SECURITYAGREEMENT

THIS SECURITY AGREEMENT (this “Security Agreement”), dated as of ___________________, 2009, by and between SwissINSO SA, a Swiss corporation (“SwissINSO”), with an address at Biopole, Route de la Corniche, 1066 Epalinges, Switzerland, and each of those persons and entities whose names are set forth on the signature page hereto (collectively, the “Secured Parties”).

W I T N E S S E T H:

WHEREAS, SwissINSO Holding Inc. (the “Issuer”) has issued or will be issuing to the Secured Parties secured promissory notes (the “Notes”), in the aggregate maximum principal  amount of $15,000,000;

WHEREAS, SwissINSO is a wholly-owned subsidiary of the Issuer and will benefit directly from the issuance of the Notes;

WHEREAS, as security for the prompt and complete payment and performance in full by the Issuer of the Notes and the other Secured Obligations (as herein defined), SwissINSO has agreed to enter into this Security Agreement assigning, pledging, conveying, hypothecating, transferring, granting and delivering to the Secured Parties a security interest in and to the Collateral (as defined herein).

NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

1.           SECURITY INTEREST.

1.1           Grant of Security.   As security for the prompt and complete payment and performance in full by the Issuer of the indebtedness, together with all interest, fees and other charges, arising under the Notes and including any of its remedies under the Notes (the “Secured Obligations”), SwissINSO hereby grants, assigns, conveys, mortgages, pledges, hypothecates and transfers to the Secured Parties a first priority lien on and security interest in, all of SwissINSO’s right, title and interest in, to and under, all of the property and assets currently owned by or owing to, or hereafter acquired by or arising in favor of, SwissINSO, wherever located, including, but not limited to, all accounts, deposit accounts, chattel paper, instruments, documents, securities, contract rights, receivables, equipment, goods, inventory, investment property, goodwill, general intangibles, intellectual property, patents, patent applications, trademarks, trademark applications, trade names, copyrights, copyright applications, Internet domain names, service marks, trade secrets, know-how, technology, software, hardware, commercial tort claims, warranties and guarantees, as any of the foregoing terms may be defined in the UCC, and including any products, proceeds (including insurance proceeds) or income derived therefrom, whether by disposition or otherwise (all of the above, collectively, the “Collateral”).  Notwithstanding the foregoing, in the event that SwissINSO obtains commercial or equipment financing for the purchase of water purification units, machinery and other similar equipment in connection with its business and the lender requires a first priority lien on and security interest in such property, the Secured Parties agree that their lien on such property will be subordinate to that of the lender.

 

 

 

 

 

 

 

 

 

 

5.2           Amendment.  This Agreement may be amended or modified only by a writing signed by all of the parties hereto and any provision hereof may be waived only by a writing signed by the Secured Parties.

 

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Security Agreement on the date first set forth above.