SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made this 1st day of December, 1998, by and
between X-TREEM PRODUCTS CORPORATION, a Delaware corporation, whose principal
offices are located at 000 Xxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
("X-Treem"), and PERRY'S MAJESTIC BEER, INC. a Delaware corporation whose
principal offices are located at 00 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx
Xxxx 00000 (the "Secured Party").
X. Xxxxx of Security Interest by X-Treem. X-Treem, for value received,
hereby grants to the Secured Party a continuing security interest, which is
subordinate only to the security interest in all of the assets of X-Treem held
by Quantum Corporate Funding, Ltd., in and to the following described property
and any and all accessions and substitutions thereto and therefor:
(a) X-Treem's general intangibles of any kind or nature whatsoever
related to the xxxx "XxXxx'x" and the formulae, label and bottle designs
and other packaging, and research and development related thereto,
including but not limited to any and all names, insignias, labels, logos,
commercial symbols, slogans and other identification schemes, patents,
patent applications, copyrights, trademarks, service marks, trade names,
trade secrets, customer or supplier lists, manuals, operating instructions,
permits and franchises and/or applications that may be controlled from time
to time by the Company for use in association with xxxx "XxXxx'x" and/or
the Products, including but not limited to the following marks:
XxXxx'x Serial #75/316,497
(hereinafter being collectively referred to as the "Collateral");
to secure the performance of the obligations of X-Treem pursuant to that certain
License Agreement dated the date hereof between X-Treem and the Secured Party,
pursuant to which X-Treem has granted to the Secured Party a license to use the
Collateral and an option to purchase the Collateral (the "License Agreement")
(hereinafter, the "Obligations").
II. Additional Agreements of X-Treem. X-Treem agrees that:
(a) It will upon request of Secured Party, execute such financing
statements and other documents (and pay the cost of filing or recording the
same in all public offices deemed necessary by Secured Party) and do such
other acts and things as Secured Party may from time to time reasonably
request or deem necessary to establish and maintain the security interests
in the Collateral granted hereunder;
(b) Except with Secured Party's prior written consent, it will not
sell, lease, assign, create or permit to exist any lien or encumbrance upon
or security interest in any Collateral to or in favor of anyone other than
Secured Party and Quantum Corporate Funding, Inc.;
(c) It will reimburse Secured Party for all expenses, including
without limitation reasonable attorneys' fees and expenses, incurred by
Secured Party in seeking to collect or enforce any rights under this
Agreement or incurred by Secured Party in seeking to enforce the material
obligations of X-Treem pursuant to the License Agreement;
(d) It will not use the Collateral in violation of any applicable law,
regulation or insurance policy; and
(e) Secured Party may from time to time at its option take any action
reasonably necessary for the maintenance or preservation of any of the
Collateral or the interest of Secured Party therein (including without
limitation, the discharge of liens of any kind against the Collateral
unless such liens are being diligently contested in good faith by X-Treem),
and X-Treem agrees to forthwith reimburse Secured Party, on demand, for all
reasonable expenses of Secured Party in connection with the foregoing.
III. Defaults. Each of the following shall constitute an Event of Default,
whatever the reason for such event and whether it shall be voluntary or
involuntary, or within or without the control of X-Treem, or be effected by
operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental or nongovernmental body:
(a) The Company shall default in the performance or observance of any
material covenant or condition under the License Agreement, which default
is not cured or waived within a period of thirty (30) days;
(b) (i) X-Treem shall (A) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (B) file a petition
seeking to take advantage of any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (C) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws, (D) apply for, or consent to, or
fail to contest in a timely and appropriate manner, the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of a substantial part of its assets, domestic or foreign or
(E) make a general assignment for the benefit of creditors; or
(ii) A case or other proceeding shall be commenced against
X-Treem in any court of competent jurisdiction seeking (A) relief
under the federal bankruptcy laws (as now or hereafter in effect) or
under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding
up or adjustment of debts, or (B) the appointment of a trustee,
receiver, custodian, liquidator or the like of X-Treem, or of all or
any substantial part of the assets, domestic or foreign, of X-Treem
and such case or proceeding shall continue undismissed or unstayed for
a period of 60 calendar days, or an order granting the relief
requested in such case or proceeding against X-Treem (including, but
not limited to, an order for relief under such federal bankruptcy
laws) shall be entered.
IV. Remedies. Upon the occurrence of an Event of Default:
(a) Secured Party shall have the right to take immediate possession of
the Collateral covered hereby, and, for that purpose may pursue the same
wherever said Collateral may be found, and may legally enter upon any of
the premises of X-Treem, wherever said Collateral may be or may be supposed
to be, and search for the same, and, if found, take possession of and
remove said Collateral, or any part thereof;
(b) Secured Party may legally enter any premises where the books and
records of X-Treem pertaining to Collateral are or may be located and seize
and remove said books and records from said premises or remain upon said
premises and use the same for the purpose of identifying, location, and
collecting any of the Collateral. X-Treem shall, upon Secured Party's
request, assemble the Collateral and make the Collateral available to
Secured Party at any place designated by Secured Party which is reasonably
convenient to X-Treem; and
(c) Secured Party may use the Collateral for the unexpired term of the
License Agreement and may exercise the option to purchase the Collateral
pursuant to the License Agreement (including the payment of the Option
Price, as defined in the License Agreement) at any time prior to the
expiration of such option. Upon the expiration of the term of the License
Agreement, if Secured Party has not timely exercised the option to purchase
the Collateral pursuant to the License Agreement, Secured Party shall
return the Collateral to X-Treem.
V. Amendment or Waiver. Secured Party shall not by any delay or omission be
deemed to have waived any of its rights or remedies hereunder, and no waiver
whatsoever shall be valid unless in writing signed by Secured Party, and then
only to the extent therein set forth. A waiver by Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Secured Party would otherwise have had on any future
occasion. This Agreement may not be amended except by a writing duly executed by
X-Treem and the Secured Party.
VI. Notices. All notices provided for herein shall be in writing and shall
be deemed to have been given when delivered in accordance with the notice
provisions contained in the License Agreement.
VII. Remedies Cumulative. All rights, remedies and powers granted to the
Secured Party herein or in any other agreement given to the Secured Party
pertaining to the Collateral shall be cumulative and may be exercised singly or
concurrently.
VIII. Applicable Law and Severability. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware. To the extent any provision of this Agreement is not enforceable under
applicable law, such provision shall be deemed null and void and shall have no
effect on the remaining portions of this Agreement. The headings of the
paragraphs hereof shall not be considered in the construction or interpretation
of this Agreement.
IX. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of X-Treem and the Secured Party and their respective heirs,
executors, administrators, personal representatives, successors and assigns,
except that X-Treem may not assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the
Secured Party.
X. Other Obligations. Nothing contained in this Agreement shall be deemed
or held to impair or limit in any way the enforcement of the terms of any
instrument evidencing any obligation of X-Treem to Secured Party.
XI. Duration of Security Interest. This Agreement shall continue in full
force and effect and the security interest granted hereby and all of the
representations, warranties, covenants and agreements of X-Treem hereunder and
all of the terms, conditions and provisions hereof relating thereto shall
continue to be fully operative until such time as X-Treem shall have discharged
all of its obligations to the Secured Party pursuant to the License Agreement.
XII. Miscellaneous. The neuter pronoun, when used herein, shall include the
masculine and feminine and also the plural.
IN WITNESS WHEREOF, X-Treem has executed this Security Agreement as of the
1st day of December, 1998.
X-TREEM PRODUCTS CORPORATION
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx, President
