Dated as of March 9, 2005
GENERAL SECURITY AGREEMENT
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(SECURES A GUARANTY)
1. GRANT OF SECURITY INTEREST
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(a) In consideration of the extensions of credit and other
financial
accommodations made by GMAC COMMERCIAL
FINANCE LLC ("SECURED PARTY") to I/OMagic
Corporation (the "BORROWER") and other
valuable consideration, IOM HOLDINGS,
INC. ("DEBTOR") hereby grants Secured Party
a lien and security interest in the
"Collateral" to secure the
"OBLIGATIONS".
(b) For purposes of this Agreement, the term "COLLATERAL" means all
of
Debtor's right, title and interest in and
to personal property, including
without limitation, accounts, chattel paper
(both tangible and electronic),
goods, inventory, equipment, fixtures,
payment intangibles, general intangibles
(including tax refunds and intellectual
property), software, instruments,
letters of credit, letter or credit rights,
money, documents, deposit accounts,
commercial tort claims (including all of
Debtor's rights and claims arising
under, in connection with or related to the
lawsuit styled IOM HOLDINGS, INC.
AND I/OMAGIC CORPORATION V. LAWRENCE W.
HOROWITZ, GREGORY B. BEAM, LAWRENCE M.
CRON, HORWITZ & CRON, KEVIN J. SENN,
SENN PALUMBO MEULMANS LLP ET AL, Case
Number 03CC07383, Orange County California
Superior Court, and the claims on
which such lawsuit is based, and the matter
of arbitration styled, IOM HOLDINGS,
INC. V. DEVELOPMENT SPECIALISTS, INC., REF.
NUMBER 73 Y 181 00168 04 LOPE,
AMERICAN ARBITRATION ASSOCIATION, and the
claims on which the arbitration matter
is based), investment property, commodity
contracts, commodity accounts, timber
to be cut, oil, gas and other minerals
prior to extraction, as-extracted
collateral vehicles, and supporting
obligations, and all additions and
accessions to, all spare and repair parts,
special tools, dies, equipment and
replacements for, all returned or
repossessed goods, the sale of which gave rise
to, and all proceeds (including proceeds of
insurance and condemnation awards)
and products of the foregoing, wherever
located, whether now existing or
hereafter acquired.
(c) For purposes of this Agreement, the term "OBLIGATIONS" means
(i)
all amounts now or in the future owing by
Debtor to Secured Party, however and
whenever arising, including, without
limitation, under the Guaranty of even
date, pursuant to which Debtor guaranteed
all of Borrowers' obligations to
Secured Party (the "GUARANTY"), (ii) all of
Debtor's obligations under this
Agreement and (iii) reasonable attorneys'
fees and costs incurred by Secured
Party in enforcing its rights under this
Agreement or as called for by any other
agreement or instrument to which Secured
Party and Debtor are parties.
2. DEBTOR'S WARRANTIES
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Debtor warrants that while any of the Obligations are unpaid:
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(a) OWNERSHIP. Debtor is the owner of the Collateral free of
all
encumbrances and security interests other
than security interests of record as
of the date hereof and Secured Party's
security interests, free from all other
encumbrances and security interests.
(b) AUTHORITY TO CONTRACT. The execution and delivery of this
Agreement
and any instruments evidencing the
Obligations will not violate or constitute a
breach of Debtor's Articles of
Incorporation, Code of Regulations or any
agreement or restriction to which Debtor is
a party or is subject, which has not
been waived.
(c) STATE OF FORMATION; NAME. The Debtor is a corporation
organized
under the laws of the State of Nevada. The
Debtor's name as it appears in this
agreement is identical to the name of the
Debtor appearing in the Debtor's
organizational documents, as amended.
(d) ADDRESSES. The address of Debtor's place of business, or if
Debtor
has more than one place of business, then
the address of Debtor's chief
executive office, is as set forth below.
Such location shall not be changed
without the prior written consent of
Secured Party, but the Collateral, wherever
located, is covered by this Agreement.
(e) CHANGE OF NAME OR ADDRESS. Debtor shall immediately advise
Secured
Party in writing of any change in its name
or address.
(f) TAYPAYER I.D. NO. AND ORGANIZATION NO.. Debtor's taxpayer
identification number and state
organization number, if any, shown below are
correct.
(g) SALES OR TRANSFERS OF COLLATERAL. Debtor shall not sell or
transfer
any of the Collateral except in the
ordinary course of Debtor's business.
(h) BENEFIT. Debtor and Borrowers are part of a integrated
business
operation and Debtor will benefit in a
direct and substantial way from loans and
financial accommodations being made by
Secured Party to Borrowers.
3. DEBTOR'S COVENANTS
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Debtor covenants and agrees:
(a) MAINTENANCE OF COLLATERAL. Debtor shall: maintain the
Collateral in
good condition and repair and not permit
its value to be impaired, ordinary wear
and tear excepted, keep it free from all
liens, encumbrances and security
interests (other than the security
interests noted above); defend it against all
claims and legal proceedings by persons
other than secured creditors of record
as of the date of this Agreement; pay and
discharge when due all taxes, license
fees, levies and other charges upon it; not
sell, lease or otherwise dispose of
it or permit it to become a fixture or an
accession to other goods, except for
sales as provided in paragraph 2(g) of this
Agreement, not permit it to be used
in violation of any applicable law,
regulation or policy of insurance; and, as
to Collateral consisting of instruments and
chattel paper, preserve rights in it
against prior parties. Loss of or damage to
the Collateral shall not release
Debtor from any of the Obligations.
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(b) INSURANCE ON COLLATERAL. At its own expense, Debtor will
maintain
comprehensive casualty insurance on all
tangible Collateral against such risks,
in such amounts, with such deductibles and
with such companies as may be
satisfactory to Secure
