Exhibit 10.17
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made on this 11
day of April, 2002 by Health & Nutrition Systems International, Inc., a Florida
corporation ("HNS") in favor of Garden State Nutritionals, a division of
Vitaquest International Inc., a Delaware corporation located at 0 Xxxxxxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx ("GSN") under that certain Promissory Note (as
hereinafter defined).
WHEREAS, HNS has delivered to GSN that certain promissory note with an
aggregate principal amount of Seven Hundred Thousand Dollars ($700,000) of even
date herewith, a copy of which is attached hereto as Exhibit "A" (the
"Promissory Note"); and has agreed to enter into an Exclusive Manufacturing
Agreement, appended hereto as Exhibit "B".
WHEREAS, HNS has agreed to provide security for the obligations under
the Promissory Note;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. GRANT OF SECURITY INTEREST.
(a) As security for the repayment of sums due under the
Promissory Note, HNS hereby grants to GSN a security interest under the Uniform
Commercial Code (as in effect on the date hereof and as amended from time to
time hereafter) of the State of Florida (the "UCC") in all tangible and
intangible assets of the HNS and all intellectual property of HNS (all as more
fully described on Schedule A to this Agreement) and (iii) proceeds of all or
any of the items described in items (i) and (ii) of this Section 1 (collectively
the "Collateral"). HNS shall not move the Collateral or HNS's headquarters
offices outside the State of Florida without first giving GSN 30 days' prior
notice.
(b) Notwithstanding anything herein to the contrary, HNS shall
be entitled to, without consent from or notice to GSN, use and dispose of the
Collateral in the ordinary course of its business, including but not limited to
the granting of licenses to any third party.
2. DEFAULTS AND REMEDIES. HNS shall be in default hereunder upon, and
only upon, the failure of Borrower to make three (3) consecutive quarterly
principal payments in accordance with the terms of the Promissory Note (a
"Default"). Upon the occurrence of a Default, GSN shall have and may exercise
all rights and remedies available to GSN under the UCC, subject to the terms of
this Security Agreement.
3. NOTICES. All notices, demands and other communications required or
permitted hereunder shall be in a writing and shall be deemed to have been duly
given, when delivered by hand or five (5) days after deposit in the United
States mail, by registered or certified mail, return receipt requested, postage
prepaid, as follows:
If to the HNS: 0000 Xxxxxxxxxx Xxxx, Xxxxx 0
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxx, President and
Chief Executive Officer
With copy to: Xxxxxxxxx Traurig, P.A.
000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000X
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
or, if to the GSN c/o Vitaquest International Inc.
0 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxxx, Xxx Xxxxxx
Attn: Xxxxx Xxxxxx, General Counsel
or to such other address as any party hereto may from time to time designate in
writing delivered in a like manner.
4. FINANCING STATEMENTS. HNS shall execute all appropriate financing
statements, and amendments thereto, to be filed with the Secretary of State of
Florida as GSN may reasonably request from time to time to evidence the security
interest granted hereunder. Upon the full and final payment of all amounts due
under the Promissory Note, the parties hereto will cause a termination statement
to be prepared and filed terminating the security interest created hereunder.
5. MISCELLANEOUS.
a. This Security Agreement shall become effective as of the date hereof
and shall continue in full force and effect so long as any balance
remains outstanding under the Promissory Note.
b. No amendment, modification or waiver of any provision hereof shall be
effective unless it is in a writing and signed by HNS, in the case it
is to be enforced against the HNS, or GSN, in the case it is to be
enforced against GSN.
c. This Security Agreement may be signed in counterparts, which taken
together shall constitute one instrument.
d. No waiver of any provision hereunder shall act or be construed as a
continuing waiver of any provision hereof.
e. This Agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns, heirs and personal
representatives. Any provision hereof which is prohibited or
unenforceable in any applicable jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without affecting the validity or enforceability of
the remainder of this Security Agreement or the validity or
enforceability of such provision in any other jurisdiction.
f. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
IN WITNESS WHEREOF the undersigned has duly executed this Security
Agreement as of the date first above written.
2
Health & Nutrition Systems International, Inc.,
a Florida corporation
/s/ Xxxxxxxxxx Xxxx
--------------------
Xxxxxxxxxxx Xxxx
President and Chief Executive Officer
3
SCHEDULE A
HEALTH & NUTRITION SYSTEMS, INTERNATIONAL, INC.
STATUS OF PENDING AND REGISTERED TRADEMARKS
APRIL 1, 2002
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OUR SERIAL NO./ DATE FILED/
REF. XXXX REG NO. REG. DATE: STATUS
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2196.001 THIN TAB 75/367,999 10/093/97 U.S. Trademark Reg. No. 2,198,376,
registered October 20, 1998
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2196.003 THIN SHAKE 75/626,392 01/25/97 Pending, approved for publication; await
AND DESIGN publication date from Trademark Office
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2196,004 THIN TAB 75/705,603 06/05/00 Pending, approved for publication; await
CARB publication date from Trademark Office
BLOCKER
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2196.005 ON THE 2,491,296 09/18/01 Registered
MOVE
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2196.006 CARB 2,451,931 05/15/01 Registered
CUTTER
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2196.007 COME 75/875,788 12/21/00 Notice of Allowance issued 01/16/01;
TOGETHER registration imminent (Statement of use or
further Ext. due by 7/16/02)
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2196.008 I CHEAT 75/939,009 03/08/00 Pending, approved for publication; await
publication date from Trademark Office
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2196.010 JOINT LUBE 76/097~459 07/24/00 Office Action dated 10/29/01; Response to
Office Action due: 4/29/02
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2196.011 DO YOU CHEAT? 76/081,818 07/03/00 Published by Trademark Office on 1/22/02; if
no opposition filed, xxxx will register
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2196012 WE CHEAT 76/082,098 07/03/00 Pending, approved for publication; await
publication date from Trademark Office
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2(96.013 FAT DROPS 76/082,384 07/03/00 Exts. filed by other party to file
Opposition against xxxx
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2196.015 CARB 76/373,492 02/2202 Newly filed application; await
BLOCKER correspondence from Trademark Office
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2196.000 ACUTRIM 1,266,820 02/14/84 Registered / Ownership acquired by Contract
dated 01/12/2001
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