SECURITY INTEREST AGREEMENT
Exhibit
10.4
The
undersigned, MILLENNIUM BIOTECHNOLOGIES, INC. (“Millennium” or “Debtor”), a
Delaware corporation with headquarters located at 000 Xxxxxxxxxxxx Xxxx,
Xxxxx
000, Xxxxxxx Xxxxx, XX, for value received, hereby grants unto
Harborview
Master Fund LP (“Harborview” or the “Secured Party”), a limited partnership
organized and existing under the laws of the British Virgin Islands, having
its
principal place of business at Harbour House, 2d Floor, Road Town, Tortola,
BVI,
a
security interest in the Collateral (as defined below), as follows:
1. COLLATERAL:
As
used
herein, the term “Collateral” means:
(a)
the
United States patents owned by Millennium listed in Exhibit I hereto;
and
(b)
the
United States trademarks, trademark applications and trademark registrations
owned by Millennium listed in Exhibit I hereto.
2. INDEBTEDNESS
SECURED:
Pursuant
to the terms of a personal guaranty (the “Guaranty”), Millennium has guaranteed
to the Secured Party certain obligations of its parent entity, Millennium
Biotechnologies Group, Inc. (“Group”), which obligations include, but are not
necessarily limited to, the payment of one or more certain Secured Convertible
Notes of Group to the Secured Party (the “Group Notes”) in the aggregate
original principal amount of $550,000 (all such obligations of Group and
the
obligations of Millennium under such Guaranty and any other written obligations
of Millennium to the Secured Party [the Guaranty and such other written
obligations of Millennium are referred to collectively as the “Millennium
Agreements”], the “Obligations”). By this Agreement, Millennium secures payment
and performance of the Obligations by granting the Secured Party a security
interest in and to the Collateral and all of the proceeds of all or any of
the
Collateral.
The
term
“Permitted Encumbrance” means other the liens and encumbrances on the Collateral
previously disclosed to the Secured Party in a writing acknowledged or
countersigned by the Secured Party, subject, in each case, to the terms and
conditions and limitations provided in such writing.
This
Agreement shall continue in full force and effect until terminated in accordance
with the provisions of paragraph 10 hereof.
3. REPRESENTATION
AND WARRANTIES:
Millennium
hereby represents and warrants that:
(i)
except for the security interest granted to the Secured Party hereby and
for the
Permitted Encumbrances, (a) the Collateral listed in Exhibit I hereto is
owned
by Millennium free and clear of all liens, charges, encumbrances, set-offs,
defenses and counterclaims whatsoever of any kind or nature, and (b) Millennium
has made, and will make, no assignment, pledge, mortgage, hypothecation or
transfer of any Collateral or of the proceeds thereof;
(ii)
the
execution and delivery of this instrument will not conflict with or contravene
any contractual restriction binding on Millennium, including any license
agreement relating to the Collateral or any part thereof;
(iii)
except as heretofore disclosed to the Secured Party in writing, there are
no
legal actions or administrative proceedings pending or threatened before
any
court or administrative agency involving the Collateral, or any part thereof;
and
(iv)
Millennium will defend its title to the Collateral against the claims of
all
persons (other than the Secured Party) whatsoever.
4. USE
AND OWNERSHIP PRIOR TO DEFAULT:
Unless
and until an event of default shall occur and be continuing, Millennium shall
retain the legal and equitable title to the Collateral, and shall have the
right
to use and register the Collateral in the ordinary course of the business
of
Millennium, but, except for Permitted Encumbrances, shall not be permitted
to
sell, assign, transfer, license or otherwise encumber the Collateral or any
part
thereof to any party (including, but not limited to, Group) other than the
Secured Party; provided, however, that nothing herein contained shall prohibit
Millennium from failing to renew or otherwise abandoning any item included
within the Collateral if, in Millennium’s good faith judgment, the retention of
such item is not material to the proper conduct of Millennium’s business, except
that Millennium shall not permit the abandonment of any pending or issued
patent
or trademark application or expiration of the trademark registrations listed
in
Exhibit I hereto, without the prior written consent of the Secured Party,
which
consent shall not be unreasonably withheld.
5. REMEDIES
ON DEFAULT:
Upon
the
occurrence of an event of default under the Obligations, the Secured Party
shall
be entitled to exercise in respect to the Collateral all of the rights and
remedies available to a secured party upon default under the Uniform Commercial
Code in New York at that time, and, in addition thereto, the rights and remedies
provided for herein and such other rights and remedies as might be provided
for
by law:
(a) In
the
event of sale of the Collateral, or any part thereof, the Secured Party shall
give Millennium reasonable notice (i) of the time and place of any public
sale
thereof, or (ii) of the time and place of any private sale, or (iii) that
any
other intended disposition thereof is to be made. The requirement of reasonable
notice shall be met if notice of the sale or other intended disposition is
mailed, by the Secured Party, postage prepaid, to Millennium at its address
set
forth on the first page hereof or such other address as Millennium may, by
notice, have furnished to the Secured Party in writing for such purpose,
at
least ten days prior to the time of such sale or other intended
disposition.
(b) If
Millennium shall fail to do any act or thing which it has covenanted to do
hereunder or any representation or warranty of the Millennium Agreements
shall
be breached, the Secured Party may (but shall not be obligated to) do the
same
or cause it to be done or remedy any such breach and there shall be added
to the
liability of Millennium hereunder the cost or expense incurred by the Secured
Party in doing so, and any and all amounts expended by the Secured Party
in
taking any such action shall be repayable to it upon its demand to Millennium
thereof and shall bear interest at the same rate which would apply to such
amounts if they were subject to and including in the Group Note to the Secured
Party, from and including the date advanced to the date of
repayment.
(c)
Millennium
will, in the event of a sale, and upon advance written request, duly execute
and
acknowledge all documents necessary or advisable to record title to the
Collateral in the name of the purchaser, including valid, recordable assignments
of the issued patents, pending patent applications, trademark applications
and
trademark registrations listed in Exhibit I hereof. In the event that Millennium
should then fail or refuse to execute and deliver any or all documents necessary
or advisable to record title to the Collateral in the name of the purchaser,
Millennium does hereby irrevocably appoint the Secured Party its
attorney-in-fact (with power of substitution) to execute any or all of such
documents on Millennium’s behalf. Such appointment shall be deemed coupled with
an interest.
6.
APPLICATION
OF PROCEEDS:
All
proceeds of Collateral shall be applied as provided in a separate agreement
between Millennium and the Secured Party.
7. PURCHASERS
OF COLLATERAL:
Upon
any
sale of Collateral by the Secured Party hereunder (whether under power of
sale
herein granted, pursuant to judicial process or otherwise), the receipt of
the
Secured Party or the officer making the sale shall be a sufficient discharge
to
the purchaser or purchasers of the Collateral so sold and such purchaser
or
purchasers shall not be obligated to see the application of any part of the
purchase money paid over to the Secured Party or Millennium nor shall such
officer or be answerable in any way for the misapplication or non-application
thereof.
8. INDEMNITY:
Millennium
agrees to indemnify and hold harmless the Secured Party from and against
any and
all claims, demands, losses, judgments and liabilities (including liabilities
for penalties) of whatsoever kind or nature, and to reimburse the Secured
Party
for all costs and expenses, including attorneys' fees, growing out of or
resulting from a breach and subsequent enforcement of this Agreement, or
the
exercise by the Secured Party of any right or remedy granted to it hereunder.
In
no event shall the Secured Party be liable for any matter or thing in connection
with this Agreement, other than to account for monies actually received by
it in
accordance with the terms hereof.
9. FURTHER
ASSURANCES:
Millennium
agrees that it will join with the Secured Party in executing and, at its
own
expense, shall file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices
including, without limit, the Patent and Trademark Office, as the Secured
Party
may deem necessary or appropriate and wherever required or permitted by law
in
order to perfect and preserve the Secured Party’s security interest in the
Collateral. Millennium hereby authorizes the Secured Party to file financial
statements and amendments thereto relative to all or any part of the Collateral
without the signature of Millennium where permitted by law, and Millennium
agrees to do such further acts and things and execute and deliver to the
Secured
Party such additional conveyances, assignments, agreements and instruments
as
the Secured Party may require or deem advisable to carry into effect the
purpose
of this Agreement or to better assure and confirm unto the Secured Party
its
rights, powers and remedies hereunder.
10. TERMINATION:
This
Agreement, and the security interest of the Secured Party hereunder, shall
terminate when all of the Obligations to the Secured Party shall have been
fully
paid and satisfied, at which time the Secured Party shall release to Millennium
the Secured Party’s security interest in the Collateral and, if requested by
Millennium, the Secured Party shall execute permit Millennium to file in
each
office in which any financial statement or assignment relative to the
Collateral, or any part thereof, shall have been filed, a termination statement,
assignment or other appropriate instrument releasing the Secured Party’s
interest therein, all without recourse to and without warranty by such Secured
Party; notwithstanding the foregoing, all costs of preparing, transmitting
and
filing such termination statements, assignments, or other instruments shall
be
at the sole cost and expense of Millennium.
11. GOVERNING
LAW:
This
Agreement shall be construed and governed by the substantive law of the State
of
New York exclusive of its conflict of law rules and, to the extent applicable,
by federal law, to the exclusion of all other jurisdictions. The parties
agree
that any and all disputes arising under or relating to this Agreement shall
be
litigated solely in the state or federal courts located in the State of New
York
and the parties hereby agree to submit to such jurisdiction.
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12. MISCELLANEOUS:
Nothing
in this Agreement shall be interpreted to limit the obligations of Millennium
to
the Secured Party the rights of the Secured Party pursuant to the provisions
of
any other written agreement between Millennium and the Secured Party, each
of
which such agreements remains in full force and effect in accordance with
its
terms.
IN
WITNESS WHEREOF,
each of
the parties has caused this Agreement to be duly executed by its duly authorized
officer or representative as of the 30th
day of
November, 2007.
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DEBTOR:
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MILLENNIUM
BIOTECHNOLOGIES, INC.
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By:
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/s/
Xxxxx Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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CFO
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ACCEPTED
BY THE SECURED PARTY:
HARBORVIEW
MASTER FUND LP
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By:
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s/
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Name:
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Navigator
Management Ltd.
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Title:
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Authorized
Signatory
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