SECURITY AGREEMENT
Exhibit 10.4
This
SECURITY AGREEMENT (this “Agreement”) is made as of April
5, 2018 by and
among True Drinks Holdings, Inc., a Nevada corporation (the
“Grantor”), and
Red Xxxxx Holdings, LLC, a Delaware limited liability company,
holder of the Grantor’s Senior Secured Notes due on or before
December 31, 2019, in the original aggregate principal amount of
Two Million, Two Hundred Fifty Thousand Dollars ($2,250,000) (the
“Note”)
(together with its endorsees, transferees and assigns, the
“Secured
Party”).
RECITALS
WHEREAS, the
Grantor issued and sold the Note to the Secured Party on or about
April 4, 2018; and
WHEREAS, in order
to induce the Secured Party to extend the loan evidenced by the
Note, the Grantor has agreed to execute and deliver to the Secured
Party this Agreement and to grant the Secured Party a security
interest in all assets of the Grantor to secure the prompt payment,
performance and discharge in full of all of the Grantor’s
obligations under the Note.
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 (as defined
herein) (such as “general intangibles” and
“proceeds”) shall have the respective meanings given
such terms in Article 9 of the UCC. All capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in
the Note.
(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,
including, without limitation, 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, owned by the Grantor and
used in connection with the Grantor’s businesses and all
improvements thereto;
(ii) All
inventory of the Grantor;
(iii) All
of the Grantor’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, employee
non-compete, non-disclosure and assignment of rights agreements,
leases, franchises, customer lists, quality control procedures,
grants and rights, goodwill, deposit accounts, and income tax
refunds;
(iv) All
accounts of the Grantor including, without limitation, 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
guarantees with respect to each receivable, including any right of
stoppage in transit;
(v) All of the
Grantor’s Intellectual Property;
(vi) All
of Grantor’s investment property including, without
limitation, any and all equity interest in its Subsidiaries and
certificates evidencing such equity interest, and any shares of
stock (including, without limitation, a distribution in connection
with any reclassification, increase or reduction of capital or in
connection with any reorganization), or any option or right to
acquire shares of stock, in substitution of, or in exchange for,
any of such equity interest, or any stock dividend or split with
respect to such equity interest, and any distributions, whether
dividend or liquidating or otherwise, of any cash or property with
respect to such equity interest; and
(vii) All
of the Grantor’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 paragraphs (i) through (vi), inclusive,
above.
(b) “Copyrights” shall mean all of the
following in which the Grantor now hold or hereafter acquires any
interest (i) all copyrights, whether registered or unregistered,
held pursuant to the laws of the United States, any State thereof
or any other country; (ii) registrations, applications and
recordings in the United States Copyright Office or in any similar
office or agency of the United States, any State thereof or any
other country; (iii) any continuations, renewals or extensions
thereof; (iv) any registrations to be issued in any pending
applications; (v) prior versions of works covered by copyright and
all works based upon, derived from or incorporating such works;
(vi) income, royalties, damages, claims and payments now and
hereafter due and/or payable with respect to copyrights, including,
without limitation, damages, claims and recoveries for past,
present or future infringement; (vii) rights to xxx for past,
present and future infringements of any copyright; (viii) any
rights in any material which is copyrightable or which is protected
by common law, United States copyright laws or similar laws, or any
law of any State; and (ix) any other rights corresponding to any of
the foregoing rights throughout the world.
(c) “Copyright License” shall mean any
agreement, written or oral, in which the Grantor now holds or
hereafter acquires any interest, granting any right in or to any
Copyright or Copyright registration (whether a Grantor is the
licensee or the licensor thereunder) including, without limitation,
licenses pursuant to which the Grantor has obtained the exclusive
right to use a copyright owned by a third party.
(d) “Intellectual Property” shall
mean, collectively, the Software Intellectual Property, Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses and Trade Secrets, but shall exclude any and all direct
and/or indirect rights granted to
and/or
that the Grantor has received directly and/or indirectly pursuant
to any License Agreement between the Grantor and Disney Consumer
Products, Inc.
(e) “Obligations” means all of the
Grantor’s direct and/or indirect obligations under this
Agreement, the Note and the other Transaction Documents, 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.
(f) “Patents” shall mean all of the
following in which the Grantor now holds or hereafter acquires any
interest: (i) all patents of the United States or any other
country, all registrations and recordings thereof and all
applications for patents of the United States or any other country,
including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State
thereof or any other country; (ii) all reissues, divisions,
continuations, renewals, continuations in part or extensions
thereof; (iii) all patents to issue in any such applications; (iv)
income, royalties, damages, claims and payments now and hereafter
due and/or payable with respect to patents, including, without
limitation, damages, claims and recoveries for past, present or
future infringement; and (v) rights to xxx for past, present and
future infringements of any patent.
(g) “Patent License” shall mean any
agreement, whether written or oral, in which the Grantor now holds
or hereafter acquires any interest, granting any right with respect
to any Patent (whether a Grantor is the licensee or the licensor
thereunder).
(h) “Software Intellectual Property”
shall mean (i) all software programs (including, without
limitation, all source code, object code and all related
applications and data files), whether now owned, upgraded,
enhanced, licensed or leased or hereafter acquired by the Grantor;
(ii) all computers and electronic data processing hardware and
firmware associated therewith; (iii) all documentation (including,
without limitation, flow charts, logic diagrams, manuals, guides
and specifications) with respect to such software, hardware and
firmware described in the preceding subclauses (i) and (ii); and
(iv) all rights with respect to all of the foregoing, including,
without limitation, any and all upgrades, modifications,
copyrights, licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, support rights,
improvement rights, renewal rights and indemnifications and
substitutions, replacements, additions, or model conversions of any
of the foregoing.
(i) “Subsidiaries” shall mean
collectively any and all direct and/or indirect and/or wholly-owned
and/or partially owned entities that the Grantor (i) has a direct
and/or indirect interest in, and (ii) may have and/or acquire
directly and or indirectly an ownership interest in following the
date hereof.
(j) “Subsidiary” shall mean each of
the Subsidiaries
(k) “Trademarks” shall mean any of the
following in which the Grantor now holds or hereafter acquires any
interest: (i) any trademarks, tradenames, corporate names, company
names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof and any
applications in connection therewith, including, without
limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any other
country (collectively, the “Marks”); (ii) any reissues,
extensions or renewals thereof; (iii) the goodwill of the business
symbolized by or associated with the Marks; (iv) income, royalties,
damages, claims and payments now and hereafter due and/or payable
with respect to the Marks, including, without limitation, damages,
claims and recoveries for past, present or future infringement; and
(v) rights to xxx for past, present and future infringements of the
Marks.
(l) “Trademark License” shall mean any
agreement, written or oral, in which the Grantor now holds or
hereafter acquires any interest, granting any right in and to any
Trademark or Trademark registration (whether a Grantor is the
licensee or the licensor thereunder).
(m) “Trade Secrets” shall mean common
law and statutory trade secrets and all other confidential or
proprietary or useful information and all know-how obtained by or
used in or contemplated at any time for use in the business of the
Grantor (all of the foregoing being collectively called a
“Trade
Secret”), whether or not such Trade Secret has been
reduced to a writing or other tangible form, including, without
limitation, all documents and things embodying, incorporating or
referring in any way to such Trade Secret, all Trade Secret
Licenses, and including, without limitation, the right to xxx for
and to enjoin and to collect damages for the actual or threatened
misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
(n) “Transaction Documents” means the
Notes and this Agreement and/or other documents, amendments,
supplements, relating to and/or attached to such agreements and/or
the transactions contemplated in and/or related to such documents
and/or agreements.
(o) “UCC” means the Uniform Commercial
Code, as the same may, from time to time, be in effect in the State
of California; provided,
however, in the event that,
by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Secured Party’s
security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State
of California, the term “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment,
perfection of priority and for purposes of definitions related to
such provisions.
2. Grant of Security Interest. As
a further inducement for the Secured Party to purchase the Note,
and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations,
the Grantor hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party a continuing senior
first priority security interest in, and continuing lien upon, all
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 Grantor’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 Grantor. Except as set forth on
Schedule A attached
hereto, the Grantor represents and warrants to, and covenants and
agrees with, the Secured Party as follows:
(a) The Grantor has the
requisite corporate power and authority to enter into this
Agreement and otherwise carry out their obligations hereunder. The
execution, delivery and performance by the Grantor of this
Agreement and the filings contemplated herein have been duly
authorized by all necessary action on their part and no further
action is required by it. This Agreement constitutes a legal, valid
and binding obligation of the Grantor, enforceable in accordance
with its terms.
(b) The Grantor’s
place of business where all of their respective books of account
and records and other assets and Collateral are kept, stored and/or
located is set forth on Schedule A hereto. Other than
as set forth on Schedule
A hereto, there exists no other place of business or offices
where any such materials of the Grantor is kept, stored and/or
located;
(c) The Grantor is the
sole owner of the Collateral (except for non-exclusive licenses
granted by a Grantor in the ordinary course of its business), free
and clear of any liens, security interests, encumbrances, rights or
claims, and are 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 covering or
affecting any of the Collateral. So long as this Agreement shall be
in effect, without the prior consent of the Secured Party, which
consent shall not be unreasonably withheld, the Grantor 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.
(d) No part of the
Collateral or rights in connection therewith has been judged, by
any governmental body with proper jurisdiction, to be invalid or
unenforceable. No written claim has been received alleging the
Grantor’s use of any Collateral violates the rights of any
third party. There has been no adverse decision to the
Grantor’s claims of ownership rights in or exclusive rights
to use the Collateral in any jurisdiction or to the Grantor’s
rights to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending or
threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental
authority.
(e) The Grantor shall
at all times maintain its books of account and records relating to
the Collateral at the locations set forth on Schedule A attached
hereto.
(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 and, to the extent that it can be
perfected through such filings, the Intellectual Property. Except
for the filing of financing statements on Form UCC-1 under
the
UCC
with the jurisdictions indicated, or otherwise set forth, on
Schedule A,
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 Grantor of, or the effectiveness
of, the Security Interest granted hereby or for the execution,
delivery and performance of this Agreement by the Grantor or (ii)
for the perfection of, or exercise by the Secured Party of, its
rights and remedies hereunder.
(g) The Secured Party
is hereby authorized to file or cause to be filed one or more
executed UCC-1 financing statements on Form UCC-1, or other
necessary or required filings necessary to perfect the Security
Interest with the appropriate jurisdictions, either prior to or
after the execution of this Agreement. Furthermore, upon request of
the Secured Party, the Grantor shall execute and deliver any and
all agreements, instruments, documents, and papers as the Secured
Party may reasonably request to evidence the Secured Party’s
security interest in the Intellectual Property and the goodwill and
general intangibles of the Grantor relating thereto or represented
thereby.
(h) The execution,
delivery and performance of this Agreement does not conflict with
or cause a material breach or default, or an event that with or
without the passage of time or notice, shall constitute a material
breach or default, under any agreement to which any of the Grantor
is a party or by which the Grantor is bound. No consent (including,
without limitation, from stockholders or creditors of the Grantor)
is required for the Grantor to enter into and perform its
obligations hereunder.
(i) The Grantor shall
at all times safeguard, protect and maintain the Collateral for the
account of the the Secured Party until this Agreement and the
Security Interest hereunder shall terminate pursuant to Section 12.
Without limiting the generality of the foregoing, the Grantor shall
pay all governmental fees and taxes necessary to maintain the
Collateral and the Security Interest hereunder, and the Grantor
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 Grantor will
not transfer, pledge, hypothecate, encumber, license, sell or
otherwise dispose of any of the Collateral without the prior
written consent of the Secured Party.
(k) The Grantor shall,
within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, 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.
(l) The Grantor 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 reasonably request and in their sole discretion
deem necessary to perfect, protect or enforce the Security
Interest.
(m) The Grantor shall
permit the Secured Party to inspect the Collateral at any time and
from time to time and to make copies of records pertaining to the
Collateral as may be requested by the Secured Party from time to
time.
(n) The Grantor will
take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the
Collateral.
(o) The Grantor shall
promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other
legal process levied against any Collateral and of any other
information received by the Grantor that may materially affect the
value of the Collateral, the Security Interest or the rights and
remedies of the Secured Party hereunder.
(p) All information
supplied to the Secured Party by or on behalf of the Grantor with
respect to the Collateral is accurate and complete in all material
respects as of the date hereof, and all information supplied after
the date hereof to the Secured Party shall be accurate in all
material respects.
(q) With respect to any
of the Grantor’s Intellectual Property:
(i) such Intellectual
Property is subsisting and the rights in connection with such
Intellectual Property have not been adjudged invalid or
unenforceable, in whole or in part;
(ii) the
rights in connection with such Intellectual Property are valid
and enforceable;
(iii) the
Grantor has made all necessary filings and recordations necessary
to
protect
its interest in such Intellectual Property, including, without
limitation, recordations of all of their interests in the Patents,
Patent Licenses, Trademarks and Trademark Licenses in the United
States Patent and Trademark Office and its claims to the Copyrights
and Copyright Licenses in the United States Copyright
Office;
(iv) the
Grantor is the exclusive owners of the entire and unencumbered
right, title and interest in and to such Intellectual Property and
no claim is currently being asserted that the use of such
Intellectual Property infringes on the asserted rights of any third
party; and
(v) the Grantor has
performed and will continue to perform all acts and have paid all
required fees and taxes to maintain their rights with respect to
each and every item of Intellectual Property in full force and
effect throughout the United States, as applicable.
(r) The Grantor
shall:
(i) maintain each
Trademark and Copyright in full force free from any claim of
abandonment for non-use, maintain as in the past the quality of
products and services offered under such Trademark or Copyright;
employ such Trademark or Copyright with the appropriate notice of
registration; not adopt or use any xxxx which is confusingly
similar or a colorable imitation of such Trademark or Copyright
unless the Secured Party shall obtain a perfected
security
interest in such
xxxx pursuant to this Agreement; and not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark or Copyright may become
invalidated;
(ii) not,
except with respect to any Patent that it shall reasonably
determine is of negligible economic value to it, do any act, or
omit to do any act, whereby any Patent may become abandoned;
and
(iii) notify
the Secured Party immediately if it knows, or has reason to know,
that any application or registration relating to any Patent,
Trademark or Copyright may become abandoned, or of any material
adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court
or tribunal in the United States) regarding its ownership of any
Patent, Trademark or Copyright or its right to register the same or
to keep and maintain the same.
(s) Whenever a Grantor,
either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any
Patent, Trademark or Copyright with the United States Patent and
Trademark Office or the United States Copyright Office or acquire
rights to any new Patent, Trademark or Copyright whether or not
registered, report such filing to the Secured Party within five (5)
business days after the last day of the fiscal quarter in which
such filing occurs.
(t) The Grantor shall
take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office or the United States Copyright Office, to maintain
and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the Patents,
Trademarks and Copyrights, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(u) In the event that
any Patent, Trademark or Copyright included in the Intellectual
Property is infringed, misappropriated or diluted by a third party,
the Grantor shall promptly notify the Secured Party after a Grantor
learns thereof and shall, unless such Grantor shall reasonably
determine that such Patent, Trademark or Copyright is of negligible
economic value to it, which determination it shall promptly report
to the Secured Party: promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other
actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright. If a
Grantor lacks the financial resources to comply with this Section
3(u), such Grantor shall immediately so notify in express and
detailed writing the Secured Party and shall cooperate fully with
any enforcement action undertaken by the Secured Party on behalf of
the Grantor.
(v) None of such
Patents, Trademarks, Copyrights and Trade Secrets is the subject of
any licensing or franchise agreement as of the date of this
Agreement. No holding, decision or judgment has been rendered by
any governmental authority which would limit, cancel or question
the validity of any License, Patent, Trademark, Copyright and Trade
Secrets. No action
or
proceeding is pending (i) seeking to limit, cancel or question the
validity of any License, Patent, Trademark, Copyright or Trade
Secret, or (ii) which, if adversely determined, would have a
material adverse effect on the value of any License, Patent,
Trademark, Copyright or Trade Secret. The Grantor has used and will
continue to use for the duration of this Agreement, proper
statutory notice in connection with their use of the Patents,
Trademarks and Copyrights and consistent standards of quality in
products leased or sold under the Patents, Trademarks and
Copyrights.
(w) Grantor’s
representations and warranties made in this Agreement will survive
its execution, delivery, and termination.
4. Defaults. The following events
shall be “Events of
Default”:
(a) The occurrence of
an Event of Default as defined in the Note;
(b) If any
representation or warranty of any Grantor in this Agreement proves
to be incorrect in any material respect when made; and
(c) The failure by any
Grantor to observe or perform any of its obligations hereunder
(including but not limited to, any provision, agreement, covenant
and other items) for five (5) business days.
5. Duty To Hold In Trust. Upon the
occurrence of an Event of Default, and at any and all times
thereafter, and subject in all respects to the Secured Party's
rights and remedies upon default under Section 6 hereof, the
Grantor shall, upon receipt by any of them of any revenue, income
or other sums subject to the Security Interest, whether payable
pursuant to the Note or otherwise, or of any check, draft, note,
trade acceptance or other instrument evidencing an obligation to
pay any such sum, hold the same in trust for the Secured Party and
shall forthwith endorse and transfer any such sums or instruments,
or both, to the Secured Party, for application to the satisfaction
of the Obligations.
6. Rights and Remedies Upon
Default. Upon occurrence and continuance of any Event of
Default and at any and all times thereafter, the Secured Party
shall have the right to exercise all of the remedies conferred to
the Secured Party hereunder and under the Note, and the Secured
Party shall have all the rights and remedies of a secured party
under the UCC and/or any other applicable law (including the
Uniform Commercial Code of any jurisdiction in which any Collateral
is then subject). Without limitation, the Secured Party shall have
the following rights and powers:
(a) to have a third
party custodian take possession of the Collateral and, for that
purpose, enter, with the aid and assistance of any person, any
premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Grantor shall assemble the
Collateral and make it available to the Secured Party at places
which the Secured Party shall reasonably select, whether at the
Grantor’s premises or elsewhere, and make available to the
Secured Party, without rent, all of the Grantor’s respective
premises and facilities for the purpose of the Secured Party taking
possession of, removing or putting the Collateral in saleable or
disposable form for the benefit of the Secured Party;
and
(b) to operate the
business of the Grantor using the Collateral and shall have the
right to assign, sell, lease or otherwise dispose of and deliver
all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such
parcel or parcels and at such time or times and at such place or
places, and upon such terms and conditions as the Secured Party may
deem commercially reasonable, all without (except as shall be
required by applicable statute and cannot be waived) advertisement
or demand upon or notice to any Grantor or right of redemption of
any Grantor, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the
Secured Party may, unless prohibited by applicable law which cannot
be waived, purchase all or any part of the Collateral being sold,
free from and discharged of all trusts, claims, right of redemption
and equities of the Grantor, which are hereby waived and
released.
7. Indemnification
of the Secured Party. Neither the Secured Party, nor any of
its respective affiliates, employees, agents and/or representatives
will be liable for any action taken or omitted to be taken by any
of them under this Agreement directly and/or indirectly and
believed by them to be within the discretion or power conferred
upon them by this Agreement or otherwise be responsible for the
consequences of any error of judgment (except for willful
misconduct). THE GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY INDEMNIFIES THE SECURED PARTY, THE
SECURED PARTY, AND ITS RESPECTIVE AFFILIATES, EMPLOYEES, AGENTS AND
REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST ANY AND ALL
DIRECT AND/OR INDIRECT LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND
DISBURSEMENTS OF ANY KIND OR NATURE (INCLUDING, BUT NOT LIMITED TO,
LEGAL FEES WHEN INCURRED, WHICH THE GRANTOR SHALL PAY NO LATER THAN
THREE (3) BUSINESS DAYS AFTER THE SECURED PARTY OR SO REQUESTS WITH
ACCOMPANYING INVOICES) WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED
AGAINST, OR INCURRED BY THEM IN ANY WAY DIRECTLY AND/OR INDIRECTLY
RELATING TO AND/OR ARISING OUT OF THIS AGREEMENT AND/OR ANY ACTION
TAKEN OR OMITTED BY THEM UNDER THIS AGREEMENT.
8. Applications of Proceeds. The
proceeds of any such sale, lease or other disposition of the
Collateral hereunder shall be applied first, to the expenses of
retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes,
fees and other costs incurred in connection therewith) of the
Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Secured Party in enforcing its rights hereunder and
in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations on a pro
rata basis based on the Principal Amount of the Secured
Party’s Note at the time of the default, and to the payment
of any other amounts required by applicable law, after which the
Secured Party shall pay to the Grantor any surplus proceeds. If,
upon the sale, license or other disposition of the Collateral, the
proceeds thereof are insufficient to pay all amounts to which the
Secured Party is legally entitled, then the Grantor will be liable
for the deficiency, together with interest thereon as set forth in
the Note, and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency. To the extent permitted
by applicable law, the Grantor waives all claims, damages and
demands against the Secured Party arising out of the repossession,
removal, retention or sale of the Collateral.
9. Costs and Expenses. The Grantor
irrevocable and expressly agrees to pay any and all direct and/or
indirect out-of-pocket fees, costs and expenses (including, but not
limited to legal fees and expenses of all the Secured Party’s
attorneys) incurred (as and when incurred) in connection with any
filing required hereunder, including without limitation, any
financing statements, continuation statements, partial releases
and/or termination statements related thereto or any expenses of
any searches reasonably required by the Secured Party. The Grantor
shall also pay all other claims and charges which would reasonably
be expected to prejudice, imperil or otherwise affect the
Collateral or the Security Interest therein. Upon the occurrence
and continuance of an Event of Default, the Grantor shall upon
demand, pay to the Secured Party the amount of any and all
reasonable expenses, including the fees and expenses of its counsel
and of any experts and agents, which Secured Party incurs direct,
and/or indirect, in connection with
(a) the
enforcement of this Agreement, (b) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of
the Collateral, or (c) the exercise or enforcement of any of the
rights of any Secured Party under the Notes and/or other
Transaction Documents, including, without limitation, costs of
collection. Until so paid, any fees payable hereunder shall be
added to the principal amount of the Notes and shall bear interest
as set forth in the Notes.
10. Responsibility for Collateral.
The Grantor assumes all liabilities and responsibility in
connection with all Collateral, and the obligations of the Grantor
hereunder or under the Notes shall in no way be affected or
diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any
reason.
11. Security Interest Absolute. All
rights of the Secured Party and all Obligations of the Grantor
hereunder, shall be absolute and unconditional, regardless of: (a)
any change in the time, manner or place of payment or performance
of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from
the Note or any other agreement entered into in connection with the
foregoing; (b) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any
other security, for all or any of the Obligations; or (c) any
action by the Secured Party to obtain, adjust, settle and cancel in
its sole discretion any insurance claims or matters made or arising
in connection with the Collateral. The Grantor expressly waives
presentment, protest and notice of protest. In the event that at
any time any transfer of any Collateral or any payment received by
the Secured Party hereunder shall be deemed by final order of a
court of competent jurisdiction to have been a voidable preference
or fraudulent conveyance under the bankruptcy or insolvency laws of
the United States, or shall be deemed to be otherwise due to any
party other than the Secured Party, then, in any such event, the
Grantor’s obligations hereunder shall survive cancellation of
this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but
shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Grantor waives
all right to require the Secured Party to proceed against any other
person or to apply any Collateral which the Secured Party may hold
at any time, or to marshal assets, or to pursue any other
remedy.
12. Term of Agreement. This
Agreement and the Security Interest shall terminate on the date on
which all payments under the Note have been indefeasibly made in
full and all other Obligations have been indefeasibly paid and/or
completed.
13. Other Financings. In any
other agreement that any Grantor enters into with any party (other
than a Secured Party), related to the direct and/or indirect
borrowing of funds by the Grantor, Grantor shall ensure provisions
are in each applicable loan and/or loan related agreement expressly
providing that all such borrowed third party funds are subordinate
in all respects to the Note and Obligations and that upon any
default, and/or Event of Default no lender shall take any action,
including, but not limited to, declaring its loan documents and/or
loan in default and/or in an event of default until and unless all
Obligations of the Grantor to the Secured Party are indefeasibly
paid and/or completed, as the case may be.
14. Power of Attorney; Further
Assurances.
(a) The Grantor
authorizes the Secured Party, and do hereby make, constitute and
appoint the Secured Party, and its respective officers, agents,
successors or assigns with full power of substitution, as the
Grantor’s true and lawful attorney-in-fact, with power, in
their own name or in the name of any Grantor, to, after the
occurrence and during the continuance of an Event of Default, (i)
endorse any Note, checks, drafts, money orders, or other
instruments of payment (including, without limitation, payments
payable under or in respect of any policy of insurance) in respect
of the Collateral that may come into possession of the Secured
Party; (ii) to sign and endorse any UCC financing statement or any
invoice, freight or express xxxx, xxxx of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) to
demand, collect, receipt for, compromise, settle and xxx for monies
due in respect of the Collateral; and (v) generally, to do, at the
option of the C Secured Party, and at the Grantor’s expense,
at any time, or from time to time, all acts and things which the
Secured Party deem necessary to protect, preserve and realize upon
the Collateral and the Security Interest granted therein in order
to effect the intent of this Agreement and the Note, all as fully
and effectually as the Grantor might or could do; and the Grantor
hereby ratifies all that said attorney shall lawfully do or cause
to be done by virtue hereof. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement
and thereafter as long as any of the Obligations shall be
outstanding.
(b) On a continuing
basis, the Grantor will cooperate in good faith and as requested by
the Secured Party make, execute, acknowledge, deliver, file and
record, as the case may be, in the proper filing and recording
places in any applicable jurisdiction, all such instruments, and
take all such action as may reasonably be deemed necessary or
advisable, or as reasonably requested by the Secured Party, to
perfect the Security Interest granted hereunder and otherwise to
carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Party the grant or
perfection of a security interest in all the
Collateral.
(c) The Grantor hereby
irrevocably appoints the 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, from time to time in the
Secured Party’s discretion, to take any action and to execute
any instrument which the Secured Party may deem necessary or
advisable in order to perfect the Security Interest, including the
filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Grantor where permitted
by law.
15. Notices. All notices, requests,
demands and other communications hereunder shall be in writing,
with copies to all the other parties hereto, and shall be deemed to
have been duly given (i) if delivered by hand, (ii) upon receipt of
proof of sending thereof if sent by facsimile, (iii) upon receipt
if sent by nationally recognized overnight delivery service
(receipt requested), the next business day, or (iv) if mailed by
first-class registered or certified mail, return receipt requested,
postage prepaid, four days after posting in the U.S. mails, in each
case if delivered to the following addresses: (A) if to a Grantor,
to the address set forth immediately below such Grantor’s
name on the signature pages hereto; and (B) if to the Secured
Party, to the address set forth in respect of the Secured
Party’s name as it appears in the Note. Each party shall
provide notice to all of the other parties of any change in
address.
16. Other Security. To the extent
that the Obligations are now or hereafter secured by property other
than the Collateral or by the guarantee, endorsement or property of
any other person, firm, corporation or other entity, then the
Secured Party shall have the right, in their sole discretion, to
pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any
of the Secured Party’s rights and remedies
hereunder.
17. [Reserved].
18. Miscellaneous.
(a) No course of
dealing between the Grantor and the Secured Party, nor any failure
to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder or under the
Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(b) All of the rights
and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Note or by any other
agreements, instruments or documents or by law shall be cumulative
and may be exercised singly or concurrently.
(c) This Agreement
constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto.
Any term of this Agreement may be terminated or amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only with written consent of the Grantor and the
Secured Party. Any termination, amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of
the Notes, each future holder of the Notes, their successors and
assigns, and the Grantor.
(d) In the event that
any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn
so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is
held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be
ineffective to the extent of such invalidity, prohibition
or
unenforceability
without invalidating the remaining portion of such provision or the
other provisions of this Agreement and without affecting the
validity or enforceability of such provision or the other
provisions of this Agreement in any other
jurisdiction.
(e) No waiver of any
breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or
similar nature or otherwise.
(f) This Agreement
shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each party shall
take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.
(h) This Agreement and
all questions relating directly and/or indirectly to the
construction, validity, enforcement and interpretation of this
Agreement shall be governed solely and exclusively by the internal
laws of the State of California, without giving effect to any
choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction). Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the County of Orange, California for any
and all disputes directly and/or indirectly hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. In any action brought concerning and/or arising directly
and/or indirectly out of this Agreement, the prevailing party shall
be entitled to recover all of its legal fees and expenses incurred
by it with respect to any such legal action. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY. Each party hereto acknowledges that this waiver is a
material inducement for each party to enter into a business
relationship, that each party has relied on this waiver in entering
into this Agreement and that each party will continue to rely on
this waiver in their related future dealings. Each party further
warrants and represents that it has reviewed this waiver with its
legal counsel, and that such party has knowingly and voluntarily
waives its rights to a jury trial following such consultation. This
waiver is irrevocable, meaning that, notwithstanding anything
herein to the contrary, it may not be modified either orally or in
writing, and this waiver shall apply to any subsequent amendments,
renewals and 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.
(i) The parties hereto
agree that this Agreement was the product of the mutual input and
drafting by all the parties hereto, and, accordingly, no party
shall make any claim against another party that a presumption
exists against any party because that party was the drafter of this
Agreement.
19. Counterparts.
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same
instrument.
20. Facsimile
Signature. In the event that any signature is delivered by
facsimile transmission, PDF, electronic signature or other similar
electronic means, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such
signature page were an original thereof.
[Remainder Of Page Left
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IN WITNESS WHEREOF, the parties hereto
have caused this Security Agreement to be duly executed on the day
and year first above written.
GRANTOR:
TRUE
DRINKS HOLDINGS, INC. (On behalf of itself and its Subsidiaries, as
defined herein)
By:
_______________
Name:
Xxxxx Xxxxx
Title:
Chief Executive Officer
Notices
For Grantor:
True
Drinks Holdings, Inc. 0 Xxxxxxxxx Xxxxxx
Xxxxx
000
Xxxxxx,
XX 00000
Telephone: (000)
000-0000 Fax No:
Attention: Chief
Executive Officer
SECURED
PARTY:
RED
XXXXX HOLDINGS, LLC
By:
Name:
Title:
