SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTERESTS
Exhibit
10.4
This SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF LIMITED LIABILITY COMPANY INTERESTS (as
may be at any time hereafter amended, restated, supplemented or modified, this “Agreement”), dated
as of September 27, 2005, is entered into between MATRIXX INITIATIVES, INC., a Delaware corporation
(referred to herein as “Matrixx” or “Assignor”), and COMERICA BANK, a Michigan banking corporation
(“Bank”), with reference to the following facts:
R E C I T A L S
A. Assignor and Zicam, LLC, an Arizona limited liability company, formerly known as Gel Tech,
L.L.C. (“Zicam” or “Company”) (collectively, “Borrowers”), on the one hand, and Bank, on the other
hand, are contemporaneously herewith entering into that certain Amended and Restated Credit
Agreement, dated as of even date herewith (as may be at any time hereafter supplemented, modified,
amended or restated, the “Loan Agreement”).
B. Assignor owns one hundred percent (100%) of the Limited Liability Company Interest in
Zicam.
C. In order to induce Bank to enter into the Loan Agreement, and in consideration thereof,
Assignor has agreed to execute and deliver this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing, Assignor and Bank hereby agree as follows:
1. Defined Terms; Construction.
1.1 All initially capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Loan Agreement. In addition, as used in this Agreement:
“Act” shall mean the Arizona Limited Liability Company Act, or any successor statute governing
the subject matter thereof, and any and all rules and regulations issued or promulgated in
connection therewith.
“Articles of Organization” shall have the meaning given to such term in the Act.
“Assigned Benefits” shall have the meaning given to such term in Section 4.1.
“Assignment” shall have the meaning given to such term in Section 4.1.
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“Certificated Security,” “Endorsement,” “Registered Form,” “Security,” “Security Certificate,”
and “Uncertificated Security” have the meanings ascribed to such terms in the Code.
“Code” shall mean the Arizona Uniform Commercial Code, as amended and supplemented from time
to time, and any successor statute.
“Collateral” shall have the meaning given to such term in Section 2.
“Company” shall have the meaning set forth in the Recitals.
“Event of Default” shall have the meaning given to such term in Section 12.
“Governmental Authority” means any federal, state, local or other governmental department,
commission, board, bureau, agency, central bank, court, tribunal or other instrumentality or
authority or subdivision thereof, domestic or foreign, exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
“Limited Liability Company Interest” means membership interest as defined in the Act.
“Manager” shall have the meaning given to such term the Act.
“Member” shall have the meaning given to such term the Act.
“Operating Agreement” means that certain Amended and Restated Operating Agreement of Gel Tech,
L.L.C., dated December 5, 2001.
“Secured Obligations” shall have the meaning given to such term in Section 2.
1.2 Construction. Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular, references to the singular include the plural, and
the term “including” is not limiting. The words “hereof,” “herein,” “hereby,” “hereunder,” and
other similar terms refer to this Agreement as a whole and not to any particular provision of this
Agreement. Article, section, subsection, clause, exhibit and schedule references are to this
Agreement, unless otherwise specified. Any reference herein to the Loan Agreement includes any and
all alterations, amendments, extensions, modifications, renewals, or supplements thereto or
thereof, as applicable. Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Bank or Assignor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by Bank and Assignor and their
respective counsel, and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of Bank and Assignor.
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2. Security Interest. Assignor hereby grants a continuing security interest to Bank
in the collateral described in Section 3 (the “Collateral”) as security for the prompt payment and
performance of all of Borrowers’ obligations owing to Bank under the Loan Agreement and the
obligations of Assignor hereunder (collectively, the “Secured Obligations”).
3. Collateral. The Collateral under this Agreement consists of all of the following:
(a) All of Assignor’s right, title and interest in and to Assignor’s Limited Liability Company
Interest in the Company;
(b) All of Assignor’s rights as a member (including without limitation the Assigned Benefits
and the right to receive the Assigned Benefits), whether now existing or hereafter arising, under
the Operating Agreement and any and all amendments thereto, whether arising from Assignor’s Limited
Liability Company Interest in the Company; and
(c) All proceeds from the foregoing, including without limitation any distributions and
profits payable to Assignor as a Member in the Company or as a creditor of the Company, whether in
cash or in kind, and any proceeds from a disposition of the foregoing or of Assignor’s Limited
Liability Company Interest in the Company.
4. Assignment; Assigned Benefits.
4.1 Assignment of Certain Funds. Assignor hereby collaterally assigns and transfers
to Bank (the “Assignment”), all of Assignor’s right, title and interest in and to: (a) all
payments and/or distributions of revenue, income, profits, property and other sums now or hereafter
due from the Company to Assignor in respect of Assignor’s Limited Liability Company Interest in the
Company, whether in cash or in kind; (b) all monies owed and payable to Assignor by the Company,
other than in respect of Assignor’s Limited Liability Company Interest in the Company, whether owed
in connection with loans, management agreements, marketing agreements, other contracts or
otherwise; (c) the right of Assignor to receive any of the foregoing; and (d) all proceeds of the
foregoing (collectively, “Assigned Benefits”). The Assignment shall be binding upon Assignor and
shall inure to the benefit of Bank but shall impose no obligations or liabilities upon Bank.
Assignor hereby agrees to indemnify, defend and hold Bank harmless from and against any and all
claims, liabilities, costs, losses, demands, damages, judgments and awards (including without
limitation reasonable attorney’s fees and costs of defense by counsel chosen and controlled by
Bank) arising from or in connection with this Assignment, the Assigned Benefits or the Operating
Agreement (except to the extent that it is finally judicially determined to have resulted from the
gross negligence or willful misconduct of Bank).
4.2 Payment of Assigned Benefits; Voting Rights. So long as no Event of Default is
continuing, Assignor may receive the Assigned Benefits and may exercise any voting rights to which
Assignor is entitled under the Operating Agreement and applicable law; provided,
however, no vote shall be cast or any consent, waiver or ratification given or any action
taken which would violate or be inconsistent with the terms of this Agreement or any other
instrument or agreement referred to therein or herein. During the continuance of an Event of
Default, the provisions of Section 13 shall apply.
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4.3 Assignor to Cooperate. Assignor hereby covenants and agrees that Assignor shall
take any and all actions within Assignor’s power to cause the Company to comply with all terms and
conditions of this Agreement.
5. Control of Collateral. Assignor shall promptly deliver to Bank any and all
Certificated Securities comprising all or any portion of the Collateral for Bank to hold pursuant
to the terms hereof, and if such Certificated Securities are in Registered Form, (i) such
Certificated Securities shall be endorsed in blank by an effective undated Endorsement, in form and
substance satisfactory to Bank, in its sole and absolute discretion, or (ii) Assignor shall cause
the Company or the Company’s transfer agent to transfer such Securities into the name of Bank and
issue a replacement Security Certificate evidencing the same in the name of Bank. In the event
that all or any portion of the Collateral consists of Uncertificated Securities, Assignor shall
cause the Company to enter into a control agreement with respect to such Uncertificated Securities,
in form and substance satisfactory to Bank, in its sole and absolute discretion.
6. Further Assurances. Assignor agrees that it shall cooperate with Bank and shall
execute and deliver, or cause to be executed and delivered, to Bank all proxies, assignments,
financing statements, instruments, control agreements and other documents, and shall take all
further action, at the expense of Assignor, from time to time requested by Bank, in order to
maintain a continuing, first-priority, perfected security interest in the Collateral in favor of
Bank and to enable Bank to exercise and enforce its rights and remedies hereunder with respect to
the Collateral, and Assignor agrees that it shall execute and deliver to Bank, at Bank’s request,
any further applications, agreements, documents and instruments, and shall perform any and all acts
deemed necessary by Bank to carry into effect the terms, conditions, and provisions of this
Agreement and the transactions connected herewith. Should Assignor fail to execute or deliver any
such applications, agreements, documents, financing statements and instruments, or to perform any
such acts, Assignor acknowledges that Bank may, to the extent permitted by law, execute and deliver
the same and perform such acts in the name of Assignor and on its behalf as its attorney-in-fact in
accordance with Section 11. Assignor hereby authorizes Bank or its designee to file such Uniform
Commercial Code financing statements or financing statement amendments in any jurisdiction as Bank
shall deem necessary or desirable, at any time and from time to time, to carry out the terms of
this Agreement, or otherwise to protect, perfect or continue Bank’s security interests in the
Collateral, in each case naming Assignor, as debtor, and Bank, as secured party, and without
Assignor’s signature.
7. Bank’s Duties. Bank shall not have any duties with respect to the Collateral other
than the duty to use reasonable care of the Collateral is in its possession and other duties
imposed by applicable law. In accordance with the Code, Bank shall be deemed to have used
reasonable care if it observes substantially the same standard of care with respect to the custody
or preservation of the Collateral as it observes with respect to similar assets owned by Bank.
Without limiting the generality of the foregoing, Bank shall be under no obligation to take any
steps necessary to preserve rights in the Collateral against any other parties, to sell the same if
it threatens to decline in value, or to exercise any rights represented thereby (including rights
with respect to calls, conversions, exchanges, maturities, or tenders); provided,
however, that Bank may, at its option, do so, and any and all expenses incurred in
connection therewith shall be for the account of Assignor.
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8. Representations and Warranties. Assignor hereby represents and warrants to Bank
that:
8.1 Assignor is the lawful owner of the Collateral, free of all claims, liens or encumbrances
other than Permitted Liens.
8.2 The Operating Agreement is in full force and effect.
8.3 Assignor’s Limited Liability Company Interest in the Company constitutes a one hundred
percent (100%) ownership interest in the Company.
8.4 The security interest granted to Bank under this Agreement is valid and constitutes a
first priority security interest in the Collateral. Upon (i) the filing of a financing statement
(form UCC-1) with the Secretary of State of the State of Delaware, or (ii) the completion of all
actions described in Section 5, such security interest shall be perfected.
8.5 Assignor has not assigned, transferred or encumbered the Assigned Benefits or the
Collateral or any portion thereof or any interest therein, except as provided in this Agreement or
in the other Loan Documents. There are no restrictions upon the transfer of any of the Collateral
to or by Bank and Assignor is the sole beneficial owner of the Collateral and has the right to
assign and grant a security interest in or otherwise transfer such Collateral free of any
encumbrances or rights of third persons.
9. Covenants. Assignor covenants and agrees that Assignor shall do all of the
following:
9.1 Furnish Bank such information concerning Assignor, the Collateral, the Assigned Benefits
and the Company as Bank may from time to time request;
9.2 Pay all charges of any nature against the Collateral or the Assigned Benefits prior to
their delinquency, except to the extent being contested in good faith by appropriate proceedings
and reserves have been established as required by GAAP; provided, however, that upon Assignor’s
failure to do so, Bank may pay such charges which they deem necessary (but shall have no obligation
to do so) and Assignor shall reimburse Bank the amount paid; and
9.3 Reimburse Bank, upon demand, for any costs or expenses (including attorneys’ fees and
legal expenses and attorneys’ fees and expenses pursuant to proceedings brought under the
Bankruptcy Code, to the extent allowed by law) reasonably incurred by Bank: (a) in exercising any
right, power, or remedy conferred by this Agreement; (b) in enforcing or attempting to enforce the
payment or performance of the obligations of Bank hereunder; (c) in connection with any redemption
of the Collateral by Assignor; or (d) otherwise in connection with this Agreement.
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10. Negative Covenants. Assignor shall not without the prior written consent of Bank:
10.1 Approve the amendment or termination of the Operating Agreement, or approve the
dissolution or winding up of the Company;
10.2 Sell, assign, mortgage, pledge, assign in trust, hypothecate or otherwise create or
permit to exist any Lien on the Collateral, the Assigned Benefits or any Assets of the Company in
favor of anyone other than Permitted Liens;
10.3 Do or permit any act in contravention of the Operating Agreement; or
10.4 Permit the Company to issue any additional Limited Liability Company Interests.
11. Substitute Performance; Power of Attorney. Assignor authorizes Bank to perform
any and all acts which Bank deems necessary for the protection and preservation of the Collateral
or of the value of Bank’s security interest therein, including but not limited to receiving income
thereon as additional security hereunder, all at Assignor’s expense, and any amounts expended
hereunder by Bank, shall constitute Bank Expenses and shall be payable pursuant to the terms of the
Loan Agreement. Assignor further grants to Bank a power of attorney coupled with an interest to
execute all agreements, forms, applications, documents and instruments and to take all actions and
do all things as could be executed, taken, or done by Assignor in connection with the protection
and preservation of the Collateral, the Assigned Benefits, or this Agreement. This power of
attorney is irrevocable and authorizes Bank to act for Assignor in connection with the matters
described herein without notice to or demand upon Assignor.
12. Events of Default. The occurrence of any Event of Default under the Loan agreement
shall constitute an event of default (an “Event of Default”) hereunder.
13. Rights and Remedies.
13.1 Assignor acknowledges and agrees that this Agreement contains both the Assignment and the
grant of a security interest in the Collateral. Assignor further acknowledges and agrees that Bank
has distinct rights and remedies in connection with the Assignment and the security interest (some
of which are available under both the Assignment and the security interest) and that Bank may
exercise and/or enforce separately the distinct rights and remedies available in connection with
either or both the Assignment and the security interest.
13.2 During the continuance of an Event of Default, at Bank’s option, Assignor shall cooperate
with Bank in having Assignor’s Limited Liability Company Interest in the Company transferred to
Bank in the Company’s records as required by the Act; whereupon all of Assignor’s voting rights
shall cease, and all such rights shall become vested in Bank, whereupon Bank shall have the sole
right to exercise such voting rights.
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13.3 During the continuance of an Event of Default, Bank may, without notice of election and
without demand, do any one or more of the following, all of which Assignor authorizes and agrees
are commercially reasonable:
(a) Notify the Company that Bank has the absolute and unconditional right to receive any and
all payments of any kind whatsoever to be made by or payable by the Company to Assignor, in respect
of Assignor’s Limited Liability Company Interest, including without limitation the Assigned
Benefits;
(b) Receive payment of the Assigned Benefits directly from the Company, or otherwise collect
the Assigned Benefits, or transfer the right to receive the Assigned Benefits, without recourse to
the security interest granted hereby; Assignor hereby authorizes and instructs the Company to pay
all of the Assigned Benefits directly to Bank from time to time as the same shall become due, from
and after receipt by the Company of written demand from Bank;
(c) Make such payments and do such acts as they consider necessary or reasonable to protect
Bank’s security interest in the Collateral. Assignor agrees to assemble and make available any and
all of the Collateral if Bank so requires. Assignor authorizes Bank to enter the premises where
the Collateral is located, take and maintain possession of the Collateral, or any part of it, and
to pay, purchase, contest or compromise any encumbrance, charge, or lien which, in the opinion of
Bank, appear to be prior or superior to Bank’s security interest, and to pay all costs and expenses
incurred in connection therewith;
(d) At any time or from time to time, to sell, assign and deliver, or grant options to
purchase, all or any part of the Collateral, or any interest therein, at any public or private
sale, without demand of performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of which are hereby waived by
Assignor) for cash, on credit or for other property, for immediate or future delivery without any
assumption of credit risk, and for such price or prices and on such terms as Bank in its reasonable
discretion may determine; provided, that at least ten (10) days notice of the time and place of any
such sale shall be given to Assignor. Bank shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has therefore been given. Assignor hereby
waives any other requirement of notice, demand, or advertisement for sale, to the extent permitted
by law. Assignor hereby waives and releases to the fullest extent permitted by law any right or
equity of redemption with respect to the Collateral, whether before or after sale hereunder, and
all rights, if any, of marshalling the Collateral and any other security for the Secured
Obligations or otherwise. At any such sale, unless prohibited by applicable law, Bank may bid for
and purchase all or any part of the Collateral so sold free from any such right or equity of
redemption. Bank shall not be liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing nor shall Bank be under any obligation to take any action
whatsoever with regard thereto;
(e) Buy the Collateral, in its own name, or in the name of a designee or nominee. Bank shall
have the right to execute any document or form, in its name or in the name of the Assignor, that
may be necessary or desirable in connection with such sale of the Collateral; and
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(f) Sell all or any part of the Collateral by a private placement, restricting bidders and
prospective purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, Bank may solicit offers to buy the
Collateral, or any part of it for cash, from a limited number of investors deemed by Bank, in its
reasonable judgment, to be responsible parties who might be interested in purchasing the
Collateral. If Bank shall solicit such offers from not less than four (4) such investors, then the
acceptance by Bank of the highest offer obtained therefore shall be deemed to be a commercial
reasonable method of disposition of such Collateral.
13.4 Assignor shall pay all of Bank’s reasonable costs and expenses (including attorneys’ fees
and expenses and attorneys’ fees and expenses incurred pursuant to proceedings brought under the
Bankruptcy Code, to the extent allowed by law) incurred in connection with the enforcement and
exercise of any of the rights and remedies provided for herein, irrespective of whether suit is
commenced.
13.5 Bank may waive or release all or any part of the Collateral at Bank’s option. Any monies
in excess of the Secured Obligations which exist after disposition of the Collateral shall be
returned promptly, without interest and subject to the rights of third parties, to Assignor by
Bank.
13.6 The rights and remedies of Bank under this Agreement shall be cumulative. Bank shall
have all other rights and remedies provided by applicable law. No exercise by Bank of any one
right or remedy shall be deemed an election and no waiver by Bank of any default on Assignor’s part
shall be deemed a continuing waiver. No delay by Bank in the exercise of rights or remedies shall
constitute a waiver, election, or acquiescence thereof or thereto.
13.7 Any sale of the Collateral which is conducted in accordance with the Code as then in
effect shall be valid notwithstanding any notice or other provision of this Agreement. Bank shall
have no obligation to attempt to satisfy the Secured Obligations by collecting them from any third
Person which may be liable for them or any portion thereof, and Bank may release, modify or waive
any collateral provided by any other Person as security for the Secured Obligations or any portion
thereof, all without affecting Bank’s rights against Assignor. Assignor waives any right it may
have to require Bank to pursue any third Person for any of the Secured Obligations.
13.8 Bank may comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral, and Bank’s compliance therewith will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
13.9 Bank may sell the Collateral without giving any warranties as to the Collateral. Bank
may specifically disclaim any warranties of title or the like. This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the Collateral.
13.10 If Bank sells any of the Collateral upon credit, Assignor will be credited only with
payments actually made by the purchaser, received by Bank and applied to the
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indebtedness of the purchaser. In the event that the purchaser fails to pay for the
Collateral, Bank my resell the Collateral and Assignor will be credited with the proceeds of such
sale.
13.11 Bank shall be under no obligation to marshal any assets in favor of Assignor, or against
or in payment of the Secured Obligations or any other obligation owed to Bank by Assignor or any
other Person.
13.12 Upon the exercise by Bank of any power, right, privilege, or remedy pursuant to this
Security Agreement which requires any consent, approval, registration, qualification, or
authorization of any Governmental Authority, Assignor agrees to execute and deliver, or will cause
the execution and delivery of, all applications, certificates, instruments, assignments, and other
documents and papers that Bank or any purchaser of the Collateral may be required to obtain for
such governmental consent, approval, registration, qualification, or authorization.
14. Successors and Assigns. This Agreement shall bind the successors and assigns of
Assignor, and shall inure to the benefit of the respective successors and assigns of Bank,
provided, however, Assignor may not assign this Agreement or delegate any of its
duties hereunder without Bank’s prior written consent and any such prohibited assignment shall be
absolutely null and void.
15. Headings. Headings in this Agreement are included solely for the convenience of
the parties and shall not be deemed either to amplify or to limit the meaning of any provision of
this Agreement.
16. Amendment. This Agreement may not be amended except in a writing signed by the
party asserted to be bound thereby.
17. Severability. If any provision of this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, that provision shall not affect the validity,
legality or enforceability of any other provision of this Agreement.
18. Notices. All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile transmission or similar writing) and shall be given to
such party in accordance with Section 10.1 of the Loan Agreement.
19. Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall constitute but one and the
same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile also shall deliver a manually
executed counterpart of this Agreement but the failure to deliver a manually executed counterpart
shall not affect the validity, enforceability, and binding effect of this Agreement.
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20. Recitals and Exhibits. The preamble to this Agreement, the factual Recitals and
all Exhibits mentioned in this Agreement are incorporated herein and constitute a part of this
Agreement.
21. Governing Law. This Agreement shall be deemed to have been made in the State of
Arizona and the validity, construction, interpretation, and enforcement hereof, and the rights of
the parties hereto, shall be determined under, governed by, and construed in accordance with the
internal laws of the State of Arizona, without regard to principles of conflicts of law. Assignor
and Bank consent to the exclusive jurisdiction of any state or federal court located in Maricopa
County, Arizona.
22. WAIVER OF JURY TRIAL. THE ASSIGNOR AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND
FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING
THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.
IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A TRIAL BY
THE COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first set forth
hereinabove.
| Address of Assignor: | “ASSIGNOR”: | ||
0000 X. 00xx Xxxxxx, Xxxxx 000
|
MATRIXX INITIATIVES, INC., a Delaware | ||
Xxxxxxx, Xxxxxxx 00000
|
corporation | ||
| By: | /s/ Xxxxxxx Xxxxxx | ||
| Name: Xxxxxxx Xxxxxx | |||
| Its: Executive Vice President, CFO, Treasurer | |||
Address of Bank:
|
“BANK”: | ||
Xxxxxx Dodge Tower
|
COMERICA BANK, a Michigan Banking corporation | ||
0 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
|
|||
Xxxxxxx, Xxxxxxx 00000-0000 |
|||
| By: /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: Xxxxxxx X. Xxxxxxxxx | |||
| Title: Assistant Vice President | |||
S-1
Security Agreement and Collateral Assignment of LLC Interests
CONTROL AGREEMENT
ZICAM, LLC, an Arizona limited liability company (“the Company”), hereby acknowledges and
approves the terms of the foregoing Security Assignment and Collateral Assignment of Limited
Liability Company Interest (the “Assignment”), dated as of September 27, 2005, by and between
MATRIXX INITIATIVES, INC., a Delaware corporation (“Assignor”) and Comerica Bank, a Michigan
banking corporation (“Bank”). The Company agrees that it will comply with all instructions from
Bank with respect to transfers of all or any part of the Collateral (as defined in the Assignment),
whether by sale or otherwise, without further consent from Assignor. The Company further
acknowledges and agrees that it has received a copy of the Assignment and has registered the
assignment of Assignor’s Limited Liability Company Interest (as defined in the Assignment) in the
undersigned in the name of Bank. The Company confirms to Bank that the execution, delivery and
performance of the Assignment does not cause any of the undersigned to dissolve. The Company
further acknowledges that it has recorded the terms of the Assignment upon its books and records.
The Company acknowledges that, in entering into the Loan Agreement (as defined in the Assignment),
Bank is relying on the Assignment and on the Company’s agreement to be bound by the terms of the
Assignment; and by and between agrees that any offset or claim it may now or hereafter have against
Assignor (or against Assignor’s interests, claims or rights) shall be subordinate to the claims,
rights and interests of Bank under the Assignment.
| Dated: September 27, 2005 | ZICAM, LLC, an Arizona limited liability company |
|||
| By: | Xxxxxxx Xxxxxx | |||
| Name: Xxxxxxx Xxxxxx | ||||
| Title: Manager | ||||
S-2
Security Agreement and Collateral Assignment of LLC Interests
