SECURITY AGREEMENT
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1. Identification.
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This Security Agreement (the "Agreement"), dated for identification
purposes only May 3, 2001, is entered into by and between Go Online Networks
Corporation, a Delaware corporation ("Debtor"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (referred to
herein individually as "Shareholder") and Laurus Master Fund Ltd. (the
"Lender").
2. Recitals.
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2.1 The Lender has made a loan to Debtor (the "Loan").
2.2 The Loan is evidenced by a certain Secured Convertible Note in the
principal amount of $500,000 ("Note") and executed by Debtor as the "Borrower"
thereof, for the benefit of Lender as the "Holder" thereof.
2.3 In order to induce Lender to make the Loan, and as security for
Debtor's performance of its obligations under the Note and as security for the
repayment of the Loan and any and all other sums due from Debtor to Lender
whether arising under the Note issued pursuant to a Subscription Agreement
entered into between Debtor and Lender relating to the Note (the "Subscription
Agreement"), or pursuant to other written instruments and agreements entered
into by the Debtor and Lender, whether before or after the date hereof, and
further specifically including all of the Debtor's obligations arising under the
Note and the Subscription Agreement relating thereto (collectively, the
"Obligations"), Debtor and Shareholder for good and valuable consideration,
receipt of which is acknowledged, have agreed to grant to the Lender, a security
interest in the Collateral (as such term is hereinafter defined), on the terms
and conditions hereinafter set forth.
Defined Terms. The following defined terms which are defined in the
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Uniform Commercial Code in effect in the State of New York on the date hereof
are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment,
General Intangibles, Instruments, Inventory and Proceeds.
3. Grant of General Security Interest in Collateral.
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3.1 As security for the Obligations, Debtor and Shareholder hereby
grant the Lender a security interest in the Collateral.
3.2 "Collateral" shall mean all of the following property of the
Shareholder: the common stock of the Debtor as set forth on Schedule A hereto,
together with medallion signature guaranteed stock powers ("Security Shares").
Such additional Collateral shall include, but not be limited to, all the
Shareholder right, title and interest in and to the Security Shares, together
with the proceeds of any sale, exchange, liquidation or other disposition,
whether voluntary or involuntary, and including but not limited to any
securities, Instruments, and all benefits and entitlements evidenced by or
arising out of the Security Shares and all other securities, Instruments and
other property (whether real or personal, tangible or intangible) issued or
accepted in substitution for, or in addition to, the foregoing, and all
dividends, interest, cash, instruments, distributions, income, securities and
any other property (whether real or personal, tangible or intangible) at any
time received, receivable or otherwise distributed in respect of, or in exchange
for, the foregoing, whether now owned or hereafter acquired, and any and all
improvements, additions, replacements, substitutions and any and all Proceeds
arising out of or derived from the foregoing.
3.3 "Collateral" shall also mean all of the following property of Debtor:
(a) All now owned and hereafter acquired right, title and interest of
Debtor in, to and in respect of the Kiosks described on Schedule B hereto and
with respect thereto the accounts existing and future leasehold interests in the
Kiosks;
(b) All present and future books and records relating to any of
the above; and
(c) All products and proceeds of the foregoing in whatever form
and wherever located, including, without limitation, all insurance proceeds and
all claims against third parties for loss or destruction of or damage to any of
the foregoing.
3.4 The Lender is hereby specifically authorized to transfer any
Collateral into the name of the Lender and to take any and all action deemed
advisable to the Lender to remove any transfer restrictions affecting the
Collateral.
4. Perfection of Security Interest.
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Debtor and Shareholder shall execute and deliver to the Lender the Security
Shares and corresponding signature guaranteed medallion stock powers, and UCC-1
Financing Statements ("Financing Statements") assigning to the Lender security
interests in Debtor's and Shareholder's right, title and interest in and to the
Collateral. Debtor and Shareholder hereby authorize the Lender to file
Financing Statements at the Debtor's expense, in such filing locations as the
Lender deems appropriate. Debtor agrees, at Debtor's expense, to file the
Financing Statements with all jurisdictions necessary for the perfection of the
security interest by Lender, in connection with the Collateral (other than the
Security Shares) within thirty days of the date of this Agreement and provide
satisfactory proof of filing to Lender. Failure by Debtor to make such filings
shall be deemed an Event of Default under this Agreement and an Event of Default
under Article III of the Note, for which no notice to cure or cure period is
provided.
5. Distribution on Liquidation.
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5.1 If any sum is paid as a liquidating distribution on or with respect
to the Collateral, Shareholder shall accept same in trust for the Lender and
shall deliver same to the Lender to be applied to the Obligations then due, in
accordance with the terms of the Note.
5.2 Prior to any Event of Default (as defined herein), Shareholder
shall be entitled to exercise all voting power pertaining to any of the
Collateral, provided such exercise is not contrary to the interests of the
Lender and does not impair the Collateral.
6. Further Action By Debtor; Covenants and Warranties.
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6.1 Lender at all times shall have a perfected security interest in the
Collateral which shall be prior to any other unperfected interest therein.
Subject to the security interest described herein, Debtor and Shareholder, as
the case may be, have and will continue to have full title to the Collateral
free from any liens, leases, encumbrances, judgments or other claims. Lender's
security interest in the Collateral constitutes and will continue to constitute
a first, prior and indefeasible security interest in favor of Lender. Debtor
and Shareholder will do all acts and things, and will execute and file all
instruments (including, but not limited to, security agreements, financing
statements, continuation statements, etc.) reasonably requested by Lender to
establish, maintain and continue the perfected security interest of Lender in
the Collateral, and will promptly on demand, pay all costs and expenses of
filing and recording, including the costs of any searches deemed necessary by
Lender from time to time to establish and determine the validity and the
continuing priority of the security interest of Lender, and also pay all other
claims and charges that in the opinion of Lender might prejudice, imperil or
otherwise affect the Collateral or its security interest therein.
6.2 Debtor and Shareholder will not sell, transfer, assign or pledge
those items of Collateral and Debtor and Shareholder will not allow any such
items to be sold, transferred, assigned or pledged, without the prior written
consent of Lender. Although Proceeds of Collateral are covered by this Security
Agreement, this shall not be construed to mean that Lender consents to any sale
of the Collateral.
6.3 Debtor and Shareholder will, at all reasonable times, allow Lender
or its representatives free and complete access to all of Debtor 's and
Shareholder's records which in any way relate to the Collateral, for such
inspection and examination as Lender deems necessary.
6.4 Debtor and Shareholder, at their sole cost and expense, will
protect and defend this Security Agreement, all of the rights of Lender
hereunder, and the Collateral against the claims and demands of all other
parties.
6.5 Debtor and Shareholder will promptly notify Lender of any levy,
distraint or other seizure by legal process or otherwise of any part of the
Collateral, and of any threatened or filed claims or proceedings that might in
any way affect or impair any of the rights of Lender under this Security
Agreement.
6.6 Debtor and Shareholder, at their own expense, will maintain
presently in force insurance policies covering losses or damage to those items
of Collateral which constitute physical personal property, if any. Upon the
occurrence of an Event of Default, Company and Shareholder shall make the Lender
a loss payee thereon. Lender is hereby irrevocably appointed Debtor's and
Shareholder's attorney-in-fact to endorse any check or draft that may be payable
to Debtor or Shareholder, so that Lender may collect the proceeds payable for
any loss under such insurance. The proceeds of such insurance, less any costs
and expenses incurred or paid by Lender in the collection thereof, shall be
applied either toward the cost of the repair or replacement of the items damaged
or destroyed, or on account of any sums secured hereby, whether or not then due
or payable.
6.7 Lender may, at its option, and without any obligation to do so,
pay, perform and discharge any and all amounts, costs, expenses and liabilities
herein agreed to be paid or performed by Debtor and Shareholder, and all amounts
expended by Lender in so doing shall become part of the Obligations secured
hereby, and shall be immediately due and payable by Debtor and Shareholder to
Lender upon demand and shall bear interest at 18% per annum from the dates of
such expenditures until paid.
6.8 Upon the request of Lender, Debtor and Shareholder will furnish within
five (5) days thereafter to Lender, or to any permitted assignee of this
Security Agreement, a written statement in form satisfactory to Lender, duly
acknowledged, certifying the amount of the principal and interest then owing
under the Obligations, whether any claims, offsets or defenses exist against the
Obligations or against this Security Agreement, or any of the terms and
provisions of any other agreement of Debtor or Shareholder securing the
Obligations. In connection with any assignment by Lender of this Security
Agreement, Debtor and Shareholder hereby agree to cause the insurance policies
required hereby to be carried by Debtor and Shareholder, if any, to be endorsed
in form satisfactory to Lender or to such assignee, with loss payable clauses in
favor of such assignee, and to cause such endorsements to be delivered to Lender
within ten (10) calendar days after request therefore by Lender.
6.9 The Debtor and Shareholder will, at Debtor's expense, make,
execute, endorse, acknowledge, file and/or deliver to the Lender from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Lender may reasonably require.
6.10 Shareholder represents and warrants that he is the true and lawful
exclusive owner of the Security Shares, free and clear of any liens and
encumbrances and acquired the Security Shares for purposes of calculating the
holding period for purposes of Rule 144 under the Securities Act of 1933 ("Rule
144") on the dates set forth on Schedule A. Shareholder makes the foregoing
representation to the Lender and any transfer agent of the Company's common
stock as if originally made to such transfer agent. The Company represents and
warrants that it is the true and lawful exclusive owner of the Collateral, free
and clear of any liens and encumbrances.
6.11 Shareholder and Debtor hereby agree not to divest themselves of
any right under the Collateral absent prior written approval of the Lender.
6.12 Debtor and Shareholder will cooperate and provide such
certificate, resolutions, representations, legal opinions and all other matters
necessary to facilitate a transfer or sale of any part of the Collateral
pursuant to Rule 144, or otherwise. Debtor and Shareholder are unaware of any
impediment to the resale of the security by the Lender pursuant to Rule 144.
Debtor and Shareholder will take no action that would impede or limit the
Lender's ability to resell all the Security Shares pursuant to Rule 144.
7. Power of Attorney.
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Debtor and Shareholder hereby irrevocably constitute and appoint the Lender
as the true and lawful attorney of Debtor and Shareholder, with full power of
substitution, in the place and stead of Debtor and Shareholder and in the name
of Debtor and Shareholder or otherwise, at any time or times, in the discretion
of the Lender, to take any action and to execute any instrument or document
which the Lender may deem necessary or advisable to accomplish the purposes of
this Agreement which Debtor or Shareholder fail to take or fail to execute
within five (5) business days of the Lender's reasonable request therefor. This
power of attorney is coupled with an interest, is irrevocable and shall not be
affected by any subsequent disability or incapacity of Debtor or Shareholder.
8. Performance By The Lender.
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If Debtor or Shareholder fails to perform any material covenant, agreement,
duty or obligation of Debtor or Shareholder under this Agreement, the Lender
may, at any time or times in its discretion, take action to effect performance
of such obligation. All reasonable expenses of the Lender incurred in
connection with the foregoing authorization shall be payable by Debtor and
Shareholder as provided in Paragraph 12.1 hereof. No discretionary right,
remedy or power granted to the Lender under any part of this Agreement shall be
deemed to impose any obligation whatsoever on the Lender with respect thereto,
such rights, remedies and powers being solely for the protection of the Lender.
9. Event of Default.
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An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of any event of default as defined in the Note or
Subscription Agreement. Upon and after any Event of Default, after the
applicable cure period, if any, any or all of the Obligations shall become
immediately due and payable at the option of the Lender, for the benefit of the
Lender, and the Lender may dispose of Collateral as provided below. A default
by Debtor or Shareholder of any of their material obligations pursuant to this
Agreement including but not limited to the obligations set forth in Section 6 of
this Agreement, or a misrepresentation by Debtor or Shareholder of a material
fact stated herein, shall be deemed an Event of Default hereunder and an event
of default as defined in the Obligations.
10. Disposition of Collateral.
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10.1 Upon and after any Event of Default which is then continuing,
(a) The Lender may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations or any other component of the
Collateral. In addition to other rights and remedies provided for herein or
otherwise available to it, the Lender shall have all of the rights and remedies
of a lender on default under the Uniform Commercial Code then in effect in the
State of New York.
(b) If any notice to Shareholder of the sale or other disposition of
Collateral is required by then applicable law, five (5) days' prior notice (or,
if longer, the shortest period of time permitted by then applicable law) to
Debtor and Shareholder of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to
be made, shall constitute reasonable notification.
(c) The Lender is authorized, at any such sale, if the Lender deems it
advisable to do so, in order to comply with any applicable securities laws, to
restrict the prospective bidders or purchasers to persons who will represent and
agree, among other things, that they are purchasing the Collateral for their own
account for investment, and not with a view to the distribution or resale
thereof, or otherwise to restrict such sale in such other manner as the Lender
deems advisable to ensure such compliance. Sales made subject to such
restrictions shall be deemed to have been made in a commercially reasonable
manner.
(d) All cash proceeds received by the Lender in respect of any sale,
collection or other enforcement or disposition of Collateral, shall be applied
(after deduction of any amounts payable to the Lender pursuant to Paragraph 12.1
hereof) against the Obligations. Upon payment in full of all Obligations,
Debtor and Shareholder shall be entitled to the return of all Collateral,
including cash, which has not been used or applied toward the payment of
Obligations or used or applied to any and all costs or expenses of the Lender
incurred in connection with the liquidation of the Collateral (unless another
person is legally entitled thereto). Any assignment of Collateral by the Lender
to Debtor or Shareholder shall be without representation or warranty of any
nature whatsoever and wholly without recourse. The Lender may purchase the
Collateral and pay for such purchase by offsetting any sums owed to such Lender
by Debtor or Shareholder arising under the Obligations or any other source.
(e) No exercise by the Lender of any right hereby given it, no dealing
by the Lender with Debtor, Shareholder or any other person, and no change,
impairment or suspension of any right or remedy of the Lender shall in any way
affect any of the obligations of Debtor or Shareholder hereunder or any
Collateral furnished by Shareholder or give Debtor or Shareholder any recourse
against the Lender.
10.2 The Collateral shall be released to the Debtor and Shareholder
upon the sooner of (i) complete satisfaction of the Obligations, or (ii) the
timely compliance by the Debtor of its registration obligations set forth in
Section 10.1(iv) of the Subscription Agreement. Notwithstanding anything
contained in this Security Agreement, or in the Subscription Agreement to the
contrary, the Collateral that has not been released pursuant to this Security
Agreement shall be released and returned promptly to the Shareholder upon the
effectiveness of the SB-2 registration statement required to be filed by the
Company pursuant to Section 10.1(iv) of the Subscription Agreement, provided
that no Event of Default has occurred, otherwise the Collateral shall remain
subject to this Agreement until the complete satisfaction of the Obligations.
10.3 The Debtor and Shareholder, individually or collectively may
substitute with the Lender prior to the occurrence of an Event of Default a sum
of money equal to the greater of (i) the Mandatory Payment as defined in Section
9.2 of the Subscription Agreement, or (ii) all sums due, payable or accruing on
the Obligations through the Maturity Date of the Note as substitute Collateral
and receive the Collateral in lieu thereof. Said sum of money will be held as
Collateral pursuant to this Security Agreement, and shall be deposited in an
interest bearing account for the benefit of the Debtor or Shareholder, as the
case may be, provided that such Debtor or Shareholder provide to the Lender a
taxpayer identification number and other documents reasonably requested by
Lender.
11. Waiver of Automatic Stay. The Debtor and Shareholder acknowledge and
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agree that should a proceeding under any bankruptcy or insolvency law be
commenced by or against the Debtor or Shareholder, or if any of the Collateral
(as defined in the Security Agreement) should become the subject of any
bankruptcy or insolvency proceeding, then the Lender should be entitled to,
among other relief to which the Lender may be entitled under the Note, Security
Agreement, Subscription Agreement and any other agreement to which the Debtor,
Shareholder, or Lender are parties, (collectively "Loan Documents") and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Lender to
exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law. THE DEBTOR AND SHAREHOLDER EXPRESSLY WAIVE THE BENEFIT OF THE
AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE DEBTOR AND
SHAREHOLDER EXPRESSLY ACKNOWLEDGE AND AGREE THAT NEITHER 11 U.S.C. SECTION 362
NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE LENDER TO ENFORCE ANY
OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The
Debtor and Shareholder hereby consent to any motion for relief from stay which
may be filed by the Lender in any bankruptcy or insolvency proceeding initiated
by or against the Debtor and Shareholder, and further agree not to file any
opposition to any motion for relief from stay filed by the Lender. The Debtor
and Shareholder represent, acknowledge and agree that this provision is a
specific and material aspect of this Agreement, and that the Lender would not
agree to the terms of this Agreement if this waiver were not a part of this
Agreement. The Debtor and Shareholder further represent, acknowledge and agree
that this waiver is knowingly, intelligently and voluntarily made, that neither
the Lender nor any person acting on behalf of the Lender has made any
representations to induce this waiver, that the Debtor and Shareholder have been
represented (or has had the opportunity to be represented) in the signing of
this Agreement and in the making of this waiver by independent legal counsel
selected by the Debtor and Shareholder and that the Debtor and Shareholder have
had the opportunity to discuss this waiver with counsel. The Debtor and
Shareholder further agree that any bankruptcy or insolvency proceeding initiated
by the Debtor or Shareholder will only be brought in courts within the
geographic boundaries of New York State.
12. Miscellaneous.
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12.1 Expenses. Debtor shall pay to the Lender, on demand, the amount
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of any and all reasonable expenses, including, without limitation, attorneys'
fees, legal expenses and brokers' fees, which the Lender may incur in connection
with (a) sale, collection or other enforcement or disposition of Collateral; (b)
exercise or enforcement of any the rights, remedies or powers of the Lender
hereunder or with respect to any or all of the Obligations; or (c) failure by
Debtor or Shareholder to perform and observe any agreements of Debtor or
Shareholder contained herein which are performed by the Lender.
12.2 Waivers, Amendment and Remedies. No course of dealing by the
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Lender and no failure by the Lender to exercise, or delay by the Lender in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
the Lender. No amendment, modification or waiver of any provision of this
Agreement and no consent to any departure by Debtor or Shareholder therefrom,
shall, in any event, be effective unless contained in a writing signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. The rights, remedies and
powers of the Lender, not only hereunder, but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Lender from time to time in such order
as the Lender may elect.
12.3 Notices. Any notice or other communications under the provisions
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of this Agreement shall be given in writing and delivered to the recipient in
person, by reputable overnight courier or delivery service, by facsimile machine
(receipt conformed) with a copy sent by first class mail on the date of
transmission, or by registered or certified mail, return receipt requested,
directed to its address set forth below (or to any new address of which a party
hereto shall have informed the other by the giving of notice in the manner
provided herein):
To Debtor: Go Online Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telecopier)
And for Informational Purposes only, a copy to:
▇▇▇▇▇▇ Law Group
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (Telecopier)
To Shareholder: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
c/o Go Online Networks Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (Telecopier)
To Lender: LAURUS MASTER FUND, LTD.
A Cayman Island corporation
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇.▇. ▇▇▇ ▇▇▇▇ G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: ▇▇▇-▇▇▇-▇▇▇▇
And for Informational
Purposes Only, copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Grushko & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address by written notice in accordance with this
paragraph.
12.4 Term: Binding Effect. This Agreement shall (a) remain in full force
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and effect until payment and satisfaction in full of all of the Obligations; (b)
be binding upon Debtor and Shareholder, and their successors and assigns; and
(c) inure to the benefit of the Lender, for the benefit of the Lender and
Lender's respective heirs, legal representatives, successors in title and
permitted assigns.
12.5 Captions. The captions of Paragraphs, Articles and Sections in
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this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.
12.6 Governing Law; Venue; Severability. This Agreement shall be
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governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts or choice of law, except to the extent
that the perfection of the security interest granted hereby in respect of any
item of Collateral may be governed by the law of another jurisdiction. Any
legal action or proceeding against the Debtor and Shareholder with respect to
this Agreement may be brought in the courts of the State of New York or of the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the Debtor and Shareholder hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Debtor and
Shareholder hereby irrevocably waive any objection which they may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
aforesaid courts and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. If any provision of this
Agreement, or the application thereof to any person or circumstance, is held
invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect.
12.7 Counterparts/Execution. This Agreement may be executed in any
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number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Security
Agreement, as of the date first written above.
"DEBTOR"
GO ONLINE NETWORKS CORPORATION
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President
"SHAREHOLDER"
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
"THE LENDER"
/s/ ▇▇▇▇▇ Grin
LAURUS MASTER FUND LTD.
THIS SECURITY AGREEMENT MAY BE EXECUTED BY FACSIMILE SIGNATURE AND DELIVERED BY
CONFIRMED FACSIMILE TRANSMISSION.
SCHEDULE A TO SECURITY AGREEMENT
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DEPOSITOR DEPOSITED SECURITY SHARES STOCK CERTIFICATE NUMBERS
--------- --------------------------- ---------------------------
ACQUISITION DATE *
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
1,340,000 common shares ($.001 par value per share) of Go Online Networks
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Corporation 3167 6/28/00
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
960,000 common shares ($.001 par value per share) of Go Online Networks
---------------------------------------------------------------------------
Corporation 3304 1/12/01
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* EACH OF THE DEPOSITED SECURITY SHARES WAS INITIALLY ISSUED ON THE ACQUISITION
DATE AND FULLY PAID FOR AS OF THE ACQUISITION DATE.
SCHEDULE B TO SECURITY AGREEMENT
--------------------------------
"KIOSK DESCRIPTIONS"
