 (iii) Liens arising
from judgments, decrees and attachments not constituting an event of default; 
  
 (iv) Liens in favor of financial institutions arising in connection with Company’s deposit accounts held at such institutions; 
  
 (v) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); 
  
 (vi) leases or subleases granted to others not interfering with the ordinary conduct of the business of the Company or of its Subsidiaries; 
  
 (vii) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering with the ordinary conduct of the business of the Company or of its Subsidiaries; 
  
 (viii) purchase money Liens upon or in any property acquired or held by the Company or any Subsidiary in the ordinary course of business to secure the
purchase price of such property or to secure indebtedness incurred solely for the purpose of financing the acquisition of such property; 
  
 (ix) Liens in existence on the date hereof; 
  
 (x) Liens securing the Reimbursement Obligations; and 
  
 (xi) other Liens arising in the ordinary course that do not create a material adverse effect. 
  
 6.4 Restricted Payments 
  
 Directly or indirectly declare, order, pay, make or set apart any sum for
any Restricted Payments. 
  
 6.5 Relateds, Investments,
Contingent Liabilities 
  
 A. Incur any indebtedness for
borrowed money or guarantee any such indebtedness of another Person, except under this Agreement, another Related Document or any other agreement or relationship with a Guarantor, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any “keep well” or other agreement to maintain 

  

 -13- 

 
any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing; or 
  
 B. make any loans, advances or capital contributions to, or investments in,
any other Person, other than (1) to the Company or any direct or indirect wholly owned subsidiary of the Company or (2) loans or advances to employees of the Company or any of its Subsidiaries for travel or business expenses in the ordinary course
of business; 
  
 except that the Company may: 
  
 (i) own, purchase or acquire commercial paper rated Standard &
Poor’s A-1 or Moody’s P-1, direct obligations of the United States of America or its agencies; and obligations guaranteed by the United States of America; 
  
 (ii) acquire and own stock, obligations or securities received from customers in connection with debts created in the
ordinary course of business owing to the Company or any of its Subsidiaries; 
  
 (iii) continue to own the existing capital stock of the Company’s and each of its Subsidiaries’ subsidiaries (including stock in its minority interests); and 
  
 (iv) endorse negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business. 
  
 6.6
Consolidation, Merger, Acquisition 
  
 Consolidate with or
merge into any other corporation or entity or acquire or agree to acquire (for cash or shares of stock or otherwise) (A) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, limited liability company, joint venture, association or other business organization or division thereof or (B) any assets with a fair market value in excess of $50,000 except purchases of inventory in the ordinary
course of business consistent with past practice. 
  
 6.7 Asset
Sales 
  
 Sell, lease, exchange or otherwise dispose of any
of, its or any of its Subsidiaries’ business, properties or assets, except for sales of its or their properties or assets in the ordinary course of business consistent with past practice. 
  
 6.8 Agreements; Billing Practices 
  
 Except in the ordinary course of business consistent with past practice,
modify, or amend in any material respect, or, to the extent within the Company’s control, renew, fail to renew or terminate, any material contract to which the Company or any subsidiary is a party or waive, release or assign any material rights
or claims. In addition, the Company shall not modify or change its current practice of billing its credit card sales until after merchandise has been shipped. 
  

 -14- 

 6.9 Remedies of Guarantors 
  
 The Company and each of its Subsidiaries shall not seek to obtain any stay on the exercise of the remedies available to the
Guarantors under this Agreement. 
  

	SECTION 7	EVENTS OF DEFAULT 

  
 The occurrence of any one or more of the following conditions or events, regardless of the reason therefore, shall constitute an “Event of
Default” hereunder: 
  
 7.1 Failure to Pay

  
 Failure of the Company to make any repayment of principal or
interest with respect to a Payment hereunder as and when due; failure to fulfill any other Reimbursement Obligation as and when due; or failure to pay any amounts required by subsection 8.10 hereof as and when due. 
  
 7.2 Breach of Covenant 
  
 Failure of the Company to perform or observe any other term or condition of
this Agreement or other Related Document which failure results in a material adverse effect, unless such failure has been cured by the Company within five (5) Business Days; provided that any such material adverse effect that is incapable of
cure shall, at the election of the Guarantors and without notice to Company, constitute an Event of Default hereunder on and as of the date thereof. 
  
 7.3 Breach of Representation or Warranty 
  
 Any of the Company’s representations or warranties made herein, in any Related Document or in any statement or certificate at any time given in
writing pursuant hereto or thereto or in connection herewith or therewith, shall be false or misleading on any date to which such representation or warranty is applicable in any respect that results in a material adverse effect and that has not been
cured by the Company within five (5) Business Days; provided that any such material adverse effect that is incapable of cure shall, at the election of the Guarantors and without notice to Company, constitute an Event of Default hereunder on
and as of the date thereof. 
  
 7.4 Intentionally Omitted

  
 7.5 Bankruptcy or Insolvency 
  
 A. The Company or any of its Subsidiaries shall commence any case,
proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any substantial part of its 

  

 -15- 

 
assets, or the Company or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or 
  
 B. there shall be commenced against the Company or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of sixty (60)
days. 
  
 7.6 Intentionally Omitted 
  
 7.7 Intentionally Omitted 
  
 7.8 Intentionally Omitted 
  
 7.9 Invalidity of Related Documents 
  
 The Company denies that it has any further liability, other than as a result
of or based upon the fraud or material misrepresentation of both Guarantors, including without limitation with respect to future advances by the Guarantors, under any Related Document to which it is a party, or gives notice to such effect; or either
Guarantor, through no action or fault on the part of such Guarantor, shall not have or shall cease to have a valid and perfected security interest in any material and significant portion of the Collateral of the same nature and priority (relative to
any other Liens in the Collateral) as the security interest purported to be granted in such Collateral pursuant to the Related Documents on the date thereof; or any Related Document or any Lien granted to a secured party thereunder shall be
determined to be invalid or unenforceable in a material and significant respect; or any treaty, law, regulation, communique, decree, ordinance or policy of any Governmental Authority shall render any material provision of any Related Document
invalid or unenforceable in a material and significant respect; or the Company shall fail to comply with its obligations under Section 5 of the Security Agreement. 
  
 THEN immediately and automatically upon the occurrence of any Event of Default described in subsections 7.1 or 7.5 hereof, and
immediately and automatically after the expiration of any applicable cure periods with respect to any other Event of Default: (i) (a) all Payments hereunder with accrued interest thereon, and (b) all other Reimbursement Obligations under this
Agreement and the other Related Documents, shall all automatically become immediately due and payable, without notice, presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company.

  
 Further, upon the occurrence and during the continuance of any
Event of Default, either Guarantor may exercise all rights and remedies of such Guarantor set forth in any of the Related Documents, in addition to all rights and remedies allowed by, the United States and of any state thereof, including but not
limited to the UCC. The Guarantors shall have no obligation of any kind to make any presentment, demand, protest or other notice or action of any kind. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the
exercise of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative and not alternative. 
  

 -16- 

 The Company hereby waives (i) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties or other property at any time held by the Guarantors on which the Company and any of its Subsidiaries may in any way be liable and hereby ratify and confirm whatever the Guarantors may lawfully do in this regard, (ii) all rights to notice
and hearing prior to the Guarantors’ taking possession or control of, or to the Guarantors’ attachment or levy upon, the Collateral, or any bond or security which might be required by any court prior to allowing either Guarantor to
exercise any of its remedies, and (iii) the benefit of all valuation, appraisal and exemption laws. The Company and each of its Subsidiaries acknowledges that it has been advised by counsel of its choice with respect to the effect of the foregoing
waivers and this Agreement, the other Related Documents and the transactions evidenced by this Agreement and the other Related Documents. 
  

	SECTION 8	MISCELLANEOUS 

  
 8.1 Survival of Warranties 
  
 All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement, and the making of the Payments, and
shall terminate on the fulfillment of the conditions set forth in subsection 2.6 herein. 
  
 8.2 Failure or Indulgence Not Waiver 
  
 No failure or delay on the part of either Guarantor in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. 
  
 8.3 Modification 
  
 This Agreement may be not be amended, waived or modified without the written
consent of each party hereto. 
  

 -17- 

 8.4 Notices 
  
 Except as otherwise expressly provided herein, any notice herein required or permitted to be given shall be in writing and
may be personally served or sent by United States mail or by telegram, telex or facsimile transmission and shall be deemed to have been given on the earlier of the date of receipt or two (2) days after deposit in the United States mail, registered,
with postage prepaid and properly addressed, provided that notices under Section 2 hereof shall not be effective until actually received by the recipient thereof. For the purposes hereof, the addresses of the parties hereto (until notice of a change
thereof served as provided in this Section 8.4) shall be as follows: 
  

			
	 The Company:
	 	Buy.com Inc.
	 	 	27 Brookline
	 	 	Aliso Viejo, California 92656
	 	 	Facsimile: (949) 389-2840
	 	 	Attention: Keven F. Baxter, Esq.
		
	 with a copy to:
	 	Cooley Godward LLP
	 	 	4365 Executive Drive, Suite 1100
	 	 	San Diego, California 92121
	 	 	Facsimile: (858) 453-3555
	 	 	Attention: Frederick T. Muto, Esq.
		
	 The Guarantors:
	 	Scott A. Blum
	 	 	C/O Tom Ko, V.P.
	 	 	ThinkTank LLC
	 	 	65 Enterprise
	 	 	Aliso Viejo, CA 92656
		
	 	 	Scott A. Blum Separate Property Trust
	 	 	C/O Tom Ko, V.P.
	 	 	ThinkTank LLC
	 	 	65 Enterprise
	 	 	Aliso Viejo, CA 92656
		
	 with a copy to:
	 	O’Melveny & Myers LLP
	 	 	610 Newport Center Drive, Suite 1700
	 	 	Newport Beach, California 92660
	 	 	Facsimile: (949) 823-6994
	 	 	Attention: David Krinsky, Esq.

  
 8.5
Severability 
  
 In case any provision in this Agreement
shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of such contract and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

  
 8.6 Effectiveness; Binding Effect; Governing Law

  
 This Agreement shall become effective when it shall have been
executed by the Company and the Guarantors and thereafter shall be binding upon and inure to the benefit of the Company, the Guarantors and their respective successors and assigns, except that the Company shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the each Guarantor. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW
PRINCIPLES 

  

 -18- 

 
WHICH WOULD RESULT IN THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION. 
  
 8.7 Waiver of Jury Trial 
  
 EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR THE RELATIONSHIP THAT IS BEING ESTABLISHED. 
  
 8.8 Consent to Jurisdiction 
  

All judicial proceedings brought against the Company and each of its Subsidiaries with respect to this Agreement and the Related Documents may be
brought in any state or federal court of competent jurisdiction in the State of California, and by execution and delivery of this Agreement, the Company accepts for itself and for its Subsidiaries and in connection with its and their properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. The Company for itself and on behalf of its Subsidiaries
irrevocably waives any right it may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section. 
  
 8.9 Assignability 
  
 This Agreement shall be binding upon the parties hereto and their respective
successors and assigns, and shall inure to the benefit of the parties hereto and the successors and assigns of each party hereto, provided that neither party hereto may assign its rights under this Agreement without the prior written consent of the
other party hereto; except that either Guarantor may assign, delegate or otherwise transfer all of such Guarantor’s interest in or rights or obligations under this Agreement (i) at any time to any Person controlling, controlled by, or under
common control with, such Guarantor, with the consent of the Company and (ii) after an Event of Default to any Person, without the consent of the Company. 
  
 8.10 Costs and Expenses 
  
 The Company agrees to pay on the Termination Date all costs and expenses of the Guarantors (including attorney’s fees and the reasonable estimate of
the allocated cost of in-house counsel and staff) in connection with the preparation, amendment, modification, enforcement (including, without limitation, in appellate, bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar
proceedings) or restructuring of the Related Documents, including without limitation the costs and expenses referenced in Section 19 of the Security Agreement; provided that each Guarantor agrees to and shall waive the right to receive any of
the foregoing costs of preparation, amendment and modification of the Related Documents in each case incurred prior to the date hereof upon the payment in fill of all Reimbursement Obligations, provided that at the time of such repayment there
exists no Event of Default hereunder. Any amount of any costs and expenses under this paragraph not paid when 

  

 -19- 

 
due, whether at stated maturity, by acceleration or otherwise, shall thereafter bear interest at a rate that is equal to the rate of interest that would
apply to unpaid principal under the Reimbursement Obligations for the same period. Upon four days written request of the Company, such requests to be made no more often than is necessary and reasonable, each Guarantor agrees to deliver to the
Company a payoff letter setting forth the then-present amount of the Reimbursement Obligations owed under this subsection 8.10. 
  
 8.11 Counterparts 
  
 This Agreement may be executed in counterparts, in original or by facsimile, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. 
  
 8.12 Headings

  
 The various headings used in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretations of this Agreement or any provision hereof. 
  

 -20- 

 IN WITNESS WHEREOF, the Grantor and the Secured Parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date last executed below. 
  

									
	 “Company”
	 	 	 	 
	BUY.COM, INC.,	 	 	 	 
					
	 By:
	 	 /s/ Robert B. Price
	 	 	 	 Date:
	 	 12 19-2002

	 Name:
	 	 Robert B. Price
	 	 	 	 	 	 
	 Title:
	 	 President, CFO
	 	 	 	 	 	 

  

									
	 “Blum”
	 	 	 	 
	SCOTT A. BLUM	 	 	 	 
					
	 By:
	 	 /s/ Scott A. Blum
	 	 	 	 Date:
	 	 12/20/02

	 	 	 Scott A. Blum
	 	 	 	 	 	 

  

									
	 “Company”
	 	 	 	 
	SCOTT A. BLUM SEPARATE PROPERTY TRUST U/D/T 8/2/95
					
	 By:
	 	 /s/ Scott A. Blum
	 	 	 	 Date:
	 	 12/20/02

	 	 	 Scott A. Blum as Trustee
	 	 	 	 	 	 

  

 S-1 

 EXHIBIT 1 
  
 NONEXCLUSIVE LIST OF GUARANTIES 
  

			
	 Beneficiary of Guaranty
	 	Guaranty Executed
		
	 Chase Merchant Services, L.L.C. and The Chase Manhattan Bank
	 	on or about August 30, 2001
		
	 Baker & Taylor
	 	on or about January 30, 2002
		
	 Ingram Micro (letter of credit)
	 	on or about February 4, 2002
		
	 American Express Travel Related Services
	 	on or about December 18, 2002
		
	 United Stationers Supply Company
	 	on or about December 18, 2002

  

 A-1Security Agreement, dated December 20, 2002

 Exhibit 10.10 
  
 SECURITY AGREEMENT 
  
 This SECURITY AGREEMENT (this “Agreement”) is dated as of October 31, 2002 and entered into by and between BUY.COM, INC., a
Delaware corporation (the “Grantor”) on one part, and SCOTT A. BLUM, an adult individual with an address at [***] (“Blum”) and the SCOTT A. BLUM SEPARATE PROPERTY TRUST U/D/T 8/2/95, a trust having an address at [***], by and through Scott A. Blum as trustee (the “Trust” and, together with Blum,
the “Secured Parties”) on the other part. 
  
 PRELIMINARY STATEMENTS 
  
 A. Pursuant to that
certain Reimbursement Agreement of even date herewith (said Reimbursement Agreement, as it may hereafter amended, restated, supplemented or otherwise modified from time to time, being the “Reimbursement Agreement”; the terms defined
therein and not otherwise defined herein being used herein as therein defined), by and between the Grantor and the Secured Parties pursuant to which the Secured Parties have agreed, subject to the terms and conditions set forth in the Reimbursement
Agreement, to execute certain Guaranties for the benefit of the Grantor and to provide certain financial accommodations to the Grantor. 
  
 B. It is a condition precedent to the agreements of the Secured Parties under the Reimbursement Agreement that the Grantor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement. 
  
 NOW, THEREFORE, in consideration of the premises and in order to induce the Secured Parties to execute the Guaranties and to make certain financial accommodations for the Grantor, and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Grantor hereby agrees with the Secured Parties as follows: 
  

	 	Section 1.	Grant of Security. 

  
 Except as specifically excepted below, the Grantor hereby assigns to each Secured Party, and hereby grants to each Secured Party a security interest in,
all property, property interests, assets and other rights and interests of such Grantor, whether now or hereafter existing, whether tangible or intangible, or in which such Grantor now has or hereafter acquires an interest and wherever the same may
be located, including without limitation all of the Grantor’s right, title and interest in and to the following, in each case whether now or hereafter existing, whether tangible or intangible, or in which the Grantor now has or hereafter
acquires an interest and wherever the same may be located (the “Collateral”): 
  
 (a) all equipment in all of its forms, all parts thereof and all accessions thereto (any and all such equipment, parts and accessions being the “Equipment”); 
  
 (b) all inventory in all of its forms, including but not limited to (i) all
goods held by the Grantor for sale or lease or to be furnished under contracts of service or so leased or furnished, (ii) all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping,
advertising, selling, leasing, finishing or production of such inventory or otherwise used or consumed in the Grantor’s business, (iii) all goods in which the Grantor has an interest in mass or a joint or other interest or right of any kind,
and (iv) all goods which are returned to or repossessed by the Grantor and all accessions thereto and products thereof (collectively the “Inventory”) and all negotiable 

  

	[***] 	Confidential treatment has been requested for the bracketed portions. The confidential redacted portion has been omitted and filed separately with the Securities and Exchange
Commission. 

  
 1 

 
and non-negotiable documents of title (including without limitation warehouse receipts, dock receipts and bills of lading) issued by any Person covering any
Inventory (any such negotiable document of title being a “Negotiable Document of Title”); 
  
 (c) all accounts, contract rights, chattel paper, documents, instruments, letter-of-credit rights and other rights and obligations of any kind owned by or
owing to the Grantor and all rights in, to and under all security agreements, leases and other contracts securing or otherwise relating to any such accounts, contract rights, chattel paper, documents, instruments, letter-of-credit rights or other
rights and obligations (any and all such accounts, contract rights, chattel paper, documents, instruments, letter-of-credit rights and other rights and obligations being the “Accounts”, and any and all such security agreements,
leases and other contracts being the “Related Contracts”); 
  
 (d) all deposit accounts, together with (i) all amounts on deposit from time to time in such deposit accounts and (ii) all interest, cash, instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing (“Deposit Accounts”); 
  
 (e) all “Securities Collateral”, which term means investment or similar property (including without limitation and in each case whether
certificated or uncertificated all (A) securities, (B) security entitlements, (C) securities accounts, (D) commodity contracts, (E) commodity accounts, (F) any and all other debt interests issued by any other Person, and (G) any other equity or
ownership interests in or of any other Person, including without limitation any shares of stock, partnership interests, interests in joint ventures, limited liability company interests and all other equity interests owned by any Grantor in its
respective Subsidiaries) in which the Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, including without limitation any right to receive any of the foregoing in the future, whether such right be
contingent or uncontingent, matured or unmatured, receivable upon conversion or substitution of any other right, or otherwise), as well as (1) the certificates, instruments or other documents, if any, representing or evidencing such investment
property, and (2) all dividends, interest, distributions, value, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such investment property.

  
 (f) all “Intellectual Property Collateral”,
which term means: 
  
 (i) all rights, title and
interest (including rights acquired pursuant to a license or otherwise) in and to all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade
styles and/or other source and/or business identifiers and applications pertaining thereto, owned by the Grantor, or hereafter adopted and used, in its business (including, without limitation, the trademarks specifically identified in section 4(e)
of the Disclosure Schedule hereto, as the same may be amended pursuant hereto from time to time) (collectively, the “Trademarks”), all registrations that have been or may hereafter be issued or applied for thereon in the United
States and any state thereof and in foreign countries (including, without limitation, the registrations and applications specifically identified in section 4(e) of the Disclosure Schedule hereto, as the same may be amended pursuant hereto from time
to time) (the “Trademark Registrations”), all common law and other rights in and to the Trademarks in the United States and any state thereof and in foreign countries (the “Trademark Rights”), and all goodwill of
the Grantor’s business symbolized by the Trademarks and associated therewith (the “Associated Goodwill”): 
  
 (ii) all rights, title and interest (including rights acquired pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the 

  

 2 

 
future may be, owned or held by the Grantor and all patents and patent applications and rights, title and interests in patents and patent applications under
any domestic or foreign law that are presently, or in the future may be, owned by the Grantor in whole or in part (including, without limitation, the patents and patent applications listed in section 4(e) of the Disclosure Schedule hereto, as the
same may be amended pursuant hereto from time to time), all rights corresponding thereto (including, without limitation, the right, exercisable only upon the occurrence and during the continuation of an Event of Default, to sue for past, present and
future infringements in the name of the Grantor or in the name of such Secured Party), and all re-issues, divisions, continuations, renewals, extensions and continuations in-part thereof (all of the foregoing being collectively referred to as the
“Patents”); it being understood that the rights and interests included in the Intellectual Property Collateral hereby shall include, without limitation, all rights and interests pursuant to licensing or other contracts in favor of
the Grantor pertaining to patent applications and patents presently or in the future owned or used by third parties but, in the case of third parties which are not Affiliates of the Grantor, only to the extent permitted by such licensing or other
contracts and, if not so permitted, only with the consent of such third parties; and 
  
 (iii) all rights, title and interest (including rights acquired pursuant to a license or otherwise) under copyright in various published
and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software, layouts, trade dress, drawings, designs, writings, and formulas owned by the Grantor (including, without limitation,
the works listed on section 4(e) of the Disclosure Schedule hereto, as the same may be amended pursuant hereto from time to time) (collectively, the “Copyrights”), all copyright registrations issued to the Grantor and applications
for copyright registration that have been or may hereafter be issued or applied for thereon by the Grantor in the United States and any state thereof and in foreign countries (including, without limitation, the registrations listed on section 4(e)
of the Disclosure Schedule hereto, as the same may be amended pursuant hereto from time to time) (collectively, the “Copyright Registrations”), all common law and other rights in and to the Copyrights in the United States and any
state thereof and in foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements) (the “Copyright Rights”), including, without
limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the
benefit of the Grantor), authored (as a work for hire for the benefit of the Grantor), or acquired by the Grantor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter
granted or applied for, and all renewals and extensions thereof, throughout the world, including all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits), the right to renew and
extend such Copyright Registrations and Copyright Rights and to register works protectable by copyright and the right to sue for past, present and future infringements of the Copyrights and Copyright Rights; 
  
 (g) all information used or useful or arising from the business including all
goodwill, trade secrets, trade secret rights, know-how, customer lists, processes of production, ideas, confidential business information, techniques, processes, formulas, and all other proprietary information; 
  
 (h) all agreements of the Grantor, as each such agreement may be amended,
restated, supplemented or otherwise modified from time to time (said agreements, as so amended, restated, supplemented or otherwise modified, being referred to herein individually as an “Assigned Agreement” and collectively as the
“Assigned Agreements”), including, without limitation, (i) all rights of the Grantor to receive moneys due or to become due under or pursuant to the Assigned Agreements, (ii) all 

  

 3 

 
rights of the Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (iii) all claims of the
Grantor for damages arising out of any breach of or default under the Assigned Agreements, and (iv) all rights of the Grantor to terminate, amend, supplement, modify or exercise rights or options under the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder, 
  
 (i) to the extent not included in any other paragraph of this Section 1, all general intangibles, including, without limitation, tax refunds, payment intangibles, other rights to payment or performance, choses in
action, software and judgments taken on any rights or claims included in the Collateral); 
  
 (j) all plant fixtures, business fixtures and other fixtures and storage and office facilities, and all accessions thereto and products thereof; 
  
 (k) all books, papers, documents, certificates, records, ledger cards, files, correspondence, computer programs, tapes,
disks or related data processing or storage hardware or software, and any other data wherever located and however processed, that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in
the monitoring or collection thereof or the realization thereupon; and 
  
 (l) all proceeds, products, rents and profits of or from any and all of the foregoing Collateral and, to the extent not otherwise included, all payments under insurance (whether or not such Secured Party is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral. For purposes of this Agreement, the term “proceeds” includes whatever is receivable or received
when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. 
  
 Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and the Grantor shall not be deemed to have granted a security
interest in (i) any of the Grantor’s rights or interests in any account, license, contract, agreement or other general intangibles to which the Grantor is a party or any of its rights or interests thereunder, or any permits, instruments, or
chattel paper of the Grantor, to the extent, but only to the extent, that such a grant would, under the terms of such account, license, contract, agreement, general intangible, permit, instrument or chattel paper or otherwise, result in a breach of
the terms of, or constitute a default under such license, contract or agreement to which the Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to the Uniform Commercial Code, as it exists on the
date of this Agreement or as it may hereafter be amended, in the State of California (the “UCC”) or any other applicable law (including the Bankruptcy Code) or principles of equity); provided, that immediately upon the
ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and the Grantor shall be deemed to have granted a security interest in, all such rights and interests, effective as of the date hereof as if such
provision had never been in effect; (ii) any real property leasehold of the Grantor as lessee or sublessee; (iii) motor vehicles and other vehicles owned or leased by the Grantor which are subject to state licensing statutes and on such basis
excluded from the scope of Article 9 of the UCC; (iv) any intent to use application at the U.S. Patent and Trademark Office with respect to intellectual property to the extent an assignment for security purposes would void the same; or (v) any
governmental permit or franchise that prohibits Liens on or collateral assignments of such permit or franchise. 
  
 In the event that any asset of the Grantor is excluded from the Collateral by virtue of the foregoing paragraph, the Grantor agrees to seek, to the extent
required by Section 5 herein, requisite waivers to enable the Grantor to provide a security interest in such asset. 
  

 4 

 Each item of Collateral listed in this Section 1 that is defined in Articles 8 or 9 of the UCC shall have
the meaning set forth in the UCC, it being the intention of the Grantor that the description of the Collateral set forth above be construed to include the broadest possible range of assets, except for assets expressly excluded as set forth above.

  

	 	Section 2.	Security for Obligations. 

  
 This Agreement secures, and the Collateral assigned by the Grantor is collateral security for, the prompt payment or performance in full when due, whether
at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all Secured Obligations of the Grantor. “Secured Obligations” means with respect to the Grantor, all obligations and liabilities of every nature of the Grantor now or hereafter existing under or arising out of or in
connection with this Agreement, the Reimbursement Agreement and/or the other Loan Documents, together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to the Grantor, would accrue on such obligations, whether or not a claim is allowed against the Grantor for such interest in the related bankruptcy proceeding), fees, expenses or otherwise, whether 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 a Secured Party as a preference, fraudulent transfer or otherwise, and all obligations of
every nature of the Grantor now or hereafter existing under this Agreement. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments, proceeds or remuneration of any kind at any time received by a Secured Party on
account of the Secured Obligations shall be subsequently avoided or recovered directly or indirectly from a Secured Party as a preference, fraudulent transfer or otherwise, then such portion of the Secured Obligations, and all liens, rights and
remedies therefor, shall be revived and continued in full force and effect, as if such payment, proceeds or remuneration had never been received, and the provisions of Section 20(b) shall be ineffective to the extent of such revived obligations.

  

	 	Section 3.	Grantor Remains Liable. 

  
 Anything contained herein to the contrary notwithstanding, (a) the Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by either Secured Party of any of its rights hereunder shall not
release the Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, and (c) neither Secured Party shall have any obligation or liability under any contracts, licenses, and agreements included in
the Collateral by reason of this Agreement, nor shall either Secured Party be obligated to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

  

	 	Section 4.	Representations and Warranties. 

  
 The Grantor represents and warrants, except as specifically excepted on the attached Disclosure Schedule; as follows: 
  
 (a) Ownership of Collateral. Except as expressly permitted by the
Reimbursement Agreement and for the security interest created by this Agreement, the Grantor owns the Collateral owned by the Grantor free and clear of any Lien, except for Permitted Liens (as defined in the Reimbursement 

  

 5 

 
Agreement). Except as expressly permitted by the Reimbursement Agreement, the Permitted Liens and such Liens as may have been filed in favor of the Secured
Parties relating to this Agreement, no effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office. 
  
 (b) Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in section 4(b) of the Disclosure Schedule hereto, except for Inventory and Equipment comprising of mobile goods which, in the ordinary course of business, is in transit either (i)
from a supplier to the Grantor, (ii) between the locations specified in section 4(b) of the Disclosure Schedule hereto, or (iii) to customers of the Grantor, and except for Inventory held by Ingram Micro, Inc. or Grantor’s other distributor or
vendor partners. 
  
 (c) Office Locations; Type and
Jurisdiction of Organization. The chief place of business, the chief executive office and the office where the Grantor keeps its records regarding the Accounts and all originals of all chattel paper that evidence Accounts are, as of the date
hereof, and, except as set forth on section 4(c) of the Disclosure Schedule hereto, have been for the four month period preceding the date hereof, located at the locations set forth on section 4(c) of the Disclosure Schedule hereto. 
  
 (d) Delivery of Certain Collateral. All certificates or instruments
(excluding checks) evidencing, comprising or representing the Collateral (including, without limitation, the Securities Collateral) have been delivered, or shall be delivered prior to the making of the initial Loan or the issuance of the initial
Letter of Credit, to the Secured Parties duly endorsed or accompanied by duly executed instruments of transfer or assignment in blank, except as set forth in section 4(d) of the Disclosure Schedule hereto. 
  
 (e) Intellectual Property Collateral. 
  
 (i) a true and complete list of all Trademark Registrations
and Trademark applications registered or filed with the United States Patent and Trademark Office and owned, held (whether pursuant to a license or otherwise) or used by the Grantor, in whole or in part, is set forth in section 4(e) of the
Disclosure Schedule hereto; 
  
 (ii) a true and
complete list of all Patents owned, held (whether pursuant to a license or otherwise) or used by the Grantor, in whole or in part, is set forth in section 4(e) of the Disclosure Schedule hereto; 
  
 (iii) a true and complete list of all Copyright
Registrations and applications for Copyright Registrations registered or filed with the United States Copyright Office and held (whether pursuant to a license or otherwise) by the Grantor, in whole or in part, is set forth in section 4(e) of the
Disclosure Schedule hereto; 
  
 (iv) after
reasonable inquiry, the Grantor is not aware of any pending or overtly threatened claim by any third party that any of the Intellectual Property Collateral owned, held or used by the Grantor is invalid or unenforceable, except as set forth in
section 4(e) of the Disclosure Schedule; and 
  
 (v) no effective security interest or other Lien covering all or any part of the Intellectual Property Collateral is on file in the United States Patent and Trademark Office or the United States Copyright Office other than Liens as may have
been filed in favor of one or both of the Secured Parties. 
  

 6 

 (f) Perfection. The security interests in the Collateral granted to the Secured Parties hereunder
constitute valid security interests in the Collateral, securing the payment of the Secured Obligations. Upon (i) the filing of UCC financing statements naming the Grantor as “debtor”, naming the Secured Parties as “secured party”
and describing the Collateral in the filing offices set forth on section 4(f) of the Disclosure Schedule hereto, (ii) in the case of the Securities Collateral consisting of certificated securities or evidenced by instruments, delivery of the
certificates representing such certificated securities and delivery of such instruments to the Secured Parties, in each case duly endorsed or accompanied by duly executed instruments of assignment or transfer in blank, or delivery of a control
agreement duly executed by the applicable securities intermediary, the Secured Parties and the Grantor, (iii) in the case of the Intellectual Property Collateral, in addition to the filing of such UCC financing statements, the filing of a Grant of
Trademark Security Interest, substantially in the form of Exhibit I, and a Grant of Patent Security Interest, substantially in the form of Exhibit II, with the United States Patent and Trademark Office and the filing of a Grant of Copyright Security
Interest, substantially in the form of Exhibit III, with the United States Copyright Office (each such Grant of Trademark Security Interest, Grant of Patent Security Interest and Grant of Copyright Security Interest being referred to herein as a
“Grant”), (iv) in the case of foreign Intellectual Property, the filings necessary to perfect assignments of Intellectual Property Collateral in any applicable office or agency in any foreign country or any political subdivisions
thereof, (v) in the case of Inventory, the receipt of a bailee letter duly acknowledged by the applicable bailee, (vi) receipt of any necessary consents of third parties to the assignment and perfection of a security interest in the Collateral, and
(vii) in the case of Deposit Accounts, receipt of control agreements duly executed by each depository of Deposit Accounts of the Grantor, the security interests in the Collateral granted to the Secured Parties will constitute perfected security
interests therein prior to all other Liens (except for Permitted Liens). 
  
 (g) Maintain Accounts. The Grantor shall maintain the accounts with the depository institutions listed with particularity on Schedule 3.1B to the Reimbursement Agreement as its primary cash accounts.

  

	 	Section 5.	Further Assurances. 

  
 At the reasonable request of either Secured Party, the Grantor will, in each case with respect to all Collateral, whether the same be now or hereafter
existing or in which the Grantor now has or hereafter acquires an interest: (i) mark conspicuously each item of chattel paper included in the Accounts, each Related Contract and, at the request of the Secured Party, each of its records pertaining to
the Collateral, with a legend, in form and substance reasonably satisfactory to the Secured Party, indicating that such Collateral is subject to the security interest granted hereby, (ii) (A) execute such financing or continuation statements, or
amendments thereto prepared by the Secured Party, (B) at the reasonable request of the Secured Party, execute and deliver, and cause to be executed and delivered, agreements prepared by the Secured Party establishing that the Secured Party has
control of specified items of Collateral and (C) execute and deliver such other instruments or notices prepared by the Secured Party, in each case as may be reasonably necessary, or as the Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby, (iii) furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with
the Collateral as the Secured Party may reasonably request and promptly notify the Secured Party of any material change in the Collateral or the Grantor’s rights therein (including without limitation the acquisition of any Securities Collateral
or the acquisition of new or altered rights in any Intellectual Property Collateral), all in reasonable detail, (iv) at any reasonable time, upon request by the Secured Party, exhibit the Collateral to and allow inspection of the Collateral by the
Secured Party, or persons designated by the Secured Party, all in accordance with the terms of the Reimbursement Agreement and (v) use commercially reasonable efforts to seek any necessary consents of third parties to the assignment and perfection
of a security interest to the Secured 

  

 7 

 
Party with respect to any portion of the Collateral believed by the Secured Party in good faith to be material that would otherwise be excluded from the
Collateral by operation of the penultimate paragraph of Section 1. The Grantor hereby authorizes the Secured Parties to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral
without the signature of the Grantor. The Grantor agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement signed by the Grantor shall be sufficient as a financing statement and may be filed as a
financing statement in any and all jurisdictions. Notwithstanding anything to the contrary in this Section 5, the Grantor shall be under no obligation to prepare, file or record any documents or instruments required to perfect the Collateral by the
methods described in (iv), (v), (vi) and (vii) of subsection 4(f), but upon the reasonable request of either Secured Party, shall execute and deliver such documents or instruments prepared by such Secured Party, and shall take commercially
reasonable efforts to seek execution and delivery of such documents or instruments from any necessary third parties. 
  

	 	Section 6.	Certain Covenants of the Grantor. 

  
 The Grantor shall: 
  
 (a) not use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral; 
  
 (b) notify the Secured Parties of any change in the Grantor’s name, identity or corporate structure within 15 days of such change; 
  
 (c) give the Secured Parties 30 days’ prior written notice of any change in the Grantor’s chief place of business, chief executive office or
residence or the office where the Grantor keeps its records regarding the Accounts and all originals of all chattel paper that evidence Accounts or a reincorporation, reorganization or other action that results in a change of the jurisdiction of
organization of the Grantor, 
  
 (d) if either Secured Patty gives
value to enable the Grantor to acquire rights in or the use of any Collateral, use such value for such purposes; and 
  
 (e) except as expressly permitted by the Reimbursement Agreement, pay promptly when due all property and other taxes, assessments and governmental charges
or levies imposed upon, and all claims (including claims for labor, services, materials and supplies) against, the Collateral, except to the extent the validity thereof is being contested in good faith; provided that the Grantor shall in any event
pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment entered or filed against the Grantor or any of the Collateral as a result of the
failure to make such payment. 
  

	 	Section 7.	Special Covenants With Respect to Equipment and Inventory. 

  
 The Grantor shall: 
  
 (a) keep the Equipment and Inventory owned by the Grantor at the places therefor specified on section 4(b) of the Disclosure Schedule hereto or permitted
in Section 4(b) hereof or, upon 10 days’ prior written notice to the Secured Parties, at such other places in jurisdictions where all action that may be reasonably necessary, or that either Secured Party may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted hereby, or to enable the Secured 

  

 8 

 
Parties to exercise and enforce its rights and remedies hereunder, with respect to such Equipment and Inventory shall have been taken; 
  
 (b) except for Equipment which has become obsolete or in the Grantor’s
business judgment, commercially unreasonable to maintain, cause the Equipment owned by the Grantor to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with
the Grantor’s past practices, and shall forthwith make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable to such end. The Grantor shall promptly furnish to the Secured
Parties a statement respecting any material loss or damage to any of the Equipment owned by the Grantor; 
  
 (c) keep correct and accurate records of Inventory owned by the Grantor; and 
  
 (d) the Grantor shall, at its own expense, maintain insurance with respect to the Equipment and Inventory in accordance with
the terms of the Reimbursement Agreement. 
  

	 	Section 8.	Special Covenants with respect to Accounts and Related Contracts. 

  
 (a) The Grantor shall keep its chief place of business and chief executive office and the office where it keeps its records
concerning the Accounts and Related Contracts, and all originals of all chattel paper that evidence Accounts, at the locations therefor set forth on section 4(c) of the Disclosure Schedule hereto, upon 10 days’ prior written notice to the
Secured Parties, at such other location in a jurisdiction where all action that may be reasonably necessary. The Grantor will hold and preserve such records and chattel paper and will permit representatives of either Secured Party at any time during
normal business hours upon 24 hours prior written notice to inspect and make abstracts from such records and chattel paper after an Event of Default, and the Grantor agrees to render to the Secured Parties, at Grantor’s cost and expense, such
clerical and other assistance as may be reasonably requested with regard thereto. 
  
 (b) The Grantor shall maintain complete records of such Account. 
  
 (c) Except as otherwise provided in this Section (c), the Grantor shall continue to collect, at its own expense, all amounts due or to become due to the
Grantor under the Accounts and Related Contracts. In connection with such collections, the Grantor may take such action as the Grantor may deem necessary or advisable to enforce collection of amounts due or to become due under the Accounts;
provided, however, that the Secured Patties shall each have the right at any time, upon the occurrence and during the continuation of an Event of Default and upon written notice to the Grantor of its intention to do so, to notify the account debtors
or obligors under any Accounts of the assignment of such Accounts to the Secured Parties and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Grantor thereunder directly to the Secured Parties, to
notify each Person maintaining a lockbox or similar arrangement to which account debtors or obligors under any Accounts have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to the Secured Parties and, upon such notification and at the expense of the Grantor, to enforce collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as the Grantor might have done. After receipt by the Grantor of the notice from the Secured Parties referred to in the proviso to the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by the Grantor in respect of the Accounts and the Related Contracts shall be received in trust for the benefit of the Secured Parties hereunder, shall be segregated from other funds of the Grantor
and shall be forthwith paid over or delivered to the Secured Parties in the same form as so received (with any necessary endorsement) to be held as cash Collateral 

  

 9 

 
and applied as provided by Section 18, and (ii) the Grantor shall not adjust, settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount thereon. 
  

	 	Section 9.	Special Covenants With Respect to the Securities Collateral. 

  
 The Grantor agrees that upon the execution of and as a condition precedent to the effectiveness of this Agreement all certificates or instruments
representing or evidencing the Securities Collateral shall be delivered to and held by or on behalf of the Secured Parties pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by such
Grantor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Secured Parties. For purposes of this Section 9, delivery of all such items to the Trust
pursuant to that certain Security Agreement dated as of August 10, 2001 between Grantor and the Trust shall also be deemed delivery of such items to Secured Parties as required hereunder. 
  

	 	Section 10.	Special Covenants With Respect to the Intellectual Property Collateral. 

  
 (a) The Grantor shall: 
  
 (i) keep reasonable records respecting the Intellectual Property Collateral and at all times keep; and 
  
 (ii) furnish to the Secured Parties from time to time at the
Secured Parties’ reasonable request statements and schedules further identifying and describing any Intellectual Property Collateral and such other reports in connection with such Collateral, all in reasonable detail. 
  
 (b) Except as otherwise provided in this Section 10, the Grantor shall
continue to collect, at its own expense, all amounts due or to become due to the Grantor in respect of the Intellectual Property Collateral or any portion thereof. In connection with such collections, the Grantor may take such action as the Grantor
may deem reasonably necessary or advisable to enforce collection of such amounts; provided, each of the Secured Parties shall have the right at any time, upon the occurrence and during the continuation of an Event of Default, and upon written notice
to the Grantor of its intention to do so, to notify the obligors with respect to any such amounts of the existence of the security interest created hereby and to direct such obligors to make payment of all such amounts directly to such Secured
Party, and, upon such notification and at the expense of the Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Grantor might have
done. After receipt by the Grantor of the notice from a Secured Party referred to in the proviso to the preceding sentence and during the continuation of an Event of Default, (i) all amounts and proceeds (including checks and other instruments)
received by the Grantor in respect of amounts due to the Grantor in respect of the Intellectual Property Collateral or any portion thereof shall be received in trust for the benefit of the Secured Parties hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over or delivered to the Secured Parties in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 18, and (ii) the Grantor
shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. 
  
 (c) The Grantor shall do any and all acts which are necessary or desirable to preserve and maintain all rights in all
Intellectual Property Collateral unless the Grantor determines that any 

  

 10 

 
Intellectual Property Collateral is of negligible economic value or is no longer necessary for its operations. Any expenses incurred in connection therewith
shall be borne solely by the Grantor. Subject to the foregoing, the Grantor shall give the Secured Parties prior written notice of any abandonment of any Intellectual Property Collateral or any pending patent application or any Patent. 

 
 (d) Except as provided herein, the Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own benefit and at its own expense, such suits, proceedings or other actions for infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the Intellectual Property Collateral. The Secured Parties shall provide, at the Grantor’s expense, all reasonable and necessary cooperation in connection with any such suit,
proceeding or action including, without limitation, joining as a necessary party. The Grantor shall promptly, following its becoming aware thereof, notify the Secured Parties of the institution of, or of any adverse determination in, any proceeding
(whether in the United States Patent and Trademark Office, the United States Copyright Office or any federal, state, local or foreign court) or regarding the Grantor’s ownership, right to use, or interest in any Intellectual Property
Collateral. The Grantor shall provide to the Secured Parties any information with respect thereto reasonably requested by either Secured Party. 
  
 (e) In addition to, and not by way of limitation of, the granting of a security interest in the Collateral pursuant hereto, the Grantor, effective upon
the occurrence and during the continuation of an Event of Default, hereby assigns, transfers and conveys to the Secured Parties the nonexclusive right and license to use all trademarks, trade names, copyrights, patents or technical processes
(including, without limitation, the Intellectual Property Collateral) owned or used (to the extent the Grantor may grant such right or license) by the Grantor that relate to the Collateral and any other collateral granted by the Grantor as security
for the Secured Obligations, together with any goodwill associated therewith, all to the extent reasonably necessary to enable the Secured Parties to realize on the Collateral in accordance with this Agreement and to enable any transferee or
assignee of the Collateral to enjoy the benefits of the Collateral. This right shall inure to the benefit of all successors, assigns and transferees of the Secured Parties and their successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license shall be granted free of charge, without requirement that any monetary payment whatsoever be made to the Grantor.

  

	 	Section 11.	Special Provisions With Respect to the Assigned Agreements. 

  
 (a) The Grantor shall at its expense: 
  
 (i) if consistent with sound business practices, perform and observe the material terms and provisions of the Assigned Agreements to be
performed or observed by it, maintain the Assigned Agreements in full force and effect, enforce the Assigned Agreements in accordance with their terms, and take all such action to such end as may be from time to time reasonably requested by either
Secured Party; and 
  
 (ii) upon the reasonable
request of either Secured Party, furnish to the Secured Parties, promptly upon receipt thereof, copies of all notices, requests and other documents received by the Grantor under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to the Secured Parties such information and reports regarding the Assigned Agreements as either Secured Party may reasonably request and (B) upon request of either Secured Party make to the parties to such Assigned Agreements such demands
and requests for information and reports or for action as the Grantor is entitled to make under the Assigned Agreements. 
  

 11 

 (b) Upon the occurrence and during the continuance of an Event of Default, the Grantor shall not:

  
 (i) cancel or terminate any of the Assigned
Agreements or consent to or accept any cancellation or termination thereof except as provided therein; or 
  
 (ii) amend or otherwise modify the Assigned Agreements or give any consent, waiver or approval thereunder except as provided therein;

  
 (iii) take any other action in connection
with the Assigned Agreements that would reasonably be expected to materially impair the value of the interest or rights of the Grantor thereunder or that would reasonably be expected to materially impair the interest or rights of either Secured
Party. 
  

	 	Section 12.	Intentionally Deleted. 

  

	 	Section 13.	Each Secured Party Appointed Attorney-in-Fact. 

  
 The Grantor hereby irrevocably appoints each Secured Party as the Grantor’s attorney-in-fact, with full authority in the place and stead of the
Grantor and in the name of the Grantor, the Secured Party or otherwise, from time to time in the Secured Party’s reasonable discretion to take any action and to execute any instrument that the Secured Party may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including without limitation: 
  
 (a) upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral; 
  
 (b) upon the occurrence
and during the continuance of an Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clauses (a) and (b) above; 
  
 (c) upon the occurrence and during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that the Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Secured Party with respect to any of the
Collateral; 
  
 (d) to pay or discharge taxes or Liens (other than
Liens permitted under this Agreement or the Reimbursement Agreement) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Secured Party
in its sole discretion, any such payments made by the Secured Party to become obligations of the Grantor to the Secured Party, due and payable immediately without demand; 
  
 (e) upon the occurrence and during the continuance of an Event of Default, to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with Accounts and other documents relating to the Collateral; and 
  
 (f) upon the occurrence and during the continuance of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Secured Party were the absolute owner thereof for all purposes, and to 

  

 12 

 
do, at the Secured Party’s option and the Grantor’s expense, at any time or from time to time, all acts and things that the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and the Secured Party’s security interest therein in order to effect the intent of this Agreement, all as fully and effectively as the Grantor might do. 
  

	 	Section 14.	Either Secured Party May Perform. 

  
 If the Grantor fails to perform any agreement contained herein, either Secured Party may itself perform, or cause performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be payable by the Grantor under Section 19. 
  

	 	Section 15.	Standard of Care. 

  
 The powers conferred on the Secured Parties hereunder are solely to protect their interests in the Collateral and shall not impose any duty upon them to
exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, neither Secured Party shall have any duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. Each Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral
in its possession if such Collateral is accorded treatment substantially equal to that which the Secured Party accords its own property. 
  

	 	Section 16.	Remedies. 

  
 (a) Generally. If an Event of Default shall have occurred and be continuing, each Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral), and also may (i) require
the Grantor to, and the Grantor hereby agrees that it will at its expense and upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place
to be designated by the Secured Party that is reasonably convenient to both parties, (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process in accordance with applicable laws, (iii)
prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Secured Party deems reasonably appropriate, (iv) take possession of
the Grantor’s premises or place custodians in exclusive control thereof, remain on such premises and use the same and any of the Grantor’s equipment for the purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, (v) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable, (vi) exercise dominion and control over and refuse to permit
further withdrawals from any Deposit Account maintained by Secured Party constituting a part of the Collateral, and (vii) without notice to the Grantor but subject to the Securities Act of 1933 and or such state securities laws, transfer to or to
register in the name of the Secured Party or any of its nominees any or all of the Securities Collateral. The Secured Party may be the purchaser of any or all of the Collateral at any such sale and the Secured Party shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any
Collateral payable by the Secured Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of the Grantor, and the Grantor hereby waives (to the 

  

 13 

 
extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted. The Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to the Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Grantor hereby waives any claims against the Secured Party arising by
reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Secured Party accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, the Grantor shall be jointly and severally liable for the deficiency and the
reasonable fees of any attorneys employed by the Secured Party to collect such deficiency. The Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Secured Party, that the
Secured Party has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against the Grantor, and the Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. 
  
 (b) Securities Collateral. 
  
 (i) The Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities laws, the Secured Party may be compelled, with respect to any sale of all or any part of the Securities Collateral conducted without prior registration or qualification of
such Securities Collateral under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Securities Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. The Grantor acknowledges that any such private sales may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to
a registration statement under the Securities Act) and, notwithstanding such circumstances and the registration rights granted to the Secured Party by the Grantor pursuant hereto, the Grantor agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Secured Party shall have no obligation to engage in public sales and no obligation to delay the sale of any Securities Collateral for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. 
  
 (ii) If the Secured Party shall determine to exercise its
right to sell all or any of the Securities Collateral pursuant to this Section after an Event of Default, the Grantor agrees that, upon request of the Secured Party (which request may be made by the Secured Party in its sole discretion), the Grantor
will, at its own expense (A) execute and deliver, and cause each issuer of the Securities Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of the Secured Party, advisable to register such Securities Collateral under the provisions of the Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and 

  

 14 

 
supplements thereto and to the related prospectus which, in the opinion of the Secured Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (B) do or cause to be done all such other acts and things as may be necessary to make such sale of the Securities
Collateral or any part thereof valid and binding and in compliance with applicable law; and (C) bear all costs and expenses, including reasonable attorneys’ fees, of carrying out its obligations under this Section. 
  

	 	Section 17.	Additional Remedies for Intellectual Property Collateral. 

  
 (a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, (i) each Secured
Party shall have the right (but not the obligation) to bring suit, in the name of the Grantor, the Secured Party or otherwise, to enforce any Intellectual Property Collateral, in which event the Grantor shall, at the request of the Secured Party, do
any and all lawful reasonable acts and execute any and all documents required by the Secured Party in aid of such enforcement and, to the extent that the Secured Party shall elect not to bring suit to enforce any Intellectual Property Collateral as
provided in this Section, the Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property Collateral by others and for that purpose agrees to use
its commercially reasonable judgement in maintaining any action, suit or proceeding against any Person so infringing reasonably necessary to prevent such infringement; (ii) upon written demand from either Secured Party, the Grantor shall execute and
deliver to the Secured Parties an assignment or assignments of the Intellectual Property Collateral and such other documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; and (iii) the Grantor agrees that
such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Secured Parties receive cash proceeds in respect of the sale of, or other realization upon, the Intellectual Property
Collateral. 
  

	 	Section 18.	Application of Proceeds. 

  
 Except as expressly provided elsewhere in this Agreement, all proceeds received by either Secured Party in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied in the following order of priority: 
  
 FIRST: To the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to the Secured Party and
its agents and reasonable fees of counsel, and all other expenses, liabilities and advances made or incurred by the Secured Party in connection therewith, and all advances made by the Secured Party hereunder for the account of the Grantor, and to
the payment of all costs and expenses paid or incurred by the Secured Party in connection with the exercise of any right or remedy hereunder; 
  
 SECOND: To the payment of all other Secured Obligations owed to the Secured Party and, as to obligations arising under the Reimbursement Agreement, as
provided in the Reimbursement Agreement; and 
  
 THIRD: To the
payment of all other Secured Obligations, without regard to whom they are owed; and 
  
 FOURTH: To the payment to or upon the order of the Grantor, or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such
proceeds. 
  

 15 

	 	Section 19.	Expenses. 

  
 The Grantor hereby agrees to pay to the Secured Parties upon the Termination Date of the Reimbursement Agreement the amount of any and all reasonable
costs and expenses, including the reasonable fees and expenses of their counsel and of any experts and agents, that the Secured Parties may incur in connection with (i) the exercise or enforcement of any of the rights of the Secured Parties
hereunder, (ii) the failure by the Grantor to perform or observe any of the provisions hereof, or (iii) the preparation, filing or recording of any documents or instruments referenced in the last sentence of Section 5. 
  

	 	Section 20.	Continuing Security Interest; Transfer of Loans; Termination and Release. 

  
 (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and
effect until the payment in full of the Secured Obligations and the cancellation or termination of the obligations of both Secured Parties under all of the Guaranties, (ii) be binding upon the Grantors and their respective successors and assigns,
and (iii) inure, together with the rights and remedies of the Secured Parties hereunder, to the benefit of the Secured Parties and their successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), each of the
Secured Parties may assign or otherwise transfer any Loans held by it to any other Person in accordance with the Reimbursement Agreement, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the
Secured Parties herein or otherwise. 
  
 (b) Upon the payment in
full of the Secured Obligations and the cancellation or termination of the obligations of Secured Parties under the Guaranties, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon
any such termination the Secured Parties will, at the Grantor’s expense, promptly execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such termination. In addition, upon the proposed sale,
transfer or other disposition of any Collateral by the Grantor in accordance with the Reimbursement Agreement for which the Grantor desires to obtain a security interest release from the Secured Parties, the Grantor shall deliver an Officer’s
Certificate (x) stating that the Collateral subject to such disposition is being sold, transferred or otherwise disposed of in compliance with the terms of the Reimbursement Agreement and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such Officer’s Certificate, the Secured Parties shall, at the Grantor’s expense, promptly execute and deliver such releases of its security interest in such Collateral
which is to be so sold, transferred or disposed of, as may be reasonably requested by the Grantor. 
  

	 	Section 21.	Secured Parties as Guarantors. 

  
 (a) The Secured Party shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation the release or substitution of Collateral), in accordance with this Agreement, the Reimbursement Agreement and all applicable law, including without limitation the Uniform Commercial Code
as such is in effect from time to time. 
  
 (b) The Secured
Parties shall at all times be the same Persons that are the Guarantors under the Reimbursement Agreement, and any assignment, delegation or other transfer of the rights of the Guarantors under the Reimbursement Agreement shall also constitute an
assignment, delegation or transfer of the rights of the Secured Party hereunder. Upon the transfer to one or more successor Guarantors of any Reimbursement Obligation under the Reimbursement Agreement, that successor 

  

 16 

 
Guarantor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the transferring Secured Party under this
Agreement, and the transferring Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all sums, securities and other items of Collateral held hereunder, together with all records and other documents necessary
or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions,
as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such assigning Secured Party shall be discharged from its duties and obligations under this
Agreement. After any such transfer by a Secured Party hereunder, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was the Secured Party hereunder.

  

	 	Section 22.	Intentionally Deleted. 

  

	 	Section 23.	Amendments; Etc. 

  
 No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by the Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the Secured Parties and, in the case of any such amendment or modification, by the Grantor. Any such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. 
  

	 	Section 24.	Notices. 

  
 Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile, or three Business Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided that notices to the Secured Parties shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as provided in Section 8.4 of the Reimbursement Agreement or such other
address as shall be designated by such party in a written notice delivered to the other parties hereto. 
  

	 	Section 25.	Failure or Indulgence Not Waiver; Remedies Cumulative. 

  
 No failure or delay on the part of either Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. 
  

	 	Section 26.	Severability. 

  
 In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 
  

 17 

	 	Section 27.	Headings. 

  
 Section and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for
any other purpose or be given any substantive effect. 
  

	 	Section 28.	Governing Law; Terms; Rules of Construction. 

  
 THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise defined herein or in the Reimbursement Agreement, terms
used in Articles 8 and 9 of the UCC are used herein as therein defined. The rules of construction set forth in Section 1.3 of the Reimbursement Agreement shall be applicable to this Agreement mutatis mutandis. 
  

	 	Section 29.	Consent to Jurisdiction and Service of Process. 

  
 ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, THE GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT THE SECURED PARTIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40 OR OTHERWISE.

  

	 	Section 30.	Waiver of Jury Trial. 

  
 THE GRANTOR AND THE SECURED PARTIES HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims. The Grantor and the Secured Parties acknowledge that 

  

 18 

 
this waiver is a material inducement for the Grantor and the Secured Parties to enter into a business relationship, that the Grantor and the Secured Parties
have already relied on this waiver in entering into this Agreement and that each will continue to rely on this waiver in their related future dealings. The Grantor and the Secured Parties further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY
A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the court. 
  

	 	Section 31.	Counterparts. 

  
 This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, in original or by telefacsimile, each
of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same document. 
  

 19 

 IN WITNESS WHEREOF, the Grantor and the Secured Parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date last executed below. 
  

			
	BUY.COM, INC.,
	 as Grantor

		
	 By:
	 	 /s/ Robert R. Price

	 Name:
	 	 Robert R. Price

	 Title:
	 	 President, CFO

	
	SCOTT A. BLUM
	 as Secured Party

		
	 By:
	 	 
	 	 	 Scott A. Blum

	
	SCOTT A. BLUM SEPARATE PROPERTY TRUST U/D/T 8/2/95
	 as Secured Party

		
	 By:
	 	 
	 	 	 Scott A. Blum as Trustee

  

 S-1 

 IN WITNESS WHEREOF, the Grantor and the Secured Parties have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as of the date first written above. 
  

									
	BUY.COM, INC.,	 	 	 	 
	 as Grantor
	 	 	 	 
					
	 By:
	 	 /s/ Robert R. Price
	 	 	 	 Date:
	 	 
	 Name:
	 	 Robert R. Price
	 	 	 	 	 	 
	 Title:
	 	 President, CFO
	 	 	 	 	 	 
			
	SCOTT A. BLUM	 	 	 	 
	 as Secured Party
	 	 	 	 
					
	 By:
	 	 /s/ Scott A. Blum
	 	 	 	 Date:
	 	 12/20/02

	 	 	 Scott A. Blum
	 	 	 	 	 	 
	
	SCOTT A. BLUM SEPARATE PROPERTY TRUST U/D/T 8/2/95
	 as Secured Party
	 	 	 	 
					
	 By:
	 	 /s/ Scott A. Blum
	 	 	 	 Date:
	 	 12/20/02

	 	 	 Scott A. Blum as Trustee
	 	 	 	 	 	 

  

 S-1 

 DISCLOSURE SCHEDULE TO 
 SECURITY AGREEMENT 
  

 DS-1

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