SECURITY AGREEMENT
SECURITY
AGREEMENT (this “
Agreement ”),
dated as of April 15, 2008, by and among Optigenex Inc., a Delaware
corporation (“
Parent ”
or “
Company ”)
and the secured parties signatory hereto and their respective
endorsees, transferees and assigns (collectively, the
“
Secured Party ”).
WITNESSETH:
WHEREAS,
pursuant to a Securities Purchase Agreement, dated the date
hereof, between Parent and the Secured Party (the
“
Purchase Agreement ”),
Parent has agreed to issue to the Secured Party and the Secured
Party has agreed to purchase from Parent certain of Parent’s
8% Callable Secured Convertible Notes, due three years from the
date of issue (the “
Notes ”),
which are convertible into shares of Company’s Common Stock,
par value $.001 per share (the “
Common Stock ”).
In connection therewith, Parent shall issue the Secured Party
certain Common Stock purchase warrants (the “
Warrants ”);
and
WHEREAS,
the Parent has been, and is now, engaged in [
INSERT DESCRIPTION OF BUSINESS ];
and
WHEREAS,
in order to induce the Secured Party to purchase the Notes,
Company has agreed to execute and deliver to the Secured Party
this Agreement for the benefit of the Secured Party and to
grant to it a first priority security interest in certain
property of Company to secure the prompt payment, performance
and discharge in full of all of Company’s obligations
under the Notes and exercise and discharge in full of
Company’s obligations under the Warrants;
and
WHEREAS,
in light of the foregoing, the Company expects to derive
substantial benefit from the Purchase Agreement and sale of
the Notes and the transactions contemplated thereby and, in
furtherance thereof, has agreed to execute and deliver
this.
NOW,
THEREFORE, in consideration of the agreements herein contained
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1.
Certain Definitions .
As used in this Agreement, the following terms shall have the
meanings set forth in this Section 1. Terms used but not otherwise
defined in this Agreement that are defined in Article 9 of the UCC
(such as “
general intangibles ”
and “
proceeds ”)
shall have the respective meanings given such terms in Article 9 of
the UCC.
(a)
“
Collateral ”
means the collateral in which the Secured Party is granted a
security interest by this Agreement and which shall include the
following, whether presently owned or existing or hereafter
acquired or coming into existence, and all additions and accessions
thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without
limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort
claims in connection therewith:
(i)
All
Goods of the Company, including, without limitations, all
machinery, equipment, computers, motor vehicles, trucks,
tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and
other equipment of every kind and nature and wherever
situated, together with all documents of title and documents
representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful
in connection with the Company’s businesses and all
improvements thereto (collectively, the “
Equipment ”);
and
(ii)
All
Inventory of the Company; and
(iii)
All
of the Company’s contract rights and general
intangibles, including, without limitation, all partnership
interests, stock or other securities, licenses, distribution
and other agreements, computer software development rights,
leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service
marks, trade styles, trade names, patents, patent
applications, copyrights, deposit accounts, and income tax
refunds (collectively, the “
General Intangibles ”);
and
(iv)
All
Receivables of the Company including all insurance proceeds,
and rights to refunds or indemnification whatsoever owing,
together with all instruments, all documents of title
representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title,
security and guaranties with respect to each Receivable,
including any right of stoppage in transit; and
(v)
All
of the Company’s documents, instruments and chattel
paper, files, records, books of account, business papers,
computer programs and the products and proceeds of all of the
foregoing Collateral set forth in clauses (i)-(iv)
above.
(b)
“
Company ”
shall mean, collectively, Company and all of the subsidiaries of
Company, a list of which is contained in
Schedule A ,
attached hereto.
(c)
“
Obligations ”
means all of the Company’s obligations under this Agreement
and the Notes, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or
extinguished and later decreased, 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 the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to
time.
(d)
“
UCC ”
means the Uniform Commercial Code, as currently in effect in the
State of New York.
2.
Grant of Security Interest .
As an inducement for the Secured Party to purchase the Notes and to
secure the complete and timely payment, performance and discharge
in full, as the case may be, of all of the Obligations, the Company
hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Secured Party, a continuing security interest
in, a continuing first lien upon, an unqualified right to
possession and disposition of and a right of set-off against, in
each case to the fullest extent permitted by law, all of the
Company’s right, title and interest of whatsoever kind and
nature in and to the Collateral (the “
Security Interest ”).
3.
Representations, Warranties, Covenants and Agreements of the
Company .
The Company represents and warrants to, and covenants and agrees
with, the Secured Party as follows:
(a)
The
Company has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its
obligations thereunder. The execution, delivery and
performance by the Company of this Agreement and the filings
contemplated therein have been duly authorized by all
necessary action on the part of the Company and no further
action is required by the Company. This Agreement constitutes
a legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditor’s rights generally.
(b)
The
Company represents and warrants that it has no place of
business or offices where its respective books of account and
records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored
or located, except as set forth on
Schedule A attached
hereto;
(c)
The
Company is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Company in the ordinary
course of business), free and clear of any liens, security
interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the
Collateral. There is not on file in any governmental or
regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer
or any notice of any of the foregoing (other than those that
have been filed in favor of the Secured Party pursuant to this
Agreement) covering or affecting any of the Collateral. So
long as this Agreement shall be in effect, the Company shall
not execute and shall not knowingly permit to be on file in
any such office or agency any such financing statement or
other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms
of this Agreement).
(d)
No
part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any
Collateral or the Company’s use of any Collateral
violates the rights of any third party. There has been no
adverse decision to the Company’s claim of ownership
rights in or exclusive rights to use the Collateral in any
jurisdiction or to the Company’s right to keep and
maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best
knowledge of the Company, threatened before any court,
judicial body, administrative or regulatory agency, arbitrator
or other governmental authority.
(e)
The
Company shall at all times maintain its books of account and
records relating to the Collateral at its principal place of
business and its Collateral at the locations set forth
on
Schedule A attached
hereto and may not relocate such books of account and records or
tangible Collateral unless it delivers to the Secured Party at
least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing
statements and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security
Interest to create in favor of the Secured Party valid, perfected
and continuing first priority liens in the Collateral.
(f)
This
Agreement creates in favor of the Secured Party a valid
security interest in the Collateral securing the payment and
performance of the Obligations and, upon making the filings
described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except
for the filing of financing statements on Form-1 under the UCC
with the jurisdictions indicated on
Schedule B ,
attached hereto, no authorization or approval of or filing with or
notice to any governmental authority or regulatory body is required
either (i)
for
the grant by the Company of, or the effectiveness of, the Security
Interest granted hereby or for the execution, delivery and
performance of this Agreement by the Company or (ii)
for
the perfection of or exercise by the Secured Party of its rights
and remedies hereunder.
(g)
On
the date of execution of this Agreement, the Company will
deliver to the Secured Party one or more executed UCC
financing statements on Form-1 with respect to the Security
Interest for filing with the jurisdictions indicated on
Schedule B ,
attached hereto and in such other jurisdictions as may be requested
by the Secured Party.
(h)
The
execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that
with or without the passage of time or notice, shall
constitute a breach or default, under any agreement to which
the Company is a party or by which the Company is bound. No
consent (including, without limitation, from stock holders or
creditors of the Company) is required for the Company to enter
into and perform its obligations hereunder.
(i)
The
Company shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected first
priority liens and security interests in the Collateral in
favor of the Secured Party until this Agreement and the
Security Interest hereunder shall terminate pursuant to
Section 11. The Company hereby agrees to defend the same
against any and all persons. The Company shall safeguard and
protect all Collateral for the account of the Secured Party.
At the request of the Secured Party, the Company will sign and
deliver to the Secured Party at any time or from time to time
one or more financing statements pursuant to the UCC (or any
other applicable statute) in form reasonably satisfactory to
the Secured Party and will pay the cost of filing the same in
all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the
rights and obligations provided for herein. Without limiting
the generality of the foregoing, the Company shall pay all
fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the
Company shall obtain and furnish to the Secured Party from
time to time, upon demand, such releases and/or subordinations
of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(j)
The
Company will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the
Company in the ordinary course of business), sell or otherwise
dispose of any of the Collateral without the prior written
consent of the Secured Party.
(k)
The
Company shall keep and preserve its Equipment, Inventory and
other tangible Collateral in good condition, repair and order
and shall not operate or locate any such Collateral (or cause
to be operated or located) in any area excluded from insurance
coverage.
(l)
The
Company shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Collateral, and of
the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the
Secured Party’s security interest therein.
(m)
The
Company shall promptly execute and deliver to the Secured
Party such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments,
documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and
may in its sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including,
without limitation, the execution and delivery of a separate
security agreement with respect to the Company’s
intellectual property (“
Intellectual Property Security Agreement ”)
in which the Secured Party has been granted a security interest
hereunder, substantially in a form acceptable to the Secured Party,
which Intellectual Property Security Agreement, other than as
stated therein, shall be subject to all of the terms and
cond
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